Business

finance that

Annual Report and

Accounts 2024

backs you

STRATEGIC REPORT

Overview and highlights

Powering UK

businesses

We’re the UK’s leading SME finance platform, backing

small businesses with the funding they need to win.

From coffee roasters and bakeries to furniture

manufacturers and estate agents, our customers

are the nation’s small and medium-sized businesses.

Our products

Enabled by data and technology,

our expanded product suite allows

businesses to borrow, pay later and

spend – supporting them at every

stage of their finance journey.

Borrow

Longer term

Pay later

Monthly

Spend

Daily

More detail on page 18

Our customers

We’re building a great

business for our customers,

who are the backbone of the

economy. We provide the fuel

to power SMEs, enabling them

to build their businesses that

create jobs, bring economic

growth and support their

communities.

More detail on page 14

Front cover image: Laird Hatters.

More detail on page 44

Our financial performance

Revenue

£160.1m

Credit extended

£1.9bn

Balances outstanding

£2.8bn

Profit before tax

(before exceptional items)

£3.4m

Contents

Strategic report

01 Overview and highlights

02 Chair’s statement

05 Chief Executive Officer’s statement

08 Our business model

10 Our strategy

12 Key performance indicators

14 Our customers

16 Technology and data

18 Our products

20 Our people

24 Environment, social and governance

(“ESG”)

39 Non-financial and sustainability

information statement

40 Engaging our stakeholders

44 Financial review

51 Risk management

55 Principal risks and uncertainties

63 Viability statement

Corporate governance

66 Chair’s introduction

67 Governance at a glance

68 Board of Directors

70 Corporate governance report

78 Report of the Nomination Committee

82 Report of the Audit and Risk

Committee

88 Report of the ESG Committee

90 Directors’ remuneration report

101 Annual report on remuneration

112 Report of the Directors

115 Statement of Directors’

responsibilities in respect

of the financial statements

Financial statements

117 Independent auditors’ report

124 Consolidated statement of

comprehensive income

125 Consolidated balance sheet

126 Consolidated statement of

changes in equity

127 Consolidated statement

of cash flows

128 Notes forming part of the

consolidated financial statements

180 Company balance sheet

181 Company statement of changes

in equity

182 Company statement of cash flows

183 Notes forming part of the Company

financial statements

193 Alternative performance measures

194 Glossary

197 Shareholder information

198 Company information

160.1

1.9

2.8

3.4

130.1

1.3

2.9

(9.9)

2024

2023

The Strategic report was approved by the Board on 06 March 2025.

Lisa Jacobs

Chief Executive Officer

STRATEGIC REPORT

01Funding Circle Holdings plc | Annual Report and Accounts 2024

CORPORATE GOVERNANCE FINANCIAL STATEMENTS

STRATEGIC REPORT

Chair’s statement

A remarkable

year of evolution,

and serving

more SMEs

Review of the year

2024 was a remarkable year, a year of major decisions

and change.

In last year’s report I wrote about our decision to seek

an exit of our US business which we had owned and

developed almost since start-up. This was a hard

decision made after we won the licence to distribute SBA

loans in 2023. We received several approaches for the

business and, following the Board decision to proceed,

the team executed a seamless sale despite our emotional

connection to all the team and all we had achieved

in the US.

Over a period of years, we had invested heavily in

talent, having built expected economic recovery into

our budgets. However by the end of 2023 we stopped

building in such recovery in our budget process. The

decision to press ahead with cost reductions during

2024 was another hard but necessary decision. I am

pleased that this was done fairly and properly with

a significant reduction in our cost base but a culture

largely unscathed.

These two major decisions were also driven by a

prioritisation of shareholder value. In 2023, I referenced

the value of the operational and financial leverage in our

business model, “we can hope and expect that the share

price will reflect that value in due course”, I wrote. It is at

last pleasing that Funding Circle Holdings was one of the

best performing shares in the UK market in 2024.

corporate.fundingcircle.com

Andrew Learoyd

Chair

2024 was a remarkable year

for Funding Circle, a year of major

decisions and change. I feel more

confident about Funding Circle’s

future than ever before.”

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202402

Strategy

In 2022, we began our strategic pivot from a single

to a wider product offering, and in 2024 we completed

the shift to a single geography focus. We now offer UK

SMEs more ways to borrow, pay later and spend and

we will continue to bring more flexibility and value to our

existing customers and also say “yes” to a broader range

of customers.

While the Board has made a conscious decision to

demonstrate the underlying profitability of our core

business, we do not want to do this at the expense of

growth. New products require research, development and

investment and we will use our balance sheet strength

and cash generative core business to fuel the longer-

term growth. FlexiPay is a good demonstration of how

much growth we can deliver with this strategy and since

launching in 2022, FlexiPay is now facilitating almost

£45 million payments per month. Our newly launched

Cashback Business Credit Card (“Cashback credit

card”) is next, and we have high hopes this will drive

further growth.

Board and people

Last March, I said there would be changes to the Board

over the year as some of our Non-Executive Directors

were nearing the end of their tenure, and that we would

use this opportunity to ensure we have the right size

and composition of Board for our revised strategy. In

May 2024, our Risk and Compliance Committee Chair,

Eric Daniels stepped down after almost eight years on

the Board. In October 2024, founder Samir Desai CBE

stepped down from the Board as he was coming to the

end of his three years as a Non-Executive Director, and

Matthew King recently retired from the Group Board

having spent many years chairing the Board of our

regulated subsidiary. We also announced in May 2024

that CFO Oliver White would stand down at the end

of the year.

To our departing Directors, I give thanks for your

commitment, your support and for leaving Funding Circle

in the strong position it is in today. Samir, especially to

you, none of this would have been possible without you

and your co-founders.

The Nomination Committee had much to do in 2024 and

the work is ongoing. We appointed Tony Nicol as CFO and

Ken Stannard has joined as Non-Executive Director and

Chair Designate to replace me following the AGM in May

2025. We plan to appoint at least two new Non-Executive

Directors in the coming months.

In Tony Nicol we have a trusted colleague who

understands our business intimately. We are excited to

have Ken Stannard join us, together with the additional

Non-Executive Director hires that we are seeking, we will

have a new Board replete with the skills and experience

to drive Funding Circle forward as the champion of SMEs

in the UK.

Introducing our new Chair

Excited to be joining Funding

Circle on its next chapter

I am delighted to join Funding Circle as the

Independent Non-Executive Director and Chair

Designate. In 2025 and beyond, I look forward to

working with the Board, the executive team and

Circlers to drive forward the Group’s strategy and

ensuring that it continues to create significant

value for all stakeholders.

Assuming the role of Chair Designate is a

significant responsibility. However, with over three

decades of experience and expertise in credit,

lending, and payments, I am eager to contribute

and continue bringing the Company’s vision to

life, and ensuring more small businesses get the

funding they need to win.

I look forward to my election to the Board and role

of Chair at the Annual General Meeting in May 2025,

where our shareholders will have the opportunity to

ask me and the Board about our vision.

I am confident that 2025 will be a year of

excitement and opportunity for Funding Circle

to grow and maintain its position in the market.

Ken Stannard

Chair Designate

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 03

It has been an honour,

a privilege and a pleasure

to serve on the Board of

Funding Circle for the

nearly 15 years since it

was founded.”

Board and people continued

While 2024 has been a year of great successes, some

of the changes have been difficult for our Circlers such

as the sale of the US business, and the restructuring in

the UK. I pay full respect to the whole team who have

together delivered an exceptional year of growth with

almost no blip in the culture that defines Funding Circle.

The future

With my final report to shareholders, I feel more confident

about Funding Circle’s future than ever before. No longer

“unproven through the cycle”, the attractive financial

model and cash generation of our core business will

become obvious, while our newer products will provide

the turbo charge to growth.

Our new strategic direction has given us a more simplified

focus, but a wider product offering also raises challenges

that we have not previously faced. For example, it has

dramatically increased the velocity and frequency of our

customer interactions and the need for us to offer the

right product with the simplest messaging. Having spent

many years offering a single product, we will need to

offer a different and improved customer experience in the

future. We need to be best in class to ensure that SMEs

come to us and stay with us for an increasing number of

their financial needs.

As part of this process, there are skills we need to learn

and resources to hire. We have recently set up a team of

AI experts who will harness the technology to support

this. For many years, we have used machine learning

to develop the market leading SME credit technology.

Adding AI will allow us to become the go-to supplier of

financial products for the vast army of SMEs that are the

bedrock of the British economy.

Thank you

Our journey since 2010 has not always been easy. The

sector that we helped to create, peer-to-peer finance,

is said no longer to exist, but here we are with much the

same platform-based model that we started with. We

have faced a series of economic and political headwinds,

but we have faced these challenges with great purpose,

based on a mission that has always remained constant, to

support SMEs with the funding they need to win.

With that mission, there have been some extraordinary

achievements. We knew the demand from SME borrowers

would be there, but how could we ensure there would

always be a steady supply of investor lending. We have

proven after 14 successive years delivering positive net

returns for institutional investors on our platform that we

have indeed invented a new asset class. An asset class

that has been endorsed by the Bank of England, which

recently approved our securitised loans as eligible bonds

for collateral.

It is an asset class which feeds capital and jobs to the

real economy, and we have secured a market position

that is so important to that asset class that when the

State needed to provide government-guaranteed loans

to British businesses, we became a significant part of

the British Business Bank’s programme. I once told a

shareholder that I would not leave Funding Circle until

we were regarded as essential to the health and funding

of a large swathe of SMEs in the UK economy. I believe

that Funding Circle is now in that position, I truly believe

that with Funding Circle around, British business is in a

better place!

It has been an honour, a privilege and a pleasure to serve

on the Board of Funding Circle for the 15 years since it

was founded, and I wish all who will now take it forward

great fulfilment, success and fun.

Andrew Learoyd

Chair

6 March 2025

Chair’s statement continued

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202404

Chief Executive Officer’s statement

A year of change

and significant

progress

We provide the fuel to power

SMEs up and down the country.

We enable these entrepreneurs to

build great businesses that create

jobs, bring economic growth and

support their communities.”

2024 was a successful year of change and transformation

as we executed against our plan to deliver a simpler,

leaner business.

I am proud of the progress we have made. We have

delivered strong revenue growth and profitability ahead

of market expectations. Our business is in a strong

position as the market leader in online SME lending. We

have leveraged our data and technology strengths to

expand our product set to serve more of our customers’

needs. We have delivered robust, attractive loan returns

to our institutional investors through the cycle. We have

an attractive go forward plan, driving sustained revenue

growth and expanding our margins.

Borrow, Pay Later and Spend: Our multi-product

transformation

Three years ago, when I stepped into the CEO role, I set

an ambition to be a multi-product business, one that

enabled businesses to not only borrow for the longer

term, but to also pay later and spend, becoming a more

important part of our customers’ lives and providing further

growth opportunities. Over the last three years, we have

delivered against this plan. Today, businesses can borrow

with our Term Loan, for longer term investment; pay later,

managing their cash flow through FlexiPay; or spend on

our Cashback credit card.

This shift is reaping strong rewards for our business. First,

we have seen strong growth. In 2024, more than a quarter

of our credit extended was via FlexiPay and FlexiPay

revenue grew threefold. Secondly, we are seeing an

increase in our share of our customers’ financing as over

70% of FlexiPay revenue came from existing Term Loan

customers. Finally, we have increased our interactions

and engagement with our customers. Three years ago,

we interacted with a customer approximately every half an

hour, today we interact with a customer every 92 seconds

as they take a loan, FlexiPay a supplier or spend on their

Cashback credit card.

Lisa Jacobs

Chief Executive Officer

corporate.fundingcircle.com

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 05

Over the last three years,

we have transformed our

business. We see a future

where Funding Circle is at the

heart of SMEs’ financial lives.”

£33.7 million of share buybacks in 2024, we finished

the year with a healthy unrestricted cash position of

£151 million.

Our core Term Loans business grew strongly with

33% origination growth, reaching £19 million in PBT, a

margin of 13.3% as we attracted more businesses and

enhanced our product offering, launching government-

backed Growth Guarantee Scheme loans and a broader

Marketplace offering.

FlexiPay, our pay later proposition, continued to show

strong growth with revenue tripling over the course of the

year. Businesses have now FlexiPaid more than 280,000

times. When we launched FlexiPay, we had a hypothesis

that this would be a product that would attract both

existing and new to Funding Circle customers, and I am

pleased to say that this is the case, with ~30% of our

2024 FlexiPay revenue from new customers. We continue

to see strong usage from existing FlexiPay customers,

once a customer starts using FlexiPay it becomes part

of their day-to-day cash flow management tools. In

2024, over 70% of revenue was from customers who had

opened their FlexiPay account before 2024. In H2 2024,

we launched our Cashback credit card, completing our

“borrow, pay later and spend” proposition. It is still early

days for our credit card but initial metrics are in line with

our expectations and we look forward to seeing further

growth in 2025 and beyond.

2024 was a year of change and progress as we executed

against our plan of delivering a simpler, leaner business.

I am proud of the progress we have made, delivering

strong growth, expanding our product set and delivering

profit ahead of market expectations.

We executed the plan I laid out to be a simpler, leaner

business. We sold the US business in July for a gain on sale

of £10 million and restructured the UK business, to deliver

£15 million in annualised cost savings from 2025. These

were not easy decisions to make. We said goodbye to some

talented Circlers who were vital in our business’s journey.

However, these decisions were essential to position us for

long term success, and they have placed the business in a

strong position to deliver against our medium-term plan with

continued growth and profitability trajectory.

Our competitive advantage: data and technology

at the heart of everything we do

We’ve delivered this by leveraging our credit, data

and technology advantage, delivering the same great

customer experience. SMEs want fast, easy access to

credit. We provide that with a six minute application form,

an instant decision for 77% of applicants and funding in

businesses’ accounts in as little as 24 hours. This drives

strong customer satisfaction with an NPS of 79 and

enables our busy customers to get back to what they

do best, running their business.

Our AI powered risk models are trained with data

from public sources alongside proprietary data on our

hundreds of thousands of loans and transactions and are

three times better at discriminating risk than the bureau

scores alone. Despite the challenging macroeconomic

environment of the last several years, our business

has delivered well through the cycle. Loan returns have

been robust and attractive, attracting further institutional

investor demand and we have continued to attract and

serve SME demand.

Fuelling the nation’s SMEs

We’re passionate about our mission. We provide the

fuel to power SMEs up and down the country. We enable

these entrepreneurs to build great businesses that

create jobs, bring economic growth and support their

communities. They are not the high growth venture-

backed rocket ships, but they are the backbone of

the economy – the florists, the manufacturers, the

restaurateurs, the builders and countless others.

They have a huge impact on the economy, but they

have historically been underserved. For the last

15 years, we have been changing that with fast,

easy finance that backs small businesses.

As we continue to back these businesses, we’re

also backing the economy. In 2024, lending through

Funding Circle supported over 87,000 jobs, £7.2 billion

in GDP contribution and £2 billion in tax receipts. We

lent to businesses in every one of the country’s 650

constituencies. That is pretty remarkable and I am

reminded of the impact we have whenever I meet

one of our borrowers and hear their stories. This year,

I have had the pleasure of meeting Tina from the French

bakery, Croissant D’Or, and Debi from the flooring

business, Springfield Carpets, in Leeds; and husband

and wife team, Brian and Kerry, from Powderhall Bronze,

an Edinburgh based foundry, fine art producer and

gallery. They each have wonderful stories of running

and building their businesses with plenty of ups and

downs. It’s a privilege to know that our loans have

been part of those journeys.

2024: a simpler, leaner, high growth, profitable

business

In 2024, we executed well. We delivered £3.4 million

in PBT, above market expectations and up from a loss

of £9.9 million in 2023. Revenue grew by 23% to £160

million. Alongside this, our credit extended grew 47% to

£1.9 billion. We have a strong balance sheet and despite

Chief Executive Officer’s statement continued

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202406

Simpler

Sold US business for

a gain on sale of £10 million

In July, we sold our US business to iBusiness

Funding for a gain on sale of £10 million in order

to focus on nearer term profitability and cash

generation in the UK.

Leaner

Restructuring announced

to deliver an annualised

benefit of ~£15 million in 2025

In May, we announced a restructuring

programme to reduce our total head count

by c.120, delivering an annualised benefit

of c.£15 million in 2025. This focused on

management layers, business prioritisation

and productivity, supported by GenAI tools.

Profitable

Delivered PBT margins of

13.3%, in line with profit

guidance

The actions that we have progressed this year

have meant that the business has delivered

£3.4 million PBT, following an upgrade to our

profit guidance in September. In our more

mature Term Loans business, we delivered PBT

margins of 13.3%.

Key actions

from 2024.

People & culture

Our performance this year is down to the hard work of

our Circlers. We are a technology business, but we are

also a people business, driven by the passion, innovation

and delivery of our team. I want to thank them all for

their dedication and commitment to helping SMEs thrive.

Our culture is something that we nurture and celebrate.

We pride ourselves on being a great place to work and

develop careers. In 2024, we have held various team

events and socials, including our first ever CircleIN. Our

Circler groups have been active and we have had an

office refresh to upgrade the space, foster collaboration

and work seamlessly for a hybrid working environment.

We were delighted to be awarded the Transformation of

the Year at the PLC Awards in recognition of the changes

we have made and the team’s strong execution.

I would like to thank Oliver White, our departing CFO, who

has had a significant impact in his four years at Funding

Circle, and our departing Board members, particularly

Samir Desai and Andrew Learoyd, whose leadership

and vision have built this business from the start. I am

delighted to have Tony Nicol step into the CFO role, after

six years at Funding Circle, and Ken Stannard bringing

his vast experience and energy as he steps into the

Chair role.

Looking ahead

2024 was a strong year, but I believe the best is yet to

come. The market opportunity is vast, with over £80 billion

in SME loans outstanding, over £1 trillion in SME B2B

payments and over £80 billion in SME card transactions.

We are in a strong position to capitalise on this opportunity

with high customer satisfaction rates driven by proprietary

and defensible data and technology advantages.

Our four strategic priorities are focused on profitable,

customer-led growth:

l Get to Yes: continuing credit innovation and

product enhancements will enable us to get to yes for

more businesses as we bring the right product to the

right customer.

l Expand our audience: expanding our audience

by targeting new segments with our newer

products whilst also deepening and expanding

our distribution channels.

l Scale our product offering: scaling our products

and adding new features, capitalising on the

significant market opportunity to drive growth

and margin expansion.

l Build a seamless lifetime customer experience:

delivering an exceptional experience throughout our

customers’ journey as their trusted financial partner.

We have a strong, mission-driven team, a clear vision and

plan. As we execute this plan, we’ll become an even more

integral part of our customers’ lives, fuelling the success

stories of hundreds of thousands more businesses and

creating countless jobs. We see a future where Funding

Circle is at the heart of SMEs’ financial lives, providing the

tools and resources they need to thrive.

Lisa Jacobs

Chief Executive Officer

6 March 2025

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 07

Our business model

We’re proud of our impact in powering the nation’s SMEs, which supports jobs and

economic and community prosperity. Small businesses are the backbone of the

economy. Since 2010 we have been fuelling small businesses with the funding they

need using our data and technology advantage to drive a superior, fast and hassle-free

customer experience.

Our capital light model enables scale and growth whilst our superior risk and analytic

capabilities deliver robust and attractive returns for institutional investors.

Our addressable

market

Our

customers

l Access to affordable finance

l Fast, convenient applications

l Instant automated decisions for 77% of applications

l Superior customer experience with a 79 Group

Net Promoter Score

Our business model

£84bn

addressable SME

loans market

£1.3trn

SME B2B

payments

£80bn

SME card

transactions

Small business

borrowers

l Access to hard-to-reach asset class at scale with

diversified loan book

l Robust and attractive returns

l Forward flow agreements with £2.1 billion future

funding in place

Institutional

investors

1. Funding Circle addressable market research July 2022

2. Visa SME market sizing July 2022

STRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 202408

CORPORATE GOVERNANCE FINANCIAL STATEMENTS

More detail on page 16

The value

we create

>111,000

small businesses

supported

£7.2bn

contribution to GDP

87,000+

jobs supported

~5%

annualised returns to

institutional investors

171

Impact Days taken in

2024

Our competitive

advantage

Superior customer

experience

NPS

4.6

Trustpilot

better risk

discrimination

77%

instant

decisions

Data and technology

advantage

Wide product suite

Borrow

Spend

Pay later

For details on how we generate revenue, see page 46

STRATEGIC REPORT

09Funding Circle Holdings plc | Annual Report and Accounts 2024

CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Our strategy

We delivered against

our ambitious strategy in 2024

Our product expansion and growth

have enabled us to increase

applications, open up new

marketing channels and attract a

broader set of businesses.

In addition to our product evolution,

we have continued to invest in our

brand with our second and third

season sponsoring Premiership

Rugby. We expanded our sponsorship

by welcoming Jamie George, England

Captain and Funding Circle borrower,

as our brand ambassador.

Along with our regular marketing

channels, the sponsorship has

driven increased brand visibility and

helped us reach an even wider pool

of customers. Our Season 2 content

series amassed 43 million views

across online media platforms and

11 million in print and radio, driving

increased spontaneous brand

awareness and brand consideration.

In 2024 we grew our credit

extended by 47%.

Throughout the course of the year, we

continued to use our credit analytics

and product innovation capabilities to

say yes to more businesses.

In July 2024, we launched

our lending under the Growth

Guarantee Scheme, expanding

our offering to a new segment of

SME borrowers.

Through Marketplace, we expanded

the number of partners we work

with and the products we provide so

we can say yes to businesses even

if we don’t have a Funding Circle

product to meet their needs. Our

Marketplace now accounts for ~11%

of our loan originations, an increase

of 1% in 2023, enabling us to deliver

a great outcome for our SME

customers and further monetise our

distribution capabilities.

We have continued to expand and

diversify our Funding Circle product

offering, scaling our FlexiPay pay

later product and launching our

Cashback credit card. In doing so,

we have expanded the ways we can

serve customers and increased our

share of wallet with our customers,

whilst leveraging our strengths in

credit, data and distribution.

We have enhanced our FlexiPay

offering, adding new product

features throughout the year,

including enabling businesses to

buy now and pay later in 1, 3, 6, 9 or

12 months. FlexiPay revenue grew

by 3.4 times in 2024.

In Q3 2024, we launched our

Cashback credit card, initially in

beta. This enables us to attract

a broader set of customers, and

interact with them on a daily basis.

Attract more

businesses

Say yes to more

businesses

#1 in new

products

How we delivered in 2024Our strategic pillars

See our KPIs on page 12

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202410

Evolution of our

strategic framework

Over the course of the last three years, we have transformed our business offering

from a single product to one that enables businesses to borrow, pay later and spend.

We now have deeper relationships with customers as we meet more of their needs and

have increased our interaction with them from every few years to every few days.

As we continue to scale our business, our evolved strategic framework is focused on

customer-centric profitable growth.

Get to ‘Yesʼ Expand our audience

Scale our product offering Deliver a seamless lifetime

customer experience

When our customers win, we win. We will leverage

our credit and product innovation capabilities to

enhance our products and open new segments to

serve a broad customer base.

Enhanced product offerings to new customer

segments through new marketing channels will

expand our audience, attracting more businesses to

Funding Circle.

Our product suite is wide and meets most of the

needs of our customers, but some products are

nascent whilst the market opportunity is large. Over

the coming years, we will scale our newer products,

innovating and unlocking new product features to

drive profitable growth.

Our customers have a broad range of finance needs

and we now have the right products to meet them.

Through our broader product set we will deliver a

great lifetime customer experience serving them

with our renowned superior customer experience

and the right product at the right time.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 11

Key performance indicators

Net income (£m)

£160.1m

Profit/(loss) before tax (£m)

(before exceptional items)

£3.4m

Basic earnings/(loss) per share (p)

(before exceptional items)

0.8p

Definition

The Group generates net income

principally from: transaction fees earned

from originating loans with borrowers;

servicing fees from servicing of loans

under management; interest income

from FlexiPay and cash balances; and

investment income net of investment

expense and after fair value gains/

(losses) and cost of funds.

Definition

Profit/(loss) before tax is defined as

net income after taking into account

all operating expenses and finance

income, costs and share of (loss)/profit

of associates. It is presented above

before the impact of exceptional items.

Definition

Basic earnings/(loss) per share is

defined as the profit/(loss) for the year

attributable to ordinary equity holders

of the Parent Company divided by the

weighted average number of ordinary

shares in issue during the year. It is

presented above before the impact of

exceptional items.

Links to strategy:

Financial

Operational

2023

119.5

2022

(0.9)

2022

2024

160.1

130.1

2022

(3.1)

(9.9)

2024

3.4

(2.4)

2024

0.8

Term Loans originations

£1,407m

FlexiPay transactions

£492m

Originations (£m)

Definition

This represents the monetary value of loans originated through the Group’s platform or

through Marketplace referrals in any given year as well as drawdowns on the FlexiPay

lines of credit and Cashback credit card spend. These are key drivers of transaction

and servicing fees for the Term Loans business and the upfront fee for the FlexiPay

business. These are presented above for continuing operations only in both the

current and comparative periods.

Links to strategy:

2023

2022

1,095

2022

1,060

2024

1,407 2024

492

234

2023

How we measure our performance

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202412

Financial Alternative performance measures (“APMs”)

Links to strategy:

6.7

Adjusted EBITDA (£m)

£24.5m

Free cash flow

(£m)

£(1.2)m

Definition

Adjusted EBITDA represents the profit/(loss) for the year

before finance costs (the discount unwind on lease liabilities),

taxation, depreciation and amortisation, and impairment,

and additionally excludes share-based payment charges

and associated social security costs, foreign exchange and

exceptional items.

Definition

Free cash flow 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 warehouse and securitisation

financing and funding cash flows and lines of credit cash

flows. The Directors view this as a key liquidity measure.

1. Free cash flow excludes restricted cash movement due to the

payment of guarantee fees.

Key to strategic objectives

Attract more businesses

Say yes to more businesses

#1 in new products

Operational continued

Term Loans under management

£2,714m

End of month balances

£119m

Balances outstanding (£m)

Definition

This represents the total value of outstanding principal of borrower loans, lines of credit and credit card balances.

It includes amounts that are overdue but excludes loans that have defaulted and loans originated through

Marketplace referrals to other lenders. These are presented above for continuing operations only in both the

current and comparative periods.

Links to strategy:

2023

(27.9)

2023

3,311

2022

12.6

2022

24.5

2024

(1.2)

2024

2,714

2024

119

2,853

182022

(13.3)

2022

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 13

Our customers

The pandemic has fundamentally changed SME Britain, with

92% small business owners who pivoted during Covid-19,

making these strategic changes permanent.

Five years after the pandemic, SMEs

continue to show their resilience

SMEs remain resilient and

competitive in an evolving market

With 2025 marking five years since the pandemic,

small businesses are more resilient than ever. The latest

research published by Oxford Economics in partnership

with Funding Circle in 2024 shows that over three in five

(65%) SMEs are expecting their business to grow in 2025,

highlighting their long-term confidence.

The pandemic accelerated digital adoption, and

the research demonstrates that it was not just a

temporary measure, it has fundamentally reshaped how

SMEs operate.

SMEs are increasingly prioritising digital transformation

and technology investment over physical expansion,

while maintaining a strong appetite for growth. This trend

signifies a lasting change in business strategies that

began as a response to the Covid-19 pandemic.

Making up 99% of the business population, small

businesses create jobs, boost the economy, and support

local communities. In 2024, Funding Circle’s Term Loans

and FlexiPay lending not only contributed £7.2 billion

to the UK’s gross domestic product (“GDP”) but also

played a pivotal role in supporting over 87,000 jobs.

Additionally, the economic activity supported by these

loans generated £2 billion in tax receipts.

Investing in the future

Despite macroeconomic headwinds, the findings highlight

that SMEs are investing for the future, rather than pulling

back. The continued prioritisation of technology investment

and hiring suggests that businesses are focusing on

productivity, operational efficiency, and adaptability to

remain competitive in a post-pandemic world.

SME access to finance

To support this momentum, access to capital remains

crucial. While SMEs are demonstrating strong resilience,

many will require continued financial support to unlock

growth opportunities. Ensuring that businesses have the

right tools to fund expansion is key in shaping the next

stage of business recovery and innovation.

Despite tougher credit conditions, the research also

showed that Funding Circle remained committed to

providing loans to SMEs with businesses in every one

of the UK’s 650 parliamentary constituencies, with an

average of £1.9 million in Term Loans per constituency.

£7.2bn

contribution to GDP

>87k

jobs supported

£2bn

generated in tax receipts

Details of Funding

Circle’s impact

in 2024 can be

found here

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202414

Reaching more

Powderhall Bronze Editions, a fine

art foundry in Edinburgh, tried to

get a loan from their bank but found

the process slow and painful.

Instead, they turned to us for help,

and really appreciated the speed

and service. Their loans have

since allowed them to reach more

customers, and set up a stand at the

Chelsea Flower Show.

Building up

Constructive & Co Ltd are a team of

makers who design, create and fit

bespoke furniture.

Having attracted more customers in

their local area, they used their loan

to invest in new machinery for their

workshop – so they could take on the

additional demand in house, and get

more headspace with their cash flow.

Looking ahead

England rugby captain Jamie George

and his business partner Rhys Carter

started The Carter & George Practice

to deliver elite physiotherapy

services to the public.

With big plans to grow, they took

out a loan to fund acquisitions of

other physio businesses, while using

FlexiPay to protect their cash flow.

We’re proud to support businesses across the country with agile,

competitive finance. Whether it’s long-term investment through

a Term Loan or everyday cash flow management using FlexiPay

or our Cashback credit card, we’re helping businesses seize

opportunities like never before.

We’d use Funding

Circle again and again

thanks to the great

service and ease.”

We found borrowing

to be an essential part

of taking us to the

next level.”

Once we’d been

approved, the funds

were in our account

in 24 hours or so.”

Our customers’ stories, investing

in growth and innovation

Scan to learn more Scan to learn more Scan to learn more

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 15

Reinventing

SME lending

Our cutting-edge technology and data platform is

constantly evolving, enabling more small businesses

to access the funding they need to win.

We combine our unique behavioural and performance data from over

150,000 Term Loans and nearly 230,000 FlexiPay transactions with publicly

available sources over nearly 15 years to give us a deeper understanding

of SMEs.

Our approach to SME credit risk, using machine learning tools and approaches

and combining public and proprietary data, gives us a competitive edge. Our

ability to discriminate risk better than the bureau scores enables us to deliver

superior customer outcomes and launch new products.

Risk model evolution

Building on over ten years’ worth of data, our ninth-generation risk models outperform bureau scores by a

factor of three. This allows us to streamline the customer journey and balance risk insights with a frictionless

customer experience.

Technology and data

Open banking

Commercial Credit Data Sharing

Bank statement

Application

Financials

Internal behaviour

Consumer bureau

Commercial bureau

Gen 3

2015

Gen 4/5

2016

Gen 6

2017

Gen 7

2018

Gen 8

2019

Gen 9

2023

Our performance data so far

150,000

Term Loans

228,000

FlexiPay transactions

Learn more about

our technology

and data

STRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 202416

CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Our proprietary technology platform

is designed to provide customers with

quick and easy access to finance.

Built-in flexibility and scale enable us

to successfully expand our product

range and continually improve the

digital customer experience. Today, we

see customers engage more frequently

with our broader range of products.

Use of AI

AI is at the core of our lending and we are

investing in the transformative potential of

Generative AI (“GenAI”) to benefit both our

customers and employees.

l We have implemented GenAI tools to enhance

employee productivity.

l We are actively exploring further opportunities

to streamline and improve the customer

experience, from loan origination to ongoing

customer service.

l In 2024, we established technical and

governance frameworks to ensure the ethical,

secure, and effective use of GenAI as we expand

its applications in 2025.

2024 highlights: scalable

platform with ongoing

product releases

l Scalable platform managing 36% loan

application growth.

l >100% transaction growth and 3x growth in

monthly active users on our app.

l Deployment of improved product features and

customer experience such as an increase of 20%

engineering productivity.

l Launch of Cashback credit card and Growth

Guarantee Scheme loans.

better risk

discrimination

77%

instant

decision

6 min

application time

24 hrs

funds in account

NPS

See our Technology risk on page 62

STRATEGIC REPORT

17Funding Circle Holdings plc | Annual Report and Accounts 2024

CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Our products

Our diverse product range enables businesses to borrow,

pay later and spend. We meet a broad range of finance

needs through our product suite, all with our trademark

ease, speed and instant decision technology.

Borrow

Term Loans

Loans for long-term investment or working

capital purposes to support business growth

or long-term cash flow management.

l Loan sizes of £10,000 to £750,000.

l Available from six months to six years.

l Amortises monthly.

l Marketplace offering for SMEs, opening

the door to finance solutions from across

the market.

Case studies

l ANNA Cake Couture used their

loan to grow by expanding their

kitchen, creating more jobs and

opening a new office.

l Studio Gauthier used their loan

to expand their restaurant by

renovating and refurbishing.

Scan for

product details

STRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 202418

CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Pay later

FlexiPay line of credit

Flexible line of credit for paying bills, supplier invoices

and managing cash flow using bank transfer or card.

l Businesses can pay bills directly to suppliers or into

their bank accounts for a fixed fee.

l With flexible terms and billing, small businesses can

repay in 1, 3, 6, 9 or 12 months.

l Credit limit up to £250,000.

Spend

NEW

Case studies

l Carter & George were able to protect their cash

flow and do acquisitions of SMEs.

l Beauty Boutique were able to invest in medical

machinery as the line of credit helped with their

cash flow.

Scan for

product details

Scan for

product details

Cashback Business

Credit Card

Cashback credit card for everyday

business spending.

l Launched the Cashback credit card

in Q3 (beta), with full roll-out in Q4,

following customer feedback pointing

us in the direction of a credit card for

everyday transactions.

STRATEGIC REPORT

19Funding Circle Holdings plc | Annual Report and Accounts 2024

CORPORATE GOVERNANCE FINANCIAL STATEMENTS

84%

equal opportunities

171

Impact Days taken

91%

aligned to values

Circler events and initiatives

81%

bring their authentic self to work

1,364

volunteering hours in 2024

Our values

Our people

Backing our

people

’

s growth

Gender pay gap

Gender breakdown

(as at 31 December 2024)

1. Includes those in levels CEO -3

Other metrics

Obsess over the customer

Live the adventure

Think smart

Be open

Stand together

Make it happen

All Circlers

Mean pay gap Median pay gap Women in leadership

Executive Committee ExCo and direct reports

Group Board

42%

25%

37.5%

43%

57%

58%

75%

62.5%

20.4% 27.1% 35%

17.4% 26.1% 34%

22.4% 30.5% 32%

18.5% 27.1% 34%

21.4% 32.2% 31%

2024 2024 2024

2023 2023 2023

2022 2022 2022

2021 2021 2021

2020 2020 2020

Female Male

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202420

CircleIN

It is vitally important to invest in our people, their

understanding of the business, our customers and

our products, and their personal development.

To reconnect Circlers and reinforce our mission,

strategy and culture, we brought our team

together for our first ever CircleIN event.

Hosted on site in our newly refurbished office

space, Circlers spent an afternoon hearing from

our leaders on our strategy, mission and evolving

product suite, meeting our customers, and learning

more about other parts of the business. Alongside

this, we shared information on our development

programmes and our Circler groups, and gave an

opportunity for Circlers from across the business

to connect.

Our people (“Circlers”) are central to all that we do

at Funding Circle. 2024 was a significant year for our

business, as we undertook a number of large strategic

changes, which tested our resilience. Thanks to the

contributions of everyone working at Funding Circle,

we continue to build a better, stronger business together,

as the wider social and economic environment has

shifted in the post-pandemic years.

As we evolve our business strategy, we have come a long

way and made big strides under our strategic people

core foundation, “High Performing Teams Executing

Brilliantly”. We have continued to nurture a strong, diverse

and unique culture underpinned by our values. We remain

fully committed to our hybrid model, balancing flexibility

with in-person collaboration to enable our teams to

collaborate, be productive and develop at Funding Circle.

Backing high performance

We believe in excellence and challenging ourselves to

set new standards. We believe it is possible to create

an inclusive environment and a supportive culture, but

equally one where we can challenge each other to set

new standards and push ourselves to achieve more.

This is the core philosophy underpinning “High Performing

Teams Executing Brilliantly”. We continue to place a

strong focus on developing a high performance company,

embedding performance, ownership and accountability

further into our culture. Sitting alongside the Company’s

Objectives and Key Results (OKRs) framework, we have a

well established cadence of goal setting for all Circlers,

anchored in our business context and personal growth

journey. Performance is assessed through an individual’s

impact on the business on a biannual basis, alongside our

value-based behaviours to measure how we achieve

our goals.

Similarly, our tools and data for helping us calibrate

how we measure performance consistently and through

multiple lenses are applied rigorously and equitably

across all parts of the business. Our ambition is high

performance, and we reward those who stretch

themselves to go further.

Looking ahead, in 2025 we will be investing further in

resources to enhance our high performance philosophy,

both in how we feed back to each other and how we

recognise Circlers for their efforts. We will also be

focusing on continuing to build our career frameworks,

to ensure consistency of standards and progression

pathways across teams.

Backing personal growth

We embraced a “best of both” philosophy as we emerged

from the pandemic and entered the world of hybrid

work. Now into our fifth year, we continue to operate a

model which provides all Circlers with flexibility whilst

retaining the best of what we know and love about

working together in person. To support this, we invested

in a 100 day refurbishment programme to redesign our

office space in 2024. We remain fully committed to a

flexible and hybrid approach, but we strongly believe that

in-person collaboration is an important element to enable

our teams to achieve more.

We continued to empower Circlers with resources to

support their growth and development. To support

newly promoted or hired managers at Funding Circle,

we launched the Emerge programme. Emerge is a

blended development offering designed to give our

managers the tools and knowledge they need to

successfully manage and coach for high performance.

We also invested in our leadership with the launch of

Elevate, a development initiative to support our senior

leaders, enhance their leadership capabilities and further

embed our leadership commitments.

More widely, backing growth and development remains

a core foundation of our Circler experience. Throughout

2024 we hosted 230 training events and 610 Circlers

(84%) took the opportunity to further their professional

growth. 2024 saw Funding Circle’s first Growth Week

as part of a dedicated month-long development

series. Anchored around the pillars of ownership,

entrepreneurship and commercial mindset, Circlers

engaged with live sessions and curated content to

enhance their future performance.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 21

Our people continued

Technology apprenticeships

In 2024, we sponsored our third cohort of technology

apprentices, in line with our ambition to create opportunities

for all and our commitment to building an inclusive and

diverse workforce. We welcome all backgrounds and

experiences from those looking to start their career in

technology, whether that be an early career technologist

seeking out a training opportunity and a place to put

their knowledge into practice, a career changer with

significant experience in another field looking to kick-start

their professional journey within a technical environment,

or an existing Circler looking for an opportunity to pivot

their career into technology and transfer their skills and

experience to further serve our customers.

Technology apprenticeships have provided us with the

opportunity to build stronger gender and ethnicity equity

in our teams and create a pipeline of future female and

ethnically diverse talent in technology.

Q&A with Jennie Woods, VP, Engineering

What drives you to lead our Engineering

teams at Funding Circle?

I’m driven by the opportunity to lead diverse teams

that build products which enable SMEs to thrive – it’s

incredibly rewarding.

What do we do to change the under-

representation of women in technology?

We take a multi-faceted approach to increase female

representation. We attract diverse talent through

initiatives like our apprenticeship scheme, which

provides an alternative route into the industry for

people from a variety of backgrounds. We ensure

fair hiring practices by using gender-neutral job

descriptions, diverse interview panels, and bias

training for interviewers. To retain female talent,

we offer flexible work arrangements, provide

development programmes, and foster a supportive

environment through employee resource groups.

Why is building a female future talent

pipeline important?

Diversity and inclusion are core to our culture. We

believe diverse teams are more innovative, make

better decisions, and better represent our customers.

By fostering a supportive environment and building

a strong female talent pipeline, we ensure continued

innovation and success for Funding Circle.

What are the biggest successes or learnings

you’ve seen from Funding Circle’s hiring and

development of technology apprentices?

The programme has successfully attracted and

developed diverse talent, fostering a more inclusive

and innovative workplace.

Apprenticeships have

proven to be an effective

way to identify and

develop high potential

individuals with strong

technical skills and a

passion for technology. Many

apprentices have gone on to have

successful careers within Funding Circle.

Recognising the importance of continuous

improvement, we have introduced the Apprentice

Academy to provide dedicated mentorship and

ongoing support for apprentices throughout

their journey.

What initiatives in technology have helped

ensure there is time available for ongoing

professional development?

Last year, our Engineering team achieved a notable

increase in its productivity. A key contributor to this

success was the implementation of an AI Copilot. By

automating low complexity tasks, the Copilot empowers

engineers to concentrate on higher value business

challenges supporting their continued development.

This tool has proven particularly beneficial

for entry-level engineers, including apprentices.

They receive real-time code feedback and

explanations, facilitating a smoother onboarding

process and accelerating their professional growth.

These insights help them understand existing code

and improve their coding skills.

It’s amazing

to see how far

you’ve come

at the end.”

Ella Bastian, Engineer

Graduate apprentice

Diversity, equity and inclusion

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202422

85%

identify as

female

Of our technology apprenticeship cohorts:

69%

are of Black,

Asian or multiple

ethnicity heritage

23–52

age range

We have created a robust framework for the development

and support of apprentices in our technical teams making

the required time, resource and training available to

ensure successful completion of their apprenticeship,

and that they are set up for success in their onward

career. To date, 100% of apprentice Circlers have

received a distinction grade in their formal qualification,

the highest available level, and have proven to be able to

operate above the expected level at time of completion.

Circler-led groups

Our Circler-led groups remain at the forefront of our

culture as a driving force for positive change. Across our

six Circler-led groups there were events and initiatives in

2024, with highlights including 1,364 volunteering hours

taken. Circlers are given two paid “Impact Days” per year

for charitable contributions to causes important to them.

Women @ FC

l Building a community where women connect,

thrive and win.

Parents @ FC

l Providing a supportive space and a network for

working parents and carers.

Neurodiversity @ FC

l Spearheading the discussion about how neurological

differences add value, and building the infrastructure

for an equitable and accessible workplace.

Let’s Talk About Heritage

l Educating on the experiences of minorities, celebrating

racial diversity, and creating a safe space to continue

engaging in dialogue.

FC Impact

l Coming together and giving back to communities in

need, raising awareness for worthy causes, and making

an impact through charity and volunteering projects.

Circle of Pride

l Championing inclusion for all by building an open

community and celebrating LGBTQIA+ contributions.

To further champion flexible working in support of the

wellbeing of our Circlers, we joined Working Families,

a charity for parents and carers. We have worked with

the charity to advance our policies and practices to

better recognise and empower our Circlers to achieve

their full potential alongside their parenting and caring

responsibilities. We continue to drive a culture of

productivity that embraces individual and personal needs.

Each year we run reverse mentoring initiatives and we

focused on neurodiversity in 2024. Circlers volunteered

throughout Q4 to reverse mentor managers on

neurodiversity to further bolster our manager population

in its ability to manage neurodivergent individuals and

educate our individual contributors on the importance of

making the necessary accommodations when working

with neurodivergent teammates. We launched several

other mentorship schemes and have established a

certification programme. Currently we have 52 internally

certified mentors across departments and of varying

seniority whose experience can be called upon. The

Mentoring in Tech (“MinT”) scheme, a programme

connecting women and gender minorities in technology

with mentors across Funding Circle, specifically aims to

support female Circlers in achieving their individual goals.

Diversity, equity and inclusion (“DEI”) statement

Our recruitment process is designed to ensure

all applications, including those from disabled

persons, are treated equally and fairly.

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, where they can contribute

their ideas, have opportunities to be successful,

and have their talents 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 and expression,

disability, marital status, age,

nationality, religion, of thought,

belief, experience or expression.

We stand together, as one.

Awards in 2024

l Luke Santon – recognised as one of LGBT’s

Great 2024 30 Under 30 Role Model.

l Kate Turgoose – named in Innovate Finance’s

Pride in FinTech Powerlist.

l Antje Bustamante Mena – won HotTopic’s Global

CDO 100 Award.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 23

Environment, social and governance (“ESG”)

Delivering on our

commitments

At Funding Circle we are committed to contributing positively to our

communities; we do this through the business finance we provide

to our SME customers who are often underserved by mainstream

finance, and through sound and responsible ESG practices that

support broader societal and environmental efforts.

Our approach to ESG considers relevant risks and

opportunities, and is informed by our engagement

with our strategic stakeholders. For more detail on

corporate governance and risk management, and our

climate-related disclosures, please refer to the sections

referenced below.

Relevant policies

can be found on

the Company’s

Sustainability

webpage

l More detail on corporate governance is set

out on page 70

l More detail on risk management is set out

on page 51

l Our Non-Financial and Sustainability Information

Statement is set out on page 39

l Our climate disclosures consistent with the

Task Force on Climate-related Financial

Disclosures (“TCFD”) are set out on pages 28 to 38

STRATEGIC REPORT

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202424

Our ESG framework sets out our goals and

roadmap for each strategic pillar

DEI

Our ambition and

commitment

To be best in class and

live by our DEI statement,

building an inclusive and

diverse culture.

Achievements in 2024

l Stable key metrics in 2024, with

continued strong sentiment for inclusion

and belonging expressed in our 2024

engagement survey.

l Delivery of all-Company CircleIN internal

event, celebrating our culture and

spotlighting Circler-led groups, alongside

a knowledge-sharing networking event

to celebrate inclusivity and diversity, led

and delivered by employee groups across

the business.

l Delivery of 51 Circler group initiatives over

the course of 2024, including the MinT

scheme by Women@FC, and representing

Funding Circle at the annual London

Pride celebrations.

l Partnered with Working Families, the

UK’s national charity for working parents

and carers.

Goals and roadmap for 2025

l Continue to make progress against key DEI

metrics and targets, including women in

leadership and the gender pay gap.

l In Q1 2025, we plan to undertake a review

of our approach, plan and goals for DEI, to

ensure we continue to focus on building a

diverse and inclusive culture.

Social impact

Our ambition and

commitment

To back a diverse and

thriving SME customer base

– creating jobs, fostering

financial inclusion and having

a positive impact on UK

SMEs, entrepreneurs and

their wider communities.

Climate and

environment

Our ambition and

commitment

To support initiatives

that help drive progress

towards net zero, and

contribute meaningfully

to climate, nature and

biodiversity outcomes

for healthier communities.

Governance and

risk management

Our ambition and

commitment

To meet shareholder

and investor expectations,

and be viewed positively

in the market.

Achievements in 2024

l As outlined in Our Customers on page 14, our

lending supported 87,500 jobs, £7.2 billion in

GDP, and helped businesses in every one

of the 650 parliamentary constituencies.

l We renewed our partnership with Thrive

Mental Wellbeing, providing free or

discounted access to its NHS-trusted

mental health app to all SMEs in the UK.

l We continued to back underserved social

entrepreneurs through our partnership

with Hatch Enterprise for a third year, also

supporting 72 founders through 93 volunteer

hours of employee mentoring.

l Our Circlers contributed 171 “Impact

Days”, 1364 hours, volunteering with

environmental and people charities

including NishkamSWAT, Hatch Enterprise,

and London Wildlife Trust.

Goals and roadmap for 2025

l Continue to identify internal and external

opportunities to further embed our

ambition of delivering positive social and

sustainability outcomes for our customers.

l In line with our core mission, build on

our strong partnerships with Hatch,

Thrive and others to support the wider

SME ecosystem.

Achievements in 2024

l We achieved a 35% reduction in GHG

emissions (excluding 3.15 financed

emissions) due to the sale of our US

business, head office consolidation, and

a real-world reduction in business travel.

l We brought forward our interim net zero

target for emissions within our control

(scopes 1, 2 and 3 business travel) from

2030 to 2025, but retiring our previous net

zero stretch target for supplier, employee

commuting and waste emissions due to

a need for further work to understand the

drivers and scope for influence.

l We developed our approach to Beyond

Value Chain Mitigation (“BVCM”), retiring the

previous terminology on carbon neutrality,

while retaining our commitment to climate

and nature contributions in line with the

Science Based Targets initiative (“SBTi”)

BVCM principles.

l Our partnership with Earthwatch Europe’s

Tiny Forest initiative was featured in the

UN Global Compact UK’s “Nature-based

Solutions for Business” webinar series.

Goals and roadmap for 2025

l Progress our restated interim net zero

targets towards our 2050 net zero

ambition, including our accelerated interim

(2025) partial net zero target.

l Continue investing in UK-focused BVCM

activities, including verified and robust

carbon credit projects, to contribute

societal nature and climate benefits.

Achievements in 2024

l We published our Human Rights Statement

as planned.

l We developed our Climate Risk

Management Framework (“CRMF”), and

our disclosures are now aligned to the

TCFD recommendations, considering

proportionality and materiality and subject

to continued evolution in certain areas.

l We continued our engagement on

sustainability issues related to SME lending

with industry working groups under UK

Finance and the Partnership for Carbon

Accounting Financials (“PCAF”).

l We continued to uphold the highest

standards of corporate governance and

risk management more broadly, which are

covered in the sections starting on pages

51 and 70.

Goals and roadmap for 2025

l Prepare for UK introduction of ISSB/IFRS

S1 and S2, and changes to the 2024 UK

Corporate Governance Code.

l Understand how our current efforts align

to transition planning guidance and identify

priorities for further development.

For more please see the

Our People section on page 20

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 25

Environment, social and governance (“ESG”) continued

Social impact

In line with our mission to back SMEs with business finance,

we also aim to deliver and support initiatives that bring real

benefits to small businesses and local communities.

Our customers and SMEs

We value the contribution of SMEs to the economy,

through the jobs they create and the potential multiplying

effect they can have on wider society. Our lending

helps businesses invest and scale up, but also sustains

employment and stability locally. We recognise the

importance of financial inclusion – our borrowers sit at the

heart of diverse communities, and the business finance

we provide supports SMEs in every corner of the UK.

Our primary impact as a business is the multi-faceted

positive impact of our lending on society. Given the

materiality of this impact versus our other social and

environmental impacts, we work with Oxford Economics

each year to carry out an economic impact analysis

focused on our efforts and the outcomes they drive. In

2024, Funding Circle’s Term Loans and FlexiPay lending

supported 87,500 jobs, £7.2 billion in GDP, and helped

businesses in every one of the 650 parliamentary

constituencies. Please see page 14 for more detail.

In 2024 we continued our partnership with Thrive

Mental Wellbeing (“Thrive”). Thrive’s NHS-trusted app

provides help anytime, anywhere. In our 2023 Resilience

in SMEs report, 88% of respondents told us employee

wellbeing and mental health was an area they wanted

to focus on, with 79% reporting they would greatly value

external support in this area. We are also giving access to

Thrive’s unlimited in-app therapy to our most vulnerable

customers, providing them with an alternative to NHS

pathways which often have longer waiting times.

Other societal contributions and commitments

Funding Circle is a participant of the United Nations

Global Compact and the UN Global Compact Network

UK, and adheres to their principles-based approach

to responsible business on human rights, labour,

environment, and anti-corruption. We publish our

Communication on Progress annually.

Please also see our Non-Financial and

Sustainability Information Statement on page 39

We are a signatory to the HM Treasury Women in Finance

Charter and the Investing in Women Code.

We renewed our collaboration with Hatch Enterprise for

a third year, contributing to its mission to build a fairer,

more equitable and more diverse business landscape.

In the 12 months to September 2024, our employees

contributed 93 hours of volunteer mentoring, supporting

72 founders. Through its programmes, Hatch supports

underrepresented entrepreneurs from across the UK to

launch and grow successful businesses that also have a

positive impact on their communities. Its work is targeted

at those typically underrepresented in entrepreneurship,

including women and other marginalised genders, people

from ethnic minority backgrounds, people with disabilities

and neurodivergent people.

Alongside our social impact, we want to contribute

meaningfully to the environment, and our approach focuses

on BVCM activities that help move towards societal net

zero, by delivering positive climate and nature outcomes

with co-benefits for communities. More detail on this is

set out on page 31.

Circlers participated in an annual Tower Climb charity

event in March 2024 and fundraised over £3,000 for

Great Ormond Street Hospital Children’s Charity.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202426

Mathew Keech

Company name: HEJ Coffee

Borrower type: Term Loan

HEJ Coffee is an artisan neighbourhood coffee

shop that roast their beans in house at their

London roastery, allowing customers to enjoy

their coffee whilst watching roasters create

exceptional batches of coffee. They play an

active part in their neighbourhood, celebrating

individual identities and championing local

charities and organisations – from including

customer photos on their wall of fame, to

sponsoring local schools and an LGBTQIA+

homeless shelter, and even building a

grassroots football club, HEJ FC.

In addition to being an important part of the

community, Mathew and his team are making

sustainability a key mission for HEJ Coffee.

Leading in their industry, they are in the

process of becoming B Corp certified. They

have already invested in a 100% electric fleet,

and are changing how they package and sell their

coffee, to continue reducing carbon emissions

and materials.

Since 2019, they have delivered significant

environmental savings:

l More than 231,000 coffee bags and 38,000

cardboard boxes were redirected from landfill.

l Over 88 tonnes of carbon emissions were

averted by using electric vans or bikes

for deliveries.

l They donated £23k towards planting over 2,300

trees in urban areas.

HEJ Coffee came to Funding Circle in 2019, after

their bank could not see their vision or support

them in delivering their plans efficiently. Funding

Circle fuelled the company with funding quickly,

allowing Mathew to secure the equipment and

begin the process of building the state of the art

all-electric roastery.

We needed a partner that

had faith in our ideas and

could see our vision with the

capacity to help us make

it happen; with Funding

Circle we got exactly that,

a quick decision and a

straightforward process,

allowing us to get on with

our business plans.”

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 27

Environment, social and governance (“ESG”) continued

Climate and

environment

At Funding Circle, we are committed to fostering a

resilient and sustainable business model that contributes

to the broader global effort of mitigating climate change

and protecting the environment. Our approach to

environmental responsibility is being proportionately

embedded in our operational strategies, recognising

the growing importance of climate-related risks and

opportunities for the wider UK economy, but limited

idiosyncratic risks to Funding Circle’s business model.

This section incorporates disclosures consistent with

the Task Force on Climate-related Financial Disclosures

(“TCFD”) recommendations, in compliance with the

Financial Conduct Authority’s (“FCA”) UK Listing

Rules

. Our disclosures are now aligned to the TCFD

recommendations, considering proportionality and

materiality and recognising that certain areas will

continue to be deepened and enhanced over many years.

This section includes greenhouse gas (“GHG”) emissions

reporting per Companies Act 2006 regulations.

1. Strategy

Climate-related risks and opportunities

Funding Circle is an SME finance platform, providing

the technology, data and products to provide fast, fair

and hassle-free finance to SMEs and diversified lending

opportunities for institutional investors. Of the £2.8 billion

balances under management on our platform as of

31 December 2024, 98% are funded by third party

institutional investors and 2% by Funding Circle equity.

We have, however, chosen to incorporate all balances

under management, as well as defaulted loans, in our

assessment of climate-related risks to provide maximum

transparency to our stakeholders.

Following the sale of our US business on 1 July 2024,

Funding Circle operates only in the UK. We define short,

medium, and long-term horizons as one year or less,

one to five years, and more than five years, respectively.

These time periods are consistent with those used in

our Enterprise Risk Management Framework (“ERMF”)

and strategic planning, although we recognise that some

climate-related risks and opportunities will take decades to

materialise. The weighted average life of a Funding Circle

Term Loan under management

is between 24 and 36

months (i.e. within the current medium-term horizon).

Funding Circle’s business model means we have low

exposure to physical risks from climate change: a minor

operational physical presence, unsecured loan products

which do not rely on the borrower’s physical assets as

security

, maximum loan terms of six years, and a broad

geographical distribution of lending to SMEs across the

UK, as shown in Table 1. This means we are at low risk

of operational disruption, have no risk of damage or

devaluation of assets relied on for loan collateral, and are

similarly diversified to the broader UK economy with an

aim to maintain this diversification.

Funding Circle’s exposure to transition risks is also

structurally low due to its business model: lending is well

diversified across sectors in line with the broader UK

economy as shown in Table 2, around a third of lending

is to a broad spectrum of “carbon-related” sectors

, and

we support a diversified pool of institutional investors.

Furthermore, as our lending is unsecured

, we are not

exposed to the risk of transition-related devaluation of

physical assets used as loan security.

We recognise that physical and transition risks will have

wide-reaching and long-term impacts on all parts of

the UK economy. Although our exposure to these risks

through our lending is deemed low due to the absence

of physical collateral, we acknowledge that potential

disruptions to business continuity may make it difficult for

some impacted SMEs to maintain regular, uninterrupted

loan repayments. We therefore continue to invest in our

forbearance processes and capabilities so that we can

swiftly deploy the right support in the case of a climate-

related event whilst continuing to provide better access

to finance to SMEs in all UK sectors and geographies.

We continue to assess potential transition-related or

sustainable finance product opportunities following

an internal commercial review in 2023. However, we

have seen no change to the review’s findings of muted

customer demand and significant gaps in loan pricing

and institutional investor return expectations.

Beyond our on-balance-sheet lending, which comprises

96% of our greenhouse gas emissions, Funding Circle’s

largest source of emissions is from our supply chain,

as shown in Figures 1 and 2. These principally relate to

digital activities (including software, advertising and

cloud computing) and to purchased services.

Our assessment to determine the materiality of current

and potential future impacts of climate-related risks and

opportunities on Funding Circle’s financial performance

looked across our operations and value chain and

involved measuring emissions, including financed

emissions, a mixture of qualitative and quantitative

analysis, risk analysis in line with our ERMF, and

feedback from stakeholders and subject matter experts.

Due to the nature of our business model, climate-related

risks will only really manifest for us if they affect SME or

investor appetite, performance or liquidity (rather than

risks to any specific physical assets). Currently, we do

not consider there to be any financially material climate-

related risks or opportunities, nor do we foresee any of

significance materialising over the medium term. There

was no impact on our financial position, performance or

cash flows from climate-related risks and opportunities

in the reporting period. Our analysis is summarised

in Table 3.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202428

Table 1: Geographical lending distribution

UK Region

All balances

under

management

Balances on

balance sheet

South East 24% 25%

London 15% 15%

Midlands 15% 14%

North West 12% 12%

North East 10% 10%

South West 10% 10%

Scotland 5% 5%

East Anglia 4% 4%

Wales 3% 3%

Northern Ireland 2% 2%

Table 2: Sectoral lending distribution

Sector (based on SIC classification)

All balances

under

management

Balances on

balance sheet

Wholesale & retail 17.9% 20.4%

Other business activities 18.8% 18.2%

Health & other service

activities 12.7% 11.9%

Other manufacturing 5.5% 6.4%

IT & telecommunication 5.1% 5.4%

Hotels & restaurants 4.1% 3.6%

Finance 1.7% 1.6%

Construction & real estate 20.0% 18.6%

Automotive 4.6% 4.7%

Transport, storage &

communication 3.9% 3.7%

Manufacture of metal products 2.1% 1.9%

Manufacture of paper

products, publishing & printing 1.4% 1.3%

Manufacture of food products

& beverages 1.2% 1.2%

Agriculture 0.8% 0.8%

Electricity, gas & water supply 0.1% 0.2%

Mining & quarrying 0.1% 0.1%

Total “carbon related”

34.2% 32.5%

Note: In Tables 1 and 2, and Figure 1, we include defaulted loans for the

estimation of financed emissions and the climate-related risk analysis, whereas

defaulted loans are excluded when reporting balances under management

elsewhere in this Annual Report.

1. The Company has also considered the 2021 TCFD Annex and the Supplemental Guidance for the Financial Sector.

2. Term Loans make up 96% of balances under management, with the remaining balances being up to 12 months and corresponding to shorter-term open ended

products (Cashback credit card and FlexiPay drawn lines of credit).

3. The majority of Funding Circle’s loans under management are unsecured, with <5% subject to a debenture (floating charge). Funding Circle also provides SMEs

with access to a range of asset, vehicle and equipment finance solutions through its Marketplace. These products are arranged directly between the SME and

the third party provider and Funding Circle has no role in the delivery or management of the resulting loan.

4. Carbon-related sectors as defined in “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures” (TCFD, 2021) and

highlighted in Table 2.

Scope 2 – location based 0.02%

Scope 3 – categories 1–14 3.49%

Scope 3 – category 15 (financed emissions

– balances on balance sheet) 96.49%

Fig.1: Total GHG emissions 2024 (location based)

by Scope 1

, 2 and 3 (categories 1-15)

Fig.2: Total GHG emissions 2024 (location based)

by Scope 1

, 2 and Scope 3 (excl. category 15)

Scope 2

2. Purchased electricity (location based) 0.7%

Scope 3

3.1 Purchased goods and services 79.4%

3.2 Capital goods 10.7%

3.3 Fuel and energy activity 0.2%

3.5 Waste generated in operations 0.4%

3.6 Business travel 3.9%

3.7 Employee commuting 3.2%

3.8 Upstream leased assets 1.5%

In 2024 we reclassified Scope 1 (gas heating of UK office) to

Scope 3 category 8, as explained on page 34.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 29

Environment, social and governance (“ESG”) continued

Climate and environment continued

1. Strategy continued

Climate-related risks and opportunities continued

Table 3: Summary of climate-related risks and opportunities

Category Driver Potential business impact

Horizon

(short,

medium,

long) Potential financial impact*

Transition risk Market: changes to SME

and/or investor demand

and preferences

Policy and legal: more

demanding climate

policy including

carbon taxes

Technology: need for

SMEs and suppliers to

transition to greener

technologies

Reputation: climate-

related compliance

or delivery failures

negatively impact public/

stakeholder perception

Strategic: increased SME or investor

demand for green finance products could

reduce demand for existing Funding

Circle products and/or require investment

in data and product innovation

Funding: reduced investor risk appetite

for SME lending or for certain sectors,

or reduction in available investor capital

(e.g. as a result of climate policy) may

constrain platform liquidity

Credit: financial pressure on SME

borrowers in higher carbon industries may

impact their ability to repay

Operational: compliance with more

onerous climate data, reporting or

other climate regulation or taxes could

increase costs for Funding Circle, SME

borrowers and investors; transition

investment by suppliers may increase

procurement costs

M, L

Reduced revenue:

l from lower demand for existing

products and services;

l from deteriorating borrower credit

quality in higher carbon sectors; or

l from write-offs, impairments and early

retirement of existing assets

Increased costs:

l from compliance costs or carbon taxes;

l from investment in data and product

innovation; or

l from suppliers passing on transition-

related costs

Reduced access to capital and liquidity:

l from changes to investor risk appetite

or liquidity

Likely to be below the threshold for

financial materiality in the medium term

Physical risk Acute: e.g. increase in

extreme climate-related

weather events

Credit: temporary interruptions to SME

borrowers’ operations affecting their

ability to repay

Reputation: insufficient forbearance tools

and processes exacerbate SME stress

and contribute to SME business closure

Funding: reduced investor appetite or

liquidity due to impacts of weather events

on borrower or investor operations

S, M, L Reduced revenue:

l from deteriorating borrower credit

quality;

l from customer boycotting;

l from lower demand for products

or services; or

l from write-offs and early retirement

of existing assets

Increased costs:

l from fines or litigation

Likely to be below the threshold for

financial materiality in the medium term

Chronic: e.g. alterations

in weather patterns,

rising sea levels

Credit: permanent changes to SME

borrowers’ operations or supply chains

resulting in structurally higher costs and

affecting their ability to repay

Funding: long-term changes in investor

risk appetite or reduced liquidity due to

chronic impacts on investors’ operations

Opportunities Market: changes to SME

and/or investor demand

and preferences

Increased SME demand for

transition-related finance

Increased investor demand for

transition-related or sustainable lending

S, M Increased revenue:

l from access to new and emerging

markets; or

l from new products and services

relating to climate transition, resilience

or adaptation

Increased access to capital and liquidity

(for the same reasons)

Decreased costs:

l from reduced reliance on volatile power

sources;

l from increased energy efficiency; or

l from less physical (e.g. paper) resource

use and waste

Likely to be below the threshold for

financial materiality in the medium term

Technology: innovation

in circularity, energy

efficiency and

renewables

Platform and marketing enhancements

to increase efficiency, reduce waste and

utilise 100% renewable electricity

M, L

For further detail on how we determine and define materiality for our climate-related risks and opportunities, please see page 28 and “Risk management” on

pages 33 to 34.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202430

Strategy, net zero and transition planning

The identification and analysis of potential climate-

related risks and opportunities have not driven any

changes to Funding Circle’s strategy, business model

or credit decisioning to date. Our strategy supports an

agile, low risk approach to the climate transition through

the continued evolution of a diversified loan portfolio, a

diversified investor base, and the ability to respond to

changing market demands for new products.

However, as a finance platform whose activities mirror

the wider UK “real economy”, we are mindful of the

broader economic impacts expected from the climate

transition and physical risks. We expect that the longer-

term impact from climate change on Funding Circle, its

customers and its investors will reflect overall changes

to UK GDP. While we will continue to engage with

relevant information and stakeholders to understand

these impacts, we remain committed to lending to SMEs

across a diverse geographic and sectoral distribution

and do not plan to impose risk appetite changes that

will alter our portfolio away from one that reflects the

broader, diversified UK economy. In response to growing

physical risks from climate change which may create

business continuity challenges for some SME customers,

we continue to invest in developing our forbearance

measures to better support customers experiencing

temporary repayment difficulties.

We are beginning to see early signs of institutional

investor interest in our climate policies and financed

emissions data. We expect this to increase over

time, driven by changing reporting and regulatory

requirements, and will respond as needed, leveraging our

platform technology and expanding data lake. However,

the lack of emissions reporting requirements for SMEs or

straightforward, standardised and affordable tools and

methodologies for them to use is currently an obstacle to

collecting primary data.

We participate in industry-led working groups, actively

engaging on sustainability issues and a just transition

for SMEs – specifically, the UK Finance Industry Working

Group on ESG implications for SMEs, and the PCAF (UK

chapter) working group on Business Loans and Unlisted

Equity, which aims to explore the challenges in calculating

SME emissions and support the ongoing development of

the PCAF Standard.

More broadly, recognising the need for all businesses

to proactively support the transition to a low carbon

economy, we have an ambition to reach net zero by

2050 across all emission scopes. In line with the latest

climate science, we will endeavour to achieve this

through absolute emissions reduction and offsetting the

remaining hard-to-abate emissions by purchasing high

quality carbon credits.

In 2024, we updated our interim climate target, reflecting

a deepening of our transition planning efforts. Previously,

we had in place a stretch target to reach net zero by 2030

for our operational emissions (Scope 1, 2 and 3 excluding

financed emissions). We have evolved this to an interim

target to achieve net zero for Scope 1, 2 and 3 business

travel in 2025 (“interim (2025) partial net zero target”),

which we are currently on track to meet without any

material costs. We have significant constraints around

data accuracy and level of influence for the remaining

Scope 3 categories and as such have decided to retire

the previous 2030 stretch target for these. We intend to

focus efforts in 2025 on improving data accuracy and

assessing potential levers, influence and dependencies,

with a view to setting new interim targets as appropriate.

This approach also allows us to take account of the SBTi’s

revised Corporate Net Zero Standard which is under

development at the time of publication.

Meanwhile, we continue to develop our BVCM approach,

aiming to contribute to the wider societal transition to

net zero.

In 2024, we expanded our environmental contributions

towards nature-based and biodiversity projects in the

UK. Through our partnership with Earthwatch Europe,

we supported the planting of five new Tiny Forest sites

across the UK as part of the Local Authority Treescapes

Fund. With its programme of planting small forests in

ecologically deprived areas nationwide, Tiny Forest

reconnects people with nature, enhances wellbeing,

helps mitigate the impacts of climate change and

provides nature-rich habitat to support urban wildlife.

The partnership was featured in the UN Global Compact

Network UK’s webinar series on “Nature-based Solutions

for Business”. We also partnered with GreenTheUK,

the Blue Marine Foundation and Plantlife, to support

initiatives helping native oyster restoration in the Solent

and the Sussex Kelp Recovery Project, as well as

protecting temperate rainforests in Devon and Cornwall.

We continue to review the evolving technology and

regulatory landscape for carbon credits and intend to

undertake further scoping and due diligence to select

appropriate carbon credits to offset the small tail of

hard-to-abate emissions for our interim (2025) partial net

zero target.

Resilience of our strategy

In 2023/24, Funding Circle engaged external experts to

support the qualitative analysis of its lending in relation to

physical and transition risks. This was based on loan-level

data covering financed emissions (calculated in line with

the PCAF methodology), geography, sector and principal

outstanding as at 31 December 2023, and refreshed for

31 December 2024. We assessed total balances under

management, including defaulted loans, and balances

held on Funding Circle’s balance sheet, with both

exhibiting similar profiles.

Each sector was assigned an overall transition risk

vulnerability rating based on several risk factors:

regulation, raw material cost, technology, market demand

fluctuations, and reputational risk. Physical risks were

assessed through sectoral and geographical lenses.

Inputs were sourced from external research, literature

and tools including the FCA’s Climate Financial Risk

Forum (“CFRF”) climate scenario analysis narrative tool

and the World Bank Group’s carbon pricing dashboard.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 31

Environment, social and governance (“ESG”) continued

Climate and environment continued

1. Strategy continued

Resilience of our strategy continued

Our analysis showed a small proportion of balances, both on balance sheet and under management, that are to sectors

with higher exposure or vulnerability to climate-related risks, as shown in Table 4.

Table 4: Sectors with higher exposure or vulnerability to climate-related risks

Sectors assessed as having high vulnerability to climate risks

% balances on

balance sheet

% balances

under management

Transition risks:

Transport, storage and communication 3.7% 3.9%

Electricity, gas and water supply (“Electricity and Utilities”) 0.2% 0.1%

Total 3.9% 4.0%

Physical risks:

Agriculture 0.8% 0.8%

Total 0.8% 0.8%

We used the Network for Greening the Financial System (“NGFS”) scenarios to assess Funding Circle’s climate

resilience. This was done at a relatively high level, commensurate with the materiality of our climate-related risks and

opportunities. Three diverse scenarios were considered, including one aligned to the latest international agreement

on climate change (Net Zero 2050). The results of our scenario analysis, conducted in 2024, are summarised in the

table below and show strong resilience as at the reporting date, with existing plans to develop our climate-related data,

insight and reporting capabilities sufficient under all scenarios.

As Funding Circle’s balances under management mirror the sectoral diversity of the broader UK economy, our exposure

to any economic shocks or persistent declines would likely be in line with UK GDP. All scenarios are expected to have a

negative impact on GDP by 2050 versus a baseline of no physical or transition risk.

Table 5: Summary of climate scenario analysis

Potential impacts

Characteristics

NGFS – Orderly Transition

(Net Zero 2050) NGFS – Disorderly (Delayed Transition)

NGFS – Hot House

World (NDCs)

2050 GDP vs. baseline of

no physical/transition risk

-3% -4.6% to -4.7% -5.7% to -6%

Transition

Policy reaction Immediate, smooth No additional actions until 2030 No additional pledges vs. today

Technology change Fast Slow then fast Slow

Electrification,

decarbonisation and

energy efficiency

Rapid and steady Slow then fast Slow

Overall transition risk Medium High Low

Physical

Temperature rise 1.4C 1.6C 2.6C

Physical risks Low Medium High

Impacts and considerations

Funding Circle time

horizons affected

ST, MT, LT LT LT

Potential impact on

climate-related risks

and opportunities

(see Table 3)

Heightened transition risks,

particularly for “carbon-related”

sectors, may put strain on SME

profitability and require market-wide

investment in climate compliance.

Muted transition risks initially then

significantly heightened after 2030,

with a shock to revenues and costs likely

felt across most sectors, with “carbon-

related” ones particularly exposed.

Limited transition risks with even

“carbon-related” sectors having a long

time to adapt. Physical risks will increase

significantly over the longer term with

far-reaching economic consequences.

Strategic

considerations

Continued investment in forbearance

tools and processes will support

SMEs experiencing short-term

repayment challenges.

Continued planned enhancement

of Funding Circle’s climate reporting

capabilities will support compliance

with future regulation.

Continued investment in forbearance

tools will better support businesses

suffering short-term stress in relation

to transition-related economic shocks.

Continued investment in forbearance

processes and tools will better

support businesses suffering business

continuity impacts from physical

climate events.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202432

This qualitative approach is proportionate to the

materiality of Funding Circle’s climate-related risks and

opportunities. We will continue to refresh and enhance

this analysis but do not currently have plans to invest

in further quantitative analysis as we do not foresee it

providing actionable outputs for the time being.

2. Governance

Board oversight

The Board of Directors at Funding Circle holds ultimate

responsibility for climate-related risks and opportunities.

Matthew King, Non-Executive Director, continued as

Board-level sponsor for climate in 2024, providing

support and challenge to management, drawing on his

significant financial services risk management experience

as well as knowledge of climate change from his Non-

Executive Director role in a resource-intensive industry.

Geeta Gopalan also has climate-related financial services

risk management skills, and Helen Beck has undertaken

training on transition planning.

The Board reviews climate-related issues as part of

its overall risk management and strategic planning

processes. This includes reviewing analysis on physical

and transition risk heatmaps and climate scenarios which

demonstrate that climate-related risks and opportunities

are not likely to be material in the medium term. The

Board has taken this into account in its oversight of the

Group’s strategy, with no trade-offs being required at

this point. In addition, it delegates certain matters to

two Committees, which are included in their Committee

Terms of Reference:

l the ESG Committee (“ESGC”), chaired by Andrew

Learoyd and responsible for oversight of the Group’s

ESG strategy including climate-related opportunities

(see ESG Committee Report on page 88); and

l the Audit and Risk Committee (“ARC”), chaired by Geeta

Gopalan and responsible for oversight of climate-

related (and broader ESG) risk management. Climate-

related risks are assessed in line with the ERMF and

reviewed and approved by the ARC annually.

The Board considers its skills and competencies in

relation to climate-related risks and opportunities

annually. Following Matthew King’s retirement from the

Board, it will continue to consider ways of maintaining

Board-level expertise on climate and other ESG topics,

with this being a skill taken into consideration in the Non-

Executive Director appointment process. The skills of

Geeta Gopalan and Helen Beck referred to above provide

a strong competency framework, particularly given

climate-related risks and opportunities are not likely to be

material for Funding Circle over the medium term. Further

external training has been provided in the past and will

continue to be delivered as required as we deepen our

climate scenario analysis and develop transition plans.

Management’s role

Executive responsibility for climate-related risks and

opportunities is held by the CEO, who delegates climate risk

management to the CRO. Management responsibility for

execution and delivery of the Group’s climate (and broader

ESG) strategy sits with the Chief Legal Officer and Company

Secretary. Oversight is provided by the Management Risk

Committee (“MRC”) which reports into the Board-level

Committees described above.

We have introduced controls and procedures

proportionate to the level of materiality of climate-related

risks and opportunities. As such, the principal procedure

is to identify and assess climate-related risks in line with

the ERMF which is reviewed by the MRC and approved

by the ARC annually. In addition, in 2024 Funding Circle

established the CRMF, which set safeguard thresholds

for climate risk appetite and was approved by the

ARC. The combination of the ERMF and CRMF ensures

climate-related risks are integrated into our broader risk

management processes and executives are updated

regularly.

3. Risk management

Identification and assessment of climate-related risks

Funding Circle evaluates the impact of climate-related

risks on its own operations and its balances under

management, across physical and transition risk drivers.

As well as monitoring external developments to assess

any increases to risk drivers, in 2023/24 we undertook

a loan portfolio risk heatmap exercise. This assessed

the level of exposure to physical and transition risks for

all balances under management and underpinned our

initial scenario analysis described above. The heatmap

and scenario analysis results informed this year’s annual

ERMF Risks and Control Self-Assessment.

The materiality of potential climate-related impacts is

assessed using a risk classification matrix which rates

the inherent likelihood of the risk occurring and the

impact on the business in financial and non-financial

terms. In assigning ratings, we consider both qualitative

factors (such as effect on customers, media coverage

and business continuity) and quantitative financial

thresholds ranging from “critical” (financial impact of £5

million or more in a 12-month period) to “minor” (financial

impact of £250k or less in a 12-month period) over a

medium-term horizon.

As with 2023, policy and legal transition risks were

the main driver of climate-related risks to Funding Circle,

with continued developments in reporting obligations

likely to impact Funding Circle, its SME customers and

institutional investors.

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Funding Circle Holdings plc | Annual Report and Accounts 2024 33

Environment, social and governance (“ESG”) continued

Climate and environment continued

3. Risk management continued

Identification and assessment of climate-related risks

continued

Our 2024 risk assessment identified climate as a level 1

ESG risk, within the strategic risk category. The risk was

defined as: “This risk covers (1) Transition Risks and (2)

Physical Risks. Climate risk is a cross-cutting risk type

that may manifest through some of our other established

principal categories (regulatory, credit, operational,

technology and funding).” The inherent likelihood was

assessed as “Possible” (meaning a potential occurrence

once every one to two years) and the inherent impact

was deemed to be “Minor” based on an assessment of

qualitative and quantitative factors as described above.

The resulting inherent risk rating was “Low”. Consistent

with 2023, the likelihood and impact of this risk on other

principal categories over the ERMF time horizon was

assessed as de minimis.

Management and integration of climate-related risks

Funding Circle’s risk appetite statement in relation to strategic

risks including climate risk is that it “will make efficient use

of its available resources to build a sustainable, diversified

and profitable business that can successfully adapt to

environment changes”. In line with the assessed “Low” impact

materiality, we continue to take a proportionate approach to

building our climate risk management capabilities.

The main controls in place to manage climate-related

risks include internal legal and regulatory review;

management and risk oversight and controls; third party

review; internal audit review; and internal policies and

practices. The financed emissions data and physical

and transition heatmaps developed in 2024 provide

appropriate foundations to proportionately manage and

embed climate risk in the medium term.

The residual risk rating for climate risk in 2024,

considering the effectiveness of controls in place,

was “Low” and unchanged from last year. Through its

integration into the ERMF, climate-related risk is subject

to the same evaluation, response and monitoring process

and governance as all other key risks.

4. Metrics and targets

GHG emissions metrics

Methodology

This section includes our mandatory reporting of GHG

emissions 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. Our GHG emissions reporting period is 1 January

to 31 December and is aligned with our financial

reporting year.

We measure a full inventory of material Scope 1, 2 and 3

emissions in accordance with the GHG Protocol Corporate

Standard, using an operational control approach to define

our organisational boundary. Activity data was used where

available (Scopes 2, 3.5, 3.8, and 3.1 Cloud emissions), or

estimated on a spend basis. Emissions were calculated by

applying recognised and up-to-date emission factors from

reference databases (mainly Exiobase 3.8.2, IEA 2023, UK

GHG Conversion Factor 2024, and Base Empreinte Ademe

23.4) selected based on geographical relevance and

data quality.

We carry out annual independent third party verification of

our GHG emissions in accordance with ISO 14064-1, which

was completed for FY 2023 at a limited level of assurance

at a materiality of 5%, and covering all activities under our

operational control, and all relevant emission categories,

indicating any exclusions. Verification for FY 2024 is

due in 2025.

Beyond reporting requirements, we measure and report

all material GHG categories as a way of monitoring the

transition risks outlined in Table 3, with higher emissions

being indicative of elevated transition risk.

Comparative periods

Funding Circle completed the sale of its US business on

1 July 2024. In line with the GHG Protocol for treatment

of structural business changes, emissions from our US

business have been removed, where possible, from our

core 2024 reported figures and comparative periods.

Work undertaken in 2024 in relation to Funding Circle’s

transition plan highlighted an inaccurate classification of

the London office heating emissions. Funding Circle has

no control over the hours of operation or the equipment

used for heating this building, which is leased by

Funding Circle and shared with other tenants. It was

therefore deemed more accurate to reclassify these

emissions from Scope 1 to Scope 3 category 8 for this

reporting year and all comparative periods.

Financed emissions methodology

Scope 3 category 15 emissions (financed emissions) were

calculated in accordance with the Partnership for Carbon

Accounting Financials (“PCAF”) Global GHG Accounting

and Reporting Standard (the “PCAF Standard”)

methodology for business loans. As we have no primary

emissions data for our SME customers, we have applied

PCAF’s “economic activity-based emissions” method,

which provides sector-based factors for the volume

of emissions per £ revenue (based on Exiobase v3.9,

base year 2019). We then attribute a proportion of an

SME’s emissions based on the ratio between the amount

outstanding originated through the Funding Circle

platform and the total debt and equity of the SME.

As Funding Circle holds only a small proportion of credit

extended on its own balance sheet (c.6% of balances

under management when including defaulted loans), the

majority of attributed emissions form part of the carbon

footprint of the institutional investors who fund the

lending originated through the platform. For transparency,

we report on both Funding Circle’s financed emissions

(relating to the small number of on-balance-sheet loans)

and the overall emissions attributed to the total balances

under management.

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Funding Circle Holdings plc | Annual Report and Accounts 202434

This calculation includes several assumptions which can

materially affect the final calculated emissions. This means

we can provide no assurance as to the accuracy of the

final calculated emissions. Our exposure-weighted data

quality score, based on the PCAF Standard, was 4.01

where 1 is the highest data quality and 5 is the lowest.

This is in line with the previous year’s score, however, an

updated PCAF methodology was used for the emissions

factors meaning results are not comparable with 2023.

As recommended by PCAF we used regional (sector

average) emission factors, instead of country-level ones

for 2023, with the former being generally higher. Had we

taken the same approach as reported for 2023, financed

emissions would have been 22% lower (2,190,709 tCO

for all balances under management, and 21% lower

(156,693 tCO

e) for balances on balance sheet.

We have not recalculated our 2023 financed emissions

using the updated methodology as we anticipate further

fluctuations until data quality and methodologies improve

and stabilise. Such significant, methodology-related

fluctuations make the development of actions or targets

for financed emissions impractical at present. And while

we have identified potential ways to improve the data

quality score over time, a key limitation is our ability to

source primary emissions data for SMEs, the majority

of which do not measure or disclose this information

at present.

Actions taken to reduce emissions

Total emissions, excluding 3.15 financed emissions, were

reduced by 35% in 2024 (both market and location based)

in part due to the sale of our US business in mid-2024. If

we exclude US-related emissions, where possible, from

2023, the 2024 reduction was 32%; however, we were

unable to disaggregate the US in some categories of

emissions (3.1 and 3.6) and will more fully understand the

impact in 2025 when we report our first full year of UK-

only emissions. Our FTE intensity ratio (Scopes 1, 2 and 3

excluding 3.15) was reduced by 11% (27% when excluding

US-related emissions where possible).

One of the key impacts of the sale is a real-world

reduction in business travel emissions (down 62%),

removing the need for flights between the UK and

US from the second half of 2024, with full annualised

benefits expected in 2025. Our travel policy restricts

flights to essential cases, supported by flexible working

policies, ensuring all feasible steps have now been taken

to limit travel emissions.

We also consolidated our London head office from

two floors to one and completed a re-fit in the process

which included an LED lighting upgrade. These actions

reduced electricity use and, therefore, Scope 2 UK

emissions (down 31% in 2024 vs. 2023). Following the

sale of our US business and the corrected classification

of our London head office heating emissions, our Scope

1 and 2 emissions have now been reduced to zero on a

market basis. Emissions from gas heating of this office

are now reflected in Scope 3 category 8 due to our lack

of operational control. Future reductions depend on

whether and when UK policy abolishes gas boilers in

commercial properties.

We do not fully understand the drivers of the increase in

our Scope 3 waste emissions in 2024, which are estimated

pro rata from building-level data. There was a change in

waste management provider and we saw higher building

occupancy in 2024; however, we need to interrogate the

changes further. The recycling rate was 75% and we are

planning further employee and building management

engagement in 2025.

Key remaining Scope 3 categories – purchased goods and

services, employee commuting (including homeworking),

upstream leased assets and financed emissions – pose

challenges due to limited influence and reliance on

secondary data. Employee commuting emissions reduced

by 36% in the year (even after adjusting for the sale of

the US business); however, we need to better understand

the reasons for this. Purchased goods and services

emissions saw a 38% decrease year-on-year; however,

we were unable to disaggregate country-level data and

so are unsure how much of the decrease is driven by the

divestment of our US business. Capital goods emissions

were an exceptional item included this year due to our

office re-fit.

Excluding divested loans relating to the US business,

Scope 3.15 financed emissions increased by 24% for

balances under management, or 50% for balances on

balance sheet. This reflects the move to an updated

PCAF methodology described in the previous section.

Underlying balances excluding the US business were

broadly flat, and the type of lending and customer base

remained consistent with prior years.

We switched carbon accounting solutions during 2024,

and although we do not believe this has any major

impact on measured emission results, it may account

for minor fluctuations relative to 2023. In 2025, we will

focus on improving data accuracy and identifying which

decarbonisation opportunities we might influence to

inform our evolving transition plan, including modelling

potential reduction levers, and investigating top supplier-

level emissions data. However, we expect there to

be a material dependency on government policy and

societal behaviours.

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Funding Circle Holdings plc | Annual Report and Accounts 2024 35

Environment, social and governance (“ESG”) continued

Climate and environment continued

4. Metrics and targets continued

Funding Circle Holdings plc global GHG emissions

Global GHG emissions data for period

1 January to 31 December

2024

tCO

2023

(comparative)

tCO

2023

tCO

2022

tCO

2021

tCO

Scope 1

— — 108 77 129

Scope 2

– location based 51 75 265 313 340

– market based — — 190 239 411

Total gross emissions (Scope 1 and 2) – location based 51 75 373 390 469

– market based — — 298 316 540

Scope 3 – category 1 purchased goods and services 5,718 9,217 9,217 n/a n/a

Scope 3 – category 2 capital goods

766 — — — —

Scope 3 – category 3 fuel and energy activity 15 54 103 n/a n/a

Scope 3 – category 5 waste generated in operations 29 10 15 6 3

Scope 3 – category 6 business travel 279 740 740 563 113

Scope 3 – category 7 employee commuting 230 358 568 n/a n/a

Scope 3 – category 8 upstream leased assets

110 108 8 n/a n/a

Total Scope 3 supply chain gross emissions 7,147 10,487 10,651 569 116

Total gross emissions (Scope 1, 2

and 3 excl. 3.15)

– location based

7,198 10,562 11,024 959 585

– market based 7,147 10,487 10,949

885 656

Scope 3 – category 15 investments: financed emissions –

balances under management

2,798,767

2,250,205 2,886,452 n/a n/a

Scope 3 – category 15 investments: financed emissions –

balances on balance sheet

197,783 132,105 220,357 n/a n/a

– 3.15 – balances on balance sheet: Scope 1 and 2 (tCO

e) 54,419 n/a 71,143 n/a n/a

– 3.15 – balances on balance sheet: Scope 3 (tCO

e) 143,364 n/a 149,214 n/a n/a

Total gross emissions (Scope 1, 2

and 3 incl. 3.15) – location based

204,981 142,667 231,381 n/a n/a

– market based 204,930 142,592 231,306 n/a n/a

Full-time employee (“FTE”) (average over the applicable

reporting period)

788 845 1,074 1,035 929

Total income (£m)

161.7 129.7 162.2 151.0 206.9

Intensity ratio (Scope 1 and 2): tCO

e/FTE – location based 0.06 0.09 0.35 0.38 0.5

– market based — — 0.28 0.31 0.58

Intensity ratio (Scope 1 and 2): tCO

e/£m – location based 0.32 0.57 2.30 2.58 2.27

– market based — — 1.84 2.09 2.61

Intensity ratio (Scope 1, 2 and 3 excl. 3.15):

tCO

e/FTE – location based

9.13 12.50 10.26 0.93 0.63

– market based 9.07 12.41 10.19 0.86 0.71

Intensity ratio (Scope 1, 2 and 3 excl. 3.15):

tCO

e/£m – location based

44.51 81.43 67.97 6.35 2.83

– market based 44.20 80.86 67.50 5.86 3.17

1. All figures presented for 2024 have not yet been subject to external assurance or verification. 2024 data reflects emissions from ongoing operations following

the sale of our US operations in July 2024 (except for 3.1 and 3.6 where it was not possible to disaggregate the data, and which include US data up to July).

2. We provide here 2023 emissions excluding US emissions to enable better comparison with 2024 (except for 3.1 and 3.6 where it has not been practicable to fully

disaggregate US and UK data).

3. Scope 1 emissions from gas heating of the UK leased office are now reflected in Scope 3 category 8 due to our lack of operational control.

4. Scope 2 includes purchased electricity (and steam for US offices where applicable); as per the GHG Protocol Corporate Standard, we also apply the market

based method for Scope 2 RECs.

5. Category 3.2 capital goods emissions were an exceptional item included this year due to our office re-fit.

6. In our Annual Report 2023, Categories 3.3, 3.7 and 3.8 were reported as market-based; as per the GHG Protocol we now report all Scope 3 as location-based.

7. For Category 3.15 investments, for transparency we report on financed emissions for Funding Circle’s on-balance-sheet balances, as well as for total balances

under management, and we include defaulted loans. In addition, we follow PCAF’s guidance to report Scope 1 and 2 financed emissions separately from Scope

3 (to ensure transparency while acknowledging potential double counting issues). The move to an updated PCAF methodology means the results are not

comparable for 2024 and 2023.

8. FTE and total income for 2024 are reported for continuing operations only.

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Funding Circle Holdings plc | Annual Report and Accounts 202436

Regional breakdown of energy consumption data for period 1 January to 31 December

(Kilowatt-hour equivalent – kWhe) Scope 1 Scope 2

2024 2023 2022 2021 2024 2023 2022 2021

Region

UK —

593,164 457,208 554,366 262,420 359,778 402,758 359,638

US — — — 79,469 n/a 385,700 545,219 643,284

Total — 593,164 457,208 633,835 262,420 745,478 947,977 1,002,922

1. In prior years we disclosed emissions from our legacy European operations in Germany and the Netherlands, no longer relevant for FY 2024 onwards.

2. Scope 1 emissions from gas heating of the UK leased office are now reflected in Scope 3 category 8 due to our lack of operational control, however for

transparency we can report that natural consumption for heating our UK office was estimated at 618,122 kWh for 2024.

Climate-related risk metrics

With support from third party experts in 2024, Funding Circle established portfolio-level physical and transition

risk metrics as summarised in the tables below. We monitor these metrics at a portfolio level annually to inform our

assessment of physical and transition risks outlined in “Climate-related risks and opportunities” on pages 28 to 30.

Table 6.1: Sectoral transition risk level

As at 31 December 2024 Low Medium High

Proportion of balances under management 65.4% 29.2% 5.4%

Proportion of balances on balance sheet 65.2% 28.9% 5.9%

note: This analysis for 2024 was based on a previous sectoral definition (SIC codes were adopted during 2024 for the purpose of climate risk analysis) meaning the

figures do not reconcile exactly to the sectoral splits provided in Tables 2 and 4.

Table 6.2: Physical risk exposure by hazard (proportion of balances under management)

As at 31 December 2024 Heat waves

Low

temperatures

and snow

Fluvial

flooding

Surface

water

flooding

Coastal

flooding* Drought

Storm

events Wildfire

Very low 65.5% 54.2% — — — 88.7% — —

Low 34.5% 28.6% 18.1% 86.2% 5.2% 11.3% — —

Medium — 16.3% 61.6% 13.6% 9.9% 0.0% 99.1% 66.1%

High — 0.9% 20.0% 0.2% 69.9% 0.0% 0.9% 33.4%

Very high — — 0.3% — 0.5% — — 0.5%

* Coastal flooding is not applicable for the Midlands.

Funding Circle established the CRMF in 2024 which underpins its ongoing processes to identify and assess climate-

related risks based on the metrics above. The framework sets safeguard levels to maintain geographical and sectoral

distribution of the lending portfolio broadly in line with the UK economy. It also sets risk appetite thresholds for physical

and transition risks based on the proportion of balances outstanding with high exposure to physical risks or to carbon

intensive sectors

Currently, “Low temperatures and snow” is the only “high exposure” physical risk subject to CRMF threshold targets

described in the following section; however, we continue to monitor the UK National Risk Register for any changes.

Carbon intensive sectors are a sub-group (Agriculture, Electricity & Utilities, and Mining & Quarrying) of the sectors

exposed to High transition risk and total 1% of loans outstanding as shown in Table 2.

5. For this purpose, Funding Circle defines high exposure to physical risks as a likelihood of ≥5% and an impact of “significant” or worse based on the UK National

Risk Register, and it defines carbon intensive sectors as Agriculture, Electricity & Utilities, and Mining and Quarrying.

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Funding Circle Holdings plc | Annual Report and Accounts 2024 37

Environment, social and governance (“ESG”) continued

Climate and environment continued

4. Metrics and targets continued

Targets

In 2024, Funding Circle updated its ESG framework to reflect a more granular assessment of the real-world actions

required to achieve net zero. The framework now sets out the following short, medium and long-term targets related to

managing climate-related risks and opportunities:

Table 7: Summary of targets

Target Scopes Target date FY24 update Status Change from prior targets/commitments

Net zero All 2050

↓ 11% vs.

2023

Too

early to tell

No change

Interim (2025) partial net

zero (market based)

1, 2 and 3

business travel

2025 ↓

62% vs. 2023

On track Accelerated from prior stretch target to

reach net zero by 2030

Enhance data accuracy and

consider real-world actions –

including modelling potential

reduction levers, and

investigating top supplier-

level emissions data

3 – all categories

excluding

business travel

2025 — On track

Supplier, waste and employee commuting

emissions were previously included in our

2030 net zero stretch target which has been

retired recognising the need for outputs

relating to this new qualitative target before

further quantitative targets are considered

Maintain proportion of

balances outstanding

subject to high exposure to

physical risks within agreed

CRMF thresholds

n/a Annual <1% Within

internal

thresholds

New target (internal)

Maintain proportion of

balances outstanding

to carbon intensive

sectors within agreed

CRMF thresholds

3 – financed

emissions

Annual 1% Within

internal

thresholds

New target (internal)

2030 net zero

stretch target for our

operational emissions

Scope 1, 2, 3 waste,

business travel,

supplier, employee

commuting

2030 (2021

baseline for Scope

1,2 and 3 waste and

business travel)

Retired Retired Target data for Scope 1, 2 and business

travel accelerated to 2025 but target

removed (pending further analysis) for

remaining scopes.

1. Funding Circle’s target is to reach net zero in line with the UK government’s target. This is currently 2050.

2. For total emissions including 3.15 financed emissions without adjusting for the sale of our US business. Excluding 3.15 (which increased due to a methodology

change in 2024) the reduction was 35%.

3. Physical risks rated in the National Risk Register with a likelihood ≥5% and impact of significant or higher which is currently “Low temperature and Snow” per

breakdown in Table 6.2.

4. Defined as a subset of “carbon-related” sectors: Agriculture, Electricity and Utilities, and Mining and Quarrying, per breakdown in Table 2.

Our new interim (2025) partial net zero target (market based) reflects our ambition to accelerate progress on

decarbonisation that’s within our control. This target does not contain the typical requirements for “science-alignment”

(a 90%+ reduction from a historic baseline) as our 2021 baseline was during the Covid-19 pandemic and reflects

significantly muted travel activity. However, we have achieved strong reductions in 2024 (-62% vs. 2023) and believe

that by the end of 2025 we will have taken all possible reasonable actions within our control to reduce absolute Scope

1, 2 and 3 business travel emissions, leaving only a small tail of hard-to-abate emissions beyond 2025, to be offset in

line with net zero principles. This is being done through: purchasing renewable electricity for our offices, reducing air

travel to absolute de minimis levels, and minimising business travel wherever practical.

We recognise that our most significant categories of emissions, being financed emissions and those relating to

purchased goods and services, are not currently subject to quantitative targets. As discussed in earlier sections, and

committed in our near-term qualitative target, we are focused on improving data quality and granularity to provide a

more accurate view of these emissions and will use this to help us understand what real-world actions are within our

control or influence before considering targets. We also plan to review the SBTi’s updated Corporate Net Zero and

Financial Institutions Net Zero Standards, which are expected in 2025, before committing to any further targets.

Carbon credits

For reporting periods 2020 to 2022, Funding Circle purchased and retired high quality carbon credits equivalent to the

annual emissions from our Scope 1, 2 and 3 waste and business travel

. In 2023 and 2024, we retired this approach

to BVCM in favour of expanding our investment in environmental projects (see page 31). From next year, we anticipate

offsetting our small remaining tail of hard-to-abate Scope 1, 2 and 3 business travel emissions with carbon credits

to achieve our interim (2025) partial net zero (market based) target. We intend to undertake further due diligence on

potential sources of carbon credits and refer to the SBTi’s updated Corporate Net-Zero Standard in 2025 to inform our

approach to offsetting and broader BVCM activities.

6. In previous reporting periods we referred to this as achieving carbon neutrality – terminology which we retired when SBTi guidance became available on BVCM.

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Funding Circle Holdings plc | Annual Report and Accounts 202438

This section is produced in order to comply with the reporting requirements in sections 414CA and 414CB of the

Companies Act 2006 as amended by The Companies (Strategic Report) (Climate-related Financial Disclosure)

Regulations 2022, which places requirements on us to incorporate climate disclosures in our Annual Report. We have

provided the location of relevant disclosures by cross-reference. Specifically, requirements A-H of section 414CB are

covered on pages 28 to 38.

Reporting

requirement Policies and standards

Information necessary to understand

our business and its impacts Page reference

Environmental

matters

Funding Circle ESG Framework* ESG

Risk management

Principal risks and uncertainties

Board decision making and section

172(1) duties

Report of the ESG Committee

24 to 38

51 to 54

55 to 62

72 to 73

88 to 89

Our employees Funding Circle Code

of Conduct*

People at Funding Circle*

Whistleblowing Policy*

DEI Statement

Communication Handbook

Our people

ESG

Risk management

Principal risks and uncertainties

Corporate governance report

Report of the Audit and Risk Committee

Report of the ESG Committee

20 to 23

24 to 38

51 to 54

55 to 62

70 to 77

82 to 87

88 to 89

Social matters Funding Circle ESG Framework*

Customer Complaints*

ESG

Social impact

Engaging our stakeholders

Our customers

Risk management

Report of the Directors

24 to 38

26 to 27

40 to 43

14 to 15

51 to 54

112 to 114

Human rights Human Rights Statement*

External Assurance

Supplier Standard*

Supplier Code of Conduct*

Modern Slavery Statement*

ESG

Corporate governance report

Report of the ESG Committee

Risk management

Principal risks and uncertainties

24 to 38

70 to 77

88 to 89

51 to 54

55 to 62

Anti-corruption and

anti-bribery matters

Anti-Corruption and

Bribery Policy*

Risk management

Principal risks and uncertainties

51 to 54

55 to 62

Principal risks and

risk management

Enterprise Risk Management

Framework Policy

Risk management

Principal risks and uncertainties

Viability statement

Report of the Audit and Risk Committee

51 to 54

55 to 62

63 to 64

82 to 87

Description of business model Our business model

Our strategy

8 to 9

10 to 11

Non-financial KPIs Our business model

Engaging our stakeholders

8 to 9

40 to 43

* Relevant policies

can be found on

the Company’s

Sustainability

webpage

Non-financial and sustainability information statement

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Funding Circle Holdings plc | Annual Report and Accounts 2024 39

Borrowers

Engaging our stakeholders

We actively engage with

all our stakeholders

Our shared mission with borrowers, 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 to building

open and constructive relationships with all our stakeholders.

In 2024, we engaged with our stakeholders in a variety of ways to ensure they continued to feel connected and

supported at all times.

An expanded product set is enabling us to engage with

and serve more SMEs than ever before, whatever their

business needs.

How we engage

l Real-time monitoring of customer insight from every

stage of the customer journey, human responses to all

Google and Trustpilot reviews, and dedicated customer

support via social media.

l Regular surveys, focus groups, in-depth interviews

and in-person borrower visits across the UK by the

leadership and the broader team to shape our product

and user experience.

l Supporting borrowers by continuously updating our

Purple Pages directory, to encourage employees to

purchase products and services from small businesses.

l Sourcing borrower products such as chocolates, tea

and cakes as prizes and gifts for employees.

l Twice yearly brand monitoring to an SME panel to measure

sentiment, satisfaction and comparison against competitors.

l Regular email updates and communications, including

on the launch of our new products, changes to

government guaranteed schemes and continued

service improvements and resources for borrowers.

Outcomes of engagement

l We achieved a Group NPS of 79 (2023: 75).

l Our Trustpilot score remains at an “Excellent” 4.6 rating.

l We launched the Cashback credit card to help

customers earn from their business spending,

and added features to FlexiPay as a direct result

of customer feedback, including more flexible

payment terms, and credit transfers direct to their

bank accounts.

Engaging our stakeholders

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202440

Circlers

Our people are what make Funding Circle special. We are

committed to creating an environment where Circlers

thrive and share our mission, values and ambition.

How we engage

l Regular All Hands meetings and our biannual

Company- wide events, including the Full Circle and the

newly launched CircleIN. These provide an opportunity

to reinforce Funding Circle’s values and culture by

bringing everyone physically together as “one team”.

l Meetings between Helen Beck, our Workforce

Engagement Non-Executive Director, and employee

groups, with subsequent feedback loops to the Board.

l Six Circler-led groups (Women @ FC, Let’s Talk

About Heritage, Circle of Pride, FC Impact, Parents

@ FC and Neurodiversity @ FC) that empower our

people to deliver initiatives important to them and our

DEI agenda.

l Regular employee engagement surveys, with results

shared with the Board, along with reports and updates

on diversity and inclusion initiatives.

Outcomes of engagement

l Continued to embed our value, “Obsess over the

customer” by giving Circlers the opportunity

to visit Funding Circle borrowers to learn about

their businesses.

l Delivered an allyship training programme, to further

strengthen our education on diversity, equity and inclusion.

l Supported Circler resource groups in delivering over 50

initiatives and events.

l 2024 engagement results achieved an overall score

of 64.3% with 61% recommending Funding Circle as a

place to work.

Section 172(1) statement

The Directors recognise that they have a duty to

promote the success of the Company in accordance

with section 172(1) of the Companies Act 2006. Further

details on how the Board operates and the way in

which it reaches decisions, including the matters

discussed and debated during the year, are set out

in the Governance section on pages 66 to 115. Some

examples of how the Directors have had regard

to the factors set out in section 172(1) (a) (f) when

discharging their duties are on pages 72 and 73.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 41

Engaging our stakeholders continued

Institutional investors

Providing stable and attractive returns to a

diverse range of institutional investors is a central

part of our strategy.

How we engage

l We actively engage with all types of institutional

investors – for example asset managers, banks,

insurance companies and pension funds – to share

details of our products and services. This includes

a presence at key global conferences, investor

roadshows and bespoke meetings.

l We provide information and support to existing

institutional investors in a range of accessible

formats, including monthly and daily reporting

on their investments.

Outcomes of engagement

l We onboarded new, and re-signed a number of

existing, institutional investors, further diversifying our

funding investor base across our product suite/product

family offering.

l Continued institutional investor demand to fund loans

– with an active forward pipeline.

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

l Regular shareholder communications such as full and

half-year results, and ad hoc regulatory news service

announcements.

l In early 2024 and 2025, we actively consulted with

top shareholders to get feedback on our proposed

Remuneration Policies prior to them being circulated

for approval at our 2024 and 2025 Annual General

Meetings (“AGMs”).

l Held analyst and investor meetings and presentations/

roadshows, as well as ad hoc meetings and events

with shareholders and prospective shareholders.

l The 2024 AGM was once again open to shareholders,

offering an in-person opportunity for shareholders to

interact with the Board.

l The Chair, Chief Executive Officer and Chief Financial

Officer regularly communicate with shareholders and

analysts as required and provide regular reports to the

Board on shareholder interactions.

Outcomes of engagement

l Took into account views of major shareholders through

the year when shaping Company strategy and other

key developments, including our new Remuneration

Policies in 2024 and 2025, as well as announcing two

share buybacks and a capital reduction.

Shareholders

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202442

Communities

Government and regulators

The SMEs we serve are at the centre of our

communities. We are passionate advocates of

community engagement and charitable causes that

deliver social impact.

How we engage

l Continuous evolution and implementation of our ESG

strategy, including our priorities for engagement with

our various stakeholders.

l Regular touch points with institutional investors,

including discussions regarding their ESG investment

criteria as they apply to fund Funding Circle’s business

finance products.

l Sustained approach to corporate partnerships to

drive social and sustainability outcomes for SMEs and

communities, including through employee engagement.

l Employee-led volunteering and charity initiatives led by

Circler group FC Impact.

Outcomes of engagement

l Progressed our ESG strategy, which sets out a formal

framework for operating as a responsible business and

is overseen by our ESG Committee.

l Extended our partnership with Thrive Mental Wellbeing,

an app trusted by the NHS, to help all UK small

business leaders and employees get more support

with their mental health.

l Continued to support charities delivering social and

environmental value, such as Earthwatch’s citizen

science campaigns, and Hatch Enterprise, which

empowers underrepresented entrepreneurs to launch

and grow their businesses, along with Funding Circle

volunteers providing mentoring.

l Raised £12,828 for UK charities during 2024 and

Circlers contributed 171 volunteering “Impact Days”

in support of a range of good causes, including our

charity of the year, Refuge.

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

l Engagement with local, national and supra-national

government agencies, including regulators, legislators,

policymakers and industry groups. These interactions

provide insight and leadership on policy and rule

making related to issues affecting SME borrowers,

institutional investors or lending in the fintech industry.

l Contribution to the discourse and debate on industry

issues, including submitting position papers and

participating in expert hearings, consultations, forums

and other policy engagement initiatives.

l The Board ensures it uses the results of the above

engagement, as well as key legal and regulatory

changes affecting the business, to inform its strategy

and decision making.

Outcomes of engagement

l Continued to work with the British Business Bank

(“BBB”) as we started participating in the GGS, the

successor to the UK government’s Recovery Loan

Scheme; engaged with industry groups on issues

such as levelling the playing field for fintech lenders

and reviving the UK small and mid-cap market; and

responded to the Treasury Committee’s enquiry into the

accessibility of finance and lending to SMEs, including

giving oral evidence.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 43

Financial review

Overview of the year ended 31 December 2024

We were pleased with the strong operational and

strategic performance in 2024. We saw significant

growth in both of our businesses and improved Group

profitability compared to 2023. The Group comprises

two continuing Business Units which are at different

stages of maturity: Term Loans (a longer-term financial

product offering) and FlexiPay (a shorter-term working

capital product).

In H2 2024 we launched a Cashback credit card

product. Given its recent launch, its contribution is

relatively minimal. We have therefore included its results,

transactions and balances in the FlexiPay segment.

The US business was sold on 1 July 2024 and is therefore

treated as discontinued in the year.

Originations and

transactions

Balances under

management

FY 2024

£m

FY 2023

£m

December

2024

£m

December

2023

£m

Continuing

operations

UK Term Loans 1,407 1,060 2,714 2,853

Other — — n/a 11

FlexiPay 492 234 119 58

Total 1,899 1,294 2,833 2,922

Term Loans

Term Loans originations increased by 33% to £1,407 million

(2023: £1,060 million). Growth was driven by increased

applications, product innovation and enhancements. We

participated in the third iteration of the Recovery Loan

Scheme (“RLS”) (H2 2023 to H1 2024) and the longer-term

government guarantee programme, the Growth Guarantee

Scheme (“GGS”) (from H2 2024). These schemes have

enabled us to provide finance to SMEs in parts of the

market we would not have reached otherwise.

Strong performance

and delivery against

strategic objectives

“ We were pleased with the

strong operational and

strategic performance in

2024. We saw significant

growth in both of

our businesses and

improved profitability

compared to 2023.”

Tony Nicol

Chief Financial Officer

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202444

Term loan originations were funded in a platform model

through forward flow agreements with institutional

investors. As the loans are owned by these institutional

investors, the Loans under Management (“LuM”) do not

form part of Funding Circle’s balance sheet.

We have also continued to grow originations through our

Marketplace network of third party finance providers,

where we refer SMEs if we are unable to lend to them

directly, earning a commission. This allows us to support

an even greater number of SMEs access to a wide range

of financing options.

Despite strong originations in the year, LuM decreased

in 2024 as the amortisation of the legacy Covid-19

government-guaranteed loans outpaced growth in new

lending. As at 31 December 2024, the legacy Covid-19

loans represented £743 million (31 December 2023:

£1,457 million), c.27% of total LuM. We expect Term Loan

LuM to grow in 2025.

As at 31 December 2024, we have c.£2.1 billion of forward

funding in place for future originations.

FlexiPay and Cashback credit card

Our line of credit product, FlexiPay, has demonstrated

significant growth to date and we continue to invest in it.

We successfully launched our Cashback credit card in H2

2024 with a good uptake from our customers.

Transactions more than doubled since FY 2023, reaching

£492 million (2023: £234 million), demonstrating

strong customer engagement. Drawn lines of credit

(“balances”) grew to £119 million at 31 December 2024

(2023: £58 million), in line with transaction growth.

FlexiPay and the Cashback credit card are funded by

Funding Circle capital and a senior debt facility. The lines

of credit are part of Funding Circle’s balance sheet.

Finance review

Overview

Revenue from continuing operations was £160.1 million

(2023: £130.1 million), a 23% increase. Revenue consists

of total income, fair value movements on SME loans held

for sale and investments in trusts. It is net of cost of funds

on the senior debt facility for FlexiPay.

The Group made a profit before tax (before exceptional

items) from continuing operations of £3.4 million (2023:

loss of £9.9 million). The exceptional items of £2.6 million

related to restructuring undertaken in the UK, mainly

comprising redundancy costs. After exceptional items,

the profit before tax from continuing operations was

£0.8 million (2023: loss of £9.9 million).

Segmental highlights

31 December 2024

31 December 2023

Continuing operations Continuing operations

United Kingdom United Kingdom Other Total

Term

Loans

£m

FlexiPay

£m

Total

£m

Term

Loans

£m

FlexiPay

£m

Term

Loans

£m

Total

£m

Transaction fees 84.7 0.6 85.3 65.2 0.1 — 65.3

Servicing fees 37.5 — 37.5 38.8 — 0.2 39.0

Interest income 8.3 22.6 30.9 7.5 7.8 0.1 15.4

Other fees 5.1 0.1 5.2 6.3 — 0.1 6.4

Operating income 135.6 23.3 158.9 117.8 7.9 0.4 126.1

Net investment income 2.8 — 2.8 3.6 — — 3.6

Total income 138.4 23.3 161.7 121.4 7.9 0.4 129.7

Fair value gains 4.2 — 4.2 3.1 — — 3.1

Cost of funds — (5.8) (5.8) — (2.7) — (2.7)

Net income (“revenue”) 142.6 17.5 160.1 124.5 5.2 0.4 130.1

Adjusted EBITDA 37.0 (12.5) 24.5 21.3 (14.4) (0.2) 6.7

Discount unwind on lease liabilities (0.6) — (0.6) (0.2) — — (0.2)

Depreciation, amortisation, impairment and modification

gains/(losses) (11.4) (1.8) (13.2) (11.3) (1.3) — (12.6)

Share-based payments and social security costs (6.5) (1.3) (7.8) (3.3) (0.5) — (3.8)

Exceptional items (2.3) (0.3) (2.6) — — — —

Foreign exchange gains 0.5 — 0.5 — — — —

Profit/(loss) before tax 16.7 (15.9) 0.8 6.5 (16.2) (0.2) (9.9)

1. In the year to 31 December 2024, “Other” Term Loans are presented within the UK business segment on the basis that the legacy European operations included

within Other are immaterial. The comparative period has not been re-presented. The segmental results of the US business are not presented above.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 45

Financial review continued

Term Loans business

The Term Loans business delivered revenue of

£142.6 million growing 15% on FY 2023. This growth

came principally from the growth in originations and the

corresponding transaction fees. Servicing fees reduced

in the year, reflecting the reduction in LuM.

The start of 2024 saw heightened demand from borrowers

which normalised in the second quarter. We did experience

more subdued demand over the summer months when

businesses were awaiting the new government’s October

Budget, and we then saw demand pick up in the final quarter.

Term Loans generated AEBITDA of £37.0 million in 2024

compared to £21.3 million in the prior year, with AEBITDA

margin improvement. This demonstrated the strong

operational leverage we are achieving from the more

mature business, where costs above AEBITDA increased

by 2.3%, following cost actions while revenue grew by 15%.

Profit before tax and exceptional items was £19.0 million,

up from £6.5 million in FY 2023, primarily due to the

growth in AEBITDA. After exceptional items, profit before

tax was £16.7 million, compared with £6.5 million in 2023.

FlexiPay and Cashback credit card

Revenue for FlexiPay was £17.5 million in 2024, increasing

from £5.2 million in 2023 as a result of a rise in the

number of transactions and fee growth.

When the product was initially launched customers were

able to draw and repay within a 3-month period. In H1

2024 we expanded repayment options to include 1, 3, 6, 9

and 12 months, with fees varying depending on payback

period. As a result, the average fee for each drawdown

grew to 5.8% (2023: 4.6%), reflecting a longer average

repayment period of 4 months.

A Cashback credit card was launched in H2 2024. When

customers transact using cards, we earn an interchange

fee of 1.75% alongside interest on any revolving balances.

The revenues earned from the Cashback credit card in

2024 were relatively minimal.

FlexiPay is funded through Funding Circle invested capital

and a senior debt facility with Citibank (it was solely funded

by Funding Circle until June 2023). The interest payable on

this facility is shown in “cost of funds” and is based on SONIA

plus a margin. This facility is for £150 million with the ability to

upsize further and is due for renewal in August 2025.

The AEBITDA result was negative £12.5 million (2023:

negative £14.4 million), with continued investment to

support product momentum. The principal costs incurred

include staff-related expenses, marketing costs and

expected credit losses which are required to be recognised

upfront for both drawn and undrawn lines of credit.

As the business continues to grow, we anticipate ongoing

investment with a resultant increase in the cost base,

principally marketing and expected credit losses. Once

onboarded, we earn repeat revenues as the customer

uses the product.

US Term Loans business

As was previously announced, the Group signed an

agreement in June 2024 to sell the US business to iBusiness

Funding, LLC. The sale was completed on 1 July 2024,

at which point the US business was deconsolidated. The

operations of the US business are presented in a single line

as discontinued operations within the financial statements.

The Group recognised a gain on sale of £9.8 million

(excluding foreign exchange reserve recycling through

the profit and loss). Further details can be found in the

financial statements in note 3.

How we make money from different products

Revenue stream Term Loans FlexiPay

Cashback

credit card 2024 Typical yield % 2024 Driver

c.6%

Originations

c.1.5%

LuM

c.5.8%

Transactions

1.75%

Transactions

Variable

Cash balances

and base rates

Variable

Invested capital

Transaction fees

Servicing fees

Drawdown fees

Interchange fees

Bank interest

Investment income

FeesOther

1. Servicing fees include other fees.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202446

Profit and loss

Before

exceptional

items

£m

Exceptional

items

£m

31 December

2024

Total

£m

31 December

2023

(re-presented)

£m

Transaction fees 85.3 — 85.3 65.3

Servicing fees 37.5 — 37.5 39.0

Interest income 30.9 — 30.9 15.4

Other fees 5.2 — 5.2 6.4

Operating income 158.9 — 158.9 126.1

Net investment income 2.8 — 2.8 3.6

Total income 161.7 — 161.7 129.7

Fair value gains 4.2 — 4.2 3.1

Cost of funds (5.8) — (5.8) (2.7)

Net income (“revenue”) 160.1 — 160.1 130.1

People costs (68.1) (2.3) (70.4) (65.5)

Marketing costs (45.6) — (45.6) (37.1)

Depreciation, amortisation and impairment (13.2) (0.3) (13.5) (12.6)

Expected credit loss charge (8.6) — (8.6) (4.5)

Other costs (21.2) — (21.2) (20.3)

Operating expenses (156.7) (2.6) (159.3) (140.0)

Profit/(loss) before tax from continuing operations 3.4 (2.6) 0.8 (9.9)

1. The comparative consolidated statement of comprehensive income has been re-presented to reflect the results of the US business as a discontinued operation.

Operating income includes transaction fees, servicing

fees, interest income from loans held at amortised

cost, interest on cash balances and other fees and

was £158.9 million (2023: £126.1 million).

l Transaction fees, representing fees earned

on originations, increased to £85.3 million

(2023: £65.3 million), driven by growth in originations as

the business continued to expand its Term Loan offering

to more segments of the market, and attract more

applications from SMEs. Average transaction fee yields

decreased in the Term Loans business to 6.0% (2023:

6.2%) due to the mix in government-guaranteed/non-

government lending.

l Servicing fees, representing income for servicing LuM,

were £37.5 million (2023: £39.0 million). The fees move

in line with the quantum of LuM, which decreased in the

Term Loans business as growth in LuM from new lending

was offset by continued repayment on the legacy Covid-19

scheme loans outpacing the impact of new originations.

l Servicing fees are not charged on FlexiPay lines of

credit. Servicing yields remain similar to 2023 levels.

l Interest income represents: i) The fees earned on

FlexiPay lines of credit and interest earned on cash

and cash equivalents. FlexiPay interest income is a fee

charged on transactions and spread over a number

of months, in line with borrower repayments. It has

increased to £21.3 million (2023: £7.6 million), driven by

transaction levels and the average fees on transactions

which were 5.8% in the year (2023: 4.6%).

ii) Interest earned on cash and cash equivalents

increased to £9.2 million (2023: £7.4 million) in line

with higher average base rates. This interest applies

to the Group’s unrestricted cash as well as restricted

cash drawn from the Citi facility in anticipation of

future drawdowns.

l Other fees arose principally from collection fees we

recovered on defaulted loans.

Net investment income represents the investment

income, less investment expense, on loans held on

balance sheet at fair value. It declined to £2.8 million

(2023: £3.6 million), driven by the continued amortisation

of the remaining loans on balance sheet.

Net income (“revenue”), defined as total income after

fair value adjustments and cost of funds, was £160.1

million (2023: £130.1 million). The fair value gain in the

year of £4.2 million (2023: £3.1 million) related primarily

to certain investment in trusts and co-investments, which

were sold earlier than originally anticipated thereby

accelerating the receipt of future cash flows, which were

valued at a discount. As the on-balance sheet loans

continue to amortise, we would expect fair value gains/

losses to decline in future.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 47

Financial review continued

Operating expenses: At an overall level, operating

expenses increased compared with 2023. However, costs

remain actively and tightly managed with a 12% increase

in expenses before exceptional items compared to a 23%

growth in revenue.

The primary drivers of cost growth were the variable

expenses associated with marketing and expected credit

losses. Marketing costs increased by 23% to £45.6 million

and expected credit losses increased to £8.6 million from

£4.5 million, primarily due to growth in FlexiPay balances.

For the remaining costs, share based payments grew by

£4.0 million, driven by the growth in share price which

impacts employers’ national insurance costs. Excluding

this, the costs remained flat year on year with salary

expenses decreasing following the restructuring.

Exceptional items – restructuring: As part of its ongoing

commitment to profitability, the Group launched a cost

efficiency programme during the year. These actions are

on track to deliver an annualised run rate cash saving of

~£15 million in 2025 and an actual reduction in the overall

number of roles by c.120. This resulted in redundancy

costs of £2.3 million and impairment of capitalised

development spend intangible assets of £0.3 million

which were treated as exceptional items.

People costs (including contractors) represent the

Group’s largest ongoing operating cost and include

salary-related costs plus share-based payments.

Salary-related costs reduced by 2% in the year with

the savings achieved from the restructuring more than

offsetting inflation, new hires and the absorption of

global costs previously allocated to the US business.

The average salary per head increased by 5%.

The share-based payment charge for the year, included

in people costs, was £7.8 million (2023: £3.8 million),

largely driven by a higher share price which increases

the national insurance costs associated with the awards.

Following the UK Government’s Budget in October 2024,

we expect that the Group’s employer’s national insurance

will increase by c.£2 million.

Continuing operations

31 December

2024

£m

31 December

2023

£m

Change

Salary costs 69.3 70.9 (2)

Less capitalised development spend (“CDS”) (9.0) (9.2) (2)

Salary costs net of CDS 60.3 61.7 (2)

Share-based payments 7.8 3.8 105

Total people costs 68.1 65.5 4

Average headcount (incl. contractors) 788 845 (7)

Year-end headcount (incl. contractors) 726 857 (15)

Marketing costs comprise performance marketing (direct

mail and online), brand spend and commission payments

made to brokers. Marketing costs increased in the year to

£45.6 million (2023: £37.1 million).

Depreciation, amortisation and impairment costs

of £13.5 million (2023: £12.6 million) largely represent

the amortisation of the cost of the Group’s capitalised

technology development and the depreciation of right-

of-use assets related to the Group’s office lease. Included

within this charge is £0.3 million exceptional impairment

of intangible assets related to projects used for activities

deprioritised as a result of our go forward focus.

Expected credit losses principally relate to the IFRS

9 charge for FlexiPay where we account for actual and

future expected credit losses from SMEs defaulting on

their lines of credit. We would expect this charge to

increase as FlexiPay and Cashback credit card grow.

Other operating costs, which consist of loan processing

costs, data and technology, professional fees and staff

and office-related costs, have grown as the Group

continued to invest in growth in the FlexiPay business.

The increase is driven by inflation, higher volumes and

loan processing costs.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202448

Balance sheet and investments

The Group’s net equity was £217 million at 31 December 2024 (31 December 2023: £247 million). This reduction reflects the

share buyback by the Group.

The majority of the Group’s balance sheet is represented by cash and invested capital as shown below. The invested capital

is in certain SME loans, either directly or historically through investment vehicles, and in the FlexiPay lines of credit.

Operating business Investment business

Term Loans

business

£m

FlexiPay

£m

Legacy

securitisation,

warehouse

and other

loans at

fair value

£m

CBILS/

RLS/GGS/

commercial

co-investments

£m

Private

funds

£m

31 December

2024

Total

£m

31 December

2023

Total

£m

SME loans and lines

of credit 2.1 97.1 1.2 17.8 0.6 118.8 102.0

Cash and cash

equivalents

Unrestricted 150.2 0.3 — — — 150.5 169.6

Restricted — 32.1 — 5.0 — 37.1 51.8

Other assets — 6.3 — — — 6.3 2.7

Borrowings — (101.9) — — — (101.9) (56.9)

Cash and net

investments 152.3 33.9 1.2 22.8 0.6 210.8 269.2

Other assets 45.3 — — — — 45.3 47.1

Other liabilities (34.6) — — (5.0) — (39.6) (69.5)

Equity 163.0 33.9 1.2 17.8 0.6 216.5 246.8

The table below provides a summation of Funding Circle’s net invested capital in products and vehicles:

Investment in product/vehicles

31 December

2024

£m

31 December

2023

£m

1. Legacy securitisation, warehouse and other loans at fair value 1 19

2. CBILS/RLS/GGS/commercial co-investments

18 25

3. Private funds 1 2

Net invested 20 46

FlexiPay

34 18

Total net invested capital 54 64

1. These vehicles are bankruptcy remote, see note 29 of the financial statements for details.

Legacy loans at fair value – this relates to the legacy loans previously held in SPVs and warehouses and reduced

through the sale of the US business and ongoing amortisation.

CBILS/RLS/GGS/commercial co-investments – as part of our participation in the CBILS, RLS and GGS UK

government-guaranteed loan schemes, we were required to co-invest c.1% alongside institutional investors.

Private funds – there are a small amount of other loans, comprising seed investments in private funds held

as associates.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 49

Cash flow

At 31 December 2024, the Group’s cash position was

£187.6 million (31 December 2023: £221.4 million). Of this

balance £150.5 million (31 December 2023: £169.6 million)

is unrestricted in its use with £37.1 million (£51.8 million)

being restricted.

Restricted cash relates to cash held in the funding vehicle

of FlexiPay together with amounts owed to the British

Business Bank (“BBB”) for guarantee fees collected

from institutional investors under the participation of the

CBILS, RLS and GGS schemes. Total cash movements

have principally been driven by:

i) trading performance;

ii) timing of working capital movements associated with

UK government loan guarantee payments received

from investors still to be paid to the BBB;

iii) monetisation of on-balance sheet SME loans as they

have continued to pay down;

iv) ongoing investment in FlexiPay lines of credit with

external bank debt; and

v) purchase of shares as part of the share

buyback programme.

Free cash flow, excluding the one-off guarantee fee

payment, has significantly improved year on year, and

is nearing positive, driven by the disposal of the loss-

making US business and the move to profitability of the

continuing UK Group.

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 and lease payments. It

excludes the investment vehicle financing and funding

cash flows together with FlexiPay lines of credit and

Cashback credit card. The Directors view this as a key

liquidity measure and it is the net amount of cash used or

generated to operate and develop the Group’s platform

each year.

The table below shows how the Group’s cash has been utilised:

2024

£m

2023

£m

Adjusted EBITDA from continuing operations 24.5 6.7

Adjusted EBITDA from discontinued operations (8.7) (10.6)

Adjusted EBITDA 15.8 (3.9)

Fair value adjustments (6.4) (8.7)

Purchase of tangible and intangible assets (11.9) (12.2)

Payment of lease liabilities (3.2) (6.0)

Working capital/other 4.5 2.9

Free cash flow (excl. restricted cash movement due to guarantee fee payment) (1.2) (27.9)

Cash movement due to guarantee fee payment (26.1) 23.0

Free cash flow (27.3) (4.9)

Net distributions from associates 0.9 1.2

Net movement in trusts and co-investments 10.5 4.8

Net movement in lines of credit (net of borrowings) (7.5) 15.8

Net movement in SME loans at amortised cost (net of borrowings) 2.2 (3.3)

Net movement in loans at fair value through profit and loss (net of bonds) 13.5 32.7

Share buyback/purchase of own shares (33.7) (1.8)

Net proceeds from sale of US business 7.5 —

Effect of foreign exchange 0.1 (0.8)

Movement in the year (33.8) 43.7

Cash and cash equivalents at the beginning of the year 221.4 177.7

Cash and cash equivalents at the end of the year 187.6 221.4

Share buybacks

During the year, the Group announced two share buybacks totalling up to £50 million. As at 31 December 2024,

33.5 million shares have been purchased for £33.7 million. The shares have been cancelled, reducing share

capital by c.9%.

Financial review continued

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Funding Circle Holdings plc | Annual Report and Accounts 202450

Risk management

Delivering superior

risk-adjusted returns

As we enter 2025, we are

optimistic about our future.

With the increasing reliance

of UK SMEs on non-bank

fintech lenders, we are well-

positioned to capitalise on

this trend.”

2024: A year of economic uncertainty and continued

SME resilience

2024 ended with greater uncertainty over the UK

economy than when it began and growth expectations

are now within the boundaries of a wider confidence

interval. Early hopes of easing inflation were tempered

by the new government’s October budget in the UK and

the US election, both of which sowed uncertainty and

dampened consumer and business confidence. While

acute inflationary pressures have largely subsided,

central banks remain cautious due to persistent risks

impacting the labour market, including potential trade

barriers and demographic challenges. The rapid

advancement of AI further complicates the economic

outlook, presenting both opportunities and challenges.

Despite these late-year headwinds, we successfully

navigated the higher-rate environment. Our credit

portfolios have performed well, demonstrating

the resilience of UK SMEs and the strength of our

underwriting. As we enter 2025, the full implementation

of Labour’s economic policies and the trajectory of US

trade policy will be pivotal in shaping the UK economic

landscape and influencing SME investment and financing

decisions. We remain vigilant, closely monitoring these

developments and positioning our products to capitalise

on emerging opportunities.

As always, we commend the adaptability of UK SMEs

and remain optimistic about their long-term prospects.

While short-term challenges persist, our focus on

superior service, product innovation and leveraging AI

will enable us to navigate these uncertain times and

emerge stronger.

A simpler Funding Circle helping more UK SMEs

2024 was a year of significant transformation for Funding

Circle. By streamlining our operations and focusing on

the UK market, we emerged as a more agile and resilient

organisation. Our strategic pivot was well-received by

stakeholders, and we consistently executed on our plans.

Belkacem Krimi

Chief Risk Officer

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Funding Circle Holdings plc | Annual Report and Accounts 2024 51

Risk management continued

A simpler Funding Circle helping more UK SMEs

continued

Our credit portfolios demonstrated resilience in the face

of a deteriorating market, showcasing the strength of

our underwriting and risk management practices. This

resilience, coupled with our commitment to innovation,

has enabled us to expand our product offerings to

cater to more SME needs, allowing them to borrow,

pay later, and spend with Funding Circle. By providing

broader access to finance for SMEs, we empower more

businesses with more financing solutions and we enable

economic growth.

We continue to strengthen our risk management

framework and continuously improve our underwriting

models with advanced data and risk analytics, using

the latest trends in decision science. To ensure the

security and integrity of our platform, we invest in risk

management, cybersecurity and fraud prevention.

These measures safeguard our customers and protect

their financial interests, reinforcing our position as a

trusted partner in the financial services industry. Our

commitment to ESG is unwavering, as we integrate ESG

factors into our risk management framework to build a

sustainable and responsible business.

Finally, I am very proud of our internal culture of risk

awareness. Circlers are empowered to identify and manage

risks, fostering a culture of risk awareness and accountability.

Looking Ahead

As we enter 2025, we are optimistic about our future.

With the increasing reliance of UK SMEs on non-bank

fintech lenders, we are well-positioned to capitalise on

this trend. Our goal is to accelerate our growth, double

down on our strengths and empower even more SMEs to

achieve their full potential.

While we anticipate ongoing market volatility, Funding

Circle is well-prepared to navigate these challenges.

Our strong financial position, operational efficiency and

experienced team provide us with a competitive edge. We

are confident in our ability to deliver sustainable growth

and create value for all stakeholders.

Risk culture

At Funding Circle, we recognise that fostering an open

and robust risk culture is integral to promoting ethical

behaviour and professional conduct. As part of our

ongoing commitment to upholding the Company’s values,

we actively promote this risk culture, encouraging Circlers

to consistently ‘Do the Right Thing’ in their interactions

with customers, colleagues, the environment, the

community and other stakeholders.

Board role

The Board is responsible for setting the strategy,

corporate objectives, and risk appetite. It has delegated

responsibility for reviewing the effectiveness of the

Group’s risk management framework to the ARC. On

the advice of the ARC, the Board approves the level of

risk acceptable under each principal risk category while

providing oversight to ensure an adequate framework for

reporting and managing those risks.

Chief Risk Officer (‘‘CRO’’) and the Risk function

Our CRO 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 Enterprise Risk Management

Framework (ERMF). He is also responsible for providing

assurance to the Board that the principal risks are

appropriately managed and that Funding Circle operates

within risk appetite.

Risk management policies

We have established and implemented comprehensive

risk management policies that outline mandatory

requirements for mitigating the principal risks faced by

the organisation. These policies include clearly defined

risk limits and monitoring mechanisms to ensure ongoing

adherence. Our Risk and Compliance teams conduct

regular reviews of these policies and controls to assess

compliance and make adjustments as necessary to

address evolving business conditions.

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.

Having set the risk appetite, the Board regularly reviews

the Company’s risk profile against it. The risk appetite

framework serves as a guideline for shaping business

strategies and determining the necessary level of control.

Furthermore, it establishes a foundation for ongoing

dialogue between management and the Board regarding

Funding Circle’s current and evolving risk profile, enabling

strategic and financial decisions to be made with greater

insight and confidence.

Risk governance

Funding Circle has a robust risk governance framework,

as outlined in the ERMF. The Board is ultimately

responsible for defining and approving the ERMF, with

delegations of authority granted to the Group Board, the

UK Board and relevant Principal Risk Committees.

Throughout 2024, we effectively managed our principal

risks through a Three Lines of Defence model, operating

in conjunction with our well-defined risk governance

structure. The ARC is supported by the Management

Risk Committee (MRC), comprised of members of the

Executive Committee.

Effective January 2025, we implemented a new risk

governance structure to enhance efficiency and focus on

core risk management activities. This revised structure

emphasises key areas such as Board risk appetite,

committee scorecards, and updates on material risk

incidents while minimising the administrative complexities

of the previous model.

Under this revised structure, our business will continue

to operate within the Three Lines of Defence model.

Executive management will retain full ownership and

responsibility for risk management, underscoring our

commitment to proactive and disciplined risk oversight.

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Funding Circle Holdings plc | Annual Report and Accounts 202452

Management & Implementation Committees

Executive Governance Committee

Management Risk Committee (MRC)

The MRC provides an oversight in assessing all principal

and other emerging risks. It supports & challenges

risk mitigation and acceptance. It reviews risk reports,

monitors strategic risks, and ensures risk integration

in planning and budgeting. It also approves relevant

policies, drives ESG risk strategies, and monitors audit

and compliance findings for effective remediation.

Technology Risk Committee (TRC)

The focus of the TRC is to ensure effective governance

and controls are in place for the ongoing management

of 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.

Term Loans Risk Committee (TLRC)

The TLRC facilitates and monitors the implementation

of effective risk management practices by the business

insofar as they relate to regulatory, reputational and

conduct risk, operational risk and credit risk for Term

Loan products, Marketplace and retail investor products.

FlexiPay Risk Committee (FRC)

The FRC facilitates and monitors the implementation

of effective risk management practices by the business

insofar as they relate to regulatory, reputational & conduct

risk, operational risk and credit risk for FlexiPay and

Cashback credit card products.

Risk governance structure

Board Governance Committees

Funding Circle Holdings plc Board

Funding Circle Holdings plc

Audit and Risk Committee

Funding Circle Holdings plc

Market Disclosure Committee

Management Risk Committee

Term Loans Risk CommitteeTechnology Risk Committee FlexiPay Risk Committee

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 53

Risk assessment

framework

Enterprise risk

management

3 2

1. Evaluate

l Identify key risks

l Set risk appetite

l Assess adequacy of existing controls

l Estimate residual risk

2. Respond

l Design control improvement plans

l Prioritise remediation work and assign

responsibilities

3. Monitor

l Track business performance vs. risk appetite

l Report, analyse and escalate risk incidents

l Identify new or emerging risks

l Track delivery of agreed control improvements

Evaluate

As part of its responsibilities under the 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 risk management and oversight. The

management of these risks is assigned to designated

business owners who regularly formally assess the level

of these risks, the adequacy of controls and the need for

further mitigations.

Respond

The appropriate risk response ensures that risks are

within appetite. At Funding Circle we have four types of

possible risk responses:

l accept the risk;

l take mitigation actions (such as additional risk controls)

to reduce the risk;

l stop the existing activity/do not start the proposed

activity to remove the risk; or

l 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 ARC receives a consolidated risk report

no less than three times a year detailing the risks

facing the Group and mitigation plans, as well as the

risk outlook. The ARC is also provided with metrics and

regular reports about the activities of the Audit, Risk and

Compliance functions.

Risk assurance

Assurance on the management of risk is provided by

the Three Lines of Defence model including the Internal

Audit function. We also execute external annual controls

assurance reports (e.g. ISAE 3402) certified by auditors.

A standard risk assessment framework is used to evaluate risks

at both the Business Unit and Group levels, enabling consistent

measurement. Risk assessments are 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.

We typically follow the evaluate/respond/

monitor methodology:

Risk management continued

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Funding Circle Holdings plc | Annual Report and Accounts 202454

Principal risks and uncertainties

The Board confirms that throughout 2024 a robust assessment of

the principal & emerging 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 environmental 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 business.

Key risks Management of risk Change in risk in the year

Strategic risk

Risk arising from

the failure to build a

sustainable, diversified

and profitable

business that can

successfully adapt to

environmental changes.

The ExCo manages the strategic planning

process based on risk appetite, financial

considerations, strategic themes, market

trends and economic assumptions.

We manage strategic risk by:

l performing a thorough, in-depth business

strategy review at least once a year;

l reviewing financials, strategic plans which

include new products and initiatives, and key

performance indicators;

l reviewing the strategic risk implications of

new products, business expansion, and other

Company initiatives and projects; and

l ensuring that the Board has oversight of

strategic risk and approves strategic business

plans at least annually.

Market expectations are that interest

rates have now peaked which should

ease credit conditions. However, the

impact of the broader macroeconomic

climate on SMEs remains uncertain.

This leads to uncertainties around

borrower and investor demand which

may impact our strategic objectives.

Funding Circle has also continued to

grow new products such as FlexiPay

for which performance and demand

may be uncertain until they reach

sufficient scale.

We closely monitor these trends and

we continuously adjust our product

offerings to fit market conditions and

meet evolving customer demand.

Risk trend key

Increasing Stable Decreasing

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Principal risks and uncertainties continued

Key risks Management of risk Change in risk in the year

Economic environment

Risk arising from

macroeconomic or

political factors that

may impact funding,

credit performance, and

overall financial stability.

It encompasses broader

considerations, including

demand fluctuations,

funding availability, and

cost management.

This risk reflects the

potential failure to

establish a sustainable,

diversified, and profitable

business model capable

of adapting to evolving

economic and regulatory

environments.

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):

l annual stress testing of all loan portfolios;

l resilient credit strategy and continuous

tuning of risk and pricing parameters to

correct for possible deviations in returns;

l monthly monitoring of internal and external

signals as part of the TLRC & FRC; and

l a robust in-house Collections and Recoveries

(C&R) function, designed with built-in

scalability to adapt to evolving demands.

Our capabilities are enhanced by automated

strategies and self-service solutions,

ensuring efficiency and responsiveness.

Additionally, we maintain a strategic

partnership with a specialist Debt Collection

Agency (DCA), which can be leveraged in the

event of a significant economic disruption,

such as the Covid-19 pandemic.

Interest rates have begun to reduce

and the majority of macroeconomic

indicators are better than at the end of

2023. Nonetheless, the macroeconomic

environment remains uncertain and

insolvencies are at an elevated level

to historical norms.

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.

l Our ESG framework outlines our approach

to ESG and is approved by the Board.

l The Board retains ultimate responsibility

for providing the strategic focus, support

and oversight for the implementation of

the Group’s ESG strategy, including for

climate-related risks and opportunities.

The Board delegates certain matters related

to climate-related risks and opportunities

to two Committees:

l the ESG Committee is responsible

for oversight of the Group’s overall

ESG strategy, including climate-

related opportunities and voluntary

commitments; and

l the ARC is responsible for oversight of

risk management related to ESG risks,

including climate-related risks.

We continue to integrate climate-related

risks into our ERMF and mature our

ESG framework.

We continue to assess our climate-

related risks and opportunities and

further embed them into day-to-day

practices and first-line teams.

For further information, please see

ESG section.

Strategic risk continued

Risk appetite continued

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Funding and balance sheet risk

Funding and balance sheet risks are the risks associated with the funding of our product set of Term Loans and

lines of credit and any exposure that our balance sheet has to this funding 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 the year

Funding risk

Funding risk is the

risk that demand from

borrowers for credit

cannot be met by the

providers of that funding

(institutional investors in

the case of Term Loans

and Funding Circle and

CitiBank in the case of

lines of credit). This risk

varies with the economic

attractiveness of Funding

Circle products as an

investment, the level of

diversification of funding

sources and the level of

resilience of these funding

sources and their returns

through economic cycles.

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:

l building long-term relationships with

investors and developing a forward-looking

pipeline of new investors;

l actively managing concentration risk and

diversifying sources of funding;

l managing Funding Circle’s lending activities

whether through direct lending capacity,

securitisation capacity or investment fund

lending vehicles;

l monitoring a broad range of management

information and key performance indicators at

the BSMC, TLRC, FRC and Board levels; and

l leveraging an experienced capital markets

team for sales and transaction structuring.

Despite 2024 providing a number

of macroeconomic challenges, we

experienced demand from institutional

investors to fund new loans. This

demonstrated the trust our funding

partners place in our risk management

and operational processes, as well

as their previous experience of

stable, robust and positive returns on

their investments. We also revised

our lending rates to match market

movements and maintain loan returns.

We have onboarded new investors,

continuing the trend from the previous

years and renewed existing investors

cementing strong institutional

relationships providing a good basis

for our future funding needs.

Balance sheet risk

Balance sheet risk is the

risk that, where Funding

Circle has put its balance

sheet to use in funding

either Term Loans or lines

of credit, investment

positions reduce in value

or cannot be exited at

an economically viable

price; the risk that Funding

Circle liabilities cannot be

met when they fall due

or can only be met at an

uneconomic price. This

risk is also associated with

interest rate fluctuations,

particularly in the context

of levered investments.

Balance sheet risk applies

to all products offered,

the potential challenges

faced in managing

investment positions and

meeting obligations under

favourable conditions.

We carefully manage this risk by:

l setting clear guardrails for Funding Circle

balance sheet exposures and following

a set of agreed investment principles to

guide capital allocation;

l maintaining a prudent level of liquidity to

cover unexpected outflows to ensure that

we are able to meet financial commitments

for an extended period, including under

stress scenarios;

l regularly monitoring investment performance

and assessing headroom against the trigger

hurdles agreed with senior lenders;

l considering a broad range of management

information and key performance indicators

at the senior management level; and

l 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.

Legacy SME loans on our balance sheet

continue to perform strongly as they

amortise down.

FlexiPay remains funded from our own

cash, leveraged with senior financing

from CitiBank. During the year we added

a Cashback credit card product to the

FlexiPay suite, which is also funded

through the same levered vehicle. The

credit performance of these products is

in line with our expectations. We have

sufficient disposable cash to cover our

liquidity needs and any credit downside

risk, including when tested against

stressed liquidity scenarios, and to fund

our medium-term plan going forwards.

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Principal risks and uncertainties continued

Credit risk

Credit risk is the risk of financial loss to an investor including Funding Circle itself when lending from its balance

sheet 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 management’s

expectations, in terms of net credit loss rate, risk-adjusted rate of return and its volatility through economic cycles.

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 the year

Credit risk

Borrower acquisition

Credit performance and

returns of new loans can

deviate from expectations

due to several factors:

changes in credit

quality of incoming

applications, calibration

of risk models or strategy

parameters, and control

gaps in processing loan

applications.

Portfolio risk

management

Credit performance

and returns of existing

portfolio can deviate

from expectations

due to several factors:

deterioration of credit

environment, increased

competition driving

higher prepayment rates,

effectiveness of portfolio

monitoring, collections

and recoveries.

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:

l formulating credit risk policies (covering

credit assessment and risk grading, portfolio

monitoring and reporting, collections and

recoveries) and ensuring adherence to

these policies;

l recruiting, training and managing expert

risk professionals with the adequate skills,

objectives and capacity;

l establishing the formal mandates and

authorisation structure for setting risk

parameters and approving loans;

l performing independent quality control of

credit decisions;

l limiting concentration risk to counterparties

and industries;

l actively monitoring the performance of the

loan portfolios and the market trends that

could affect performance;

l implementing adequate procedures and

controls for model risk (including the

independent validation and monitoring of

credit scoring models);

l performing annual stress tests with regards to

government programmes, tightly controlling

adherence to eligibility criteria;

l having adequately staffed and well trained

C&R department;

l ensuring forbearance tools and policies

are fully integrated in customer life

cycle management;

l constantly monitoring our portfolio

for credit insights that feed into the

underwriting policies/models and

decisioning infrastructure;

l regular pricing reviews to ensure adequate

risk-adjusted returns for our investors in a

more volatile interest rate environment; and

l active management of credit limits

and unused credit limits in the case of

open-ended products.

Whilst our portfolios are showing

resilience and generally performing

well, we do take into account the

economic environment as a potentially

significant challenge to our borrowers

and are adopting a prudent approach

to credit risk management. We are

continuously monitoring our portfolios

of existing lending and use the most

recent data to adjust our risk appetite

and underwriting policies.

Funding Circle is entering 2025 in

a strong position from a credit risk

standpoint, capitalising on our data

and experience since our inception.

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Regulatory, reputation and conduct risk

Regulatory, reputation and conduct risk is defined as the risk of engaging in activities that detract from Funding

Circle’s goal of being a trusted and reputable company with products, services and processes designed for

customer success and delivered in a way that will not cause customer detriment or regulatory censure.

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 the year

Regulatory risk

The risk that Funding

Circle’s ability to

effectively manage its

regulatory relationships

is compromised or

diminished, that the

Group’s governance and

controls framework is

not satisfactory given

business growth, or

that there is business

interruption by reason

of non-compliance

with regulation or the

introduction of business-

impacting regulation.

l We maintain vigilance around policy shifts,

and proactively engage with industry bodies

and policy-makers, highlighting our platforms’

features, benefits, and impact;

l We continue to implement and maintain

business practices and controls focused

on regulatory risk. These include controls

designed to comply with the Senior

Managers and Certification Regime and the

Consumer Duty;

l We continue to focus on governance and

controls and train all employees in such

matters relevant to their role;

l For ESG-related risks, including DEI, social

impact and climate change, we continue to

work with service providers to assist with the

integration of TCFD recommendations and

our net zero ambitions; and

l GenAI and emerging technologies feature

in Funding Circle’s data strategy as an

opportunity to enhance productivity,

innovation, and customer experience.

We recognise that the adoption of these

technologies creates potential risks to ethical

business practices and compliance with

certain legal and regulatory regimes. In 2024,

we established a GenAI steering committee

with representation from Funding Circle’s

Executive team focusing on oversight of the

successful adoption of GenAI in a responsible

way. Based on our current scale and use,

we consider this an emerging rather than

primary risk.

The Retail Investor product’s

trajectory remains downward from

a risk perspective, impacted by

balance reduction efforts. Low

residual performing balances are

anticipated to fully amortise by July

2025. The Consumer Duty came into

force for closed products on 31 July

2024, and we have reviewed against

expectations and taken the appropriate

actions to deliver good outcomes for

retail customers.

The use of personal guarantees in

commercial lending was a focus of

industry groups, as well as the regulator.

The FCA undertook an exercise to

identify potential harm where the

lending falls within the regulatory

perimeter, and we are encouraged to

see that the regulator did not identify

instances of poor practice. While our

lending activity is either unregulated

or exempt from regulation, we believe

it is important that lenders take notice

of the possibility of harm. To that end,

we became a supporter of the UK

Finance commercial finance industry

commitments to personal guarantees.

In October 2024, we saw the decision

by the Court of Appeal in a landmark

case on lender liability where

commission is paid to a broker in motor

finance arrangements. The potential

impact of the decision is widespread

and, while the case was focused on

consumer lending in the motor finance

industry, has created uncertainty across

the commercial lending industries.

We are closely monitoring the

developments and the outcome of the

appeal to the Supreme Court.

Increased regulation looms for ESG

risks, including mandatory disclosures

and labelling. We continue to proactively

monitor this area, and comply with all

current obligations.

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Principal risks and uncertainties continued

Regulatory, reputation and conduct risk continued

Risk appetite continued

Key risks Management of risk Change in risk in the 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:

l ensuring risk and compliance considerations

for new or iterated products and initiatives;

l engaging fully with regulators when required,

and external advisers in relation to any new

or iterated products and initiatives that might

impact customer outcomes;

l undertaking specific projects to address

identified risk topics and issues, including

retrospective reviews, internal audit reviews

and monitoring and testing programmes; and

l updating and refining our approach to issue

and risk identification and management.

Continued investment in FlexiPay and in

newer products, including the Cashback

credit card, presents potential risks

as a higher number of customer

touchpoints leads to more potential

for customer dissatisfaction. These

factors are closely monitored to ensure

smooth operations and optimal product

performance.

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 the year

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 in line with the Financial

Conduct Authority’s client money (‘‘CASS’’)

regulations. We continue to manage the

risk through:

l daily payments and reconciliation controls;

l a monthly CASS governance sub-committee

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 product cash flows into the

client money framework;

l oversight from the Funding Circle

Limited Board;

l annual external CASS audit providing

assurance on the Firm’s compliance with

the FCA’s “CASS” rules; and

l With the runoff of retail investor funds, the

risk profile has reduced, becoming primarily

B2B rather than consumer-focused.

In 2024, we have maintained a robust

control environment in relation

to payment creation, payment

authorisation, and monthly reporting

and have increased efficiency and

accuracy across the reconciliation

review process through adoption of a

specialised third-party client money

reconciliation tool.

Controls implemented in the 2023

for the late payment money flow are

embedded in the control environment,

and we continue to comply with the

regulatory requirements in relation to

holding and treatment of client money

and perform internal and external client

money reconciliations daily.

Proactive contact continued to be

made with our retail investors to

create awareness of funds available to

withdraw in their legacy portfolios, and

we saw the balance held continue to

reduce throughout 2024.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202460

Key risks Management of risk Change in risk in the year

Financial crime

Risk of regulatory

breach, financial loss

or reputational damage

arising from a failure to

adequately manage or

prevent money laundering,

terrorist financing, bribery

and corruption, or to

comply with sanctions

regulations.

l We comply with the laws and regulations

designed to counter money laundering,

terrorist financing, corruption and bribery is

fundamental to Funding Circle’s operations;

l The Board has adopted policies to

address financial crimes that have been

implemented through formal standards and

procedures; and

l 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.

The growth of the FlexiPay product

has added 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

checks as part of our processes;

however, further improvement and

iteration will be required as the

product matures.

Process risk

Failure to originate and

service loans in line

with Funding Circle

internal policies, investor

guidelines and third party

loan guarantees (e.g. BBB)

may result in Funding

Circle repurchasing loans

from investors.

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 of

money to investors.

We actively manage process risk by:

l continuing to automate key controls;

l performing robust first-line quality assurance

and secondary checks on manual processes;

l monitoring and testing of key controls;

l reviewing key risk indicators as part of the

Business Unit Operational Risk Committee;

l reporting, reviewing and resolving

operational errors;

l performing independent quality control

checks and ensuring highlighted issues

are resolved;

l implementing adequate policies and

procedures;

l providing training and education on risk

culture and risk management; and

l performing supplier due diligence and

undertaking ongoing performance

monitoring of key suppliers.

Building upon the effectiveness of

our established first-line of defence

controls, we sustained a stable process

risk profile over the past year.

In addition, we carry out independent

quality checks to ensure that all loans

originated are compliant with loan

eligibility requirements.

In October 2024 an application for

summary judgement, which related to

two loans originated on the Funding Circle

platform and now held by a third party

debt buyer, was dismissed. The questions

relate solely to who has the right to bring

legal proceedings. We have taken legal

advice and are confident that the claimant,

being the third party debt buyer, will be

successful at trial.

The growth of Funding Circle’s

FlexiPay product may lead to increased

operational and third-party risks due to

its reliance for processing transactions.

To ensure the effectiveness of our internal

controls, we perform both internal and

external assurance activities. Our external

assurance process which included an ISAE

3402 Control Report yielded satisfactory

results. In FY 2024, an internal Risk &

Control Self-Assessment was conducted.

The overall risk profile remained within

appetite. A few areas have been identified

for further control enhancement, we are

actively working to address these areas

and ensure continued alignment with our

risk appetite.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 61

Technology risk

Technology Risk refers to the potential negative consequences that can arise from the use or implementation

of technology, including hardware, software, and data management systems. Technology risks can arise from

a variety of sources, including hardware failures, software bugs, cyber attacks, data breaches, and user errors.

In response to evolving threats and the rise of GenAI, Technology risk has been designated a “Principal Risk”,

ensuring stringent oversight and proactive mitigation. We have made significant strides in enhancing our security

and data maturity posture. We are committed to continuous improvement and will continue to mature our security

and data practices.

Risk appetite

Funding Circle will manage its technology, data, and security risks with effective controls, preventing significant and

non-anticipated loss of confidentiality, integrity and availability of systems and data.

Key risks Management of risk Change in risk in the year

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.

l Technology remains central to Funding

Circle’s operations. Recognising the rise of

GenAI and the evolving nature of threats, the

Risk Committee upgraded technology risk

to a standalone principal risk. This change

enhances oversight of technology and data

risks now and into the future; and

l We continue to make significant investments

in our technology platform to ensure

it is resilient and scalable to support

business growth.

We have improved our technology

automation, alerting and incident

response capability to maintain a stable

platform to enable business growth,

scalable products and services.

Technology risk and technical resilience

continue to improve with more

robust testing capabilities in place to

support changes before production

implementation. Nevertheless, we

remain committed to explore additional

opportunities to further strengthen

our approach.

Information security

Failure to protect the

confidential information

of Funding Circle’s

borrowers, investors

and IT systems may

lead to financial loss,

reputational damage and

regulatory censure.

l Information security is a priority for Funding

Circle as a technology-driven company;

l As such we maintain in-depth defence with

a multi-layered control infrastructure; and

l Information security is appropriately

managed, based on materiality, and is

escalated to the TRC.

In 2024, we continued to see

improvements in our information

security infrastructure with a strong

focus by the Board.

We have increased our overall security

maturity and continue to adapt our

information security controls as the

threat landscape continues to evolve.

Data risk

Failure in our ability

to acquire, use, secure

and transform our data

assets could result in

adverse material impacts

across Funding Circle.

l Our data risk management framework is

aligned to the Group’s ERMF; and

l Data risks are appropriately managed,

based on materiality, and are escalated

to the TRC.

We continue to mature and embed

our data governance framework and

organisational structure to manage

data risk including the implementation

of new tools to maintain the standards

of documentation, clarity and integrity

of our data.

Protecting our customer and employee

data, in particular personally identifiable

information, is a high priority, and we

take appropriate measures to prevent

losses or breaches.

Principal risks and uncertainties continued

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202462

Viability statement

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.

Assessment of prospects

The Directors have determined that a three-year period

to 31 December 2027 constitutes an appropriate period

over which to perform the assessment as:

l it is within the time period which the Group’s medium-

term planning process covers (up to five years);

l it represents a period over which there is a reasonable

degree of confidence in the reliability and accuracy of

forecasts; and

l periods beyond this point in a high-growth business

like Funding Circle are significantly harder to

predict accurately.

The Group’s overall strategy and business model, as

set out on pages 10 to 11, and 8 to 9, are fundamental in

driving the growth of the business and therefore its future

prospects. The key factors that are likely to affect the

future prospects of the Group, aside from macroeconomic

factors, include the ability to:

l develop and introduce new credit products;

l grow awareness of the Funding Circle brand in order to

attract more businesses to our platforms;

l retain, diversify and increase funding from a variety of

investors in order to meet future borrower demand; and

l continue to invest in data analytics and technology

leading to innovation, expanded datasets, enhanced

credit models, better customer experience and a

greater conversion rate of applicants.

Funding Circle’s future prospects are assessed through

the Group’s strategic planning process. The strategic

planning process involves a detailed review of the

medium-term plan by the CEO and CFO. This is done

in conjunction with the Executive Committee (“ExCo”),

consisting of functional leaders, together with a review

and discussion by the Board.

The strategic plan starts with the Group’s 2025 annual

budget which is subject to re-forecasting periodically

through the year. The budget is extended into the second

and third year of the plan using the Group’s various

drivers and expected growth rates experienced across

the Group.

Progress against the financial budget and forecasts is

then reviewed each month by the ExCo and reported to,

and challenged by, the Board.

Key assumptions

The key assumptions underpinning the strategic plan

(before severe but plausible scenarios) include:

l there is sufficient investor funding in place to support

projected growth in originations;

l levels of marketing spend, the number of applications,

conversion rates, average loan sizes and mix of product

channels which drive originations and loans under

management (“LuM”);

l levels of repayments, prepayments, defaults and

recoveries which drive movements in LuM;

l expected yields on loans originated and service fee

charges which drive fee income;

l interest income receipts and interest expenses

related to our investment vehicles which drive net

investment income;

l costs across Business Units with specific focus on

fixed costs and those that fluctuate with income such

as marketing costs;

l headcount consideration across functions and

departments given it is the Group’s largest cost;

l an assumption of continued investment in the Group’s

IT infrastructure and its product set but with the

expectation of no fundamental breakdown in the IT

infrastructure or major data loss;

l review in the context of indicative market share;

l there is no improvement of deterioration to the

current macro environment conditions over the

medium term; and

l we have not assumed further government stimulus

packages over the medium term.

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 63

Assessment of viability

The output of the medium-term plan reflects the Directors’

best assessment of the future prospects of the Group over

the next three years.

As part of this assessment, the Directors have considered

and carried out a robust assessment of the principal risks

as set out on pages 55 to 62. They have also considered

the potential impact of the risks on the viability of the

Group with specific focus on shorter-term liquidity

needs and its availability, including liquidity currently tied

up in investment products. The Group currently holds

£151 million of unrestricted cash together with £54 million

equity invested in loans.

The financial plan was subject to scenario analysis to

assess those risks and quantify the financial impact

on the Group. The Group also operates liquidity 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 model and the

viability of the Group.

Severe but plausible scenario

Under a severe downturn it is expected that:

l there would be a short-term period in year one where

there would be significantly reduced transaction fees

earned, driven by increased inflation and interest rates,

alongside a large operational risk event impacting

the Group;

l following a further severe global downturn there would

be a significant increase in the number of borrowers

defaulting impacting LuM and our invested capital

cash flows;

l the returns for investors would be negatively affected

by the widening of discount rates and deterioration of

loan performance resulting in a withdrawal of funding;

l this in turn would reduce the level of originations unless

higher incentives were offered to investors to continue

funding; and

l over the medium term originations are subdued

with LuM and servicing fees consequently

negatively affected.

A further subset of risks, including the reduction in

trust from both borrowers and investors, has also been

considered within this scenario. We considered whether

environmental stress would materially impact the Group

but 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 through hiring freezes, 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

l Strategic risk

l Credit risk

l Liquidity risk

Going concern

In addition to the broad viability of the Group, the

Directors have assessed the Group’s going concern

presumption over the 15-month period to 30 June 2026.

The shorter-term projections within the Group’s strategic

plan are also used to assess the Group’s ability to operate

as a going concern. As at 31 December 2024, the Group

had net assets of £217 million, together with unrestricted

cash of £151 million and £54 million of invested capital,

some of which could be monetised if liquidity needs

arise. At all times during the assessment, and after stress

scenarios are modelled, the Group retains sufficient

financial resources.

The stress testing confirmed that the Group’s forecast

net cash position remained positive and that none of the

scenarios would threaten the going concern presumption

over the assessment period or the Group’s regulatory

capital requirements.

In all cases including the severe but plausible scenario

above, with appropriate management actions, the

scenarios were controllable to mitigate the impact on

the Group’s liquidity for the broader assessment of the

Group’s going concern.

The Group has limited regulatory capital requirements to

maintain sufficient unrestricted cash. At all times through

the forecast period, and after stress scenarios, the Group

remains within the required levels.

Based on this assessment, the Directors have a

reasonable expectation that the Group will be able

to continue in operation and meet its liabilities and

obligations as they fall due over the period to 30 June

2026 as well as for at least the next 12-month period from

the date of this Annual Report. See also page 128 of the

financial statements related to going concern.

Viability statement continued

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 202464

Corporate

governance

66 Chair’s introduction

67 Governance at a glance

68 Board of Directors

70 Corporate governance report

78 Report of the Nomination Committee

82 Report of the Audit and Risk Committee

88 Report of the ESG Committee

90 Directors’ remuneration report

101 Annual report on remuneration

112 Report of the Directors

115 Statement of Directors’ responsibilities in

respect of the financial statements

CORPORATE GOVERNANCE

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 65

Code principles

Please see below for details regarding the

application of the principles of the Code.

Board leadership and company purpose (A-E)

Risk management – pages 51 to 62

Our people and engagement – pages 20 to 23, page 70

Engaging our stakeholders – pages 40 to 43, page 70

Division of responsibilities (F-I)

Corporate governance report – pages 70 to 77

Composition, succession and evaluations (J-L)

Report of the Nomination Committee – pages 78 to 81

Directors’ biographies – pages 68 to 69

Board effectiveness review – page 76

Audit, risk and internal control (M-O)

Corporate governance report – pages 70 to 77

Report of the Audit and Risk Committee – pages 82 to 87

Risk management – pages 51 to 62

Viability Statement – pages 63 to 64

Remuneration (P-R)

Directors’ Remunerations Report – pages 90 to 100

Chair’s introduction

Governance

Confirmation of how we have complied with the 2018

Code for the year under review is set out on page 75.

From FY 2025, the updated 2024 Code will apply to the

Company (excluding provision 29 which will apply from

FY 2026), and work is underway to ensure that we are

prepared for these changes.

I hope you find the Corporate Governance Report

informative. The Board will be available at the Annual

General Meeting to respond to any questions you may have.

Andrew Learoyd

Chair

6 March 2025

As a Board, we are committed to

maintaining a strong and resilient

corporate governance foundation

that ensures Funding Circle is a

successful, sustainable business

that benefits all our stakeholders

over the long term.”

I am delighted to introduce Funding Circle’s Corporate

Governance Report for the financial year ended 31 December

2024, which will be my final report before handing over the

Chair role to Ken Stannard at the end of the 2025 AGM.

As a Board, we are committed to maintaining a strong and

resilient corporate governance foundation that ensures

Funding Circle is a successful, sustainable business

that benefits all our stakeholders over the long term.

Board activities

2024 was a pivotal year of change for the Group. Key

areas of the Board’s focus included Board and senior

management succession planning, another Remuneration

Policy review, Group strategy, Committee governance

enhancements, and simplification of the Funding Circle

business structure (as discussed further in the Chief

Executive Officer’s Statement on pages 5 to 7). We

cover these updates within the respective delegated

Committees’ reports later in this report.

Board succession

As noted further in the Nomination Committee Report,

the Board’s composition was reviewed this year, taking

into account a range of issues including its size, the

tenure of the Directors, its diversity, its independence and

the range of skills and experience required to support the

Company in this next stage of its strategic development.

This is still a work in progress and the Board will continue

to work on increasing its independence to comply with

provision 11 of the UK Corporate Governance Code.

Andrew Learoyd

Chair

Funding Circle Holdings plc | Annual Report and Accounts 202466

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Governance at a glance

Eric Daniels retired from

the Board on 15 May 2024

at the AGM

Male

Female

Board gender balance

(as at 31 December 2024)

White

Asian/Asian British

Board ethnicity

(as at 31 December 2024)

Executive Director

Independent Non-Executive Director

Non-Independent Non-Executive Director

Board independence

(excluding Chair, as at 31 December 2024)

Board tenure

(as at 31 December 2024)

0–3 years

3–6 years

6+ years

Samir Desai CBE resigned from

the Board on 25 October 2024

Oliver White resigned as CFO

on 31 December 2024

Matthew King resigned

from the Board on

31 December 2024

Ken Stannard appointed

as Non-Executive Director

and Chair Designate on

1 January 2025

Tony Nicol appointed as CFO

on 1 January 2025

Andrew Learoyd to step down

as Chair at May 2025 AGM

Ken Stannard to be appointed

Chair post-May 2025 AGM

Board changes

during 2024 and

looking into 2025

Rolling three-year female

representation on the Board

30.0% 30.0%

37.5%

12.5%

50.0%

37.5%

62.5%

87.5%

12.5%

2022 2023 2024

Board skills

(as at 1 January 2025)

Marketing/brand

ESG

Current executive leadership

Remuneration/human resources

Lending/credit

Corporate finance/equity capital management

Risk management

Financial services

Technology/innovation

Governance

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Funding Circle Holdings plc | Annual Report and Accounts 2024 67

Board of Directors

Board Committees

Audit and Risk Committee

Remuneration

Committee

Nomination Committee

ESG Committee

Market Disclosure

Committee

Committee Chair

Leading our business

from the front

Incoming

FY25

Changes to the Board between

31 December 2024 and the date

of this Annual Report

Oliver White and Matthew King resigned from the

Board on 31 December 2024 so we have not

included their biographies in this report.

Tony Nicol was appointed as CFO and Ken Stannard

was appointed as Non-Executive Director and Chair

Designate, both with effect from 1 January 2025.

Incoming

FY25

Funding Circle Holdings plc | Annual Report and Accounts 202468

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Andrew Learoyd

Chair of the Board

Term of office: Appointed to the Board as

a Non-Executive Director in February 2010

and became Chair of the Board in May 2016.

Independent: On appointment.

Skills and experience: Andrew spent

23 years working in investment banking as

a research analyst, in corporate finance, in

equity capital markets and finally as Chief

Operating Officer of the Equities Division

in Europe of Goldman Sachs. He retired

as a Managing Director of Goldman Sachs

in 2006. Andrew has been involved as an

angel investor, Non-Executive Director and

consultant to several start-up businesses.

Andrew was previously a Non-Executive

Director of Threshold Sports Limited until

the end of 2023.

External appointments: Andrew is also a

Director of WLG Learning Ltd which provides

educational services for children with

special learning disabilities.

Lisa Jacobs

Chief Executive Officer

Term of office: Lisa was appointed to

the Board as Chief Executive Officer on

1 January 2022.

Independent: No.

Skills and experience: Lisa joined Funding

Circle in 2012 and was previously UK

Managing Director and Chief Strategy

Officer. Prior to Funding Circle, Lisa

worked as a Management Consultant, both

independently and for the Boston Consulting

Group, where she had a financial services

focus. She has had roles in NGOs in Tanzania

and India.

External appointments: None.

Tony Nicol

Chief Financial Officer

Term of office: Tony was appointed to

the Board as Chief Financial Officer on

1 January 2025.

Independent: No.

Skills and experience: Tony joined Funding

Circle in 2018 as Director of Finance and

was part of the team leading the IPO. Prior

to Funding Circle, he was Group Financial

Controller at IG Group Holdings plc, where

he was responsible for all financial reporting

including budgeting and forecasting. Before

then, Tony worked at PwC as an Assurance

Director auditing and advising listed and

private businesses in a number of sectors.

Tony is an FCA of the ICAEW and holds a

BSc in Mathematics from the University

of Bristol.

External appointments: None.

Geeta Gopalan

Senior Independent Director

Term of office: Geeta was appointed to

the Board as a Non-Executive Director

in November 2018. She became Chair of

the Audit and Risk Committee (previously

the Audit Committee) in November 2018.

Geeta was appointed as Senior Independent

Director in May 2021.

Independent: Yes.

Skills and experience: Geeta has over

25 years of experience of financial services

and retail banking, particularly payments

and digital innovation. Geeta was formerly

Executive Chair of Monitise Europe. Among

the many roles in her career, Geeta was

Director of Payment Services with HBOS

plc and previously Managing Director, UK

Retail Bank and Business Development Head

EME at Citigroup. Geeta was previously

a Non-Executive Director at Dechra

Pharmaceuticals until January 2024. Geeta

is also a chartered accountant.

External appointments: Geeta serves as a

Non-Executive Director of NatWest Group plc,

Auto Trader Group plc and Intrum AB (where

she is Chair of the Risk Committee). Geeta is

also a Trustee for the Old Vic Theatre.

Hendrik Nelis

Non-Executive Director

Term of office: Hendrik was appointed to

the Board as a Non-Executive Director in

September 2013.

Independent: No.

Skills and experience: Hendrik joined

Accel in 2004 and focuses on software,

fintech and consumer internet companies.

He led Accel’s investments in KAYAK

(NASDAQ: KYAK, acquired by Priceline),

Showroomprive (EPA: SRP), Funding Circle

(LON: FCH), Celonis, CHECK24, Instana,

Miro and Zepz.

Hendrik started his career in Silicon Valley

as an engineer at Hewlett-Packard before

founding a venture-backed software

company. He is from the Netherlands and

graduated from Harvard Business School

and Delft University of Technology.

External appointments: Hendrik serves as

Manager, Partner Director and/or Member

at a number of Accel entities, as well as a

Director or supervisory board member of

several other companies.

Neil Rimer

Non-Executive Director

Term of office: Neil was appointed to

the Board as a Non-Executive Director in

March 2011.

Independent: No.

Skills and experience: Neil is a Co-Founder

and Partner of Index Ventures. Before

starting Index Ventures, he spent four

years with Montgomery Securities in San

Francisco. Neil was previously a Director of

Photobox Holdco Limited, Supercell Oy and

The Climate Corporation.

External appointments: Neil is currently

a Director on various boards of companies

based in the UK, Europe, the Cayman Islands

and the US including Raisin GmbH, Nexthink

SA, , Sofia Holdings Limited, Taxfix GmbH

and Typeform S.L. He is also the Co-Chair of

Human Rights Watch.

Helen Beck

Non-Executive Director

Term of office: Helen was appointed to

the Board as a Non-Executive Director in

June 2021.

Independent: Yes.

Skills and experience: Helen has over

25 years of experience in financial services,

particularly in remuneration design,

regulation and human resources. Helen was

formerly a Partner at Deloitte and, among

her previous roles in her career, Helen was

Global Head of Reward at Standard Bank

and Head of McLagan Europe (part of Aon)

and held roles in human resources at Fidelity

International. Helen was also previously a

Non-Executive Director of Irwin Mitchell.

External appointments: Helen serves as

Non-Executive Director of Picton Property

Income Limited (where she is Chair of

the Remuneration Committee) and as an

independent adviser of Charles II Realisation

LLP. Helen is an independent adviser for the

Wellcome Foundation’s Remuneration Sub-

Committee, is a Governor of the University

of Bedfordshire and independent member of

the Remuneration Committee for The British

Olympic Association.

Ken Stannard

Non-Executive Director and Chair

Designate

Term of office: Ken was appointed to the

Board as a Non-Executive Director and Chair

Designate in January 2025.

Independent: Yes.

Skills and experience: Ken brings 30 years’

experience in credit, lending and payments,

having held senior executive roles at Lloyds

Banking Group, Capital One and American

Express, and most recently as CEO of Cabot

Credit Management. Prior to his executive

roles, he was a partner at Oliver Wyman LLC.

Ken has an MBA from INSEAD and an MA

in Engineering Science from the University

of Oxford.

External appointments: Ken is currently

Chair of Castle Trust Capital Plc, Castle Trust

Holdings Limited and Viewture Limited. He

is currently also a Non-Executive Director of

Verastar Ltd. and Chair of its Remuneration

Committee and Lead Director of Cepal

Hellas Financial Services S.A.

Lucy Vernall

Company Secretary,

Chief Legal Officer

Term of office: Lucy was appointed

Company Secretary in July 2014.

Independent: Not applicable.

Skills and experience: Lucy is responsible

for the Legal, Compliance, ESG and Comms

functions of the business, in addition to

being Company Secretary. Prior to joining

Funding Circle in 2014, Lucy was one of

the founder members of Kemp Little LLP, a

technology focused City law firm. She was

Managing Partner of the firm from 2009

until 2011, when she became Wonga’s first

General Counsel.

External appointments: Lucy serves on the

board of the charities Bardhan Research

and Education Trust of Rotherham and The

Emerson Trust.

Funding Circle Holdings plc | Annual Report and Accounts 2024 69

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Corporate governance report

Funding Circle backs small businesses with the finance

they need to win and this purpose is underpinned by

several values including “Make it Happen” and “Live the

Adventure” which ask Circlers to embrace the founding

entrepreneurial spirit with which Funding Circle was

established. The Board embraces the Company values

as part of its decision-making process which is always

in the long-term sustainable interests of the Company

to generate value for shareholders and the wider

society. More information on the Company’s mission,

values and strategy is set out in the Strategic Report on

pages 1 to 64.

Measuring performance against strategic objectives

A review of performance against the Company’s

strategy, objectives, business plans and budget is

considered at Board meetings. Maintaining oversight

of the Company’s operations, ensuring competent and

prudent management, sound planning, an adequate

system of control, and adequate accounting in addition to

reviewing any significant risks faced by the Company and

establishing and maintaining risk management systems in

co-ordination with the Audit and Risk Committee, ensures

the Company fulfils its business objectives.

The Board is comfortable that sufficient resources are

in place for the Company to meet its objectives and

measure performance against them. As the Company

grows and seeks to achieve its medium-term plan,

the Board continues to support the ExCo with the

implementation of objectives and key results across

the whole business.

Our culture and employee engagement

We consider our employees and culture fundamental

to the success of our business. The Board monitors

the Group’s culture to ensure it is aligned with the

Company’s purpose, values and strategy. Helen Beck is

our dedicated Non-Executive Director for the workforce

providing a vital connection between the Board and

our Circlers. In 2024, Helen held an employee focus

group with various Circlers to gain diverse views across

various departments and she fed these views back to

the Board for discussion. In addition, the Board receives

regular updates from the Chief People Officer on Circler

initiatives and culture updates, including results from

employee surveys. Further information on how we engage

with our employees can be found on pages 20 to 23

and page 41.

As part of the Board’s responsibility to monitor and

oversee the Company’s culture, the Board discussed

and agreed that Helen Beck and the Chief People

Officer would set out a proposed schedule of further

opportunities for direct engagement between the Board

and employees during 2025.

Our workforce policies and practices are regularly

reviewed by the Board and Committees and the Board

is satisfied that they are consistent with the Company’s

values and support its long-term sustainable success.

In addition, as part of our “Be Open” value, we want

to ensure we foster an environment where Circlers

are encouraged and feel safe to freely raise issues

of concern. We have a dedicated whistleblowing

process which provides various channels for Circlers

to communicate and report issues of concern, including

anonymously. Our Audit and Risk Committee receives

regular whistleblowing updates. Further information can

be found in the Report of the Audit and Risk Committee

on pages 82 to 87.

Shareholder engagement

The Board is responsible for ensuring effective

engagement with, and encouraging participation from,

various stakeholders, including shareholders. Information

on how the Company has engaged with shareholders and

other stakeholders can be found in the “Engaging our

Stakeholders” section on pages 40 to 43.

Our Investor Relations team supports the Board with

continuous engagement with shareholders. In addition,

the Board receives copies of analysts’ and brokers’

reports on the Company along with a monthly Investor

Analytics Report which details key shareholders,

shareholder history, top buyers and sellers, market

analysis and share price performance to aid familiarity

with details of shareholdings.

The Company Secretarial function engages with

shareholders, providing support and information on

governance matters as required, whilst the Company’s

registrar also provides a range of shareholder services.

The Board has considered the feedback received from

the shareholder consultation held in early 2025 in relation

to the Company’s new Remuneration Policy and has taken

it into consideration when drafting the disclosures in this

Report. Details on our engagement with shareholders

who had significantly voted against certain resolutions in

the 2024 AGM can be found on page 114.

Board leadership

and Company purpose

Funding Circle’s purpose is to help small businesses get

the funding they need to win. When small businesses

succeed, they create jobs, support local communities

and drive the economy forward.

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Board activities

The Board meets formally at least six times during the

year, with meetings planned around key events in the

corporate calendar, including the half-year and full-year

results and the AGM and an annual dedicated Strategy

Day. The Board also receives monthly management

financial reports and CEO updates in between meetings.

The Chair and Non-Executive Directors have regular

discussions without Executive Directors present. Ad hoc

meetings may be called as and when appropriate, as was

the case in 2024.

Standing items provide an anchor to the strategy and

provide the Board with a consistent view of progress

during the year, whilst sessions on priority topics

allow for deeper insight. A summary of the Board’s key

activities during 2024 is set out below. In addition, some

examples of key decisions taken by the Board in 2024,

in the context of its section 172 (1) duties, are set out

on pages 72 to 73. Agendas and accompanying papers

are distributed to the Board and Committee members

well in advance of each Board or Committee meeting.

These include reports from Executive Directors, other

members of senior management and external advisers,

as appropriate. All Directors have direct access to senior

management should they require additional information

on any of the items to be discussed.

The table below sets out attendance at the eight Board

meetings held in 2024. The attendance for the Committee

meetings is detailed in each of the Committee reports.

Director No. of meetings Attendance

Andrew Learoyd 8/8 100%

Lisa Jacobs 8/8 100%

Oliver White (resigned on

31 December 2024) 8/8 100%

Geeta Gopalan 8/8 100%

Hendrik Nelis 8/8 100%

Neil Rimer 8/8 100%

Helen Beck 8/8 100%

Matthew King (resigned on

31 December 2024) 8/8 100%

Samir Desai CBE (resigned on

25 October 2024) 7/7 100%

Eric Daniels (resigned on

15 May 2024)

3/3 100%

Key topics discussed by the Board

l Group’s financial results throughout the year

(incl. half-year reforecast)

l KPIs and milestones review

l Annual budget approval and quarterly forecasts review

l Capital allocation deep dive and approval of share buybacks

and capital reduction

l Risk and macro deep dive and approval of ERMF

l Committee updates

l Appointment of new Chair and CFO

l Internal evaluations of the Board and Committees

l Approval of Whistleblowing Policy

l Approval of risk management framework for

climate- related risks

l Approval of sale of US business

l Approval of cost efficiency actions and focus on go forward

profitability of UK business

l Customers and market deep dive

l Approval of strategy for FY 2025 and medium-term plan

l Technology and FlexiPay deep dives

l Review and approval of product propositions for Term

Loans, FlexiPay and Cashback credit card

l Employee engagement and culture updates

l Diversity and inclusion update

l Shareholder engagement updates

l Approval of Board Diversity Policy

l Review Workforce Engagement Non-Executive Director’s

report on employee focus group feedback

Governance, risk

and compliance

Culture and

engagement

Financial

performance

Strategy

Key

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Communities

Government

and regulators

Shareholders

Institutional

Investors

BorrowersCirclers

Board activities continued

Board decision making and section 172(1) duties

Funding Circle has a wide and varied group of internal and external stakeholders which the Board keeps in mind

during all discussions. In addition, our Investor Relations team supports the Board with continuous engagement with

shareholders. Further information on how we have engaged with all our stakeholders can be found on page 40 to 43.

The Directors have full regard to their duties set out under section 172 of the Companies Act 2006 when making

decisions. Our section 172 Statement can be found in the Strategic Report on page 41. The following table summarises

how the Board and the wider Group have had regard to the duties under section 172(1) when considering specific

matters during the year.

Principal decision

Stakeholders

considered Board’s decision-making process

Approval of sale

of US business

and focus on

go forward

profitability of UK

business

Borrowers

Institutional

Investors

Shareholders

Circlers

Government

and regulators

Communities

The Board carefully considered the strategic direction of the Group following

the challenging macro economic environment in 2023. At the end of 2023,

Funding Circle’s US business was awarded an SBA issuer license (subject

to final SBA approval). While this reflected the progress made in the US and

offered attractive long-term growth, the Board recognised that it would require

a significant amount of cash and a different approach in terms of capital and

other resource requirements to grow the SBA proposition. The Board therefore

took the decision to simplify the business and focus on go forward profitability

of the UK business, believing that this would deliver greater shareholder value

with improved profitability and cash generation.

After due consideration and discussions over a number of months, in March

2024, the Board announced its intention to sell the US business and that it was

in early-stage discussions with interested parties. In addition to accelerating

profitability, this would also enable management to focus on the UK business

and delivering new products and an excellent customer experience to its

growing UK customer base. The Board appointed a Board Sub-Committee to

oversee the transaction and, following a thorough process involving several

interested parties, the Board agreed to sell the US business to iBusiness

Funding, LLC, a leading provider of lending solutions for banks and lenders

of all sizes with a specialisation in SBA lending. The transaction completed

on 1 July 2024. US impacted employees were carefully considered during the

sale process and Funding Circle worked with iBusiness Funding to ensure

that there were roles for as many individuals as possible post-acquisition

(including certain UK-based employees who transferred under the Transfer

of Undertakings (Protection of Employment) Regulations 2006).

Streamlining of

UK business and

cost efficiency

actions

Shareholders

Circlers

In May 2024, as part of the Group’s long-term strategic plan to promote

sustainable growth and to ensure a simpler, leaner and better positioned

UK-focused operation, the Board reviewed and approved management’s

recommendation of certain cost efficiency actions. This included a reduction

in employee headcount by c.120 and other changes to strengthen cost

management and efficiency across the business.

Funding Circle prides itself on its strong culture so this was a difficult decision,

but a necessary one to create a leaner, profitable business and reduce

leadership and management layers following the change to a UK-only business.

The wellbeing of Funding Circle’s employees has always been a material

consideration for the Board and the approach to the reduction of roles was

discussed at length, with a focus on a sympathetic and compliant process

and support for those impacted. This included offering enhanced redundancy

payments, payments in lieu of working notice periods where possible and

extended private health cover.

Corporate governance report continued

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Principal decision

Stakeholders

considered Board’s decision-making process

Initiation of two

share buyback

programmes

and a capital

reduction process

Shareholders

Circlers

Government

and regulators

As part of the Group’s overall objective to provide sustainable long-term

stakeholder value, the Board regularly considers its capital allocation strategy

along with its budget and financial planning strategy. At the time of the full-year

results in March 2024, the Company had significant cash available in excess of

c.£200 million and available distributable reserves in excess of £30 million. The

Board also considered the share price to materially undervalue Funding Circle’s

business. After careful consideration, and having taken advice as to the options

available for a capital redistribution, in March 2024, the Board approved a share

buyback and cancellation programme of up to £25 million which was further

extended by up to a further £25 million in September 2024.

In addition, in October 2024, the Board approved the initiation of a capital

reduction process which completed in December 2024. The Board considered

this to be in the best interests of the Company and its shareholders (including

Circlers who are also shareholders through employee share schemes) as this

would increase distributable reserves by £294 million.

Appointment of

Chief Financial

Officer and new

Non-Executive

Chair

Borrowers

Institutional

Investors

Shareholders

Circlers

Government

and regulators

The Company disclosed in its 2023 Annual Report that it was commencing a

search for a new Non-Executive Chair and that there would be other changes

to the Non-Executive Board composition as some Directors were coming to the

end of their tenures. It also announced in May that Oliver White had informed

the Board of his intention to stand down from his role. As part of the Board’s

decision-making process in relation to succession planning for the CFO and

Chair roles, the Board considered all stakeholders that would be impacted by

the outcomes of these appointments. For example, in addition to the underlying

skills, experience and capability required in the role, it was important that these

leadership appointments would add and reinforce the strong culture embedded

within Funding Circle. This was one of the considerations in appointing Tony

Nicol into the role – having been with Funding Circle for six years.

Additionally, finding a new Chair with a complementary skill set to the existing

Board, including card and credit experience, was important to the Board to

help drive its strategic decision making and enhance our borrowers’ end-to-

end experience. This was one of the reasons Ken Stannard was chosen by the

Board as the successor to Andrew Learoyd.

Approval of

launch of

Cashback credit

card

Borrowers

Institutional

Investors

Circlers

Shareholders

The Board approved the launch of FlexiPay in H2 2021 to further enable the

Group’s vision of supporting small businesses as they borrow, pay later and

spend to grow and manage their businesses. By the beginning of H2 2024,

FlexiPay had grown significantly. In response to customer feedback that they

wanted a business credit card providing benefits and rewards for everyday

business spending, in July 2024, the Board approved management’s proposal

to launch the Cashback credit card product. Having carefully considered the

evolution of the FlexiPay product, the Board considering that the proposed

product would complement FlexiPay in helping to solve customers’ cash flow

requirements and attract SMEs not currently looking to immediately borrow,

thereby enabling Funding Circle to properly start serving the spend use case.

The Board approved the proposal to enter the market with a leading cashback

proposition.

Adoption of risk

management

framework for

climate-related

risks

Government

and regulators

Communities

In 2024, the Board adopted a new climate risk management framework which

set safeguard thresholds for climate risk appetite and for physical and transition

risks. The framework was debated at the ARC and approved in November

2024, thereby integrating climate-related risks into the Group’s broader risk

management processes and underpinning its ongoing processes to identify

and assess climate-related risks.

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Corporate governance report continued

The responsibilities for the Market Disclosure Committee,

which is chaired by the Company Secretary and

comprises the Chair of the Board, the Chair of the Audit

and Risk Committee, the CEO, the CFO and the CRO,

include overseeing the disclosure of information by the

Company to meet its obligations under the Market Abuse

Regulation, the FCA’s UK Listing Rules (“UKLR”) and the

Disclosure and Transparency Rules (“DTR”).

The ExCo provides leadership in the day-to-day

management of the business and implements the

strategy approved by the Board. The ExCo is supported

by a number of management committees which provide

consistent reporting on key areas of the business.

There is a flow of information both ways between the

management committees and the ExCo and the Board

of Directors and its Committees. Further details on the

management risk committees are available in the Risk

management section on page 53.

Board roles and responsibilities

There is a clear division of responsibilities between

the leadership of the Board and that of the Executive

Directors and the responsibilities of the Chair, CEO,

and Senior Independent Director are set out in writing,

reviewed and approved by the Board annually.

Audit

and Risk

Committee

Board

Market

Disclosure

Committee

Remuneration

Committee

ESG

Committee

Nomination

Committee

Chief Executive Officer

Executive Committee (“ExCo”)

Executive Governance Committee and Management Implementation Committees

(see risk governance structure on page 53)

Corporate governance framework

Division of

responsibilities

The Board has adopted a formal schedule of matters reserved for its approval and delegated other specific

responsibilities to the following five Board Committees: Audit and Risk, Remuneration, Nomination, ESG and Market

Disclosure. Each Board Committee has written Terms of Reference which define the role and responsibilities of the

respective Committee and these are reviewed annually, along with the schedule of matters reserved for the Board.

Further details can be found here: corporate.fundingcircle.com/who-we-are/corporate-governance/board-committees.

More information about the role and activities of each of the Board Committees, with the exception of the Market

Disclosure Committee, can also be found in the Committee reports.

The responsibilities

of these roles can be

found on our website

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Composition,

succession and

evaluations

Board succession

As noted under Governance at a Glance on page 67,

there have been a number of changes to the Board during

2024 and up to the date of this report. One of the Board’s

2024 priorities was to refresh its composition to ensure

it had the appropriate skills, experience and knowledge

to support the Company’s execution of its more

simplified business strategy. The Board has established

a Nomination Committee to which it has delegated

responsibility for reviewing the leadership needs of the

business, including Board composition, considering

succession plans for both the Board and ExCo, selecting

and appointing new Directors, having oversight of Board

induction processes and considering the results of the

Board effectiveness reviews.

At the 2024 AGM, Eric Daniels retired from the Board after

an almost eight-year term. Samir Desai CBE also retired

from the Board in October 2024 after 14 years, firstly

as an Executive Director and subsequently as a Non-

Executive Director during his term. In December 2024,

Oliver White resigned as CFO and Executive Director after

a four-year term. Matthew King resigned from the Board

of both Funding Circle Holdings plc and Funding Circle

Ltd on 31 December 2024.

More information on the work of the Nomination

Committee can be found on pages 78 to 81.

Appointments

There were no new Director appointments during

2024. Two new appointments were announced with

effect from 1 January 2025: Tony Nicol, CFO, and Ken

Stannard, independent Non-Executive Director and

Chair Designate. More details on how the Nomination

Committee led these appointment processes are noted

in its Committee Report on pages 78 to 81.

Board composition

The Nomination Committee reviews the structure, size

and composition of the Board to maintain and develop the

robust succession plan for the Board and ExCo. For more

details on the Board’s composition, see Governance at a

glance on page 67.

Board skills

The Nomination Committee uses a skills and experience

matrix to regularly review the expertise of the Board

and its Committees, taking into account the skills and

experience, length of service and time commitment.

The Board’s skills matrix can be found on page 67.

UK Corporate Governance Code (the “Code”)

compliance

As a listed company, the Company applies the

principles and provisions of the Code which can

be found, in full, at www.frc.org.uk. This is the last

year we are reporting against the 2018 Code and

next year, we will report against the 2024 Code.

As part of this Corporate Governance Report,

we have laid out how the Board applies each of

the principles of the Code at Funding Circle. The

Board takes seriously the need for high standards

of governance and aims to implement a robust

corporate governance framework that works for

the Company, enabling it to achieve long-term

sustainable success and its wider objectives. With

this in mind, the Company was compliant with all

the provisions of the Code, except for provisions

11 and 19.

Provision 11 requires that at least half the

Board, excluding the Chair, should be Non-

Executive Directors whom the Board considers

to be independent. During 2024, the Board

was not compliant with this provision as there

were three Non-Independent Directors on the

Board, two of which were large shareholder

representative Directors in addition to the CEO

and CFO also being on the Board. With Eric

Daniels and Samir Desai CBE having resigned

from the Board during 2024, only three of the

eight Board members (excluding the Chair) were

considered to be independent by the end of the

year. One of the Board’s priorities in 2025 will

be to continue to refresh its composition and

increase independence. Please see the Report of

the Nomination Committee on pages 78 to 81 for

additional details.

Provision 19 provides that the Chair should not

remain in post beyond nine years from the date

of their first appointment to the Board. Andrew

Learoyd has served on the Board for more than

nine years. However, as previously announced,

a succession plan has been put in place with Ken

Stannard’s recent appointment on 1 January 2025

as Non-Executive Director and Chair Designate,

with a view to Ken being appointed as Board Chair

upon his election at the 2025 AGM. Further detail

on the Chair’s succession planning process can be

found in the Report of the Nomination Committee

on page 80.

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Corporate governance report continued

Board effectiveness review

The Board takes its continuous improvement and development very seriously and, at the end of 2024, conducted a

detailed internal effectiveness review of the performance of the Board, Chair and individual Directors. Topics included

leadership and purpose, composition and division of responsibility, independence, Board meeting progress, Board

development and support, risks and controls oversight, and culture and stakeholder engagement oversight. The

evaluation process is outlined below:

Scope and planning

The Chair and Company

Secretary met to determine the

proposed scope and approach

of the questionnaire to be

circulated for completion.

Obtaining feedback

Tailored questionnaire was

agreed and circulated by online

software to all Directors and

the Company Secretary to

gain feedback on the Board’s

effectiveness.

Analysing and reporting

The results of the questionnaire

were analysed with key themes

summarised in a final report

presented to the Board for

discussion. Actions were

agreed to take forward.

Outcomes

The evaluation concluded that the Board, Chair and Directors continue to be effective. Some areas noted for

improvement, which the Board is committed to addressing in 2025, included:

l continuing to review Board succession plans and performance; and

l reviewing and enhancing processes for Board oversight of people and culture, including mechanisms for

employee engagement.

Progress against actions identified in 2023 effectiveness review

Set out below is the progress during 2024 against actions identified through the 2023 Board effectiveness review:

Action for 2024 Progress

Reviewing the Board agenda programme to ensure the

appropriate deep dive topics are scheduled with the

right frequency.

The Chair circulated the 2024 Board annual planner to

all Directors for feedback on additional deep dive topics.

The Company Secretary then incorporated these topics

into the Board’s annual planner and meeting agendas.

Ensuring all Board members have access to all Board

Committee meetings and materials even if they are not

members of those Committees.

All Non-Executive Directors are now invited to all

Committee meetings and have access to all Committee

materials regardless of whether they are a member of

that Committee.

Encouraging further active shareholder engagement by

management and the Chair.

Management actively engages and offers direct meetings

with shareholders and prospective shareholders at

all half-year and full-year results periods and to gain

feedback on relevant matters. In addition, the Board Chair

and Remuneration Committee Chair, via the Company

Secretary, regularly offers to meet with shareholders to

discuss governance matters such as the Remuneration

Policy review and AGM voting results.

Improving the tracking and reporting on a range of

agreed KPIs and milestones by better building this into

management’s quarterly reporting to the Board.

Quarterly milestone trackers were added to management’s

reporting to the Board and discussed at each meeting.

External evaluation

The Board discussed the value of an externally facilitated evaluation at length including the recommendation in provision

21 of the 2018 Code and the value of an external evaluation from the perspective of stakeholders. The Board decided that

it was not appropriate at this time due to the significant change to the Board’s composition during the year and as the

internal evaluation was rigorous with full engagement and candid responses from Board members. Areas of improvement

were identified which the Board was fully committed to working on in 2025.

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

The Board has delegated to the ARC responsibility

for overseeing the financial and corporate reporting

and internal financial controls of the Company and

its subsidiaries. This includes reviewing the content

of the Annual Report and Accounts and advising the

Board on whether, taken as a whole, it is fair, balanced

and understandable. Details of this process and the

focus of the review and of the ARC’s role, activities

and relationship with the external auditors are on

pages 82 to 87 of the Report of the ARC.

Audit

The Board has formal and transparent procedures in

place to ensure the independence and effectiveness

of the internal and external audit functions, as required

by the Code. An effectiveness review of both the internal

and external audit functions was completed during

the year which included an evaluation of professional

integrity and independence. Further details of the

evaluations can be found in the Report of the ARC on

pages 86 to 87.

The Board delegates responsibility for ensuring the

integrity of the financial and narrative statements to the

ARC. Further detail can be found on pages 82 to 87.

Responsibility for preparing the Annual Report and

Accounts

The Board is responsible for maintaining adequate

accounting records and seeks to ensure compliance

with statutory and regulatory obligations. An explanation

from the Directors about their responsibility for preparing

the financial statements is on page 115 in the Statement

of Directors’ Responsibilities. The Company’s external

auditors explain their responsibilities on pages 121 to 122.

Streamlining governance

With effect from 1 January 2024, the Board approved,

with the recommendation of the Nomination Committee,

the creation of a combined ARC, replacing the old Audit

and Risk & Compliance Committees, exhibiting how

the Board continuously considers the efficacy of its

Committees and its overall governance framework.

Risk management and internal control systems

In accordance with the Code, the Board is required to

monitor the Group’s risk management and internal control

systems on an ongoing basis and carry out a review of

their effectiveness. To discharge this responsibility, the

Board has established frameworks for risk management

and internal control using a “Three Lines of Defence”

model as outlined in the Group’s ERMF and reserves for

itself the setting of the Group’s risk appetite.

Whilst the Board retains ultimate responsibility for the

Group’s systems of internal control and risk management,

it has delegated in-depth monitoring of the establishment

and operation of prudent and effective controls in order

to assess and manage risks associated with the Group’s

operations to the ARC. The ARC also monitors compliance

with the ERMF. Members of the ExCo are responsible

for the application of the ERMF, for implementing and

monitoring the operation of the systems of internal

control and for providing assurances on this to the Board

and its relevant Committees. For further details on the

ERMF and our approach to risk management, please

see page 54.

The Internal Audit function provides an independent and

objective assessment to the ARC on the robustness of

the ERMF and the appropriateness and effectiveness of

internal controls. The ARC provides regular updates to

the Board on the Committee’s review of the Group’s risk

management and internal control systems as discussed

in its Committee meetings, further details of which are

outlined in the Report of the ARC on page 87.

During the year, the Board, supported by the ARC, carried

out a robust assessment of the emerging and principal

risks and uncertainties facing the Group, including

any that would threaten our business model, future

performance, solvency or liquidity. There is an ongoing

process for identifying, evaluating and managing the

principal risks faced by the Company as described in

more detail in the Risk section. The systems have been

in place for the year under review and up to the date of

approval of this Report and they are regularly reviewed

by the ARC.

Audit, risk and

internal control

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Members and attendance

Member Meetings Attendance

Andrew Learoyd (Chair) 7/7 100%

Geeta Gopalan 7/7 100%

Helen Beck 7/7 100%

The Committee’s role and key

responsibilities are defined in its

Terms of Reference which can

be found on our website

Andrew Learoyd

Chair

On behalf of the Board, I am pleased to present the

Committee’s Report for the year ended 31 December 2024.

With three Non-Executive Directors (including our Founder,

Samir Desai CBE) and our CFO retiring and new CFO and

Chair recruitment processes being undertaken this year, the

Committee has been very busy with refreshing the Board.

More detail on these changes is provided within this Report.

The Committee met seven times in 2024 which enabled

us to cover all our duties and responsibilities. In this report,

we have provided information on the activities of the

Committee in 2024 as well as the Committee’s work on

Board composition, succession planning, diversity and

Committee effectiveness. Where we have diverted from the

UK Corporate Governance Code 2018, we have provided

a clear explanation as to why this is the best approach for

Funding Circle at this time.

Skills and experience

The Committee maintains a skills and experience matrix

which helps us review the current skills and experience

of the Board and identify any gaps that may need filling.

The skills and experience of the Directors on the Board

were evaluated as part of the annual effectiveness review

and our succession plan for the Board will take into

account the appropriate skills and expertise to match the

Company’s new strategic direction. Details of the Board’s

skills are outlined on page 67.

Board diversity

The Committee is mindful of the importance of ensuring

the Board’s and Committees’ diversity in the broadest

sense. With this in mind, the Board considers the

guidance published by the Parker Review on ethnic

diversity in the boardroom, the FTSE Women Leaders

Review (formerly the Hampton-Alexander Review) on

gender diversity in the boardroom and the requirements

of the Code in relation to composition and succession of

the Board. In February 2024, the Board adopted a Board

Diversity Policy, which outlines our approach to diversity

and inclusion with respect to the Board, the Board’s

Committees, the ExCo and their direct reports, a copy

of which can be found on our website.

2024 Committee activity

l An overwhelming majority of the Committee’s

work during the year related to the extensive

search and recruitment processes for Chair

and NED succession planning (which included

significant additional ad hoc meetings), as well

as leading a rigorous recruitment process for a

CFO replacement.

l Reviewed Committee and Board performance

results and approval of new Board

Diversity Policy.

l Reviewed Director conflicts and NED time

commitment annual review and recommended

Directors to stand for re-election at the AGM.

The Committee’s focus for 2025

l Drive forward the process of continued

succession planning for the Board.

Report of the Nomination Committee

2024 was a significant

year of change to the

Board’s composition.”

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Leadership diversity

DEI is a priority at Funding Circle, which extends across

the Company at all levels. DEI is a key component of our

ESG framework, overseen by our ESG Committee which

works closely with the Committee to support and oversee

the implementation of diversity goals across the Group

including at Board level.

Group diversity statistics can be found in the Strategic

Report on page 20. We are pleased to say that

representation of women in roles held at the ExCo level

along with their direct reports is 43%. The Committee

recognises that there is still work to be done to improve

diversity within the Group and the ESG Committee has

discussed the work being done to improve diversity

across the Group. This extends to our approach and

process to drive diverse recruitment, which includes

diverse candidate and hiring panels, alongside

ensuring DEI remains a core focus for our internal talent

management strategies. Initiatives include a female

empowerment programme, emerging and senior leader

development programmes, and reverse mentoring.

The Company also regularly reviews and is proud to offer

a range of family friendly and flexible working policies

and practices (such as adoption leave, care leave, and

support for parents returning to work).

Board appointments

We announced the appointment of Tony Nicol as successor

to Oliver White, Executive Director and CFO, and the

appointment of Ken Stannard, as Independent Non-

Executive Director and Chair Designate, both effective

from 1 January 2025. The process for the CFO appointment

was led by the Committee. As the Board Chair leads the

Committee, the process for his successor was led by a

Sub-Committee chaired by Geeta Gopalan, our Senior

Independent Director, comprising of Helen Beck, another

Committee member, and the CEO, with additional support

provided by the Chief People Officer and the Company

Secretary. The rest of the Board, including the Board Chair,

provided feedback throughout the process when requested

by the Sub-Committee. Further details on the process for

the appointments are outlined on page 80.

The following comprises our reporting against the FCA’s UK Listing Rules targets and requirements on diversity

and inclusion on company Boards and Executive management. Whilst the Board recognises it does not currently meet

the minimum 40% female representation on the Board, it does highlight that this is offset by two female directors in

senior positions, being CEO and SID roles, which is above the FCA’s requirement. The Board will continue to take into

consideration all diversity requirements in its board succession planning.

Gender representation in the Board and senior management – 31 December 2024

Number of

Board members

Percentage

of the Board

Progress

from

2023

Number of senior

positions on the

Board (CEO,

CFO, SID and

Chair)

Progress

from

2023

Number

in ExCo

Percentage

of ExCo

Progress

from

2023

Men 5 62.5% 2 6 75%

Women 3 37.5% 2 2 25%

Ethnicity representation in the Board and senior management – 31 December 2024

Number of

Board members

Percentage

of the Board

Progress

from

2023

Number of senior

positions on the

Board (CEO,

CFO, SID and

Chair)

Progress

from

2023

Number

in ExCo

Percentage

of ExCo

Progress

from

2023

White British

or other White

(including minority-

White groups)

7 87.5% 3 6 75%

Asian/Asian British 1 12.5% 1 — —

Other ethnic group — — — 2 25%

1. The reduction in ethnic representation on the Board is due to Samir Desai CBE resigning as Non-Executive Director in October 2024.

Key

Improving No change Deteriorating

Funding Circle Holdings plc | Annual Report and Accounts 2024 79

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Report of the Nomination Committee continued

Chair Designate appointment process

Stage 1

The Committee reviewed at length the Board’s composition, skills, experience and diversity and agreed on what would be required

by a new Chair to complement both the existing and near-term Board composition. A Sub-Committee was appointed.

Stage 2

The Sub-Committee reviewed and approved an outline brief and role specification and appointed Heidrick & Struggles to identify

suitable candidates from a diverse pool of individuals in line with the Board Diversity Policy. The Sub-Committee, taking input from

the wider Committee and other key stakeholders (including the CEO), determined a short list of candidates for outreach.

Stage 3

The short-listed candidates met with the respective Sub-Committee, with the preferred candidates going on to meet the remaining

members of the Board.

Stage 4

The Sub-Committee agreed the preferred candidate based on the range of skills, experience and knowledge that complemented

those of the existing Board members and recommended the same to the Board.

Stage 5

The Board considered the candidates on their merits and approved the appointment of Ken Stannard as a Non-Executive Director and Chair

Designate with effect from 1 January 2025.

1. Heidrick & Struggles is an independent executive search and global leadership advisory business with no other connection to the Company or any individual

Director. Heidrick & Struggles is accredited by the Enhanced Voluntary Code of Conduct for Executive Firms for its support to FTSE 350 Boards in increasing

gender diversity. It is also a partner with organisations like the Paradigm for Parity

coalition and the 30% Club’s Future Female Directors programme to help

close the corporate leadership gender gap and promote gender parity across all levels of organisations. Specific guidance was given to Heidrick & Struggles to

ensure diversity within the candidate long and short lists whilst identifying candidates who had the relevant skills and experience required on the Board.

CFO appointment process

Stage 1

The Committee reviewed and approved an outline brief and role specification for the CFO role. The Committee also reviewed the

existing ExCo succession plan reviewed by the Board which identified Tony Nicol as a potential successor to Oliver White as CFO.

Stage 2

The Committee appointed Heidrick & Struggles to carry out an external benchmarking exercise and identified external candidates

from a diverse pool of individuals in order to compare against internal candidate options.

Stage 3

The internal candidate went through a thorough interview process with the members of the Committee and the CEO.

Stage 4

The Committee agreed that the internal candidate was the preferred candidate for the position, based on his range of skills,

experience, knowledge and strong culture fit for the Executive role, already being a long-standing senior leader in the organisation

who had built strong stakeholder relationships within the Company and the Board, and recommended his appointment to the Board.

Stage 5

The Board considered the candidate on his merits and approved the appointment of Tony Nicol as a Executive Director and CFO with

effect from 1 January 2025.

Board appointments continued

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Board induction process

Director induction programmes to the Board are

facilitated by the Company Secretarial team and overseen

by the Committee. All new Directors are provided with full

access to our secure resource centre within our secure

Board software, which provides induction materials such

as Group policies, structure charts, Terms of Reference,

strategy material, investor relations coverage, and past

Board and Committee meeting papers and minutes.

For Ken Stannard’s induction, in addition to the above,

Ken had meetings with members of the ExCo, key

external corporate advisers, heads of key Group

functions, and the external auditors. Ken also attended an

introductory breakfast meeting with the Group’s Senior

Leadership team. Ken also met with some shareholders

upon request prior to the 2025 AGM.

As Tony Nicol was already on the Senior Leadership team

prior to being appointed as CFO, he had already built

strong relationships with the ExCo, Senior Leadership

team, external advisers and the external auditors. Due

to Tony’s existing investor relations remit, he was also

familiar with major shareholders. As this was Tony’s first

Board-level Executive role with a listed Company, he was

provided with tailored training in relation to Directors’

duties (e.g. s.172) and the Code. Tony has also previously

completed Deloitte’s CFO programme.

Board and Committee effectiveness

The Committee reviewed the 2024 Board effectiveness

review results and discussed feedback that related

to the Committee’s remit. More detail on the Board’s

effectiveness review is on page 76.

Progress on actions from 2023 Committee

effectiveness review

Feedback from the 2023 effectiveness review noted

that the Committee needed to focus more on Board

succession planning and in particular the Chair

succession planning and this was actioned in the year

with seven meetings taking place during 2024.

2024 Committee effectiveness review

The Company Secretarial team facilitated an

effectiveness review of the Committee at the end of

2024. A comprehensive questionnaire was distributed

to all the Committee members. All members of the

Committee, the Chief People Officer and the Company

Secretary responded to the questionnaire and engaged

with the evaluation process.

Overall, scores were good across all elements of the

questionnaire of the Committee’s effectiveness. There

was consistent commentary amongst all members noting

that Board and ExCo succession planning should remain

a key priority for 2025.

Re-election

I will not be standing for re-election at the 2025 AGM as I

am resigning as Board Chair at the AGM. The Committee

has recommended to the Board that the other remaining

Directors stand for election or re-election at the

forthcoming AGM.

Senior management succession

The Committee’s responsibilities include making

recommendations to the Board for orderly succession

for appointments to senior management and keeping

the Executive leadership needs of the Company and

its Group under review, with a view to ensuring they

continue to compete effectively in the market.

Board succession, composition and the year ahead

There have been several changes to our Board since

the Annual General Meeting in 2024 which are noted in

more detail within the Corporate Governance Report.

Whilst the Board is not currently majority independent,

the Committee has discussed in depth the composition

of the Board in respect of independence and tenure and

in respect of aligning the Board’s composition with the

Company’s needs which will remain a key focus for the

Committee during 2025.

Andrew Learoyd

Chair of the Nomination Committee

6 March 2025

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Report of the Audit and Risk Committee

Members and attendance

Member Meetings Attendance

Geeta Gopalan (Chair) 5/5 100%

Matthew King 5/5 100%

Helen Beck 5/5 100%

Eric Daniels

(resigned on 15 May 2024) 1/2 50%

1. Eric Daniels only attended one meeting during the year as he resigned

at the AGM in May 2024 and he missed one other Committee meeting

due to a meeting schedule conflict that was unavoidable.

The Committee’s role and key

responsibilities are defined in its

Terms of Reference which can be

found on our website

Geeta Gopalan

Chair of the Audit and

Risk Committee

l Receiving updates on emerging risks and principal

risks including strategic, funding and balance sheet,

credit, operational, regulatory and reputational, and

technology risks (including GenAI).

l Receiving updates and reviewing and approving the

climate risk management framework.

l Applying scrutiny to information security and technology

risk and receiving updates on their mitigation plans.

l Reviewing risk assessments associated with new

products in FlexiPay and Term Loans, including the

launch of the Cashback credit card.

l Approving amendments to the Group risk appetite

and Enterprise Risk Management Framework which

included the elevation of technology risk as a principal

risk (moving it from a level 1 risk under operational risk).

2024 key activities

Audit

l 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, especially

in relation to the sale of the US business, the impact

of the macro economic environment and the Group’s

ability to continue as a going concern, together with its

viability disclosures.

l Challenging, monitoring and evaluating the

effectiveness of both financial and non-financial

controls in the Group.

l Completing in-depth evaluations on the effectiveness

of the Internal Audit team, external auditors and the

Committee itself.

l Reviewing and enhancing the Group’s whistleblowing

processes to include a third party anonymous

reporting line.

l Appointing the new Director of Internal Audit.

In 2024, we streamlined the Board’s

audit and risk oversight to support a

more holistic view of the effectiveness

of the Group’s risk and internal

controls environment.”

On behalf of the Board, I am pleased to present the

inaugural Report of the newly combined Audit and Risk

Committee for the year ended 31 December 2024. In

2024, we streamlined the Board’s audit and risk oversight

to support a more holistic view of the effectiveness of the

Group’s risk and internal controls environment.

2024 key activities

Risk

l Overseeing our approach to loan originations and

agreeing to changes in credit strategy to enable

fast and effective change in an increasingly volatile

environment. Portfolios have been generally resilient

and within target despite the challenging environment.

l Receiving regular updates and closely monitoring the

external environment to look ahead at indicators of

major change and assessing risk in relation to inflation

and rising interest rates, and their impacts on SME

credit standing.

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

2025 key priorities

Risk

l Continue to review the Group’s key and emerging risks,

especially technology and cyber risks, paying close

attention to the macro environment and fraud risk.

l Greater focus on people and culture risk.

l As the Group continues to embrace new products and

increased automation, the Committee will monitor the

associated risks, both prior to and post-implementation,

as they scale as well as the execution risk as the

business moves from a focus on one product to a

number of different products.

l Continue to review the management of balance sheet

exposures and the credit risk position in relation to our

financial objectives under different outlook scenarios.

l Continue to review progress on the climate risk

management framework.

l Oversee GenAI initiatives from an internal controls and

risk perspective.

2025 key priorities

Audit

l Continue to assess accounting judgements and estimates,

particularly in relation to a provision for expected credit

losses on FlexiPay lines of credit, the evolution and

improvement of the Group’s credit provision models,

and new product launches as they mature and grow

in volume.

l 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

with a particular focus on the end-to-end processes

and the ongoing development of the controls of new

products and new features.

l Oversight of the implementation of the updated 2024

Code for audit and risk requirements.

Committee composition, skills and experience

The membership of the Committee complies with

provision 24 of the Code, requiring a minimum

membership of two Independent Non-Executive

Directors not including the Chair of the Board.

All members of the Committee have relevant financial

experience across banking and financial services,

demonstrating competency relevant to the sector

in which Funding Circle operates, including the

Committee Chair who is a chartered accountant.

The Committee meets privately to discuss matters with

the external and internal auditors, who regularly attend

all meetings, without management present.

Significant matters considered in relation to the financial statements

The Committee assessed the quality and appropriateness of, and adherence to, the Group’s accounting policies and

principles. It reviewed whether the accounting estimates and judgements made by management were appropriate.

The significant matters and accounting judgements considered by the Committee during the year are set out below.

Reporting issue Committee action

Going concern and viability

The period over which the Directors have

determined the viability assessment is three years.

Going concern is assessed annually based

on detailed cash flow forecasts for the next

15 months including a severe but plausible

downside scenario.

Inflationary pressures have eased but remained

prominent during the year, with the impact of

the UK government budget and increased global

instability also weighing on SMEs. These factors

have been considered in the above assessments.

The Committee reviewed reports from management that set out

its view on both the shorter-term going concern and longer-term

viability of the Group. These included:

l reviewing the Group’s principal risks as set out on pages 55 to 62;

l assessing and reviewing the adherence to the risk appetite

set by the Committee to track the Group’s capital, liquidity and

exposures of its funding products;

l reviewing the Group’s short- and medium-term plan, cash,

capital and liquidity;

l reviewing the outcomes of stress testing after applying a severe

but plausible scenario aligned to the principal risks; and

l reviewing the risk, going concern and viability disclosures for

clarity on scenarios, uncertainties, sensitivities and management

actions considering macro economic risks in particular.

Having challenged and considered the outcomes of management’s

assessment, the Committee recommended the Viability Statement

to the Board for approval, concluded the Group remains a going

concern and considered that related disclosures were sufficiently

clear and transparent.

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Reporting issue Committee action

Sale of US business and disclosure as a

discontinued operation

The Group sold its US business on 1 July 2024 to

iBusiness Funding, LLC for consideration of £32.6

million. A gain on sale at the Group level of £9.8

million along with £8.7 million reclassification

of foreign currency translation reserve. At the

Parent Company level a gain of £25.9 million,

was recognised when the US business was

deconsolidated.

The Committee received and reviewed reports and draft

disclosures from management related to:

l the proposed disclosure of the US business as a discontinued

operation and re-presentation of the comparative statement

of comprehensive income and related notes on this basis;

l the treatment of the US business as a disposal group at the

half-year reporting at 30 June 2024, and presentation of the

balance sheet and related notes on this basis; and

l the calculation and treatment of the gain on disposal inclusive

of recycling of the foreign currency translation reserve.

Having reviewed the disclosures and treatment the Committee

concluded that the application was correct and the disclosure

was clear and transparent in both the Group and standalone

entity accounts.

Expected credit loss impairment of FlexiPay

The Group holds FlexiPay lines of credit on its

balance sheet. These lines of credit are held at

amortised cost net of IFRS 9 expected credit

loss impairment allowance. As the business has

grown and the product features have developed,

there is more historic data available and more

complexity for use in estimating the allowance.

The allowance is sensitive to assumptions related

to the probability of default derived from macro

economic assumptions.

The Committee received and reviewed the assumptions and

methodologies used to determine the expected credit loss

together with the level of sensitivity to those assumptions and

considered whether these appropriately reflected risks in the

portfolio and development of the product in the year.

The Committee also considered the views of the external auditors

on the methodology and the assumptions, including comparing

the results to the external auditors’ independent estimation of

the allowance. The Committee considered the disclosures within

the Annual Report and after due challenge concluded that the

valuations were reasonable and the disclosures were appropriate.

Deferred tax recognition

The UK business is forecast to be in a taxable

profit position for the year ended 31 December

2025, and consideration was given as to whether

a deferred tax asset should be recognised as at 31

December 2024.

It was concluded that a deferred tax asset should

not be recognised as there was not sufficient

certainty regarding the probability of sustained

future taxable profits and disclosure was made

within the critical accounting judgements note.

The Committee reviewed a paper from management which set

out both positive and negative evidence related to the decision

to recognise a deferred tax asset or not. The Committee:

l considered the Group’s position in the context of ESMA

guidance on whether there is sufficient compelling evidence

to consider whether it is probable there will be future taxable

profits; and

l considered if not recognising a deferred tax asset now, what

evidence would be considered compelling in future that might

result in the recognition of a deferred tax asset at a later date.

It was determined that the decision to not recognise a deferred tax

asset at 31 December 2024 was sound, and that indicators that

may lead to a different outcome in future may include the delivery

of sustained taxable profit over a period of time and ongoing

market expectation of taxable profits.

The disclosure within the critical accounting judgements note

was reviewed and considered to be clear and transparent.

Exceptional items

The Group has a defined accounting policy for the

treatment and presentation of non-recurring and

material items as exceptional. These exceptional

items are also presented in a columnar fashion

on the consolidated statement of comprehensive

income in order to increase transparency and

understanding for readers.

The cost efficiency programme undertaken by

the UK totalling £2.6 million, related impairment of

intangible assets of £0.3 million and the gain on

sale of the US business of £9.8 million have been

disclosed as exceptional items.

The Committee received papers from management setting

out the analysis of the exceptional items and the rationale for

their inclusion.

The Committee received the views of the external auditors on

the items that management had included within these costs.

It noted that the disclosure as exceptional was consistent with

the Group’s accounting policy and with prior year presentations,

and concluded that the amounts and this presentation were

appropriate.

Report of the Audit and Risk Committee continued

Significant matters considered in relation to the financial statements continued

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Reporting issue Committee action

Fair, balanced and understandable reporting and

alternative performance measures (“APMs”)

The Board is required to report as to whether the

contents of the 2024 Annual Report and Accounts,

when taken as a whole, are fair, balanced and

understandable. The Group uses APMs in its

reporting of adjusted EBITDA for the Group. These

measures are used to provide insight into the

underlying performance of the business. They also

provide a close approximation to cash generation

which is key to the business. These measures are

defined within the segmental information note on

pages 144 and 193.

At the request of the Board, the Committee has assessed the

information contained within the Annual Report. This assessment

included discussions with management on the underlying

financial processes, and confirmation from the management

team of its review of the Annual Report being fair, balanced and

understandable. The Committee also discussed the contents of

the Annual Report with the external auditors.

In addition, the Committee also considered the use of various

APMs 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 were 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 2024 Annual Report and Accounts, when taken as

a whole, is fair, balanced and understandable.

Risk management and internal controls

With effect from 1 January 2024, we combined the Audit

Committee and the Risk & Compliance Committee into

one Committee and reviewed the annual cycle of work

to allow the Committee to carry out its role of monitoring

and reviewing risk for the Group, including the nature

and extent of principal and emerging risks against an

uncertain macro environment. The Committee is also

responsible for monitoring the Group’s compliance with

the ERMF, which is detailed further on page 54 of the

Strategic Report.

In addition to formal meetings, the Committee also

received regular reports and updates on overall credit

performance.

The Committee is responsible for supporting the

Board in its robust assessment of the principal and

emerging risks of the Group. The CRO reports at each

risk meeting on the top of mind principal and emerging

risks. In addition, ExCo members liaise swiftly with

the ARC when identifying an emerging risk requiring

immediate attention. The Committee considers these

and other risks that may impact the Group’s strategy and

operations and assesses its aggregated risk profile. For

in-depth information on the Group’s approach to risk and

identification of principal and emerging risks for 2024,

please refer to the Strategic Report on pages 55 to 62.

Review of effectiveness of internal controls and risk

management systems

During the year, to bring greater transparency to

the assurance the Committee receives and to gain

greater comfort over the Group’s management of risks,

monitoring of internal controls and the accuracy of

reporting, the Committee reviewed:

l the Risk Taxonomy and the cartography of risk owners;

l an annual risk and controls assessment prepared by the

enterprise risk management team;

l business line risk assessments directly from the MDs and

the CTO to foster a strong culture of risk management and

clear tone from the top across the first line;

l the assessment of the internal controls system, and

monitoring of management actions arising from the

assessment, and focus on residual risks requiring

further mitigation;

l the audit plan and actions taken following audit

recommendations;

l annually, the financial crime risk assessments, including

fraud risk and AML/CTF risk;

l whistleblowing reports and confirmation of testing;

l specific risk mitigation actions in relation to information

security risk and data risk;

l UK credit environment and adequacy of our approach

to credit assessment in all its dimensions (credit

validation, pricing, ongoing loan management); and

l the performance of all our credit portfolios including

analysis of historical trends and forecast of expected

future performance.

During the year, there was also an ad hoc deep dive

on credit risk held between the Committee Chair and

the business CRO and monthly communications were

distributed by the CRO to the Committee about the most

recent credit performance.

Additionally, throughout the year, the Committee has

monitored and reviewed the adequacy and effectiveness

of the Group’s internal controls, by receiving, discussing,

and challenging regular reports from management,

internal audit and external audit on matters in relation to

control effectiveness, monitoring and testing.

Based on its activities, the Committee confirmed to the

Board its assessment that the Group’s internal controls

and risk management systems were sufficiently robust

and operating effectively.

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

External audit

Auditor independence

External auditors: PwC

Length of tenure: 10 years (appointed in 2015)

Lead audit partner: Heather Varley

Lead audit partner tenure: 1 year

Total audit fees payable to

auditors in the year: £925,615

The Committee monitors the objectivity, independence

and effectiveness of the external auditors. The Company

is mindful of the provisions of the Code, best practice,

the Competition and Market Authority Audit Order 2014

and audit legislation in particular with regard to audit firm

rotation and the provision of non-audit services.

The Committee operates a policy for the tender of

external audit services. This policy provides that, in

accordance with applicable law and regulation, the

Company will re-tender the external audit at least every

ten years since IPO and will change the external auditors

at least every 20 years. PwC was first appointed in 2015

so, in 2023, the Committee conducted a competitive

tender of external audit services for FY 2024 and,

following a rigorous process, PwC was successful.

The auditors’ partner was rotated during 2024 from

Nick Morrison to Heather Varley. The Committee met

with PwC during the year to assess the potential new

audit engagement partner and the Committee endorsed

Heather Varley as being a suitable replacement for Nick

Morrison as new audit partner.

The Committee regularly reviews the objectivity and

independence of the external auditors and has concluded

this is safeguarded by:

l obtaining assurances from the external auditors that

adequate policies and procedures exist within their firm

to ensure that the firm and employees are independent

of the Group by reason of family, finance, employment,

investment and business relationship (other than in the

normal course of business);

l enforcing a policy of reviewing all cases where it is

proposed that a former employee of the external

auditors be employed by the Group in a senior

management position or at Board level;

l monitoring the external auditors’ compliance with

applicable UK ethical guidance on the rotation of audit

partners; and

l approving non-audit services prior to being undertaken

by the external auditors.

The engagement of the external audit firm to provide

non-audit services to the Group can impact on the

independence assessment and the Company has,

therefore, adopted a policy which requires Committee

approval for non-audit services. This policy is in line with

the FRC’s Revised Ethical Standard 2019 and gives the

Chair of the Committee delegated authority from the

Committee to approve individual non-audit services items

of up to £50,000 per service.

All fees paid to PwC for non-audit services have been

approved (in accordance with the non-audit services

policy), with a summary of all non-audit services being

provided at each Committee meeting.

External audit fees: Non-audit and audit-related

services

Description

2024

£000

2023

£000

Interim review of half-year

results announcement 141.7 137.7

CASS reporting 143.2 140.4

ISAE 3402 controls assurance 127.5 134.4

Other 1.4 1.4

Total 413.8 413.9

The Committee concluded that it was in the best interests

of the Group to purchase these services from PwC on

the basis that it was independent and was considered

to be the right provider for the services required (or, in

some cases, they were required to be performed by the

external auditors).

PwC are prohibited from providing certain non-

audit services to safeguard auditor objectivity and

independence, including, but not limited to, internal audit

work, valuations work and tax-related work.

PwC has confirmed to the Committee that it remained

independent during the year.

Audit performance and effectiveness

The quality, performance and effectiveness of the

external auditors is reviewed annually by the Committee

through an effectiveness questionnaire distributed to

management and Committee members for completion.

This covers: the quality of robust challenge provided by

the audit team; an evaluation of the knowledge and skills

of the external audit team; the accessibility of the lead

audit partner; independence and objectivity; openness,

integrity and professionalism; the quality of reporting;

the audit plan; communication between external auditors

and the Committee; and the audit team’s robustness

and constructive challenge during its engagement with

management. In FY 2024, PwC continued to receive

positive feedback.

The external auditors challenged management over the

various scenarios that they had modelled, the level of

stress testing in the models and the impact that this

would have on the ability of the Group to continue as a

going concern. There was also robust challenge around

the methodology and assumptions utilised in the FlexiPay

lines of credit expected credit loss impairment allowance,

the fair value of loans on balance sheet and the

assessment of indicators of impairment and consideration

of impairment risk related to the Parent Company

investment in subsidiaries.

Report of the Audit and Risk Committee continued

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Internal Audit

The Committee receives updates on the work of the

Internal Audit team at each meeting, including a periodic

assessment of the Group’s risk and control framework.

The Committee considered, challenged, approved,

and monitored the Internal Audit plan. Throughout

the year, the plan was regularly assessed to ensure

it remained focused on the Group’s key risks and

priorities. All proposed audit plan adjustments were

considered, challenged, and approved by the Committee.

Areas assessed by the Internal Audit team during

2024 included:

l technology strategy setup and outcomes;

l recoveries distribution in multiple defaulted loans;

l GGS readiness assessment;

l client money payment platform, operations

and controls;

l FlexiPay billing and card transactions (report

finalised in 2025);

l Marketplace conduct and lending partnerships (report

finalised in 2025);

l enterprise data governance; and

l cyber security strategy and risk management approach.

Following business restructuring and internal promotion,

Protim Banerjee was appointed as the new Director

of Internal Audit with effect from 1 July 2024. This

appointment was announced following a rigorous

recruitment process with candidates which included

several interviews with the Committee Chair and other

members of the Committee and ExCo.

The Internal Audit plan for 2025 was approved by the

Committee in November 2024 and aligns to areas of

highest inherent risk and strategic, operational and

regulatory priority, including:

l FlexiPay – third party management and reliance on

specific suppliers;

l financial crime and underwriting approach across

multiple products;

l FlexiPay – credit exposure monitoring and

management;

l technology performance;

l FY 2025 new Term Loans products;

l marketing effectiveness (carry over from the FY 2024

IA plan); and

l enterprise-wide product development methodology

(carry over from the FY 2024 IA plan).

The team also continued to validate ongoing open

issues e.g. business resilience, end user computing and

collection, recoveries and litigation processes.

Internal Audit effectiveness review

An effectiveness review was conducted by the

Committee to evaluate the performance of the Internal

Audit team. The outcomes of the evaluation overall

were 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 suggested for further

enhancement that will be appropriately progressed

during 2025.

Whistleblowing

The Company takes whistleblowing very seriously and

wants all employees to feel able to raise concerns when

they arise. This is emphasised in the Code of Conduct for

all employees which is reviewed annually. The Committee

reviewed the adequacy and security of the Group’s

whistleblowing arrangements, which included regular

whistleblowing updates, and it also provided reports to

the Board where appropriate.

As part of the Committee’s commitment to ensuring

the whistleblowing process and handling of potential

incidents are of the highest standards, the Committee

reviewed a recommendation by management to introduce

a third party anonymous reporting option for employees

under the Group’s Whistleblowing Policy. This additional

line of reporting, together with the rest of the Group’s

whistleblowing processes, was communicated to

employees in both the Company’s news bulletin and at

a bi-weekly All Hands meeting. There were no incidents

reported in 2024.

Committee effectiveness

During the year, a review was undertaken of the

effectiveness of the Audit and Risk Committee. Overall,

the results of the evaluation were positive. Feedback

on the first annual meeting cycle of the new combined

Committee was positive and members generally felt that

the oversight of the effectiveness of the Group’s risk and

internal controls was more aligned and that a framework

of prudent and effective controls was in place which

enabled risk to be assessed and managed appropriately.

The Committee agreed that its composition should be

reviewed in 2025 considering the recent Board changes

and that the agenda would have more focus on emerging

and strategic risks.

Subsidiary audit and risk governance

The Group’s main operating subsidiary, Funding Circle

Ltd (“FCL”), maintained its own Audit and Risk Committee

during 2024, which was chaired by the Chair of the

FCL Board, Matthew King, until his departure from the

Board on 31 December 2024. With the changes in the

business in 2024 and reflecting on the fact that the

main regulated activity by FCL is now a closed product,

the decision has been taken that FCL would no longer

have a separate Audit and Risk Committee and that

FCL matters relating to audit and risk would instead be

covered by this Committee. The regulated FCL Board will

continue to meet as a separate Board, with the Chair of the

Funding Circle Holdings Board as a member, and with a

newly agreed schedule of matters reserved for decisions

including approval of the CASS audit and the FCL Annual

Report and Accounts.

Geeta Gopalan

Chair of the Audit and Risk Committee

6 March 2025

Funding Circle Holdings plc | Annual Report and Accounts 2024 87

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

On behalf of the Board, I am pleased to present

the ESG Committee’s report for the year ended

31 December 2024.

The Committee met twice this year, in accordance with

its updated Terms of Reference. In addition to formal

meetings, the Committee also received quarterly reports

on progress of ESG activities. The Committee was

pleased that the majority of the 2024 ESG framework

goals were completed to its satisfaction, and is

comfortable with the level of ambition set for 2025.

In 2024, the Company made good progress in delivering

against its ESG objectives, taking into consideration

changes in the business, including the sale of the US

operations. We carried out benchmarking of our activities

and reviewed our ambition statements for each of our key

pillars – environmental, social impact, DEI and governance

– to ensure they remain in line with our vision and broader

sustainability developments.

For more detailed information on the Group’s ESG

activities and goals, and TCFD and Climate disclosures,

please see the Environment, Social and Governance

section of our Strategic Report from page 24 and the

Climate and Environment section from page 28.

Report of the ESG Committee

Members and attendance

Member Meetings Attendance

Andrew Learoyd (Chair) 2/2 100%

Matthew King 2/2 100%

Neil Rimer 1/2 50%

Helen Beck 2/2 100%

The Committee’s role

and key responsibilities

are defined in its Terms

of Reference which can

be found on our website

Andrew Learoyd

Chair of the ESG Committee

In 2024, the Company made

good progress in delivering

against its ESG objectives.”

Funding Circle Holdings plc | Annual Report and Accounts 202488

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Diversity, equity and inclusion

On DEI and social impact, the Committee continued to

be impressed with the sustained level of engagement of

the various employee “Circler groups”. This was brought

to life in particular at the CircleIN event in October of

last year, spotlighting the vibrant culture and values at

Funding Circle.

In 2024, we were pleased to see relatively stable

engagement and continued strong inclusion and

belonging results across our key DEI metrics. While we

were disappointed to see a drop in our “recommend”

score, we recognise it has been a significant year of

organisational change for Circlers, who throughout have

demonstrated their continued resilience and commitment

to our business. In particular, we were delighted and

proud to see Circlers recognised externally for their

contributions to the DEI agenda.

In 2025, we will report a higher gender pay gap ratio

compared to our lowest ever reported in 2024. The

Committee continues to focus on diversity at senior

levels of the Company and continues to challenge senior

management to identify where improvements can be

made to demonstrate progress at these levels.

Social impact

The Company is a participant of the United Nations

Global Compact, and in 2024 we published our Human

Rights Statement as planned.

We were pleased to renew our partnerships with Hatch

to support underserved social entrepreneurs, and with

Thrive Mental Wellbeing to support the mental health

of SME owners and their employees in the UK. It was

encouraging to see sustained Circler volunteering, with

171 impact days used in 2024 across a number of great

social and environmental causes.

Climate and the environment

The Company successfully completed independent

third party verification (ISO 14064-1) of its 2023 GHG

emissions data for all activities under its operational

control for the first time. During the year we evolved

our interim net zero targets, reflecting a deepening of

our transition planning efforts, as well as the sale of our

US business.

We were pleased to renew our support for Earthwatch’s

Tiny Forest UK-wide initiative, contributing to the

wellbeing of ecologically deprived areas.

We appreciate the potential challenges and opportunities

that a transition to a lower-carbon future brings for the

Company, its customers and other stakeholders. We

continued to engage on these topics through industry

forums and we look forward to continued progress, and

understanding of our financed emissions data.

Governance and risk management

The Committee is pleased with the progress made

against our roadmap this year. We developed and

approved our Climate Risk Management Framework,

and our disclosures are consistent with the TCFD

recommendations.

Matthew King continued his role as sponsor for climate-

related activities in 2024. Following his resignation

from the Board, we will continue to consider ways of

maintaining Board-level expertise on ESG topics. Helen

Beck continued with her role as Workforce Engagement

Non-Executive Director and engaged with Circlers across

the Group during the year through an employee focus

group. This provided an open forum to gain Circler insight

on the Group’s culture, recent changes to the Group’s

strategic direction and other issues of importance to

Circlers, which Helen then fed back to the Board.

2024 Committee effectiveness review

The Committee completed an internal effectiveness

review for 2024. Overall, the results of the evaluation

were positive. The questionnaire addressed the

composition and set-up of the Committee, the frequency

of meetings, the timeliness and quality of the papers, the

work of the Committee and whether it receives enough

information to feel confident about its oversight role.

Key activities in 2025

In 2025 we will continue to make progress against

our DEI goals to support a diverse and inclusive

organisational culture. We will focus on progressing our

net zero targets, while investing in BVCM activities that

contribute to environmental and societal benefits. As

sustainability regulation evolves, we will work towards

preparing for IFRS S1 and S2, and understanding how our

efforts align to transition planning guidance. Our detailed

goals and roadmap for 2025 are outlined in the ESG

section on page 25.

Andrew Learoyd

Chair of the ESG Committee

6 March 2025

Funding Circle Holdings plc | Annual Report and Accounts 2024 89

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Directors’ remuneration report

Members and attendance

Member Meetings Attendance

Helen Beck (Chair) 6/6 100%

Andrew Learoyd 6/6 100%

Matthew King 6/6 100%

The Committee’s role and key

responsibilities are defined in its

Terms of Reference which can be

found on our website

Helen Beck

Chair of the

Remuneration Committee

the agreed targets was therefore 85.4% of maximum.

The Committee considers this an appropriate reflection

of the overall performance delivered for stakeholders,

and no discretion was applied.

The 2022 restricted share awards granted to Lisa Jacobs

and Oliver White were a fixed number of shares (determined

at the beginning of the Policy period, in 2021) and represented

78% and 58% of salary respectively, a reduction of

approximately 42% on the typical Policy levels (being

133% of salary for the CEO and 100% of salary for the

CFO). The Committee assessed performance over the

vesting period and determined that the awards will vest

in full on 24 March 2025. Further information is set out

on page 105.

During the year, the CEO and CFO were granted restricted

share awards at the level of 115% and 85% of salary,

respectively. As indicated in last year’s report, the Committee

granted these awards below the respective Policy maxima

(133% and 100% of salary) in consideration of business

performance and share price at the time of award.

CFO transition

As announced in May 2024, Oliver White stood down

from his role as CFO at the end of the year, following a

successful transition period. The Committee determined

that Oliver would be treated as a good leaver, and as

such his unvested Restricted Share awards will be

time-prorated and vest on their original vesting dates,

subject to the relevant underpins. Oliver remained

eligible for a 2024 bonus having been in office for the

full financial year. The bonus outcome is as described

above and will be paid fully in cash in line with our policy.

He will not receive any other payments linked to his exit.

Further information is set out on page 108.

Tony Nicol, previously our Director of Finance and

Investor Relations, succeeded Oliver White as Chief

Financial Officer on 1 January 2025.

Remuneration Policy review

Following strategic decisions made in 2024 to focus

on a simple, leaner, and profitable UK business the

Committee determined it was appropriate to propose a

new Remuneration Policy for approval at the 2025 AGM.

The new Policy is designed to support our evolving

business strategy and new medium-term plan, will place

a strong emphasis on performance-related awards, and

will be focused on delivering against our financial goals

as a sustainable, profitable, growth business. To achieve

this, a performance share plan (the “FC PSP”) will replace

restricted shares, the current long-term incentive. Under

the proposed Policy, around 70% of the CEO’s total

remuneration will be performance-based (compared to

around 20% under the current policy). We believe this

creates greater alignment between Executive Directors

and shareholders, and incentivises the ongoing creation

of long-term value, building on progress made in 2024.

We conducted a detailed consultation with our largest

shareholders, covering over 80% of our issued share

capital, and we were grateful for all of the feedback

received which helped shape the final Policy design,

including the approach to salary increases, selection

of appropriate performance measures and overall

On behalf of the Board, I am pleased to present the

Directors’ Remuneration Report for the year ended

31 December 2024.

2024 was a significant year for Funding Circle. Good

progress was made against each of our strategic pillars

as the business successfully exceeded our financial

and strategic goals, with profit ahead of expectations

for the year (see pages 44 to 50 for more information

on business performance). The team demonstrated

resilience and focus, executing on multiple strategic

goals effectively, creating a simple UK-focused business

to serve our customers. This was achieved during a

year where Funding Circle completed the sale of the

US business, recognising a £10 million gain on the sale.

Executive Director Remuneration for 2024

For the 2024 annual bonus, the weighting on financial

targets was 70% (split equally between Group Revenue

and Group PBT) and the remaining 30% was on strategic/

non-financial metrics. As described in more detail on

pages 103 to 104, the outcome for Group Revenue was

above target and for Group PBT (before exceptionals)

was near the maximum. The Committee assessed the

strategic/non-financial goals to have been exceeded.

The overall outcome of the bonus assessment against

CORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 202490

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

remuneration structure. Under the new Policy, Executive

Directors will remain eligible for an annual bonus, with

maximum opportunities of 150% of salary for the CEO and

100% of salary for the CFO. For the FC PSP, the maximum

award size under the Policy will be 350% of salary, with

typical awards being 350% and 250% of salary for the

CEO and CFO respectively. The Committee considered

the overall quantum for Executive Directors holistically,

taking into consideration the stretching nature of our

ambitious strategy, the need to retain and incentivise

high calibre individuals, alongside relevant market data

for companies of a similar size (those at the top of the

FTSE SmallCap – see page 93 for more details). Executive

Directors will only receive the maximum vesting outcomes

under the FC PSP for achieving exceptional performance.

The proposed Remuneration Policy is designed to provide

Executive Directors with a total remuneration package

which is market competitive but more heavily weighted

towards being long-term, share-based and subject to

stretching performance targets, which we believe reflects

our culture and philosophy, and our desire to incentivise

long-term sustainable growth.

To ensure further alignment with shareholders the CEO

shareholding guidelines will be increased to 250% of

salary, for both in-post and post-exit purposes. For the

annual bonus up to 40% of any bonus earned will be

deferred into shares for three years. However, in line

with developing market practice, this may be decreased

by the Committee if the Executive Directors have met

their shareholding requirement at the time of the bonus

payment, subject to Committee retaining the capacity

to exercise malus and clawback provisions. A level of

deferral will always apply to Executive Director annual

bonus outcomes (e.g. 20%).

No other changes to the Policy are proposed, which

remains well aligned to key principles of best practice.

The full Remuneration Policy, which is set out on pages

94 to 100 of this report, will be submitted for shareholder

approval at the 2025 AGM.

Executive Director remuneration arrangements for 2025

The Committee believes the CEO salary should be

increased to £475k, to appropriately reflect the CEO’s

skills, experience and value brought to the business, and

the importance of ensuring a competitive salary. Such

a salary level would remain low against companies of

a similar size. However, as outlined above, through the

incentive opportunities available under the new Policy,

target total remuneration would be market competitive,

but weighted towards the achievement of the stretching

performance-based elements of the package.

Following shareholder consultation, considerations on

the wider Circler salary increase and our culture, as

well as input from the CEO herself, this increase will be

phased over two years. With effect from 1 March 2025,

Lisa Jacobs will receive a salary increase to £450k, with

a further increase to £475k from 1 March 2026. The CFO

was appointed on 1 January 2025 on a salary of £350k,

and will not receive a further increase this year.

The 2025 annual bonus will be based 70% on financial

measures, which will continue to reflect revenue and

profit goals, and 30% on key strategic/non-financial

objectives. Bonus opportunities will be in line with the

new Remuneration Policy as described above. In respect

of the 2025 FC PCP, we intend to grant the CEO 350% of

salary and the CFO 250% of salary, in line with the normal

awards in the new Policy. Vesting of the award will be

subject to an assessment of performance conditions,

based 60% on relative Total Shareholder Returns (rTSR)

against the FTSE 250 excluding Investment Trusts,

and 40% on stretching Profit Before Tax (PBT) targets.

The targets are disclosed on page 95. In line with good

practice, and as requested by shareholders, for awards

in future years, we will keep the measures under review,

including reviewing whether other measures (e.g. return

on tangible equity, RoTE), would be appropriate to

include. As always, the Committee will consider overall

performance in determining any vesting of awards

(including share price appreciation).

Remuneration arrangements for Circlers

In a significant year for the business, I wish to thank all

our Circlers for their dedication and commitment over

the course of 2024. The Group annual bonus for 2024

is being awarded at c.118% of target in aggregate, with

payment being based on similar financial measures as the

Executive Directors.

In 2024, we continued our Share Incentive Plan, where

for Circlers buying “Partnership” shares in Funding

Circle they would receive two “Matching” shares for

every “Partnership” share purchased. We also paid a

bonus of up to £1,000 for junior Circlers in December

and continued to keep pace with the “Real Living Wage”

increasing the salary of any Circlers whose salary was

below the threshold in 2024.

For 2025, the Executive Committee members will be

included in the FC PSP and will be subject to the same

performance measures, targets, and vesting periods as

the Executive Directors. This ensures that the most senior

Circlers are aligned on driving the performance of the

business over the long term.

Conclusion

On behalf of the Remuneration Committee, I would like

to thank the other Committee members and the Circlers

who have supported the Committee this year. I would also

like to thank our shareholders for their continued support,

including those who engaged in our Remuneration Policy

reviews during 2024 and 2025. We were delighted with

the support received from shareholders at the 2024

AGM and we hope to continue to receive your support

at our 2025 AGM, where I will be available to respond to

any questions on this report or in relation to any of the

Committee’s activities.

Helen Beck

Chair of the Remuneration Committee

6 March 2025

Funding Circle Holdings plc | Annual Report and Accounts 2024 91

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Directors’ remuneration report continued

At a glance: Remuneration outcome for 2024

The charts below show the potential 2024 remuneration opportunity and actual achievement.

Lisa Jacobs, CEO Oliver White, CFO

Minimum Minimum

On-target On-target

Maximum Maximum

2024 actual 2024 actual

2023 actual 2023 actual

445 443

1,204 1,011

1,485 1,221

1,407 1,164

701 844

£0k £250k £500k £750k £1,000k £1,500k £0k £250k £500k £750k £1,000k £1,500k

Salary Benefits Pension Bonus Restricted shares

2024 annual bonus outturn

The chart below shows the outcome of the 2024 annual bonus. A summary of overall business performance is on

pages 44 to 50.

Performance measure Weighting

Threshold

0% payout

Target

50% payout

Maximum

100% payout

Outcome

(% of maximum)

Group Revenue 35%

Actual £160.1m

67.4%

£131m £152.6m £174.1m

Group Profit

Before Tax

35%

Actual £3.4m

91.0%

-£9.7m -£2.5m £4.7m

Strategic/non-financial

(including FlexiPay)

30%

Performance of strategic/non-financial objectives exceeded

expectations, and with significant strategic value delivered in

2024. See pages 103 to 104 for further details.

100%

Outcome

(% of salary)

Total (CEO) 85.4% 113.6%

Total (CFO) 85.4% 85.4%

Payments for 2024 cover a time period of 5 years

Element

Maximum opportunity

for 2024

Awarded

for 2024 2024 2025 2026 2027 2028

Salary n/a CEO: £424k

CFO: £420k

Salary,

benefits and

pension paid

in cash or

contributions

Pension 5% of salary 5% of salary

Benefits In line with

other Circlers

In line with

other Circlers

Annual bonus CEO: 133% of salary

CFO: 100% of salary

113.6% of salary

85.4% of salary

60%

paid in cash

100%

paid in cash

40% deferred into shares for 3 years

Restricted

(granted

16 May 2024)

CEO: 133% of salary

CFO: 100% of salary

115% of salary

85% of salary

3-year vesting period (underpins tested

following completion of vesting period)

Post-vesting holding period

of 2 years

1. The CEO waived a proposed increase to £434k in 2024. 2. Oliver White’s 2024 restricted share award will be prorated for time in role.

Shareholding guidelines for Executive Directors as at 31 December 2024

700%

600%

500%

400%

300%

200%

100%

Total

CEO (Lisa Jacobs) CFO (Oliver White)

331.7%

198.8%

Guideline

Shareholding

(% of salary)

Unvested awards Unvested awards (not subject to performance)

Vested but unexercised Beneficially owned shares

Shareholding as a % of salary is based on the three-month average

share price to 31 December 2024 of 133.3p. Unvested awards

subject to performance conditions are not taken into account in

the assessment of the shareholding until such time as they vest.

Funding Circle Holdings plc | Annual Report and Accounts 202492

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Element of

Remuneration Policy Current Policy Proposed changes in Policy and rationale Implementation in 2025

Salary

l Reviewed annually in March.

l Salaries take account of the

external market and the overall

employee context.

l No prescribed maximum salary level

or salary increases.

Proposed changes:

l No changes.

As of 1 March 2025, Executive

Director salaries are as follows:

l £450,000 for the CEO.

l £350,000 for the CFO on

appointment on 1 January 2025.

Benefits &

pension

l Executive Directors receive the

same benefits as other UK Circlers

which currently include, but are not

limited to, life assurance and private

medical insurance.

l Maximum contribution is in line

with contribution to other Circlers

in the Group, which is currently 5%

of salary. Individuals are entitled

to receive some or all of their

pension allowance as cash in lieu

of pension contribution.

Benefits offered to Executive

Directors will be in line with those

available to other employees in

the Group.

Executive Directors will receive

5% of salary in a combination of

contributions into their pension and

cash in lieu of pension contributions.

Annual bonus

l A maximum opportunity in respect

of any financial year of:

l CEO: 133% of salary.

l Other Executive Directors:

100% of salary.

l 40% of any bonus earned will be

deferred into Funding Circle shares

and will cliff vest after 3 years.

Proposed changes:

l Increased opportunity for the CEO to

further increase performance-based

variable pay.

l Up to 40% of any bonus earned

will be deferred into Funding Circle

shares which will cliff vest after 3

years. The level is dependent on the

shareholding of individual Executive

Directors. A level of deferral will

always apply (e.g. 20%).

Maximum opportunities of:

l 150% of salary for the CEO.

l 100% of salary for the CFO.

70% of bonus based on financial

measures, 30% strategic/

non-financial.

FC PSP

(replacing the

Restricted

Shares awards)

n/a Proposed changes:

l Introduction of the FC PSP. Grants

of up to 350% of salary, with typical

award sizes of 350% of salary for the

CEO and 250% for the CFO.

l Awards will vest after 3-years subject

to the achievement of performance

metrics. A post-vesting holding period

of 2 years will apply.

Maximum opportunities of:

l 350% of salary for the CEO.

l 250% of salary for the CFO.

Will vest 60% on Relative TSR and

40% on PBT.

Market positioning: Executive Director Remuneration

The Committee reviewed the proposed total remuneration for the Executive Directors against other listed companies

of a similar size. At the end of 2024, Funding Circle’s market capitalisation was positioned near the top of the FTSE

SmallCap. The total remuneration package, which is less fixed, and more long-term, performance-linked, than companies

of a similar size, is below the upper quartile of the top half of the FTSE SmallCap, however due to the higher leverage

will provide above upper quartile pay for achieving exceptional performance (data was also referenced against the

bottom of the FTSE 250 to ensure consistency). This weighting towards performance and the long-term aligns with

the Company’s remuneration philosophy as well as our strategic direction.

At a glance: Revised policy overview and implementation for 2025

Alignment

with Circlers

Fixed pay Variable pay

Salary Benefits Pension

Annual

bonus

Restricted

shares FC PSP

Executive

Directors

Executive

Committee

Senior

management

Mid-level

Circlers

Junior

Circlers

CEO CFO

Salary

Target total

remuneration Salary

Target total

remuneration

FTSE

SmallCap

Top Half

Upper

quartile

£583k £1,711k £402k £1,054k

Median

£518k £1,386k £350k £888k

Lower

quartile

£484k £1,193k £320k £778k

Funding

Circle

Current

(2024

Policy)

£424k £1,292k

£350k

£893k

Proposed

£450k £1,599k £984k

Funding Circle Holdings plc | Annual Report and Accounts 2024 93

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Directors’ remuneration report continued

Remuneration Policy

The Remuneration Policy, as set out in this section, applies to the roles

of Chair, Executive Director and Non-Executive Director. If approved by

shareholders in a binding vote at the 2025 AGM, the Remuneration Policy

will apply for a maximum of three years from the AGM.

The key changes to the Policy are the implementation of performance share plan and removal of restricted shares,

alongside increased variable short and long term opportunities, to drive performance based outcomes for Executive

Director reward. The other changes to the Policy include deferrals for short-term opportunities will now be subject

to Committee assessment of current Executive Director shareholdings, and the CEO shareholding requirement is

increased to 250% in-post and post-exit.

As part of the policy review, shareholders representing over 80% of issued share capital were consulted and helped

shape final Policy design.

Executive Directors’ remuneration

Element of

remuneration Key features

Purpose and link to

strategy Maximum opportunity Performance measures

Salary

Normally reviewed

annually in March.

Salaries take account of

the external market and the

overall employee context.

Supports the

attraction and

retention of the

best talent.

No prescribed maximum salary

level or salary increases.

Account will be taken of increases

applied to employees as a

whole when determining salary

increases.

Committee retains the discretion

to award higher increases where it

considers it appropriate, such as,

but not limited to:

l where an Executive Director

has had a change in scope or

responsibility;

l an Executive Director’s

development or performance

in role (e.g. to align a newly

appointed Executive Director’s

salary with the market over

time);

l where there is a significant

change in the size and/or

complexity of the Company; and

l where salary is considered to fall

behind the market competitive

range for similar roles.

n/a

Benefits

Executive Directors’ benefits

currently include, but are not

limited to, life assurance and

private medical insurance.

The Committee may

determine that Executive

Directors should receive

additional benefits if

appropriate, taking into

account typical market

practice and practice

throughout the Group.

Market competitive

(and cost effective)

benefits provide

reassurance and

risk mitigation and

support retention

of talent.

The value of benefits is not capped

as it is determined by the cost to

the Company, which may vary.

Benefits offered to Executive

Directors are broadly in line with

those available to other employees

in the Group.

n/a

Pension

Executive Directors are

entitled to receive employer

contributions to the

Funding Circle Ltd defined

contribution pension plan.

Individuals are entitled to

receive some or all of their

pension allowance as cash in

lieu of pension contribution.

To provide

retirement benefits

for Executive

Directors.

Maximum contribution in line with

contribution to other employees in

the Group, which is currently 5%

of salary.

n/a

Funding Circle Holdings plc | Annual Report and Accounts 202494

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Element of

remuneration Key features

Purpose and link to

strategy Maximum opportunity Performance measures

All-employee

plans

Executive Directors are

eligible to participate in

HMRC tax-efficient plans that

are available to all employees.

Funding Circle currently

operates a Share

Incentive Plan.

To encourage

share ownership

and alignment with

shareholders.

Participation levels are in line with

HMRC limits.

n/a

Annual bonus

Awards are based on

performance (typically

measured over a financial

year) against key

performance measures.

Up to 40% of any bonus

earned will normally be

deferred into shares for three

years. The level is dependent

on the shareholding

of individual Executive

Directors. A level of deferral

will always apply (e.g. 20%).

The Executive Directors

may, at the discretion of

the Committee, receive

dividend equivalents on the

deferred shares.

Malus and clawback

provisions apply (see below).

To motivate

and reward the

achievement of

the Group’s annual

financial and

strategic targets.

A maximum opportunity in respect

of any financial year of:

l CEO: 150% of salary.

l Other Executive Directors: 100%

of salary.

Measures and targets will

normally be set annually by the

Committee and will be in line

with Funding Circle’s strategy.

A mix of both financial and non-

financial measures will typically

be used, with at least 60% of

the annual bonus normally

based on financial measures.

The target annual bonus is

normally 50% of maximum

opportunity. Typically, 0%

will be payable for threshold

performance.

The Committee has discretion

to amend the payout should

any formulaic outcome not

reflect the Committee’s

assessment of overall business

performance, the performance

of the individual, or the

experience of shareholders or

other stakeholders over the

performance period.

Performance

Share Plan

(PSP)

Executive Directors are

granted FC PSP awards with

a three-year performance

and vesting period.

Following the end of the

vesting period, any vested

awards will be subject to a

two-year holding period.

Awards may be granted in

the form of conditional share

awards or nil-cost options.

The Executive Directors

may, at the discretion of the

Committee, receive dividend

equivalents on vested shares.

The awards are subject

to malus and clawback

provisions (see below).

Align Executive

Directors with

shareholders’

interests, and

incentivises

execution of Funding

Circle’s long-

term strategy.

The maximum award level granted

in respect of a financial year is

350% of salary.

Awards will typically be 350%

of salary for the CEO and 250%

of salary for other Executive

Directors.

Prior to each grant, the Committee

will consider the size of grant to

be awarded taking into account

the share price at the time of grant

as well as other factors such as

appropriate market data.

The vesting of the FC PSP

awards will be subject to

performance conditions.

Performance is measured over

three years against measures

set by the Committee for

each award.

The PSP is based on

quantitative measures, with

the majority normally based on

financial measures, aligned to

strategy and shareholder value.

The performance measures for

awards to be granted in 2025

are as follows:

l Relative total shareholder

return (TSR) – 60%

l Adjusted Profit Before Tax

(PBT) – 40%

Different performance

measures and/or weightings

may be used for awards in

future years.

The level of vesting for

threshold performance

will be no higher than 25%

of maximum.

At the end of the three-year

vesting period, the Committee,

in its absolute discretion, will

determine the overall vesting

level of the award to ensure

that outcomes accurately

reflect the Committee’s

assessment of overall business

performance, the performance

of the individual, performance

against key strategic,

governance or ESG metrics, or

the experience of shareholders

(e.g. share price appreciation)

or other stakeholders over the

vesting period.

Funding Circle Holdings plc | Annual Report and Accounts 2024 95

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Directors’ remuneration report continued

Element of

remuneration Key features

Purpose and link to

strategy Maximum opportunity Performance measures

In-post

shareholding

requirement

Executive Directors are

expected to build and

maintain a holding of shares

in the Company.

Supports our

ownership mentality

focus, promotes

stewardship

and helps align

management with

shareholders

Minimum shareholding

requirement, to be satisfied

within five years of appointment

of no less than 250% of salary

for the CEO and 200% of salary

for other Executive Directors. If

any Executive Director does not

meet the requirement, subject to

consideration by the Committee of

the factors at the time, they will be

expected to retain all of the net of

tax number of shares vesting under

any of the Company’s discretionary

share incentive arrangements until

the requirement is met.

n/a

Post-exit

shareholding

requirement

Executive Directors

are expected to retain

a proportion of their

shareholding for a two year

period after they have left

Funding Circle.

To reinforce long-

term alignment of

Executive Directors’

interests with those

of shareholders

post cessation of

employment.

Minimum post-exit shareholding

requirement of “guideline shares”

equal to 250% of salary for the

CEO and 200% of salary for other

Executive Directors or the actual

shareholding on departure, if

lower. “Guideline shares” do not

include shares which the Executive

Director held at IPO, purchased

in the market directly or acquired

pursuant to the exercise of

pre-IPO awards

n/a

Performance measures and targets selection

Performance measures

The measures used in the annual bonus plan will be selected annually to reflect the Group’s key financial and strategic

objectives for the year. The FC PSP will be subject to performance measures that will be measured over three years.

These measures will be selected annually to reflect the Group’s key long-term strategy and overall goals, and alignment

with value creation for shareholders. Measures are kept under review and are subject to change in line with business

strategy.

Performance targets

In setting performance targets, the Committee considers a range of factors including internal and external forecasts,

prior year performance, degree of stretch against the performance targets in the business plan, and market conditions.

Targets are set to be stretching, yet achievable to ensure Executive Directors are motivated, with maximum targets set

at a level reflecting exceptional performance.

Malus and clawback policy

Malus and clawback provisions apply to annual bonus awards, deferred bonus awards and FC PSP Share awards over

the following time periods:

Malus Clawback

Annual bonus

To such time as payment is made. Up to two years following payment.

Deferred bonus awards

To such time as the award vests. No clawback provisions apply (as malus provisions

apply for three years from the grant date).

FC PSP

To such time as the award vests. Up to two years following vesting.

Malus and clawback may apply in the following circumstances:

l a material misstatement of the audited accounts of a member of the Group;

l an error in assessing a performance measure or underpin, or an error in the information or assumptions on which

awards were granted, vest or released;

l a material failure of risk management in any member of the Group or a relevant Business Unit;

l serious reputational damage to any member of the Group or a relevant Business Unit; or

l serious misconduct or material error on the part of the participant.

Remuneration Policy continued

Executive Directors’ remuneration continued

Funding Circle Holdings plc | Annual Report and Accounts 202496

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Discretions reserved in administering incentive awards

The Committee will administer the annual bonus, deferred bonus awards, FC PSP awards and Share Incentive Plan

awards in accordance with the relevant plan rules and the above Remuneration Policy table. The Committee retains

certain discretions, consistent with market practice, in relation to the administration of the awards including:

l the determination of performance measures, underpins and targets and resultant vesting and pay-out levels;

l the ability to amend or substitute a performance measure or target if one or more events occur which cause the

Committee to reasonably consider that an amended or substituted performance measure or target would be more

appropriate and would not be materially less difficult to satisfy than originally intended;

l the determination of the treatment of individuals who leave employment, based on the relevant plan rules, and the

treatment of the awards on exceptional events, such as a change of control of the Company; and

l the ability to make adjustments to deferred bonus awards, Restricted Share awards, Share Incentive Plan awards and

FC PSP awards in certain circumstances (e.g. rights issues or corporate restructurings).

Minimum

474

371

1,599

984

2,724

1,596

3,511

2,034

£4,000k

£3,500k

£3,000k

£2,500k

£2,000k

£1,500k

£1,000k

£500

£4,000k

£3,500k

£3,000k

£2,500k

£2,000k

£1,500k

£1,000k

£500

Target

Maximum

Maximum +

50% share

price increase

Maximum +

50% share

price increase

CEO (Lisa Jacobs) CFO (Tony Nicol)

100%

30%

21%

49%

17%

25%

58%

14%

19%

67%

38%

18%

44%

23%

22%

55%

18%

17%

65%

Illustrations of the application of the Remuneration Policy in 2025

Fixed Annual Bonus FC PSP Total

Illustration assumptions

Element of pay Minimum Target Maximum

Maximum + 50% share

price appreciation

Fixed remuneration:

l Base salary – effective as at 1 March 2025

l Benefits – in line with the value of 2024 benefits disclosed in the single figure table (which includes the previous

CFO’s value for the new CFO)

l Pension – 5% of salary

Annual bonus No payout 50% of maximum

(target payout)

Maximum payout

FC PSP No vesting Assumes threshold

performance with 25%

of the award vesting.

Assumes 100% of

award vests.

Maximum value vesting

multiplied by 1.5x.

Legacy arrangements

The Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising

any discretions available to it in connection with such payments) notwithstanding that they are not in line with the Policy set out

above where the terms of the payment were agreed (i) before the 2025 Policy came into effect provided that the terms of the

payment were consistent with any shareholder-approved Directors’ Remuneration Policy in force at the time they were agreed

or (ii) at a time when the relevant individual was not a Director of the Company or other person to whom this policy applies and,

in the opinion of the Committee, the payment was not in consideration for the individual becoming a Director of the Company

or other such person. For these purposes “payments” includes the Committee satisfying awards of variable remuneration and,

in relation to an award over shares, the terms of the payment are “agreed” at the time the award is granted.

The Committee reserves the right to make minor amendments to the Policy, for regulatory, exchange control, tax or

administrative purposes or to take account of a change in legislation, without seeking shareholder approval.

Funding Circle Holdings plc | Annual Report and Accounts 2024 97

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Directors’ remuneration report continued

Remuneration Policy continued

Executive Directors’ service contracts

The Executive Directors’ service contracts are on a rolling basis and are terminable by either the Company or the

individual on 12 months’ notice for the CEO and six months’ notice for the CFO. Notice periods for Executive Directors

will not exceed 12 months from either party.

Date of service agreement

Lisa Jacobs, CEO 1 January 2022

Tony Nicol, CFO 1 January 2025

Payments for loss of office

The principles on which the determination of payments for loss of office will be approached are set out below.

Policy

Payment in

lieu of notice

The Committee has discretion to make a payment in lieu of notice based on salary for the unexpired period of notice. The

Company may make such payment in monthly instalments, and it may be subject to mitigation.

Annual bonus

This will be at the discretion of the Committee on an individual basis and the decision as to whether or not to pay a

bonus in full or in part will be dependent on a number of factors, including the circumstances of the Executive Director’s

departure and their contribution to the business during the performance period in question.

Any bonus earned will normally be pro-rated for time in service during the performance period and will, subject to

performance, be paid at the usual time (although the Committee retains discretion to pay the bonus earlier in appropriate

circumstances) and in the normal manner. Any bonus earned for the year of departure and, if relevant, for the prior year

may be paid wholly in cash at the discretion of the Committee.

Deferred

bonus award

The extent to which any unvested awards will vest will be determined in accordance with the Deferred Bonus Plan rules.

If an Executive Director leaves for any reason (other than being dismissed for cause) during the deferral period

then unvested awards will continue and vest at the normal vesting date. In exceptional circumstances (including if a

participant dies), the Committee may decide that the Executive Director’s unvested award will vest and be released early

at the date of cessation of employment, in which case the Committee has discretion to apply time pro rating in limited

circumstances.

FC PSP

The extent to which any unvested awards will vest will be determined in accordance with the share plan rules.

Unvested awards will normally lapse on cessation of employment. However, unless a participant is dismissed for cause,

the Committee has discretion to determine that the unvested awards will continue and remain capable of vesting at the

normal vesting date, subject to the performance measures being met. To the extent that the awards vest, a two-year

holding period would then normally apply. In exceptional circumstances (including if a participant dies), the Committee

may decide that the Executive Director’s awards will vest and be released early at the date of cessation of employment or

at some other time (e.g. at the vesting date).

In either case, vesting will depend on the extent to which the performance conditions have been satisfied and will be

subject to a pro rata reduction for time served during the vesting period (although the Committee has discretion to

disapply time pro rating if the circumstances warrant it).

Change

of control

Deferred bonus awards and FC PSP will vest early in the event of a takeover, merger or other relevant corporate event.

Deferred bonus awards will typically vest in full.

As regards FC PSP awards, vesting will depend on the extent to which the performance conditions have been satisfied,

with the Committee taking into account relevant factors at the time, and will be subject to a pro rata reduction for time

served during the vesting period (although the Committee has discretion to disapply time pro rating if the circumstances

warrant it).

Alternatively, the Committee may permit deferred bonus awards and FC PSP awards to be exchanged for equivalent

awards of shares in a different company (including the acquiring company).

Other

payments

Executive Directors will be entitled to payment for accrued holiday.

Awards under the Share Incentive Plan may be released in the event of cessation of employment or change of control in

accordance with the plan rules.

The Committee reserves the right to make any other payments in connection with a Directors’ cessation of office or

employment where such payments are made in good faith in discharge of an existing legal obligation (or by way of

damages for breach of such an obligation) or by way of settlement or compromise of any claim arising in connection

with the termination of a Director’s office or employment. Any such payments may include but are not limited to paying

any fees for outplacement assistance and for the Directors’ legal and/or professional advice fees in connection with his

cessation of office or employment. Incidental expenses may also be payable where appropriate.

Recruitment policy

The Company’s recruitment remuneration policy aims to give the Committee sufficient flexibility to secure the

appointment of high calibre executives to strengthen the management team and secure the skill sets necessary

to deliver the Group’s strategic aims.

When hiring a new Executive Director, the Committee will typically align the remuneration package with the Remuneration

Policy as set out above. The Committee may include other elements of pay which it considers appropriate, however, this

discretion is capped and is subject to the principles and the limits referred to below. The key terms and rationale for any

such element would be disclosed in the Directors’ Remuneration Report for the relevant year.

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Policy

Salary

Salary will be set at a level appropriate to the role and the experience of the Executive Director being appointed.

This may include a provision for future increases up to a market rate, in line with increased experience and

responsibilities, subject to good performance, where it is considered appropriate.

Buy-out awards

It may be necessary to make additional awards in connection with the recruitment to buy-out remuneration terms

forfeited by the individual on leaving a previous employer if it considers the cost can be justified and it is in the

best interests of the Company. Buy-out awards are not subject to a formal cap. The Committee will seek to make

buy-outs subject to what are, in its opinion, comparable requirements in terms of service and performance.

Where considered appropriate, buy-out awards will be liable to forfeiture or recovery provisions on early departure.

Maximum level

of variable

remuneration

The maximum level of variable remuneration which may be granted (excluding buy-out awards) will be 150% of

salary for the annual bonus and 350% of salary for FC PSP awards, in line with the limits in the Policy Table above.

Other elements of

remuneration

Other elements may be included in the following circumstances:

l An interim appointment being made to fill an Executive Director role on a short-term basis.

l If exceptional circumstances require that the Chair or a Non-Executive Director takes on an executive function on

a short-term basis.

l If an Executive Director is recruited at a time in the year when it would be inappropriate to provide an annual

bonus or Restricted Share award for that year, subject to the limit on variable remuneration set out above, the

quantum in respect of the period employed during the year may be transferred to the subsequent year.

l If the Executive Director is required to relocate, reasonable relocation, travel and subsistence payments may be

provided (either via one-off or ongoing payments or benefits).

For an internal appointment, any legacy arrangements will either continue on their original terms or be adjusted to

reflect the new appointment, as appropriate.

Any share awards referred to in this section will be granted as far as possible under the Company’s existing share

plans. If necessary, and subject to the variable remuneration limits referred to above, awards may be granted outside

of these plans as permitted under the Listing Rules which allow for the grant of awards to facilitate, in unusual

circumstances, the recruitment of an Executive Director.

Fees payable to a newly appointed Chair or Non-Executive Director will be in line with the fee policy in place at the time

of appointment.

Policy on external appointments

Executive Directors may hold external directorships and retain any fees for such directorships if the Board determines

that such appointments do not cause any conflict of interest.

Non-Executive Directors’ remuneration

Key features Purpose and link to strategy

The fees paid to the Chair are determined by the Remuneration Committee. The

fees for the Non-Executive Directors are determined by the Board as a whole.

The Chair and the Non-Executive Directors are paid annual fees and do not

participate in any of the Company’s incentive arrangements or receive any

pension provision or other benefits.

Additional fees are payable for additional Board duties, including acting as Senior

Independent Director and for chairing Committees. Additional fees may be paid

in the exceptional event that Non-Executive Directors are required to commit

substantial additional time above that normally expected for the role.

The Chair and/or Non-Executive Directors may receive part of their fee(s) in

company shares.

The Non-Executive Directors are not entitled to any compensation on termination

of their appointment.

The Non-Executive Directors are entitled to reimbursement of reasonable

expenses (including any associated tax liabilities).

Overall fees paid to the Chair and Non-Executive Directors will remain within the

limits set by the Company’s Articles of Association.

Fees are set at a level to reflect

the amount of time and level of

involvement required in order to

carry out their duties as members

of the Board and its Committees

and to attract and retain Non-

Executive Directors of the highest

calibre with relevant commercial

and other experience.

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Directors’ remuneration report continued

Remuneration Policy continued

Non-Executive Directors’ remuneration continued

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.

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.

All Circlers are eligible for either the Group annual bonus plan or another bonus arrangement. 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 to ensure it’s

aligned with our strategy, valued by Circlers, and provides value for money.

The key elements to the incentive arrangements are:

l The Executive Committee members currently participate in a restricted share plan which is similar in nature to

the plan that the Executive Directors are currently eligible for. If the proposed Remuneration Policy is approved at

the 2025 AGM, the Executive Committee members will participate in the FC PSP, to ensure an increased focus on

performance and alignment with Executive Directors. The same performance conditions will apply to the Executive

Committee as the Executive Directors and will be measured over three years and vest after three years.

l Other senior management and senior specialist roles participate in a restricted share plan with grant size increasing

with seniority. Equity awarded to these Circlers is subject to continued employment for the two years following the

grant date but is not otherwise normally subject to performance conditions.

l The leadership team, managers and specialists participate in a Group annual bonus plan which has similar financial

measures as the Executive Directors’ annual bonus.

l All Circlers, including Executive Directors, are eligible to participate in our Share Incentive Plan where, for every

“Partnership share” that is purchased, two “Matching shares” are awarded.

l Junior Circlers are eligible to receive a cash bonus each year, the size of which depends on their length of service

and affordability.

Our workforce engagement Director, Helen Beck, frequently holds workforce engagement sessions with Circlers. While

Circlers were not directly consulted in the development of the Directors’ Remuneration Policy, a range of topics are

discussed in workforce engagement sessions including those of remuneration, reward and recognition.

Alignment between Executive and Circlers’ remuneration

The Executive Directors’ Policy was designed to align Circler and Executive pay. The main differences between how

Executive Directors and Circlers are remunerated are the participation in the FC PSP, longer time periods (vesting,

holding and deferral) and tougher performance criteria. The annual performance measures that apply to senior

management and specialist roles are the same as those used by Executive Directors.

Funding Circle Holdings plc | Annual Report and Accounts 2024100

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Annual report on remuneration

This part of the report sets out how the current Remuneration Policy

has been applied in 2024 and how the Committee intends to apply the

proposed Remuneration Policy in 2025. This part of the report will be

subject to an advisory shareholder vote at the 2025 AGM.

Role of the Committee

The Committee’s primary role is to determine the remuneration of the Directors and Executive Committee, 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 external guidance, such as the UK Corporate Governance Code.

For information regarding the Committee’s role and key responsibilities, please see the Terms of Reference on our

website at corporate.fundingcircle.com/who-we-are/corporate-governance/board-committees.

Committee composition

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 the Committee.

Committee members Number of meetings attended

Helen Beck, Chair 6/6

Andrew Learoyd 6/6

Matthew King 6/6

The Executive Directors, Chief People Officer, other members of the senior management team and our external

remuneration consultants, Alvarez & Marsal, were invited to Committee meetings where it was deemed appropriate.

No individuals were involved in decisions relating to their own remuneration.

2024 Committee workstreams

l determined the payout of the Executive Directors’ 2023 annual bonus;

l approved the payout of the 2023 annual bonus for Circlers;

l approved the design of the 2024 annual bonus for Circlers and the equity plans;

l set the 2024 annual bonus targets for Executive Directors;

l set the 2024 Restricted Share Plan underpins and approved the grants for Executive Directors;

l reviewed other variable pay plans in the Group;

l approved reward decisions relating to members of the Executive Committee and reviewed Circler compensation; and

l conducted a comprehensive review of the Remuneration Policy, which included consultation with our shareholders,

in preparation for its renewal at the 2025 AGM.

2025 Committee priorities

l approve the remuneration arrangements for the Executive Committee, including their equity grants and 2024

bonus outcomes;

l approve the design of the 2025 annual bonus for Circlers and the equity plans, and review other non-Group incentives;

l set the 2025 annual bonus targets, ensuring they align with Funding Circle’s strategy as well as its ESG priorities;

l set the 2025 FC PSP performance conditions and approve the grants for Executive Directors; and

l continue to monitor remuneration practices across the Company as a whole, keeping abreast of current and evolving

market practice.

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STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Committee effectiveness

The Committee undertook an effectiveness review at the end of 2024, whereby each Committee member and, by

invitation, the Chief People Officer, Company Secretary, and the Head of Reward 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 2024. The positive scores and comments

demonstrated that the Committee is working well.

External advisers

The Committee is satisfied that the advice it has received from its appointed adviser Alvarez & Marsal 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. Alvarez & Marsal was appointed by

the Committee in 2023 following a competitive tender process. Alvarez & Marsal is a 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 Alvarez & Marsal in 2024 in relation to advice provided to the Committee was £51,900 (excluding VAT),

which was based on time spent. Alvarez & Marsal provide no other services to the Group.

Letters of appointment and service contracts

Director

Commencement date

of current term

Expiry of

current term

Notice period

From Company From Director

Executive Directors

Lisa Jacobs 1 January 2022 n/a Twelve months Twelve months

Tony Nicol 1 January 2025 n/a Six months Six months

Non-Executive Directors

Andrew Learoyd 10 September 2024 30 June 2025 One month One month

Ken Stannard 1 January 2025 1 January 2028 One month One month

Geeta Gopalan 18 September 2024 18 September 2027 One month One month

Hendrik Nelis 5 September 2024 5 September 2027 One month One month

Neil Rimer 5 September 2024 5 September 2027 One month One month

Helen Beck 3 July 2024 3 July 2027 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 in respect of the Remuneration Policy and Annual Report on Remuneration at the 2024

AGM received the following votes from shareholders:

Number of votes

Remuneration Policy

(2024 AGM)

Annual Report on Remuneration

(2024 AGM)

Votes cast in favour 262,845,251 98.7% 265,526,769 99.7%

Votes cast against 3,377,814 1.3% 696,296 0.3%

Votes withheld 42,130 0.0% 42,130 0.0%

Total votes cast (including withheld) 266,265,195 100.0% 266,265,195 100.0%

Annual report on remuneration continued

Funding Circle Holdings plc | Annual Report and Accounts 2024102

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 2024

and 2023 respectively.

2024

Salary

and fees

£000

Taxable

benefits

£000

Pensions

£000

Bonus

£000

Long-term

incentives

£000

Total

£000

Total

fixed

£000

Total

variable

£000

Executive Directors

Lisa Jacobs 423 5 21 480 478

1,407 449 958

Oliver White 419 7 21 358 359

1,164 447 717

Non-Executive Directors

Andrew Learoyd 207 — — — — 207 207 —

Eric Daniels

21 — — — — 21 21 —

Geeta Gopalan 80 — — — — 80 80 —

Helen Beck 70 — — — — 70 70 —

Matthew King 70 — — — — 70 70 —

Samir Desai CBE

45 — — — — 45 45 —

Hendrik Nelis

— — — — — — — —

Neil Rimer

— — — — — — — —

2023

Executive Directors

Lisa Jacobs 412 1 20 268 — 701 433 268

Oliver White 408 4 20 200 212

844 432 412

Non-Executive Directors

Andrew Learoyd 207 — — — — 207 207 —

Eric Daniels 70 — — — — 70 70 —

Geeta Gopalan 80 — — — — 80 80 —

Helen Beck 70 — — — — 70 70 —

Matthew King 70 — — — — 70 70 —

Samir Desai CBE 55 — — — — 55 55 —

Hendrik Nelis

— — — — — — — —

Neil Rimer

— — — — — — — —

1. Taxable benefits for Executive Directors principally include private medical cover and life assurance cover and awards made under the Share Incentive Plans

(including matching shares). 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, £10,000 was paid into each of Lisa Jacobs and Oliver White’s company pension

with the remainder paid as cash in lieu.

3. Shows the value of the vesting of the 2022 Restricted Share award based on a 3-month average share price to 31 December 2024 of 133.3p. This award was

granted on 24 March 2022 was based on a fixed number of shares and was worth 78% of salary for the CEO and 58% of salary for the CFO using a 3-month

average share price of 86.6p at date of grant. The fixed number of shares meant that the value of the award was far less than the initial policy maximums of 133%

of salary for the CEO and 100% of salary for the CFO. The proportion of the vested value which is attributable to share price growth is therefore 35.1% of the

value, or £167k for the CEO and £126k for the CFO. The Remuneration Committee did not exercise discretion in respect of this share price appreciation.

4. Eric Daniels stepped down from the FCH Board on 15 May 2024.

5. Samir Desai CBE stepped down from the FCH Board on 25 October 2024.

6. Hendrik Nelis and Neil Rimer, who are non-independent Non-Executive Directors, have waived their entitlement to a fee.

7. Shows the value of the 2021 Restricted Share award that vested on 19 May 2024 at a share price of 78.8p. This award was granted on 19 May 2021 based on

a share price of 148.5p. The proportion of the vested value which is attributable to share price growth is therefore zero. The Remuneration Committee did

not exercise discretion in respect of this share price depreciation. The 2021 Restricted Share award value disclosed in the 2023 Remuneration Report was an

estimate based on an average three-month share price to 31 December 2023 of 37.5p.

2024 annual bonus (audited)

The maximum opportunities for 2024 were 133% of salary for the CEO and 100% of salary for the CFO. As announced

in last year’s Directors’ Remuneration Report, the weighting of the financial measures would be at least 60% of

the annual bonus measures and the strategic/non-financial measures at most 40%. The Remuneration Committee

determined that the weighting on financial measures would be 70%, split equally between Group Revenue and Group

Profit Before Tax (pre-exceptionals). The remaining 30% on strategic/non-financial was based on delivering key 2024

strategic, stewardship, and sustainability objectives. The measures were set by the Committee and were in line with

Funding Circle’s strategy. Stretching financial targets were set by the Committee at the start of the year, taking into

consideration a number of factors including our 2024 guidance. For the financial measures, an on-target bonus could

be earned for achieving 2024 guidance performance.

Funding Circle Holdings plc | Annual Report and Accounts 2024 103

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Annual report on remuneration continued

2024 annual bonus (audited) continued

Structure of the 2024 bonus

Element (weighting %)

Threshold

(0% payout)

Target

(50% payout)

Maximum

(100% payout) Outcome

Implied payout

of element

CEO CFO

Financial

measures (70%)

Group revenue (35%) £131m £152.6m £174.1m £160.1m 67.4%

Group profit before tax (35%)

(pre-exceptionals)

-£9.7m -£2.5m £4.7m £3.4m 91.0%

Strategic/non-financial (30%) See below 100%

Total (% of maximum) 85.4%

Total (% of salary) 113.6% 85.4%

Final outcome (£k) 480 358

In this overall performance context, the outcome of the bonus assessment against the agreed targets was 85.4%

of maximum. The Committee considers this an appropriate reflection of the overall performance delivered for

stakeholders, and therefore no discretion was applied. In line with our Remuneration Policy, 40% of Lisa Jacobs’ bonus

payout will be deferred into shares for three years (subject to continued employment) and Oliver White’s bonus will be

paid in cash.

Strategic/non-financial measures

In 2024 we removed personal performance from the Executive Directors’ strategic/non-financial measures as the

Committee believes that their personal performance is reflected in the overall Company performance.

Category Details on objectives and performance

Strategy

Delivery of key

2024 strategic

objectives

#1 in new products: FlexiPay:

l More than 3x growth in FlexiPay line of credit compared to 2023.

l Built the infrastructure and capability for a credit card product, launching a Cashback credit card in the

second half of the year.

l Over 18k FlexiPay cards issued, and c.12k active accounts.

US disposal:

l Successful divestment of US business at a gain of £10 million and transfer of all US Circlers to the

acquiring party.

Journey to ongoing Group profitability: increased efficiency, cost management, and productivity

improvements:

l Successful streamlining of the business to deliver £15 million annualised savings into 2025, including a

reduction in headcount (~120).

l >3x share price and >£400 million market cap.

Stewardship &

Sustainability

Delivering

business goals in

the right way

Risk & Controls appetite maintained within agreed thresholds:

l Our credit portfolios demonstrated resilience in the face of a deteriorating market, showcasing the

strength of our underwriting and risk management practices.

l Continued to strengthen risk management framework and improve our credit models.

Building culture and increasing engagement:

l Engagement maintained, scoring 64% (v.66% in 2023). This is considered a positive outcome in light of

significant business change in 2024. This included a reduction in the number of UK Circlers through a

redundancy programme, and change to the hybrid working policy (increasing office attendance to at

least 3 days per week).

l Voluntary attrition levels remained low throughout the year at around 18%.

Committed and sustained focus on our ESG agenda and goals:

l In 2024, the Company made good progress in delivering against its ESG objectives, taking into

consideration changes in the business, including the sale of the US operations.

l Carried out benchmarking of our activities and reviewed our ambition statements for each of our key

pillars – Environmental, Social Impact, DEI and Governance – to ensure they remain in line with our

vision and broader sustainability developments.

The Remuneration Committee determined that as performance against strategic/non-financial objectives exceeded

expectations, and with significant strategic value delivered in 2024, that 100% of the strategic/non-financial element

should pay out. This has been a year of considerable progress for Funding Circle.

Funding Circle Holdings plc | Annual Report and Accounts 2024104

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Restricted shares awarded in 2022 vesting in respect of 2024 (audited)

The 2022 restricted share awards granted to Lisa Jacobs and Oliver White were based on a number of shares which

was fixed at the beginning of the 2021 Remuneration Policy. Awards of 358,177 and 269,306 shares were made to the

CEO and CFO on 24 March 2022. This represented 78% and 58% of salary respectively, a reduction of approximately

42% on the Policy levels at that time (being 133% of salary for the CEO and 100% of salary for the CFO).

The restricted share awards were subject to a number of underpins (as opposed to performance conditions). The

financial underpin was based on achieving average Total Income for the Group of £181.3 million over the three-year

period to 31 December 2024. Following the sale of the US business, it was no longer feasible to assess performance

against this underpin in a way which was fair and consistent with the basis of the original calibration. Further, as the

US business was highly capital intensive and required significant capital allocation from the wider Group to achieve

its goals, the Committee determined that a restatement of the underpin was not appropriate nor feasible given the

different investment assumptions that would need to be applied for the wider Group. In this context, the Committee has

considered the underpin based on a broader assessment of overall performance during the period. In this assessment,

the Committee considered a number of key aspects of financial and strategic performance, including:

l profitability being achieved ahead of expectations in 2024 and over the three-year period;

l the successful sale and transition of the US business to the acquiring party;

l successful launch of a new UK-focused multi-product strategy, including a short-term credit SME proposition in

FlexiPay; and

l market acknowledgement and significant change to share price and market capitalisation, having approximately

doubled over the period.

In addition to the financial underpin there were also qualitative underpins to ensure that Executive Directors are not

rewarded where the Committee considers there to have been a failure in performance, including serious breach

of regulation, material reputational damage and gross misconduct. The Committee determined that the qualitative

underpins were achieved.

In determining the final vesting, the Committee also took into consideration the size of the awards, which were reduced

significantly from the Policy level at the time of grant due to the fixed number of shares approach, as described above.

In this context, the Committee determined that awards will vest in full on 24 March 2025. There is a further 2-year post-

vesting holding period that will apply until 24 March 2027.

Restricted Share awards granted during 2024 (audited)

Restricted Share awards were granted to the Executive Directors on 30 March 2024 under our Policy. Details of the

awards are set out below:

Face value at grant

Type of award Number of shares £ % of salary Grant date Vesting date Holding period

Lisa Jacobs Nil-cost option 1,006,191 488,003 115% 16 May 2024 16 May 2027 16 May 2027

to 16 May 2029

Oliver White Nil-cost option 736,521 357, 213 85% 16 May 2024 16 May 2027 16 May 2027

to 16 May 2029

1. In line with Funding Circle’s established approach, based on a three-month average share price to the grant date of 48.5p and salaries of £424,350 for Lisa

Jacobs and £420,250 for Oliver White.

We disclosed in the 2023 Directors’ Report on Remuneration that the Committee intended to grant awards at a level

below the Policy maximum of 133% and 100% of salary, for the CEO and CFO respectively in 2024. This was to reflect

investor expectations around safeguarding against the potential for “windfall gains” in scenarios where long-term share

awards are granted following a period of share price decline. In May 2024 we granted awards at the level of 115% and

85% of salary for the CEO and CFO respectively. These awards are subject to an assessment of financial and non-

financial underpins.

Funding Circle Holdings plc | Annual Report and Accounts 2024 105

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Annual report on remuneration continued

Restricted Share awards granted during 2024 (audited) continued

Restricted share awards are subject to discretionary underpins that guide the Remuneration Committee when

determining whether any discretion needs to be applied to reduce, including to nil, the final vesting of the restricted

shares. The underpins are both financial as well as non-financial, and are as follows:

l For the financial underpins the Remuneration Committee will assess whether there is a material weakness in

the underlying financial health or sustainability of the business. Factors such as, but not limited to, share price,

Originations, Net Income, profitability, and cash generation would be considered, in the context of the Board’s

expectations and the market environment.

l For the non-financial underpins the Remuneration Committee will assess ESG performance, delivery against strategic

objectives, and personal performance over the vesting period.

l 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 further

reductions will be made.

l Prior to vesting, the Committee retains the flexibility to assess any element of performance it deems appropriate in

order to determine whether a discretionary adjustment is requirement.

Any vested awards will remain subject to a two-year post-vesting holding period.

Directors’ shareholding and share interests (audited)

Table of Directors’ share interests as at 31 December 2024

Beneficially

owned shares

Vested but

unexercised

awards

Unvested

awards

(not subject to

performance

conditions)

Unvested

awards

(subject to

performance

conditions) Total

Total that count

towards

shareholding

guidelines

(including

unexercised

awards

net of tax)

Executive Directors

Lisa Jacobs 414,658 736,142 473,496 1,722,545 3,346,841 1,055,766

Oliver White 179,441 340,543 502,787 1,275,133 2,297,904 626,406

Non-Executive Directors

Andrew Learoyd 1,789,991 — — — 1,789,991 n/a

Samir Desai CBE 8,388,206 2,150,000 192,570 — 10,730,776 n/a

Eric Daniels — — — — — n/a

Geeta Gopalan 33,216 — — — 33,216 n/a

Helen Beck 9,235 — — — 9,235 n/a

Matthew King 15,400 — — — 15,400 n/a

Hendrik Nelis — — — — — n/a

Neil Rimer — — — — — n/a

1. Samir Desai CBE stepped down from the Board on 25 October 2024. Share interests are listed as of this date.

2. Includes shares owned by connected persons.

Note: Between the year end and the date of this Annual Report and Accounts, there has been no movement in current Directors’ Shareholdings from that

shown above.

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

(increasing to 250% of salary for the CEO in 2025). At the end of the 2024 financial year, the CEO (who was appointed

to the Board on 1 January 2022), held 1,055,766 shares, equal to 332% of salary (which includes unexercised awards on

a net of tax basis) based on the three-month average share price to 31 December 2024 of 133.3p. The CFO (who was

appointed to the Board on 15 June 2020), held 626,406 shares, equal to 199% of salary (which includes unexercised

awards on a net of tax basis) based on the three month average share price to 31 December 2024 of 133.3p. Unvested

awards subject to performance conditions are not taken into account in the assessment of the shareholding until such

time as they vest.

Funding Circle Holdings plc | Annual Report and Accounts 2024106

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Table of Directors’ vested and unvested share awards (audited)

Award type

Date of grant

No. of

awards at

1 January

2024

Awards

granted

in the year

Awards

lapsed

in the year

Awards

vested

in the year

Awards

exercised

in the year

No. of

awards at

31 December

2024

Date of

vesting/end of

performance

period

Exercise

price

Market

price

exercise

Executive Directors

Lisa Jacobs

2018 LTIP

29/11/2019 250,000 — — — — 250,000 11/03/2020 £0.00 n/a

18/03/2020 162,500 — — — — 162,500 12/03/2022 £0.00 n/a

26/03/2021 173,642 — — — — 173,642 26/03/2023 £0.00 n/a

Restricted

24/03/2022 358,177 — — — — 358,177 24/03/2025 £0.00 n/a

30/03/2023 358,177 — — — — 358,177 30/03/2026 £0.00 n/a

16/5/2024 — 1,006,191 — — — 1,006,191 16/5/2027 £0.00 n/a

2021 Deferred

bonus plan

30/3/2023 166,110 — — — — 166,110 30/3/2026 £0.00 n/a

26/3/2024 — 303,106 — — — 303,106 26/3/2027 £0.00 n/a

Incentive Plan

03/11/2020 4,646 — — — — 4,646 15/04/2022 £0.00 n/a

05/05/2021 2,341 — — — — 2,341 05/05/2023 £0.00 n/a

20/04/2022 4,814 — — 4,814 — 4,814 20/04/2024 £0.00 n/a

16/06/2022 3,005 — — 3,005 — 3,005 16/06/2024 £0.00 n/a

17/6/2024 — 4,370 — — — 4,370 17/6/2026 £0.00 n/a

Unapproved 09/05/2018 150,000 — — — — 150,000 01/03/2022 £0.44 n/a

Oliver White

Incentive Plan

03/11/2020 4,991 — — — — 4,991 15/04/2022 £0.00 n/a

18/01/2021 3,967 — — — — 3,967 18/01/2023 £0.00 n/a

20/04/2022 4,814 — — 4,814 — 4,814 20/04/2024 £0.00 n/a

16/06/2022 3,005 — — 3,005 — 3,005 16/06/2024 £0.00 n/a

17/6/2024 — 4,372 — — — 4,372 17/6/2026 £0.00 n/a

2020 bonus

buyout

26/03/2021 71,237 — — — — 71,237 26/03/2022 £0.00 n/a

Restricted

19/05/2021 269,306 — — 269,306 — 269,306 19/05/2024 £0.00 n/a

24/03/2022 269,306 — — — — 269,306 24/03/2025 £0.00 n/a

30/03/2023 269,306 — — — — 269,306 30/3/2026 £0.00 n/a

16/5/2024 — 736,521 736,521 16/5/2027 £0.00 n/a

2021 Deferred

bonus plan

21/04/2022 147,533 — — — — 147,533 21/04/2025 £0.00 n/a

30/03/2023 124,895 — — — — 124,895 30/03/2026 £0.00 n/a

26/3/2024 — 225,987 — — — 225,987 26/03/2027 £0.00 n/a

Non-Executive Directors

Andrew Learoyd

18/6/2015 100,000 — — — 100,000 — 18/06/2015 £0.31 £0.41Unapproved

Samir Desai CBE

Unapproved 13/06/2018

2,150,000

— — — — 2,150,000 01/06/2020 £0.00 n/a

2021 Deferred

bonus plan 21/04/2022 192,570 — — — — 192,570 21/04/2025 £0.00 n/a

Eric Daniels

Unapproved 09/09/2016 187,50 0 — — — 187,500 — 01/03/2016 £0.39 £1.25

1. Other than in certain circumstances as set out in the Remuneration Policy on page 98 (e.g. on termination of employment or change of control), vested

unapproved options can be exercised during a period of ten years from the date of grant.

2. 2023 bonus deferrals: 40% of Lisa Jacobs’ bonus (£107.2k) was deferred into nil cost options for three years on 26 March 2024, using a 3-month average share

price of 35.36p. 40% of Oliver White’s bonus (£79.9k) was deferred into nil cost options for three years on 26 March 2024, using a 3-month average share price

of 35.36p.

Funding Circle Holdings plc | Annual Report and Accounts 2024 107

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Annual report on remuneration continued

Payments for loss of office (audited)

After nearly 5 years, Oliver White stood down from his role as CFO on 31 Dec 2024, following a successful transition

period. The Committee took into account Oliver’s commitment and significant contribution to the business over the

course of 2024, including the successful sale of the US business, and a reorganisation of the UK business, alongside

the delivery of the key strategic objectives of the business. Oliver will be treated as a good leaver and his unvested

Restricted Share awards will be time-prorated and vest on their original vesting dates, subject to the relevant

underpins. Any unvested deferred bonus share awards will vest in full on their original vesting date. Any unvested

matching shares granted under our all-employee Share Incentive Plan lapsed in full, in line with the plan rules. Oliver

remained eligible for a 2024 bonus having been in office for the full financial year. The bonus outcome is as described

above and it will be paid fully in cash in line with our policy. He will not receive any other payments linked to his exit.

Payments to former Directors (audited)

There were no payments made to former Directors during the year.

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 of £4.40 per share on 28 September 2018 compared with the value of £100 invested in the FTSE

AllShare Index on that date to the end of each subsequent financial year.

CEO remuneration table

The table below sets out the CEO’s single figure of total remuneration.

£000 2017 2018 2019 2020 2021 2022 2023 2024

CEO

Samir

Desai CBE

Samir

Desai CBE

Samir

Desai CBE

Samir

Desai CBE

Samir

Desai CBE

Lisa

Jacobs

Lisa

Jacobs

Lisa

Jacobs

CEO total remuneration

204 4,081 211 201 629 661 701 1,407

Annual bonus payout (% maximum)

n/a n/a n/a n/a 78.4% 45.0% 48.9% 85.4%

Long-term incentives (% maximum)

n/a n/a n/a n/a n/a n/a n/a 100%

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. Samir Desai CBE did not participate in any bonus from 2016 to 2020.

3. Samir Desai CBE 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 with the first vesting in March 2025.

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.

Net Income and Profit Before Tax (PBT) have been presented as these are two key performance measures used by the

Directors in assessing Funding Circle’s performance.

2024 2023 % Change

Net income £160.1m £130.1m 23.1%

Profit before tax £3.4m (£9.9m) (134.3%)

People costs £68.1m £65.5m 4.0%

Average number of employees 721 756 (4.6%)

100

120

31 Dec 2018 31 Dec 2019 31 Dec 2020

Funding Circle plc FTSE AllShare Index

31 Dec 2021 31 Dec 2022 31 Dec 2023

Funding Circle Holdings plc | Annual Report and Accounts 2024108

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Percentage change in Directors’ remuneration compared with employees

The table below sets out the annual percentage change in remuneration from 2019 to 2024 for each individual who was

a Director during 2024, compared to that for an average employee. Data for former Directors during this timeframe can

be found in the relevant Directors’ Remuneration Reports spanning their tenure.

Salary/fees

Benefits Annual bonus

2023

2024

2022

2023

2021

2022

2020

2021

2019

2020

2023

2024

2022

2023

2021

2022

2020

2021

2019

2020

2023

2024

2022

2023

2021

2022

2020

2021

2019

to 2020

Executive Directors

Lisa Jacobs

+2.7% +2.9% n/a n/a n/a +3.4% +2.7% n/a n/a n/a +79.3% +12.0% n/a n/a n/a

Samir Desai CBE

(CEO) n/a n/a n/a +5% -5% n/a n/a n/a 33.6%

0% n/a n/a n/a n/a n/a

Oliver White

+2.5% +2.1% — — n/a +2.1% +1.7% -22% +8.4% n/a +79.0% +11.1% -43.7% n/a n/a

Non-Executive Directors

Andrew Learoyd +0% +0.6% +2.9% +5% -100% -100% n/a n/a n/a n/a n/a n/a n/a n/a n/a

Samir Desai CBE

(NED) -17.7% — n/a n/a n/a — — n/a n/a n/a n/a n/a n/a n/a n/a

Eric Daniels 70.5% +1.2% +6.4% +5% -5% -82.1% -91.9% +21% n/a -100% n/a n/a n/a n/a n/a

Geeta Gopalan — +1.1% +11% +15% -5% — n/a n/a n/a n/a n/a n/a n/a n/a n/a

Helen Beck

— +1.2% +6.4% n/a n/a — n/a n/a n/a n.a n/a n/a n/a n/a n/a

Matthew King

— +3.7% +39.3% n/a n/a — n/a n/a n/a n/a n/a n/a n/a n/a n/a

Hendrik Nelis

n/a n/a n/a n/a n/a — n/a n/a n/a n/a n/a n/a n/a n/a n/a

Neil Rimer

n/a n/a n/a n/a n/a — n/a n/a n/a n/a n/a n/a n/a n/a n/a

Average employee

+0.9% +3.4% 8.7% -13.3% -1.7% -17.3% +7.3% -4.0% +8.7% +1.8% -9.1% 7.0% +3.3% +17.1% +61.2%

1. The Board and the Executive Committee (then 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 CBE, as CEO, waived his salary increase for 2021.

2. Lisa Jacobs was appointed to the Board on 1 January 2022.

3. Samir Desai’s CBE 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. The increase reported in the table above reflects the increase in 2022 in the additional fee payable for chairing the Remuneration Committee.

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 non-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.

Year Method 25th percentile pay ratio Median pay ratio 75th percentile pay ratio

2024 Option A 34.9 21.9 13.6

2023 Option A 18.1 11.8 7.4

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 increase in the CEO pay ratio for 2024 due to Lisa’s bonus paying out higher in 2024 than in 2023

as well as her first vesting of the 2022 Restricted Share award. The Board has confirmed that the median ratio is

consistent with the Company’s wider policies on employee pay, reward and progression.

Funding Circle Holdings plc | Annual Report and Accounts 2024 109

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Annual report on remuneration continued

CEO pay ratio continued

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.

2024 25th percentile Median 75th percentile

Salary component £33,843 £50,159 £83,187

Total pay and benefits £40,218 £64,183 £103,191

The CEO remuneration is the total single figure remuneration for the relevant years and 2023 and 2024 are disclosed

on page 103. The employee total remuneration has been calculated based on the amount paid or receivable for the

relevant years. The calculations for the UK employees were performed as at the final day of the relevant financial year.

Implementation of the Remuneration Policy for the year ended 31 December 2025

Salary

The Committee believes the CEO salary should be increased to £475k. Following shareholder consultations,

considerations on the wider Circler salary increase and our culture, as well as input from the CEO herself, this increase

will be phased over two years. In 2025 the Committee will increase Lisa Jacob’s salary to £450k, which represents

an increase of 6.0% on her current salary, and 4.5% on the proposed 2024 base salary which she decided to waive.

This new salary is still low relative to the market, however when combined with variable pay opportunities positions

the total remuneration package at a competitive level, but more heavily weighted towards the performance-related

elements. The Committee intends to increase her salary by a further 5.6% on 1 March 2026 to £475,000. Tony Nicol

was appointed CFO on 1 January 2025 on a salary of £350,000. The salary budget for other Circlers in 2025 is 3.5%.

1 March

2024

1 March

2025 % change

Lisa Jacobs £424,350 £450,000 6.0%

Tony Nicol n/a £350,000 n/a

Annual bonus

The maximum opportunity for the CEO is 150% of salary and for the CFO is 100% of salary. In line with 2024, we will

base the annual bonus 70% on financial measures, which will continue to be 35% on revenue and 35% on profit, and

30% on strategic/non-financial measures.

Up to 40% of any bonus earned will be deferred into shares for three years. The deferral applied by the Committee

will reflect whether the Executive Directors have met their shareholding requirement at the time of the bonus payment,

provided that the Committee still has sufficient ability to exercise malus and clawback provisions. A level of deferral

will always apply (e.g. 20%). The Board considers the actual targets for 2025 to be commercially sensitive at this time,

however, we will provide retrospective disclosure of these targets in next year’s report.

FC PSP

In line with the typical opportunities as set out in the proposed Policy, the CEO award will be 350% of salary and the

CFO award will be 250% of salary. The 2024 awards will be granted following shareholder approval of the new Policy at

the AGM in May. The Committee retains discretion to ensure the actual grant, which will be disclosed when awards are

granted and in next year’s report, reflects the latest available information prior to grant.

The vesting of the FC PSP awards will be subject to performance measures. These measures will be relative Total

Shareholder Returns (rTSR) which will be weighted 60% and Adjusted Profit before Tax (PBT) which will be weighted

40%. The Total Shareholder Returns will be measured against the FTSE 250 excluding Investment Trusts, which reflects

our ambition to enter, and progress through, the FTSE 250. The Adjusted PBT targets for 2027 have been set to reflect

the Board’s ambitions for growth as the business delivers on the strategy. The target range represents an appropriate

level of stretch, with maximum vesting requiring significant outperformance. The threshold and maximum performance

targets are summarised below:

Measure Threshold (25% vesting) Maximum (100% vesting)

rTSR vs. the FTSE 250 excluding Investment Trusts Median TSR ranking Upper quartile TSR ranking

Adjusted PBT in 2027 £20 million £60 million

There will be straight-line vesting in between threshold and maximum performance. As always, the Committee will

consider overall performance in determining any vesting of awards (including share price appreciation).

Any vested awards will remain subject to a two-year post-vesting holding period.

Funding Circle Holdings plc | Annual Report and Accounts 2024110

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

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. The Executive Directors, and all UK Circlers, are eligible to receive a pension contribution and/or cash in lieu

of 5% of salary.

Non-Executive Director and Chair fees

Fee 2024 2025

Chair fee £207,000 £220,000

Non-Executive Director base fee

£55,000 £60,000

Senior Independent Director fee £10,000 £10,000

Remuneration Committee Chair fee £15,000 £15,000

Combined Audit and Risk Committee Chair fee

£15,000 £25,000

ESG Committee (or any similar committee appointed by the Board) n/a £5,000

1. Ken Stannard will receive a prorated fee of £220,000 following his appointment as Funding Circle Chair if approved at the 2025 AGM. Up until that date

Ken Stannard will receive a prorated Non-Executive Director base fee. Andrew Learoyd continues to receive £207,000 until he steps down at the 2025 AGM.

2. The Non-Executive Director base fee will be increased to £60,000 in 2025. This is the first increase to base fees since IPO in 2018. Hendrik Nelis and Neil Rimer,

who are non-independent Non-Executive Directors, have waived their entitlement to a fee.

3. The Audit and Risk Committees are currently combined, and the Chair will therefore receive a combined fee of £25,000. If the Audit and Risk Committees were

standalone, the respective Committee Chairs would receive the standard fee of £15,000 each.

How our remuneration is aligned with the principles of the code

Alignment to strategy and culture

l The design of remuneration at Funding Circle is aligned to our values,

culture and strategy.

l The annual bonus is based on financial and strategic performance

promoting collective accountability and helps to align the Executive

Directors’ incentive structure with the wider Group.

l Performance share awards fully align with our remuneration philosophy of

ensuring that senior management are significant share owners, promoting

good stewardship and incentivising Executive Directors to create long term

value as the business continues to mature.

Clarity and simplicity

l Our Policy aligns the Executive Directors’ pay with pay for other Circlers.

l Our Policy is simple to understand for participants and shareholders and

promotes long term stewardship.

Risk

l Our Policy appropriately balances fixed and variable pay as well as short-

and long-term incentives.

l Opportunities are set at a level which rewards performance at the same

time as not unduly encouraging excessive risk taking.

l The annual bonus and performance share awards are subject to malus

and clawback provisions and the Committee has the discretion to adjust

pay outcomes.

Proportionality

l A significant portion of the total remuneration opportunity for Executive

Directors is variable pay. This variable pay is aligned to Company strategy

through the choice of performance measures and the link to share price.

l Our Policy is clear on the threshold, target and maximum levels of pay that

Executives can earn. Notwithstanding that actual outcomes will vary based

on the level of achievement and share price performance.

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.

Funding Circle Holdings plc | Annual Report and Accounts 2024 111

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Report of the Directors

for the year ended 31 December 2024

The Directors present their report (the “Directors’ Report”) and the Annual Report and Accounts for the year ended

31 December 2024.

Information required to be part of the Directors’ Report either by statute, by UK Listing Rule 6.6 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 UKLR6.6/DTRs

Corporate Governance Statement Corporate Governance Statement (page 75)

Going Concern and Viability Statement Viability statement (pages 63 to 64)

Directors’ interests Remuneration Report (page 106) and Directors’ Report (page 112)

Long-term incentive schemes Remuneration Report (page 95)

Waiver of emoluments Remuneration Report (pages 90 to 111)

Powers for the Company to buyback its shares Directors’ Report (page 113)

Allotment of shares during the year Note 17 to the consolidated financial statements (page 167)

Significant shareholders Directors’ Report (page 114)

Related party agreements Note 25 to the consolidated financial statements (page 175)

Diversity policy Strategic Report (page 22)

Climate-related financial disclosures Environment, social and governance (“ESG”) (pages 24 to 39)

Statutory information

Stakeholder engagement Strategic Report – Engaging our stakeholders (pages 40 to 43). See also

Board decision making and section 172 duties on pages 72 to 73 of the

Corporate Governance Report.

Employee engagement Strategic Report – Engaging our stakeholders (pages 40 to 43) and Our

people (pages 20 to 23). See also Board decision making and section

172 duties on pages 72 to 73 of the Corporate Governance Report.

Policy concerning the employment of disabled

persons

Strategic Report – Our people (page 23)

Financial instruments Note 16 to the financial statements (pages 154 to 167)

Future developments of the business Strategic Report (pages 1 to 64)

Greenhouse gas emissions, energy consumption

and energy efficiency action

Strategic Report – Environment, social and governance (pages 24 to 39)

Significant agreements Directors’ Report (page 112)

Non-financial reporting Strategic Report – see below

Management Report

This Directors’ Report, together with the Strategic Report

on pages 1 to 64, forms the Management Report for the

purposes of DTR 4.1.5R.

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 64.

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 sustainability

information statement setting out such information as is

required by section 414CB of the Act. Such information

is set out in the ESG section on pages 24 to 39, the Our

business model section on pages 8 to 9, Our strategy

section on pages 10 to 11, our KPIs on page 11 to 12, and

the Risk management and Going concern and Viability

Statement sections on pages 51 to 64.

Directors and their interests

Biographies of the Directors currently serving on the

Board are set out on page 68 to 69. Our Articles of

Association provide that all our Directors must stand

for re-election by shareholders at each AGM.

Details of Directors’ service contracts are set out in

the Directors’ Remuneration Report on page 102. The

interests of the Directors in the shares of the Company

are also shown on page 106 of that report. In the period

between 1 January 2025 and the date of this report, there

were no additional ordinary shares allotted to Lisa Jacobs

or Tony Nicol 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.

Geeta Gopalan is a Director of Intrum AB, which provides

servicing to Funding Circle’s European subsidiaries.

None of the Directors has a material interest in any significant

contract with the Company or any member of its Group.

Funding Circle Holdings plc | Annual Report and Accounts 2024112

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

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 124 to 192.

The Directors do not recommend payment of a final

dividend for 2025 (2024: £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 2025 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 54,085,678 of the

Company’s ordinary shares. The Company announced a

share buyback programme on 7 March 2024 to buy up

to £25 million worth of shares and a further programme

for up to £25 million was announced on 16 October 2024.

As at 31 December 2024, the Company made market

purchases of 33,548,734 ordinary shares of nominal

value of £0.001 in the Company, of which 181,370 were

pending cancellation at 31 December 2024, representing

9.29% of the issued share capital and all shares were

cancelled. The total cost of the market purchases was

£33.4 million (excluding stamp duty and broker fees)

with the weighted average purchase price of each share

being £1.16.

The trustee of the Company’s Employee Benefit Trust

made no market purchases of ordinary shares. As at

the date of this report, the trustee holds 2.10% of the

Company’s issued share capital.

Share capital

The Company’s issued share capital comprises

ordinary shares of £0.001, each of which is listed on

the London Stock Exchange. The issued share capital

of the Company as at 31 December 2024 comprises

327,935,779 ordinary shares of £0.001 each. Further

information regarding the Company’s issued share capital

can be found on page 167 of 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 to the Act and the requirements of the

UK Listing Rules.

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 not automatically exercise such rights arising from

allocated shares unless directed by the Company.

Restrictions on transfer of securities

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 Company’s securities.

Change of control

Certain LTIP Awards held by members of the ExCo

(excluding the Executive Directors) 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.

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 required to enable the Group’s

continued participation in those schemes.

Funding Circle Holdings plc | Annual Report and Accounts 2024 113

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Significant shareholdings

As at 31 December 2024 and at the date of this report, the Company has been notified pursuant to DTR5.1, or

is otherwise aware via our registrar, 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

2024

Percentage

issued share

capital as at

31 December

2024

Number

of ordinary

shares as at

6 March

2025

Percentage

issued capital

as at

6 March

2025

Index Ventures 58,618,351 17.88 58,618,351 18.07

Aktieselskabet af 2.7.2018 47,067,936 14.36 47,067,936 14.51

Accel London Management 26,906,743 8.21 26,906,743 8.29

Schroder Investment Management 24,963,260 7.60 26,448,592 8.15

DST Managers 16,505,378 5.04 16,505,378 5.09

Capital Group 14,713,073 4.49 14,713,073 4.53

BlackRock 13,995,821 4.27 12,647,423 3.90

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,

Germany, and the Netherlands and has one UK branch

of the Dutch entity and four UK branches of the

German entities.

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 2025 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:

l so far as the Director is aware, there is no relevant audit

information of which the Company’s external auditors

are unaware; and

l the Director has 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 Company’s auditors are aware of

that information.

This confirmation is given and should be interpreted in

accordance with the provisions of section 418 of the Act.

Voting results final update – 2024 AGM

At the Company’s AGM, held on 15 May 2024, 20%

or more votes were cast against Resolutions 17

(general disapplication of pre-emption rights) and 18

(disapplication of pre-emption rights in connection with

an acquisition or specified capital investment). These

were special resolutions requiring a 75% majority, which

did receive sufficient support to be passed, receiving

votes in favour of 78.52% respectively. However, a

significant number of votes (21.48%) were against

both resolutions.

As per provision 4 of the Code, on 14 November 2024,

the Company provided an update on its engagement

with shareholders to better understand the reasons

why the above resolutions were voted against. The

Company understands that these votes reflected, among

other things, the voting policy of certain shareholders

and the potential for dilution especially in the absence

of a specific transaction for which the authority

would be used.

2025 AGM

The Company’s AGM will take place at 12:00 pm on

15 May 2025 at the Company’s offices at 71 Queen

Victoria Street, London EC4V 4AY.

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

for the year ended 31 December 2024

Funding Circle Holdings plc | Annual Report and Accounts 2024114

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

Statement of Directors’ responsibilities in respect of the financial statements

The Directors are responsible for preparing the Annual

Report and the financial statements in accordance with

applicable law and regulation.

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. In preparing the financial statements, the

Directors are required to:

l select suitable accounting policies and then apply

them consistently;

l state whether applicable UK-adopted International

Accounting Standards have been followed, subject to

any material departures disclosed and explained in the

financial statements;

l make judgements and accounting estimates that are

reasonable and prudent; and

l prepare the financial statements on the going concern

basis unless it is inappropriate to presume that the

Group and Company will continue in business.

The Directors are also responsible for safeguarding the

assets of the Group and Company and hence for taking

reasonable steps for the prevention and detection of

fraud and other irregularities.

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:

l 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

l 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.

Approved by the Board and signed on its behalf.

Lisa Jacobs

Chief Executive Officer

6 March 2025

Funding Circle Holdings plc | Annual Report and Accounts 2024 115

STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

Financial

statements

117 Independent auditors’ report

124 Consolidated statement of comprehensive

income

125 Consolidated balance sheet

126 Consolidated statement of changes in equity

127 Consolidated statement of cash flows

128 Notes forming part of the consolidated

financial statements

180 Company balance sheet

181 Company statement of changes in equity

182 Company statement of cash flows

183 Notes forming part of the Company financial

statements

193 Alternative performance measures

194 Glossary

197 Shareholder information

198 Company information

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024116

Funding Circle Holdings plc | Annual Report and Accounts 2024 117

Independent auditors’ report

to the members of Funding Circle Holdings plc

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”):

l give a true and fair view of the state of the Group’s and

of the Company’s affairs as at 31 December 2024 and

of the Group’s profit and the Group’s and Company’s

cash flows for the year then ended;

l 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

l 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

sheet as at 31 December 2024; the Consolidated

statement of comprehensive income, the Consolidated

and Company statement of changes in equity and the

Consolidated and Company statement of cash flows

for the year then ended; and the notes to the financial

statements, comprising material accounting policy

information and other explanatory information.

Our opinion is consistent with our reporting to the Audit

and Risk 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. We believe

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 6, 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

l The scope of our audit and the nature, timing and

extent of audit procedures performed were determined

by our risk assessment.

l We identified the Term Loans business as a significant

component and as a result it was subject to a full scope

audit. We identified three non-significant components

(FlexiPay business, US business and Parent entity) and

applied judgment in determining the extent of audit

testing to be performed over each. Audit testing over

specific balances has been completed for FlexiPay

based on either size or risk profile and specified audit

procedures were performed over the US business

(up to the point of sale) to address identified risks

of material misstatement. A full scope audit was

performed over the parent entity given the Company

accounts are included within the Annual Report.

Key audit matters

l The allowance for expected credit losses in relation

to FlexiPay lines of credit (Group)

l Carrying value of the investment in FCL (parent)

Materiality

l Overall Group materiality: £1,617,500 (2023:

£1,622,000) based on 1% of total income.

l Overall Company materiality: £3,560,000 (2023:

£3,592,000) based on 1% of total assets.

l Performance materiality: £1,213,125 (2023: £1,216,500)

(Group) and £2,670,000 (2023: £2,694,000)

(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.

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.

Carrying value of the investment in FCL (parent) is a

new key audit matter this year. Carrying value of the

Company’s investment in the US subsidiary (parent) and

Valuation of SME loans (securitised) and investments in

RLS/CBILs trusts, which were key audit matters last year,

are no longer included because of the sale of the US

business and, in relation to the loans and investments,

continued amortisation of the remaining portfolios

through the year. Otherwise, the key audit matters below

are consistent with last year.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024118

Key audit matter How our audit addressed the key audit matter

The allowance for expected credit losses in

relation to FlexiPay lines of credit (Group)

Refer to Report of the Audit Committee – Key audit

matters considered in relation to the financial

statements; note 1 (material accounting policies);

note 2 (critical accounting judgements and key

sources of estimation uncertainty); and note 16

(financial risk management) of the Group

financial statements.

At 31 December 2024 the gross carrying value of

FlexiPay lines of credit was £110.0 million and the

associated allowance for expected credit losses

was £12.9 million on drawn lines of credit and

£2.7 million on undrawn lines of credit.

The determination of the allowance for expected

credit losses is subjective and judgmental. A model

is used to collectively determine the allowance for

expected credit losses for both the drawn and

undrawn lines of credit. The key assumptions and

inputs into this model are the probability of default,

loss given default and the use of multiple,

probability weighted, macroeconomic scenarios.

As a new product, FlexiPay continues to be a

strategic priority for the business. Given this, along

with continued evolution of the ECL model in the

year, the corresponding provision for expected

credit losses was a focus of our audit.

Together with our credit risk specialists, we performed the following

substantive procedures over the allowance for expected credit losses

on FlexiPay lines of credit:

l we engaged our credit risk specialists to review the methodology

and assumptions applied by management in calculating the

allowance for expected credit losses;

l we independently tested the derivation of key assumptions,

and tested that the model methodology has been implemented

as intended;

l we performed sensitivity analysis to understand and evaluate

the impact of conceptual limitations and key judgments used

in management’s ECL calculation. This included building a

challenger macro-economic default rate model to test the

sensitivity of the ECL to macro scenarios;

l we assessed macro-economic forecasts and weightings used

in the model by benchmarking to independent forecasts,

and evaluating the reasonableness of judgements applied by

management; and

l we tested the accuracy of the historical loan tape used as a key

input into the credit loss model including customer utilisation

and performance.

We also assessed the disclosures in note 2, regarding the critical

accounting judgements and key sources of estimation uncertainty

involved in determining the expected credit loss provision and found

them to be appropriate.

Based on the evidence obtained, we concluded that the methodologies,

modelled assumptions and management judgements in determining the

allowance for expected credit losses for FlexiPay lines of credit to be

appropriate and compliant with the requirements of IFRS 9.

Carrying value of the investment in FCL (Parent)

Refer to Report of the Audit and Risk Committee

– Key audit matters considered in relation to the

financial statements; note 1 (Investment in

subsidiaries); and note 5 (Investments in subsidiary

undertakings) of the Company financial statements.

The Company holds an investment in FCL with a

carrying value of £258.2 million. IAS 36 ‘Impairment

of Assets’ requires that investments should be

assessed for any indicators of impairment at the

end of each reporting period. Management

performed an assessment for indicators of

impairment and concluded that there were none

in relation to the UK business.

Given the carrying value of the investment is

material and its significance to the Company

balance sheet, the level of uncertainty associated

with the future cash flows associated with the

FlexiPay business and the extent of restructuring

that has occurred in the year this has been an area

of focus in our audit.

Our audit procedures comprised the following:

l We understood the methodology used by management to assess

their investment in subsidiaries for impairment indicators.

l We evaluated the indicators considered by management against

IAS36 requirements and substantiated relevant information

within the assessment of indicators.

l Given the significant change in the business in the year, we

performed sensitivity analysis over certain assumptions, in

particular FlexiPay cash flows, using a discounted cash flow model

to assess the impact on the recoverable value.

Based on the above procedures performed, and evidence

obtained, we considered the Directors’ conclusion that there are no

impairment indicators for the investment in FCL to be reasonable.

Independent auditors’ report continued

to the members of Funding Circle Holdings plc

Report on the audit of the financial statements continued

Our audit approach continued

Key audit matters continued

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 119

Report on the audit of the financial statements

continued

Our audit approach 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 as a whole, taking into

account the structure of the Group and the Company,

the accounting processes and controls, and the industry

in which 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 continuing business in the UK in Term

Loans and FlexiPay such as platform lending, marketplace

referrals and the origination of, and investment in, SME

loan portfolios and lines of credit and the discontinued

US business.

2) Audit work for in scope components: The risks of

material misstatement can be reduced to an acceptable

level by testing components that are significant due to

their size and those that drive significant risks identified

as part of our risk assessment. We identified the Term

Loans business as a full scope component due to being

significant due to size. We considered FlexiPay as a non-

significant component and material balances have been

included in our scope for the purpose of the Group audit.

We considered the US business as a non-significant

component and performed specified procedures over

certain balances. Whilst the parent entity is considered

non-significant for the consolidated audit, we have

completed a full scope audit given the Company

accounts are included within the Annual Report. We

assigned materiality levels to components reflecting the

size of their operations. One team performed all audit

work on the components. Through the work performed

we concluded that sufficient appropriate audit evidence

had been obtained as a basis for our opinion on the

Group financial statements as a whole.

3) Audit procedures undertaken at a Group level and

on the Company: In planning and executing our audit

no other component teams were used. We ensured

that appropriate work was undertaken for the Group

and Company.

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’s and 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:

Financial statements – Group Financial statements – Company

Overall materiality £1,617,500 (2023: £1,622,000). £3,560,000 (2023: £3,592,000).

How we determined it 1% of total income 1% of total assets

Rationale for benchmark applied We consider this to be an appropriate

benchmark as total income is a key

performance indicator for Group

performance and a metric used to guide

analysts as well as a measure to

determine executive compensation.

We consider total assets to be an

appropriate benchmark to apply on the basis

that the Company is a non-trading

investment Company that holds investment

in the Group’s subsidiaries.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024120

Independent auditors’ report continued

to the members of Funding Circle Holdings plc

Report on the audit of the financial statements

continued

Our audit approach continued

Materiality continued

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 £1,536,000 and £1,374,000.

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% (2023: 75%) of overall

materiality, amounting to £1,213,125 (2023: £1,216,500)

for the Group financial statements and £2,670,000 (2023:

£2,694,000) 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 and Risk Committee that we

would report to them misstatements identified during

our audit above £80,875 (Group audit) (2023: £81,100)

and £178,000 (Company audit) (2023: £179,615) 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:

l obtaining and evaluating management’s going

concern assessment;

l 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;

l understanding and evaluating management’s financial

forecasts and liquidity and regulatory capital over the

going concern period and an evaluation of the stress

testing performed by management;

l substantiation of financial resources available to the

Group and Company as at the balance sheet date

including the unrestricted cash; and

l reading and evaluating the adequacy of the disclosures

made in the financial statements in relation to

going concern.

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 this report.

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. 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 FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 121

Report on the audit of the financial statements

continued

Reporting on other information continued

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 2024 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:

l The directors’ confirmation that they have carried out a

robust assessment of the emerging and principal risks;

l The disclosures in the Annual Report that describe

those principal risks, what procedures are in place to

identify emerging risks and an explanation of how these

are being managed or mitigated;

l The directors’ statement in the financial statements

about whether they considered it appropriate to

adopt the going concern basis of accounting 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;

l 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

l The directors’ statement as to whether they have a

reasonable expectation that the Company will be able

to continue in operation and meet its liabilities as they

fall due over the period of its assessment, including any

related disclosures drawing attention to any necessary

qualifications or assumptions.

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 is consistent

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:

l 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;

l The section of the Annual Report that describes the

review of effectiveness of risk management and

internal control systems; and

l The section of the Annual Report describing the work

of the Audit and Risk 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.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024122

Independent auditors’ report continued

to the members of Funding Circle Holdings plc

Report on the audit of the financial statements

continued

Responsibilities for the financial statements and

the audit continued

Responsibilities of the directors for the financial

statements continued

In preparing the financial statements, the directors are

responsible for assessing the Group’s and the Company’s

ability to continue as a going 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 Financial Conduct

Authority (“FCA”), 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.

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 posting of journal entries. Audit procedures

performed by the engagement team included:

l review of correspondence with, and reports

to, the FCA;

l review of a sample of customer complaints to

identify any indicators of breaches in laws and

regulations or fraud;

l enquiries of the Directors, the Chair of the Audit

and Risk Committee, the Head of Internal Audit and

management, as well as the Group’s Chief Legal

Officer and the Group’s Head of Compliance, including

consideration of known or suspected instances of non-

compliance with laws and regulation and fraud;

l review of board meeting minutes and internal audit

reports issued in the period to identify any indicators

of breaches in laws and regulations and fraud that

could require further investigation;

l identifying and testing journal entries, including those

with unusual account combinations impacting total

income; and

l challenging significant assumptions and judgements

made by management in its accounting estimates and

assessing them for bias.

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.

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.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 123

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report

to you if, in our opinion:

l we have not obtained all the information and

explanations we require for our audit; or

l 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

l certain disclosures of directors’ remuneration specified

by law are not made; or

l 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 and Risk

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 is

ten years, covering the years ended 31 December 2015 to

31 December 2024.

Other matter

The Company is required by the Financial Conduct

Authority Disclosure Guidance and Transparency Rules to

include these financial statements in an annual financial

report prepared under the structured digital format

required by DTR 4.1.15R - 4.1.18R and filed on the National

Storage Mechanism of the Financial Conduct Authority.

This auditors’ report provides no assurance over whether

the structured digital format annual financial report has

been prepared in accordance with those requirements.

Heather Varley (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

6 March 2025

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024124

Consolidated statement of comprehensive income

for the year ended 31 December 2024

		31 December
		2024
		Before			31 December
		exceptional	Exceptional	31 December	2023
		items	items 1	2024	(re-presented) 2
	Note	£m	£m	£m	£m
Transaction fees		85.3	—	85.3	65.3
Servicing fees		3 7. 5	—	3 7. 5	39. 0
Interest income 3		30.9	—	3 0.9	15 .4
Other fees		5.2	—	5. 2	6.4
Operating income		158.9	—	15 8. 9	1 2 6 .1
Net investment income		2 .8	—	2.8	3.6
Total income		161.7	—	161 .7	129.7
Fair value gains		4.2	—	4.2	3 .1
Cost of funds		(5.8)	—	(5 . 8)	(2. 7)
Net income 4	5	1 6 0 .1	—	1 6 0 .1	1 3 0.1
People costs	4, 6, 7	(6 8 .1)	(2. 3)	(70 .4)	(65.5)
Marketing costs	6	(4 5 . 6)	—	(4 5 . 6)	(37 .1)
Depreciation, amortisation and impairment	4, 5, 6, 10, 11	(13 . 2)	(0 .3)	(13. 5)	(12 .6)
Expected credit loss charge	6, 16	(8 .6)	—	(8 .6)	(4. 5)
Other costs	6	(21 . 2)	—	(21. 2)	(20 .3)
Operating expenses	6	(156 .7)	(2 .6)	(159.3)	(140.0)
Profit/(loss) before taxation	5	3.4	(2 .6)	0. 8	(9.9)
Income tax (charge)/credit	8	(0. 5)	—	(0. 5)	1.7
Profit/(loss) for the year from continuing operations		2.9	(2 .6)	0.3	(8. 2)
(Loss)/profit for the year from discontinued operations	3	(10 . 2)	18 .5	8.3	(3 0.1)
(Loss)/profit for the year		(7. 3)	15.9	8 .6	(3 8 .3)
Other comprehensive expense
Items that may be reclassified subsequently to profit and loss:
Exchange differences on translation of foreign operations	3, 19	(0 .2)	(8.7)	(8 .9)	(2 .7)
– discontinued operations
Total comprehensive (expense)/income for the year		(7. 5)	7. 2	(0.3)	(41 . 0)
Total comprehensive income/(expense) attributable to:
Owners of the Parent
Income/(expense) from continuing operations		2 .9	(2 .6)	0. 3	(8 . 2)
(Expense)/income from discontinued operations	3	(1 0. 4)	9. 8	(0.6)	(32 . 8)
Total comprehensive (expense)/income attributable to the owners of the Parent		(7. 5)	7. 2	(0.3)	(41. 0)
Earnings per share
Basic earnings/(loss) per share from continuing operations	9	0.8p		0 .1p	(2.4)p
Diluted earnings/(loss) per share from continuing operations	9	0. 8p		0 .1p	(2.4)p
Basic (loss)/earnings per share from discontinued operations	3, 9	(3 .0)p		2.4p	(8.7)p
Diluted (loss)/earnings per share from discontinued operations	3, 9	(3 .0)p		2.2p	(8 .7)p

1. Exceptional items are detailed in note 4.

2. The comparative consolidated statement of comprehensive income has been re-presented to reflect the results of the US business as a discontinued operation.

See note 3.

3. Interest income recognised on assets held at amortised cost under the effective interest rate method and £7 .7 million (2023: £5. 3 million) on money market

funds held at fair value through profit and loss.

4. Net income is also referred to as “revenue”.

The notes on pages 128 to 179 form part of these financial statements.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 125

			31 December
		31 December	2023
		2024	(re-presented ) 1
	Note	£m	£m
Non-current assets
Intangible assets	10	21.2	23 .0
Property, plant and equipment	11	9.6	5.0
Investment in associates	29	0.6	1. 5
Investment in trusts and co-investments	12, 16	1 7. 8	25 . 2
SME loans held at amortised cost	12, 16	1.4	5.6
Trade and other receivables	13	—	1. 4
		50.6	6 1.7
Current assets
SME loans held at amortised cost	12, 16	0.7	1 .1
SME loans held at fair value through profit and loss	12, 16	1.2	18. 6
Lines of credit	12, 16	9 7.1	5 0.0
Trade and other receivables	13	20.8	20.4
Cash and cash equivalents	22	1 8 7. 6	221.4
		3 0 7. 4	311. 5
Total assets		358 .0	373 . 2
Current liabilities
Trade and other payables	14	2 7. 8	54.3
Bank borrowings	16, 22	101.9	54.7
Short-term provisions and other liabilities	15	3 .6	1.5
Lease liabilities	11, 22	1. 8	7. 2
		1 3 5 .1	1 1 7. 7
Non-current liabilities
Long-term provisions and other liabilities	15	0.6	1.1
Bank borrowings	16, 22	—	2.2
Lease liabilities	11, 22	5.8	5 .4
Total liabilities		141. 5	126 . 4
Equity
Share capital	17	0.3	0. 4
Share premium account	18	0 .1	2 9 3 .1
Foreign exchange reserve	19	5. 3	14 . 2
Share options reserve		20.6	24. 0
Retained earnings/(accumulated losses)	20	19 0.2	(84 .9)
Total equity		216.5	24 6 . 8
Total equity and liabilities		358 .0	373 .2

1. SME loans have been presented under aggregated headings and the comparative year re-presented in order to simplify the presentation of these loans as the

balances become less material. Additionally, the comparative SME loans held at amortised cost have been re-presented to more accurately reflect the current

and non-current split of these loans. See note 1 for details.

The financial statements on pages 124 to 179 were approved by the Board and authorised for issue on 6 March 2025.

They were signed on behalf of the Board by:

Tony Nicol

Director

Company registration number 07123934

The notes on pages 128 to 179 form part of these financial statements.

Consolidated balance sheet

as at 31 December 2024

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024126

						(Accumulated
			Share	Foreign	Share	losses)/
		Share	premium	exchange	options	retained	Total
		capital	account	reserve	reserve	earnings	equity
	Note	£m	£m	£m	£m	£m	£m
Balance at 1 January 2023		0.4	2 93 .1	16.9	22.2	(48 . 6)	28 4. 0
Loss for the year	20	—	—	—	—	(3 8 . 3)	(3 8 . 3)
Other comprehensive expense
Exchange differences on translation	19	—	—	(2.7)	—	—	(2 .7)
of foreign operations
Total comprehensive expense		—	—	(2 .7)	—	(3 8. 3)	(41. 0)
Transactions with owners
Transfer of share option costs	20	—	—	—	(3. 8)	3.8	—
Purchase of own shares held in Employee Benefit Trust	17. 20	—	—	—	—	(1 .8)	(1 .8)
Employee share schemes –	21	—	—	—	5.6	—	5.6
value of employee services
Balance at 31 December 2023		0.4	2 9 3 .1	14 . 2	24 .0	(8 4. 9)	24 6 . 8
Profit for the year	20	—	—	—	—	8.6	8 .6
Other comprehensive expense
Exchange differences on translation	19	—	—	(8 .9)	—	—	(8. 9)
of foreign operations
Total comprehensive (expense)/income		—	—	(8. 9)	—	8.6	(0. 3)
Transactions with owners
Transfer of share option costs	20	—	—	—	(6.6)	6.6	—
Buyback and cancellation of own shares	17, 20	(0 .1)	—	—	—	(3 3. 6)	(33 . 7)
Capital reduction	18, 20	—	(29 3.5)	—	—	293.5	—
Issue of share capital/exercise
of share options	18	—	0.5	—	—	—	0.5
Employee share schemes –	21	—	—	—	3.2	—	3.2
value of employee services
Balance at 31 December 2024		0.3	0 .1	5.3	20.6	19 0.2	216.5

The notes on pages 128 to 179 form part of these financial statements.

Consolidated statement of changes in equity

for the year ended 31 December 2024

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 127

			31 December
		31 December	2023
		2024	(re-presented) 1
	Note	£m	£m
Net cash outflow from operating activities	22	(6 7. 4)	(25 .6)
Investing activities
Purchase of intangible assets	10	(9.0)	(11. 5)
Purchase of property, plant and equipment	11	(2 . 9)	(0.7)
Originations of SME loans held at amortised cost	16	(0. 2)	(4 . 7)
Cash receipts from SME loans held at amortised cost	16	3.0	21. 2
Originations from SME loans held at fair value through profit and loss	16	—	(11. 9)
Cash receipts from SME loans held at fair value through profit and loss	16	13 .5	3 7. 6
Proceeds from sale of SME loans held at fair value through profit and loss	16	—	30.4
Investment in trusts and co-investments	16	(4 .1)	(1 .8)
Cash receipts from investments in trusts and co-investments	16	14 . 6	6.6
Redemption in associates	25, 29	0. 9	1 .1
Dividends from associates	25, 29	—	0.1
Proceeds from sale of subsidiary	3	32 .6	—
Direct costs of selling subsidiary	3	(2 . 0)	—
Cash disposed of on sale of subsidiary	3	(2 3 .1)	—
Net cash inflow from investing activities		23 .3	66.4
Financing activities
Proceeds from bank borrowings	22	52 .6	55. 8
Repayment of bank borrowings	22	(6.0)	(2 0.9)
Payment of bond liabilities	22	—	(23 . 4)
Proceeds from the exercise of share options	18	0.5	—
Purchase of own shares	17, 20	—	(1. 8)
Share buyback	17, 20	(33 . 7)	—
Proceeds from subleases		0.4	1.2
Payment of lease liabilities	22	(3 .6)	(7. 2)
Net cash inflow from financing activities		10.2	3.7
Net (decrease)/increase in cash and cash equivalents		(33 . 9)	4 4.5
Cash and cash equivalents at the beginning of the year		221. 4	1 7 7. 7
Effect of foreign exchange rate changes		0 .1	(0. 8)
Cash and cash equivalents at the end of the year	22	1 8 7. 6	221.4

1. SME loan-related cash flows have been presented under aggregated headings and the comparative year re-presented. See note 1 for details.

The notes on pages 128 to 179 form part of these financial statements.

Cash flows from discontinued operations are shown in note 3.

Consolidated statement of cash flows

for the year ended 31 December 2024

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024128

Notes forming part of the consolidated financial statements

for the year ended 31 December 2024

1. Material accounting policies

General information

Funding Circle Holdings plc (the “Company”) is a public

company limited by shares, which is listed on the London

Stock Exchange and is domiciled and incorporated in

the United Kingdom under the Companies Act 2006

and registered in England and Wales. The address of its

registered office is given on page 198. The consolidated

financial statements of the Group for the year ended

31 December 2024 comprise the Company and its

subsidiaries (together referred to as the “Group” and

individually as “Group entities”).

The principal activities of the Group and the nature of the

Group’s operations are as a facilitator of finance for SMEs.

The principal accounting policies applied in the

preparation of these financial statements are set out

below. These policies have been consistently applied to

all the years presented, unless otherwise stated.

Going concern

The Group’s business activities together with the factors

likely to affect its future development and position are set

out in the Strategic Report.

The financial statements are prepared on a going concern

basis as the Directors are satisfied that the Group has

the resources to continue in business for the foreseeable

future (which has been taken as at least 12 months from

the date of approval of the financial statements).

The Group made a total comprehensive expense of £0.3

million during the year ended 31 December 2024 (2023:

expense of £41.0 million). As at 31 December 2024, the

Group had net assets of £216.5 million (2023: £246.8

million). This includes £187.6 million of cash and cash

equivalents (2023: £221.4 million) of which £37.1 million

(2023: £51.8 million) is held for specific purposes and

is restricted in use. Additionally, within the net assets,

the Group holds £53.5 million (2023: £63.5 million) of

invested capital, some of which is capable of being

monetised if liquidity needs arise.

The Group has prepared detailed cash flow forecasts for

the next 15 months to 30 June 2026 and has updated

the going concern assessment to factor in the potential

ongoing impact of inflation and related economic stress.

The base case scenario assumes:

l the economic environment remains as is with

no improvement or deterioration in the macro

environment forecast;

l launching and growing short-term lending and non-

limited company lending;

l growth in Cashback credit card alongside FlexiPay lines

of credit;

l the Group continues to fund the lines of credit through

its balance sheet along with the senior banking facility;

l costs are controlled with any growth driven by

marketing, expected credit losses (“ECL”) and cost

of funds. Remaining costs grow but predominantly

through inflation. Strict control of headcount, with

limited increases;

l the current share buyback programme concludes in

early 2025 with no additional buyback or dividend

assumed; and

l corporation tax begins to be paid alongside utilising

brought forward tax losses.

Management prepared a severe but plausible downside

scenario in which:

l further macroeconomic volatility continues through

the period with elevated inflation and interest rates

reducing originations as borrower demand for loans

at higher interest rates reduces and investor funding

appetite reduces;

l investment returns reduce owing to increased funding

costs, widening discount rates and deterioration in

loan performance;

l an operational event occurs requiring a cash

outlay in 2025;

l a downside loss scenario is applied to Funding Circle’s

on-balance sheet investment in SME loans resulting in

higher initial fair value losses and lower cash flows to

the investments it owns combined with the inability to

monetise these;

l a reduction in operating interest income from money

market funds due to lower cash balances under

stress; and

l a combined credit and liquidity risk stress for FlexiPay.

Management has reviewed its regulatory capital

requirements. In the downside scenario, the risk of capital

requirement breach is considered remote. The Group

does not currently rely on committed or uncommitted

borrowing facilities, with the exception of a facility for

the purpose of originating FlexiPay lines of credit and

does not have undrawn committed borrowing facilities

available to the wider Group.

The Directors have made enquiries of management and

considered budgets and cash flow forecasts for the

Group and have, at the time of approving these financial

statements, a reasonable expectation that the Company

and the Group have adequate resources to continue

in operational existence for the foreseeable future,

specifically assessed for the 15 months to 30 June 2026.

Further detail is contained in the Strategic Report on

pages 63 and 64.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 129

1. Material accounting policies continued

Basis of preparation

The financial statements have been prepared in

accordance with UK-adopted International Accounting

Standards in conformity with the requirements of the

Companies Act 2006 and the disclosure guidance and

transparency rules sourcebook of the United Kingdom’s

Financial Conduct Authority.

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 preparation of financial statements requires the

use of certain accounting estimates. It also requires

management to exercise its judgement in the process

of applying the Group’s accounting policies. Changes

in assumptions may have a significant impact on the

financial statements in the year the assumptions changed.

Management believes that the underlying assumptions

are appropriate. The areas involving a higher degree of

judgement or complexity, or areas where assumptions

and estimates are significant to the financial statements,

are disclosed in note 2 .

Significant changes in the current reporting year

The financial position and performance of the Group were

affected by the following events and transactions during

the year ended 31 December 2024:

i) Sale of the US business

As was previously announced in the 31 December 2023

financial results, the Group sought to divest of the US

business. A competitive bid process was undertaken with

interested parties and a sale agreement was signed on

24 June 2024 to sell the business to iBusiness Funding,

LLC and completion occurred on 1 July 2024. As a result

of the sale of the US Business Unit, the business and

assets related to the US were considered to form a

disposal Group under IFRS 5 Non-Current Assets Held

For Sale and Discontinued Operations. The operations of

the US business have been disclosed in the consolidated

statement of comprehensive income separately as

a discontinued operation, and the comparative year

restated. Details related to the discontinued operations

can be found in note 3.

ii) Simplification and streamlining of UK business

As part of its ongoing commitment to profitability, the

Group launched a redundancy and cost efficiency

programme during the year. Non-recurring costs

to achieve these changes have been recorded as

exceptional items. See note 4 .

iii) Launch of share buyback programme

As was previously announced, the Group commenced

a share buyback programme in March 2024 to buy and

cancel up to £25 million of shares in order to return

value to shareholders. The nominal cost of the shares

cancelled reduces the Group’s share capital with an

equal increase in the capital redemption reserve. The full

cost of the buyback inclusive of stamp duty and broker

fees is debited to retained earnings. This programme

was completed on 15 October 2024 with the purchase

of 27,308,339 ordinary shares, and the programme was

extended to up to a further £25 million of shares. In the

year to 31 December 2024, 33.5 million shares were

purchased for consideration of £33.7 million inclusive of

fees and expenses under the programme representing

9.3% of the called up share capital. 0.2 million of the

purchased shares were pending cancellation as at 31

December 2024. See notes 17 and 20.

iv) Capital reduction

In November 2024, shareholders approved a capital

reduction at a general meeting held by the Company,

being the cancellation of the entire amount standing

to credit the Company’s share premium account. The

capital reduction process was completed in December

2024 and resulted in the cancellation of the share

premium and creation of accumulated profit within the

statement of changes in equity by £293.5 million. This

increased

the distributable reserves of the Company to help

facilitate

ongoing capital actions and return of value to

shareholders. See notes 18 and 20.

v) Modification to UK office lease

During February 2024, the Group signed an agreement

to modify the terms of its lease on the two levels of the

UK office previously expiring in March 2025, shortening

one to expire in June 2024 and extending the other to

March 2035 with termination options in March 2030. Both

were accounted for as a lease modification. See note 11

for details.

vi) Investment in trust and co-investment transactions

During the year, certain warehouses invested in trusts in

which Funding Circle is a minority co-investor sold their

loan assets to a third party and Funding Circle partially

re-invested alongside the purchaser. As a result of the

transaction, the net cash flows from the investment were

realised and a net fair value gain of £2.2 million was

recognised through fair value gains in the consolidated

statement of comprehensive income. The cash flows related

to the transaction are presented net within “Cash receipts

from investment in trusts and co-investments” in the statement

of cash flows, reflecting the net settlement of the realisation

and re-investment. See note 16.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024130

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

1. Material accounting policies continued

Significant changes in the current reporting year

continued

vii) Launch of Cashback business credit card

During the year the Cashback credit card product was

launched offering borrowers the ability to spend against

their credit limit and earn cashback on this spend with

an introductory rate of 2% reducing to 1% after six

months. The borrowers qualify for cashback if they

either repay the card spend in full, or make a minimum

repayment by their billing date. Borrowers who repay

the balance in full do not incur interest charges, while

any borrowers who do not pay the card spend balance

in full will be charged interest on the drawn balance.

The cashback is netted against the borrowers’ card

spend balance due. The Group recognises interchange

fee income on the card spend of c.1.75% recognised

in transaction fee income. £0.3 million of interchange

fee income (2023: £nil) was recognised during the year

gross of cashback. The cashback paid to the borrower is

recognised as a reduction in the transaction price under

IFRS 15 as it is cash settled in nature and is presented

netted against the interchange fee income, while interest

earned on card balances which revolve is recognised

within interest income in the consolidated statement of

comprehensive income.

Changes in accounting policy and disclosures

The Group has adopted the following new and amended

IFRSs and interpretations from 1 January 2024.

		Applicable for
		financial years
		beginning
Standard/interpretation	Content	on/after
Amendments to IAS 1 –	Presentation of	1 January
Classification of Liabilities	financial	2024
as Current or Non-current	statements
Amendments to IAS 1 –	Presentation of	1 January
Non-current Liabilities with	financial	2024
Covenants	statements
Amendments to IAS 12 –	Tax	1 January
International Tax Reform –		2024
Pillar Two Model Rules
IFRS 1 General	Sustainability	1 January
Requirements for Disclosure	disclosures	2024
of Sustainability-related
Financial Information
IFRS S2 Climate-related	Sustainability	1 January
Disclosures	disclosures	2024
Amendments to IAS 7 and	Financial	1 January
IFRS 7 – Supplier Finance	instruments	2024
Arrangements
Amendments to IFRS 16 –	Leases	1 January
Lease Liability in a Sale and Leaseback		2024

The amendments and interpretations listed above did not

materially affect the current year and are not expected to

materially affect future years.

Certain new accounting standards and interpretations

have been published that are not mandatory for 31

December 2024 reporting years and have not been early

adopted by the Group as follows:

		Applicable for
		financial years
		beginning
Standard/interpretation	Content	on/after
Amendments to IAS 21 –	Foreign	1 January
Lack of Exchangeability	exchange rates	2025
Amendment to IFRS 9 and	Financial	1 January
IFRS 7 – Classification and Measurement of Financial	instruments	2026
Instruments
IFRS 18 Presentation and	Financial	1 January
Disclosure in Financial	statements	2027
Statements	disclosures
IFRS 19 Subsidiaries without	Financial	1 January
Public Accountability:	statements	2027
Disclosures	disclosures

With the exception of IFRS 18, these standards are not

expected to have a material impact on the Group in

the current or future reporting years or on foreseeable

future transactions.

IFRS 18 was issued in April 2024 and is effective for

periods beginning on or after 1 January 2027. Early

application is permitted and comparatives will require

restatement. The standard will replace IAS 1 Presentation

of Financial Statements. It will not change how items are

recognised and measured but will focus on the income

statement and reporting of financial performance,

specifically, classifying income and expenses into three

new defined categories – “operating”, “investing” and

“financing”, and two new subtotals – “operating profit

and loss” and “profit or loss before financing and income

tax”, introducing disclosures of management defined

performance measures (“MPMs”) and enhancing general

requirements on aggregation and disaggregation. The

impact of the standard is yet to be fully assessed by

the Group.

Summary of new and amended accounting policies

Re-presentation of SME loans:

On the balance sheet “SME loans (securitised)”, “SME

loans (warehouse)” and “SME loans (other)” held at fair

value through profit and loss have been presented under

“SME loans held at fair value through profit and loss” and

“SME loans (other)” held at amortised cost have been

presented under “SME loans held at amortised cost” in

order to simplify the presentation of these loans as the

balances become less material with the comparative

year re-presented on this basis. Additionally, the current

and non-current split of SME loans held at amortised

cost has been re-presented to more accurately reflect

when the cash flows become due. This presentation and

re-presentation has been applied to the applicable notes

and cash flow statement throughout these accounts.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 131

1. Material accounting policies continued

Discontinued operations and deconsolidation

When the Group intends to sell assets or Business

Units, IFRS 5 Non-current Assets Held for Sale and

Discontinued Operations, is applied. An asset or group

of assets is treated as a discontinued operation if:

l it is available for immediate sale in its present condition;

l the sale is highly probable, with management

committed to a plan to sell the asset and an active

programme to locate a buyer initiated; and

l the sale is expected to be completed within 1 year of

classification as held for sale.

Where these criteria are met, the assets in the disposal

group are measured at the lower of fair value less cost

to sell and their carrying value at the point they are

considered to meet the criteria. The results from the

discontinued operations are presented separately in the

consolidated statement of comprehensive income with

the comparative year restated on a like-for-like basis.

Where a Business Unit of the Group is held as a

discontinued operation with the intention of selling it,

it will remain consolidated for as long as the criteria for

control as defined by IFRS 10 Consolidated Financial

Statements, are met. All three of these criteria must be

met in order to control an entity:

l power over the investee;

l exposure, or rights, to variable returns from its

involvement with the investee; and

l the ability to use its power over the investee to affect

the amount of the investor’s returns.

While an agreement might be signed to sell the

operation, if the Group continues to meet the criteria

for control between signing and closing the transaction,

deconsolidation will only occur on closing once the

criteria are no longer met.

Share buybacks

Shares purchased and cancelled by the Group as part

of the share buyback programme reduce the equity

of the Group, but are anti-dilutive and return value to

shareholders when calculating earnings per share. The

nominal cost of the shares purchased and cancelled is

treated as a reduction in share capital with an offsetting

increase in the capital redemption reserve. The capital

redemption reserve is a non-distributable reserve

which can be used to pay up new shares allotted as

fully paid bonus shares. The cost of the share purchase

inclusive of stamp duty and broker fees is debited to

retained earnings.

Cashback credit card accounting

Cashback offered on products issued by the Group is

considered to fall under IFRS 15 where it is contractually

linked to card spend where an interchange fee is

generated at the point of spend. Where the cashback

reward to the borrower is cash settled or netted against

an outstanding balance due from the customer, it is

treated as a reduction in the transaction price under

IFRS 15 and there is no ongoing performance obligation

beyond the card transaction with interchange fee income

recognised net of the cashback granted. The cashback

rewards programme does not currently offer borrowers

the option to exchange their cashback reward for other

non-cash goods or services. Where borrowers do not

repay the full balance due on their card and choose to

revolve an element of it, interest income is recognised

under IFRS 9 on the interest charged.

Summary of existing accounting policies

Basis of consolidation

Where the Group has control over an investee, it is

classified as a subsidiary. The Group controls an investee

if all three of the following elements are present: power

over the investee, exposure to variable returns from the

investee, and the ability of the investor to use its power

to affect those variable returns. Control is reassessed

whenever facts and circumstances indicate that there

may be a change in any of these elements of control.

Structured entities are entities that are designed so

that their activities are not governed by voting rights.

In assessing whether the Group has power over such

entities, the Group considers factors such as the purpose

and design of the entity, its practical ability to direct

the relevant activities of the entity, the nature of the

relationship with the entity, and the size of its exposure

to the variability of returns of the entity.

The consolidated financial statements present the results

of the Company and its subsidiaries as if they formed a

single entity. Intercompany transactions and balances

between Group companies are therefore eliminated in full.

The Group applies the acquisition method to account

for business combinations. In the consolidated balance

sheet, the acquiree’s identifiable assets, liabilities and

contingent liabilities are initially recognised at their fair

values at the acquisition date. Acquisition-related costs

are recognised in profit or loss as incurred. The results

of acquired operations are included in the consolidated

statement of comprehensive income from the date on

which control is obtained. They are deconsolidated from

the date on which control ceases.

Foreign currency translation

Transactions entered into by Group entities in a currency

other than the currency of the primary economic environment

in which they operate (their “functional currency”) are

recorded at the rates ruling when the transactions occur.

Foreign currency monetary assets and liabilities are

translated at the prevailing rate at the reporting date.

Exchange differences arising on the retranslation of

unsettled monetary assets and liabilities are recognised

immediately in profit or loss.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024132

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

1. Material accounting policies continued

Foreign currency translation continued

On disposal of a foreign operation, the cumulative

exchange differences recognised in the foreign exchange

reserve relating to that operation up to the date of

disposal are transferred to the consolidated statement

of comprehensive income as part of the profit or loss

on disposal.

Presentation currency

These consolidated financial statements are presented in

GBP sterling, which is the Group’s presentation currency.

All assets and liabilities of overseas operations, including

goodwill arising on the acquisition of those operations,

are translated at the prevailing rate at the reporting date.

Income and expense items are translated at the average

exchange rates for the year, unless exchange rates

fluctuate significantly during that year, in which case

the exchange rates at the date of transactions are used.

Exchange differences arising are recognised in other

comprehensive income and accumulated in equity.

Goodwill and fair value adjustments arising on the

acquisition of a foreign entity are treated as assets

and liabilities of the foreign entity and translated at

the prevailing rate at the reporting date.

Segment reporting

Operating segments are reported in the manner consistent

with the internal reporting provided to the chief operating

decision maker (“CODM”). The CODM, which is the function

responsible for allocating resources and assessing

performance of the operating segments, has been

identified as the Executive Committee (“ExCo”), formerly

known as the Global Leadership Team (“GLT”), that

makes strategic decisions. For each identified operating

segment, the Group has disclosed information for the key

performance indicators that are assessed internally to

review and steer performance in the Strategic Report.

Transactions between segments are on an arm’s

length basis in a manner similar to transactions with

third parties.

Exceptional items

Exceptional items are the items of income or expense

that the Group considers are material, one-off in nature

and of such significance that they merit separate

presentation in order to aid the reader’s understanding

of the Group’s financial performance. Such items would

include profits or losses on disposal of businesses,

transaction costs, acquisitions and disposals, major

restructuring programmes, significant goodwill or other

asset impairments, and other particularly significant or

unusual items.

Income recognition

Fee income is recognised in line with IFRS 15 which provides

a single, principles-based five-step model to be applied

to all contracts with customers:

1) identify the contract with the customer;

2) identify the performance obligations in the contract;

3) determine the transaction price;

4) allocate the transaction price to the performance

obligations in the contracts, on a relative stand-alone

selling price basis; and

5) recognise income when (or as) the entity satisfies

its performance obligation.

Fee income earned for the arrangement of loans is

classified as transaction fees. The contract signed by

the borrower and related terms are clearly identifiable.

The performance obligation in the contract is considered

to be the funding of the loan through the platform and

the transaction price is clearly stated in the borrower’s

contract. Fees are recognised immediately once loans

are fully funded and after the loans are accepted by the

borrowers. At this point the performance obligation has

been met, there are no clawback provisions and the fee

is recognised. Such fees are automatically deducted from

the amount borrowed.

Fee income earned from referrals to partner institutions

is classified as transaction fees. There are contracts in

place with partner institutions with clearly identifiable

terms. The performance obligation in the contract

is considered to be the referral by the Group and

subsequent funding of the referred loan by the partner

institution and the transaction price is clearly stated in

the referral agreement. Fees are recognised once the

referred loan has been funded by the partner institution

and accepted by the referred borrower. At this point, the

performance obligation has been met and there are no

significant clawback provisions.

Fee income earned from servicing third party loans is

classified as servicing fees and is a cost of the investor,

except in the case of the first year of servicing fees

related to CBILS loans, where the government paid

the cost. It comprises an annualised fee representing

a percentage of outstanding principal. The contractual

basis for the servicing fee and transaction price is based

on the terms and conditions agreed by investors to the

lending platform. The performance obligation is servicing

the loans and allocating repayments of the loan parts to

the respective lenders. The transaction price is allocated

as a percentage of the outstanding principal balance,

representing the outstanding performance obligation.

Fees are recognised on a monthly basis upon repayment

of loan parts. Due to the conditions of the loans, there

are no partially completed contracts at the balance sheet

date and no advance payments from customers.

Fee income earned from interchange fees from

FlexiPay card and Cashback credit card is classified as

a transaction fee. Foreign exchange fees earned from

FlexiPay card are classified as other fees and are a cost

to the FlexiPay card borrower. A contract is in place with

the card provider who remits the fee revenues to the

Group. Card fees are recognised immediately at the point

of transaction as at this point the performance obligation

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 133

1. Material accounting policies continued

Income recognition continued

has been met. Borrowers using their card will “flip” the

balance into a FlexiPay loan repayable over three months

and for a fee. The fee incurred by borrowers who flip the

card balance into a loan is recognised under IFRS 9 from

the point of the flip over the life of the loan under the

effective interest rate method and is recognised under

interest income.

Other fees includes income from collections charges

levied on the successful recovery of defaulted loans.

These are recognised as services are performed or

performance obligations are met. It also includes

performance-related fees related to the loans held by

certain institutional investors .

Net income includes the following elements under

which the recognition criteria of IFRS 9 and not IFRS 15

are applied:

Interest income includes:

l interest income recognised on assets held at amortised

cost under the effective interest rate method including

fees incurred on FlexiPay drawdowns and FlexiPay card

“flipped” balances, and interest charged on Cashback

credit card drawn balances and interest income on

corporate cash and client monies held. It also includes

interest income on money market funds held at fair

value through profit and loss.

Investment income includes:

l interest income from SME loans and investments in

trusts that the Group holds on balance sheet.

Fair value gains/losses includes:

l gains/losses from changes in the fair value of financial

assets and liabilities held on balance sheet.

Cost of funds includes:

l interest payable on funds borrowed to finance the

issuing of lines of credit.

Net income recorded in the financial statements is

generated in the UK, Germany and the Netherlands. All

fees are recognised and measured based on the above

income recognition policy.

Administrative expenses

Administrative expenses are recognised as an expense in

the statement of comprehensive income in the period in

which they are incurred on an accruals basis.

Share-based payments

The Group operates a number of equity-settled

share-based compensation plans, under which the Group

receives services from employees as consideration for

equity instruments (options and shares) of the Company.

The fair value of the employee services received in

exchange for the grant of the options and shares is

recognised as an expense. The total amount to be expensed

is determined by reference to the fair value of the options

and shares granted:

l including any market performance conditions

(for example, an entity’s share price);

l excluding the impact of any service and non-market

performance vesting conditions (for example, net

income, earnings per share and remaining an employee

of the Group over a specified time period); and

l including the impact of any non-vesting conditions

(for example, the requirement for employees to save).

Non-market vesting conditions are included in

assumptions about the number of options and shares that

are expected to vest. The total expense is recognised

over the vesting period, which is the period over which

all of the specified vesting conditions are to be satisfied.

At the end of each reporting period, the Group revises

its estimate of the number of options and shares that

are expected to vest based on the non-market vesting

conditions. It recognises the impact of the revision to

original estimates, if any, in the income statement, with

a corresponding adjustment to equity.

When the options are exercised, the Company issues

new shares or utilises shares that have been purchased

in the market. The proceeds received net of any directly

attributable transaction costs are credited to share

capital (nominal value) and share premium when the

options are exercised. The original fair value of the

amount exercised is transferred from the share option

reserve to the accumulated losses reserve.

The grant by the Company of options and shares over

its equity instruments to the employees of subsidiary

undertakings in the Group is treated as a capital

contribution. The fair value of employee services

received, measured by reference to the grant date

fair value, is recognised over the vesting period as an

increase in investment in subsidiary undertakings, with

a corresponding credit to equity in the Parent entity

(the “Company”) accounts.

Pension obligations

The Group operates a defined contribution pension

scheme for employees in the UK and the US. The

schemes are pension plans under which the Group pays

fixed contributions into a separate entity. The Group

has no legal or constructive obligations to pay further

contributions if the fund does not hold sufficient assets

to pay all employees the benefits relating to employee

service in the current and prior years. Contributions

payable to the Group’s pension scheme are charged to

the statement of comprehensive income in the year to

which they relate. The Group has no further payment

obligations once the contributions have been paid.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024134

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

1. Material accounting policies continued

Current and deferred tax

The tax expense for the year comprises current and

deferred tax. Current tax is provided at amounts expected

to be paid (or recovered) using the tax rates and laws

that have been enacted or substantively enacted by the

balance sheet date in the countries where the Company

and its subsidiaries operate and generate taxable income.

Management periodically evaluates positions taken in tax

returns with respect to situations in which applicable tax

regulation is subject to interpretation.

The Group has established transfer pricing policies and

there are mechanisms in place that ensure subsidiaries

are remunerated appropriately on an arm’s length basis

for services provided. It establishes provisions, where

appropriate, based on amounts expected to be paid to

the tax authorities.

Deferred tax assets for unused tax losses, tax credits and

deductible temporary differences are recognised to the

extent that it is probable that future taxable profit will be

available against which the temporary differences can

be utilised.

Deferred tax assets are recognised on deductible

temporary differences arising from investments in

subsidiaries, associates and joint arrangements only to

the extent that it is probable the temporary difference will

reverse in the future and there is sufficient taxable profit

available against which the temporary difference can

be utilised.

Deferred tax liabilities are provided on taxable temporary

differences arising from investments in subsidiaries,

associates and joint arrangements, except for any

deferred tax liability where the timing of the reversal of

the temporary difference is controlled by the Group and it

is probable that the temporary difference will not reverse

in the foreseeable future.

Deferred tax assets and liabilities are offset when there

is a legally enforceable right to offset current tax assets

against current tax liabilities and when the deferred tax

assets and liabilities relate to income taxes levied by the

same taxation authority on either the same taxable entity

or different taxable entities and there is an intention to

settle the balances on a net basis.

Deferred income tax is provided in full, using the liability

method, on temporary differences arising between the

tax bases of assets and liabilities and their carrying

amounts in the financial statements. However, deferred

tax is not accounted for if it arises from initial recognition

of an asset or liability in a transaction other than a

business combination that at the time of the transaction

affects neither accounting nor taxable profit or loss.

Deferred tax is determined using tax rates and laws

that have been enacted or substantively enacted at the

year-end date and are expected to apply when the related

deferred tax asset is realised or the deferred tax liability is

settled. Deferred tax balances are not discounted.

Dividends

Dividends are recognised when they become legally

payable, in accordance with the Companies Act 2006.

Intangible assets

Intangible assets with finite useful lives are amortised

on a straight-line basis over their estimated useful lives.

Useful lives and amortisation methods are reviewed

at the end of each annual reporting period, or more

frequently when there is an indication that the intangible

asset may be impaired, with the effect of any changes

accounted for on a prospective basis. Amortisation

commences when the intangible asset is available for

use. The residual value of intangible assets is assumed

to be zero.

Computer software licences

Acquired computer software licences are capitalised on

the basis of the costs incurred to acquire and bring to

use the specific software. These costs are amortised

over the licence period, which is up to five years as at

31 December 2024.

Capitalised development costs

Costs associated with maintaining computer software

programs are recognised as an expense as incurred.

Development costs that are directly attributable

to the design, build and testing of identifiable and

unique software products controlled by the Group are

recognised as intangible assets when the following

criteria are met:

l it is technically feasible to complete the build of the

platform products so that they will be available for use;

l management intends to complete the build of the

platform products for use within the Group;

l there is an ability to use the platform products;

l it can be demonstrated how the platform products will

generate probable future economic benefits;

l adequate technical, financial and other resources to

complete the development and to use the platform

products are available; and

l the expenditure attributable to the platform products

during its development can be reliably measured.

Directly attributable costs that are capitalised as part of

the software product include the software development

employee and contractor costs. The capitalisation

of employee costs is based on the amount of time

spent on specific projects which meet the criteria as

a proportion of their total time, and this proportion

of their salary-related costs is attributed to the

applicable projects.

Other development expenditure that does not meet

these criteria is recognised as an expense as incurred.

Development costs previously recognised as an expense

are not recognised as an asset in a subsequent period.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 135

1. Material accounting policies continued

Intangible assets continued

Capitalised development costs continued

Capitalised development costs are recorded as intangible

assets and amortised from the point at which the asset

is ready for use over their estimated useful lives, ranging

from three to five years.

Other intangibles

Other intangibles relate to the technology platform

and customer relationship (representing fees due

on contracted loans expected to be realised in the

foreseeable future) acquired on a business combination.

These costs are amortised over their estimated useful

lives, which do not exceed three years.

Tangible fixed assets

Tangible fixed assets are stated at cost less depreciation

and any provision for impairment. Depreciation is provided

on all tangible fixed assets, at rates calculated to write off

the cost less estimated residual value of each asset on a

straight-line basis over its expected useful life, as follows:

Computer equipment 1–3 years

Furniture and fixtures 3–5 years

Leasehold improvements that qualify for recognition

as an asset are measured at cost and are presented as

part of property, plant and equipment in the non-current

assets section on the balance sheet. Depreciation

on leasehold improvements is calculated using the

straight-line method over the lease term.

Impairment of tangible and intangible assets

Intangible assets that have an indefinite useful life or

intangible assets not ready to use are not subject to

amortisation and are tested annually for impairment.

Assets that are subject to amortisation are reviewed

for impairment whenever events or changes in

circumstances indicate that the carrying amount may not

be recoverable. An impairment loss is recognised for the

amount by which the asset’s carrying amount exceeds its

recoverable amount.

Recoverable amount is the higher of fair value less

costs to sell and value in use. In assessing value in use,

the estimated future cash flows are discounted to their

present value using a pre-tax discount rate that reflects

current market assessments of the time value of money

and the risks specific to the asset for which the estimates

of future cash flows have not been adjusted.

If the recoverable amount of an asset (or CGU) is

estimated to be less than its carrying amount, the

carrying amount of the asset (or CGU) is reduced to its

recoverable amount. An impairment loss is recognised

immediately in the statement of comprehensive income.

A previously recognised impairment loss is reversed

only if there has been a change in the estimates used to

determine the asset’s recoverable amount since the last

impairment loss was recognised. If this was the case,

the carrying amount of the asset (or CGU) is increased

to the revised estimate of its recoverable amount, but

so that the increased carrying amount does not exceed

the carrying amount that would have been determined

had no impairment loss been recognised for the asset (or

CGU) in prior years. A reversal of an impairment loss is

recognised immediately in profit or loss .

Leases

At inception of a contract, the Group assesses whether

or not a contract is, or contains, a lease. A contract is,

or contains, a lease if the contract conveys the right

to control the use of an identified asset for a period

of time in exchange for consideration. When a lease

is recognised in a contract the Group recognises a

right-of-use asset and a lease liability at the lease

commencement date.

Right-of-use assets are initially measured at cost,

comprising the initial measurement of the lease liability,

less any lease incentives. Subsequently, right-of-use

assets are measured at cost, less any accumulated

depreciation and any accumulated impairment losses,

and are adjusted for certain remeasurements of the lease

liability. Depreciation is calculated on a straight-line basis

over the length of the lease.

Liabilities arising from a lease are initially measured on

a present value basis. Lease liabilities include the net

present value of the following lease payments:

l fixed payments less any lease incentives receivable;

l variable lease payments based on an index or a

rate, initially measured using the index or rate at the

commencement date; and

l amounts expected to be payable by the Group under

residual value guarantee.

The lease payments are discounted using the interest

rate implicit in the lease. If that rate cannot be readily

determined, the Group’s incremental borrowing rate is

used, which is the rate that the Group would have to

pay to borrow the funds necessary to obtain an asset

of similar value to the right-of-use asset in a similar

economic environment with similar terms, security

and conditions.

To determine the incremental borrowing rate, the Group:

l where possible, uses recent third party financing

received by the individual lessee as a starting point,

adjusted to reflect changes in financing conditions

since third party financing was received;

l uses an approach taking the risk-free interest rate

adjusted for credit risk for leases held by Funding Circle

Holdings plc; and

l makes adjustments specific to the lease for term,

country and currency.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024136

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

1. Material accounting policies continued

Leases continued

Subsequently, the lease liability is measured by

increasing the carrying amount to reflect interest on

the lease liability and reducing it by the lease payments

made. The lease liability and right-of-use asset are

remeasured when there is a lease modification.

Lease payments are allocated between principal and

finance cost. The finance cost is charged to profit or

loss over the lease period so as to produce a constant

periodic rate of interest on the remaining balance of the

liability for each period.

The Group is exposed to potential future increases in

variable lease payments based on an index or rate, which

are not included in the lease liability until they take effect.

When adjustments to lease payments based on an index

or rate take effect, the lease liability is reassessed and

adjusted against the right-of-use asset.

Extension and termination options are included in a

number of property leases in the Group. Management

considers the facts and circumstances that may create

an economic incentive to exercise an extension or

termination option in order to determine whether the

lease term should include or exclude such options.

Extension or termination options are only included

within the lease term if they are reasonably certain to

be exercised in the case of extension options and not

exercised in the case of termination options.

Considerations include:

l if leasehold improvements are expected to have

significant value at the end of the lease term;

l expected costs or business disruption as a result of

replacing a lease; and

l significant penalties incurred in order to terminate.

Lease terms are reassessed if the option is exercised or if

a significant event occurs which impacts the assessment

of reasonable certainty.

The Group applies the short-term lease recognition

exemption to its short-term leases of machinery and

equipment (i.e. those leases that have a lease term of

12 months or less from the commencement date and do

not contain a purchase option). It also applies the lease

of low value assets recognition exemption to leases of

office equipment that are considered of low value. Lease

payments on short-term leases and leases of low value

assets are recognised as expenses on a straight-line

basis over the lease term.

When the Group is an intermediate lessor, entering into a

sublease, it accounts for the head lease and the sublease

separately. The sublease is classified as a finance or

operating lease by reference to the right-of-use asset

arising from the head lease. Rental income from operating

leases is recognised on a straight-line basis over the

lease term and the Group retains the right-of-use asset

deriving from the head lease and the lease liability on the

balance sheet.

Amounts due from lessees under finance leases are

recognised as receivables equivalent to the Group’s

net investment in the lease and the right-of-use asset

from the head lease is derecognised. Any difference

resulting from the derecognition of the right-of-use

asset and recognition of the net investment in the

sublease is recognised in the consolidated statement of

comprehensive income. The head lease liability remains

on the balance sheet and interest expense continues to

be recognised, while interest income is recognised from

the sublease.

Consolidation of special purpose vehicles (“SPVs”)

Subsidiaries are those entities, including structured

vehicles, over which the Group has control. The Group

controls an entity when it is exposed, or has rights, to

variable returns from its involvement with the entity and

has the ability to affect those returns through its power

over the investee. The Group has power over an entity

when it has existing rights that give it the current ability

to direct the activities that most significantly affect the

entity’s returns. Power may be determined on the basis

of voting rights or, in the case of structured entities, other

contractual arrangements.

The Group assesses whether it controls SPVs and the

requirement to consolidate them under the criteria of

IFRS 10. Control is determined to exist if the Group has

the power to direct the activities of each entity (for

example, managing the performance of the underlying

assets and raising debt on those assets which is used to

fund the Group) and uses this control to obtain a variable

return (for example, retaining the residual risk on the

assets). Structures that do not meet these criteria are not

treated as subsidiaries and the assets are derecognised

when the rights to the cash flows have ended.

Where the Group manages the administration of its

securitised assets and is exposed to the risks and

rewards of the underlying assets through its continued

investment or where the Group does not retain a direct

ownership interest in an SPE, but the Directors have

determined that the Group controls those entities

based on the criteria of IFRS 10, they are treated as

subsidiaries and are consolidated. See note 29 for details

of these entities.

Investment in associates

An associate is an entity over which the Group has

significant influence. Significant influence is the power to

participate in the financial and operating policy decisions

of the investee, but is not control or joint control over

those policies. The considerations made in determining

significant influence or joint control are similar to those

necessary to determine control over subsidiaries. The

Group’s investment in its associate is accounted for using

the equity method.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 137

1. Material accounting policies continued

Investment in associates continued

Under the equity method of accounting, the investments

are initially recognised at cost. This is adjusted thereafter

to recognise the Group’s share of the post-acquisition

profits or losses of the investee in the consolidated

statement of comprehensive income. The Group’s share

of movements in other comprehensive income of the

investee is recognised in other comprehensive income.

Dividends received or receivable from associates are

recognised as a reduction in the carrying amount of

the investment.

When the Group’s share of losses in an equity-accounted

investment equals or exceeds its interest in the entity,

including any other unsecured long-term receivables, the

Group does not recognise further losses, unless it has

incurred obligations or made payments on behalf of the

other entity.

Unrealised gains on transactions between the Group and

its associates are eliminated to the extent of the Group’s

interest in these entities. Unrealised losses are also

eliminated unless the transaction provides evidence of an

impairment of the asset transferred.

After application of the equity method, the Group

determines whether it is necessary to recognise an

impairment loss on its investment in its associate. At

each reporting date, the Group determines whether

there is an indication that the investment in the associate

is impaired. If there is such an indication, the Group

calculates the amount of impairment as the difference

between the recoverable amount of the associate and its

carrying value, and then recognises the loss within the

statement of comprehensive income.

Upon loss of significant influence over the associate,

the Group measures and recognises any retained

investment at its fair value. Any difference between the

carrying amount of the associate upon loss of significant

influence or joint control and the fair value of the retained

investment and proceeds from disposal is recognised in

profit or loss.

Financial instruments

Financial assets

The Group determines the classification of its financial

assets at initial recognition. The requirements of IFRS

9 for classification and subsequent measurement are

applied, which require financial assets to be classified

based on the Group’s business model for managing the

asset and the contractual cash flow characteristics of

the asset:

l financial assets are measured at amortised cost if

they are held within a business model, the objective

of which is to hold financial assets in order to collect

contractual cash flows, and their contractual cash flows

represent solely payments of principal and interest;

l financial assets are measured at fair value through

other comprehensive income (“FVTOCI”) if they are

held within the business model defined as ”held to

collect and sell”, the objective of which is achieved

by both collecting contractual cash flows and selling

financial assets, and their contractual cash flows

represent solely payments of principal and interest; and

l financial assets that do not meet the criteria to be

amortised cost or FVTOCI are measured at fair value

through profit or loss (“FVTPL”). In addition, the

Group may, at initial recognition, designate a financial

asset as measured at FVTPL if doing so eliminates or

significantly reduces an accounting mismatch.

When financial assets are recognised initially, they are

measured at fair value, plus, in the case of investments

not at fair value through profit or loss, directly attributable

transaction costs. The purchase of any credit-impaired

assets is also at fair value after any impairment.

Except for certain investments in SME loans as described

below, the Group does not recognise on its balance sheet

loans arranged between borrowers and investors as it is

not a principal party to the contracts and is not exposed

to the risks and rewards of these loans.

With the exception of investment in trusts and co-

investments and SME loans held at fair value through

profit and loss, all financial assets are held to collect

contractual cash flows.

The four types of SME loans held are as follows:

i) SME loans held at fair value through profit and loss

During the securitisation programmes previously run

by the Group, SME loans were originated in leveraged

warehouse vehicles and subsequently sold into

securitisation SPVs. By 31 December 2023 the warehouse

vehicles had been repaid and the securitisation vehicles

unwound with the loans of the vehicles purchased and

directly held by subsidiaries of the Group and remaining

bond liabilities were repaid. These SME loans have been

classified as financial assets at fair value through profit

or loss because all such loans are acquired principally

for selling in the short-term and the collection of interest

is incidental. Additionally this category includes loans

temporarily funded by the Group which are classified as

financial assets at fair value through profit or loss and

are held with the intention of selling on to investors. They

are initially measured at fair value on the balance sheet

with the subsequent measurement at fair value with all

gains and losses being recognised in the consolidated

statement of comprehensive income.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024138

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

1. Material accounting policies continued

Financial instruments continued

Financial assets continued

ii) SME loans held at amortised cost

The Group had originated PPP loans using the SBA’s

PPPLF facility and these were held on balance sheet.

Additionally, the Group holds investments in certain SME

business loans as a result of commercial arrangements

with institutional investors and in certain circumstances

the Group also buys back loans from investors.

These loans are included in SME loans held at amortised

cost (see note 12) and are classified as amortised cost

(as they are held solely to collect principal and interest

payments) and are initially recognised at fair value

and subsequently measured at amortised cost less

provision for impairment. PPP loans were fully guaranteed

by the SBA.

iii) Lines of credit

Lending through the FlexiPay product is recognised on

the balance sheet within lines of credit. This represents

the drawn amount of the facilities, net of ECL. The

contractual cash flows represent solely payments of

principal and interest (“SPPI”) and the business model

under which they are held is in order to collect the

contractual cash flows resulting in the lines of credit

being measured initially at fair value and subsequently

at amortised cost. The origination fee associated with

FlexiPay is recognised under IFRS 9 within interest

income at the effective interest rate in the consolidated

statement of comprehensive income and is recognised

over the expected life of the drawdown.

The FlexiPay lines of credit are held net of expected

credit loss allowances under IFRS 9, the methodology

and definitions of which align to the Group accounting

policy on impairment of financial assets held at amortised

cost with the exception of being assessed at the available

line of credit level, estimating the utilisation of the line of

credit to the estimated point of default and are detailed

further within note 16. Additionally, the Group assesses

the expected credit loss allowance in relation to undrawn

lines of credit, estimating the probability of default, loss

given default and exposure at default in relation to these

lines of credit were they to be drawn. This undrawn

portion of the loss allowance is recognised within other

liabilities in note 15.

iv) Investment in trusts and co-investments

The Group holds a minority beneficial ownership in

trusts set up to fund CBILS, RLS and commercial loans

with the majority of the beneficial ownership held by

institutional investors. The SME loans are originated by

Group subsidiaries, Funding Circle Focal Point Lending

Limited for CBILS and Funding Circle Eclipse Lending

Limited or Funding Circle Polaris Lending Limited for RLS

and commercial loans, which retain legal title to the loans.

These entities hold this legal title on trust on behalf of the

majority investors who substantially retain the economic

benefits the CBILS, RLS and commercial loans generate

and therefore the trusts and the assets held within,

including the SME loans, are not consolidated.

The Group assesses whether it controls the trust

structure under the criteria of IFRS 10. Control is

determined to exist if the Group has the power to direct

the activities of entities and structures and uses this

control to obtain a variable return, to which it is exposed

to the majority of the variability. As the Group’s holding is

small compared to the majority investor and pari passu,

the Group is not exposed to the majority of the variability

in the cash flows of the trust, and it is not considered to

control the trust structures, so they are not consolidated

by the Group.

Investments in trusts are classified at fair value through

profit and loss. They are initially recognised at fair value

on the balance sheet with the subsequent measurement

at fair value with all gains and losses being recognised in

the consolidated statement of comprehensive income.

The Group recognises transaction fee income on

origination of loans within the trust and service fee

income on the assets within the trust, eliminating its

proportional ownership share of the service fees. A

scheme lender fee is charged in relation to the origination

of CBILS and RLS loans and investment income is

recognised in relation to returns on the investment.

Other financial assets

Financial assets recognised in the balance sheet as

trade and other receivables are classified as amortised

cost. They are recognised initially at fair value and

subsequently measured at amortised cost less provision

for impairment.

Net investments in sublease receivables are recognised

as other receivables representing the net present

value of the lease payment receivable. Interest is

recognised within other costs in the statement of

comprehensive income.

Cash and cash equivalents are classified as amortised

cost with the exception of money market funds that

are classified as FVTPL. Cash and cash equivalents

include cash in hand, deposits held at call with banks,

money market funds and other short-term highly liquid

investments with original maturities of three months or

less. The carrying amount of these assets approximates

to their fair value.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 139

1. Material accounting policies continued

Financial instruments continued

Other financial assets continued

Impairment of financial assets held at amortised cost

The Group applies the impairment requirements of

IFRS 9. The IFRS 9 impairment model requires a three-

stage approach:

l Stage 1 includes financial instruments that have not

had a significant increase in credit risk since initial

recognition or that have low credit risk at the reporting

date. For these assets, 12-month expected credit

losses (“ECLs”) (that is, expected losses arising from

the risk of default in the next 12 months) are recognised

and interest income is calculated on the gross carrying

amount of the asset (that is, without deduction for

credit allowance).

l Stage 2 includes financial instruments that have had a

significant increase in credit risk since initial recognition

(unless they have low credit risk at the reporting date)

but are not credit-impaired. For these assets, lifetime

ECLs (that is, expected losses arising from the risk of

default over the life of the financial instrument) are

recognised, and interest income is still calculated on

the gross carrying amount of the asset. The Group

assumes there has been a significant increase in credit

risk if outstanding amounts on the financial assets

exceed 30 days past due, in line with the rebuttable

presumption per IFRS 9, or if a line of credit is late, or

has been frozen due to an identified increase in risk

such as becoming late on a third party debt at which

point the assets are considered to be stage 2.

l Stage 3 consists of financial assets that are credit- impaired,

which is when one or more events that have a detrimental

impact on the estimated future cash flows of the financial

asset have occurred. For these assets, lifetime ECLs

are also recognised, but interest income is calculated

on the net carrying amount (that is, net of the ECL

allowance). The Group defines a default, classified as

stage 3, as an asset with any outstanding amounts

exceeding a 90-day due date, which reflects the point

at which the asset is considered to be defaulted. An

account that is deemed to be fraudulent (i.e. third party

application fraud) is written off at point of identification.

l In some circumstances where assets are bought

back by the Group, the financial asset associated with

the purchase meets the definition of purchased or

originated credit-impaired (“POCI”), and impairment

is therefore based on lifetime ECLs.

The Group assesses on a forward-looking basis the

expected credit losses associated with its financial assets

carried at amortised cost and recognises a loss allowance

for such losses at each reporting date. The measurement

of ECLs reflects:

l an unbiased and probability-weighted amount

that is determined by evaluating a range of

possible outcomes;

l the time value of money; and

l reasonable and supportable information that is

available without undue cost or effort at the reporting

date about past events, current conditions and

forecasts of future economic conditions.

If in a subsequent period the amount of the impairment

loss decreases and the decrease can be related

objectively to an event occurring after the impairment

was recognised, the previously recognised impairment

loss is reversed, to the extent that the carrying value

of the asset does not exceed its amortised cost at

the reversal date. Any subsequent reversal of an

impairment loss is recognised in the statement of

comprehensive income.

Derecognition of financial assets

Financial assets are derecognised only when the

contractual rights to the cash flows from the financial

assets expire or the Group has either transferred the

contractual right to receive the cash flows from that

asset, or has assumed an obligation to pay those cash

flows to one or more recipients.

The Group derecognises a transferred financial asset

if it transfers substantially all the risks and rewards

of ownership.

Financial liabilities

Financial liabilities included in trade and other payables

are recognised initially at fair value and subsequently at

amortised cost. The fair value of a non-interest-bearing

liability is its discounted repayment amount. If the due

date of the liability is less than one year, discounting

is omitted.

A financial liability is derecognised when the obligation

under the liability is discharged or cancelled or expires.

Bank borrowings

Bank borrowings (drawdowns under the credit facilities)

are recognised initially at fair value, being their issue

proceeds net of transaction costs incurred. These

instruments are subsequently measured at amortised

cost using the effective interest rate method.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024140

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

1. Material accounting policies continued

Provisions

Provisions are recognised when the Group has a present

obligation (legal or constructive) as a result of a past

event; it is probable that the Group will be required to

settle that obligation and a reliable estimate can be made

of the amount of the obligation.

Loan repurchases

Loan repurchase contracts issued by the Group are

those contracts that require a payment to be made to

reimburse the holder for a loss it incurs because the

specified debtor fails to make a payment when due in

accordance with the terms of a debt instrument. Loan

repurchase contracts are recognised initially as a liability

at fair value, adjusted for transaction costs that are

directly attributable to the issuance of the contract. The

liability is subsequently measured at the higher of the

best estimate of the expenditure required to settle the

present obligation at the reporting date and the amount

recognised less cumulative amortisation. The expected

credit loss model is used to measure and recognise the

financial liability.

Share capital

Ordinary shares are classified as equity where their terms

include no contractual obligation to transfer cash or

another financial asset to another entity.

Earnings/(loss) per share

The Group presents basic and diluted earnings/(losses)

per share (“EPS”) for its ordinary shares. Basic and

diluted EPS are calculated by dividing the profit/(loss)

attributable to ordinary shareholders by the weighted

average number of ordinary shares outstanding during

the year excluding shares held as own shares in the

Company’s Employee Benefit Trusts.

For diluted earnings per share, the weighted average

number of ordinary shares in issue is adjusted to

assume conversion of all dilutive potential ordinary

shares. The dilutive potential ordinary shares include

those share options granted to employees under the

Group’s share-based compensation schemes which do

not have an exercise price or where the exercise price

is less than the average market price of the Company’s

ordinary shares during the year.

Shares held by the Employee Benefit Trust and Share

Incentive Plan Trust

The Company has established an offshore Employee

Benefit Trust (“EBT”) and an onshore Share Incentive Plan

(“SIP”) Trust.

The EBT and SIP Trust provide for the issue of shares to

Group employees principally under share option schemes

and SIP respectively. The Group has control of the EBT and

SIP Trust and therefore consolidates the Trusts in the Group

financial statements. Since 2022, the Trustee of the EBT

has purchased the Company’s shares in the market in order

to satisfy the exercise of employee share option schemes.

Shares which are purchased are recognised at cost

and are treated as a deduction to shareholders’ equity.

No gain or loss is recognised in the income statement

on the purchase or utilisation of equity shares.

Reserves

Foreign exchange reserve

The foreign exchange reserve represents the cumulative

foreign currency translation movement on the assets and

liabilities of the Group’s international operations at year-

end exchange rates and on the profit and loss items from

average exchange rates to year-end exchange rates.

Share premium

Proceeds received in excess of the nominal value

of shares issued, or on the market value of shares

exercised in excess of the exercise price net of any

transaction costs.

Share options reserve

The share options reserve represents the cumulative

charges to income under IFRS 2 Share-based Payments

on all share options and schemes granted, net of share

option exercises. The costs are transferred to retained

earnings when options are exercised.

2. Critical accounting judgements and key sources of

estimation uncertainty

The preparation of the consolidated financial statements

requires the Group to make estimates and judgements

that affect the application of policies and reported

amounts. Critical judgements represent key decisions

made by management in the application of the Group

accounting policies. Where a significant risk of

materially different outcomes exists due to management

assumptions or sources of estimation uncertainty, this will

represent a key source of estimation uncertainty.

Estimates and judgements are continually evaluated and

are based on experience and other factors, including

expectations of future events that are believed to be

reasonable under the circumstances. Although these

estimates are based on management’s best knowledge

of the amount, event or actions, actual results ultimately

may differ from those estimates.

The significant judgements and estimates applied by the

Group in the financial statements have been applied on

a consistent basis with the financial statements for the

comparative year to 31 December 2023.

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Funding Circle Holdings plc | Annual Report and Accounts 2024 141

2. Critical accounting judgements and key sources of

estimation uncertainty continued

Critical judgements

Loans originated through the platform

The Group originates SME loans through its platform

which have been funded primarily by banks, asset

managers, other institutional investors, funds, national

entities, retail investors or by usage of its own capital.

Judgement is required to determine whether these

loans should be recognised on the Group’s balance

sheet. Where the Group, its subsidiaries or SPVs which

it consolidates have legal and beneficial ownership to

the title of those SME loans, they are recognised on the

Group’s balance sheet. Where this is not the case, the

loans are not recognised at the point of origination.

Recognition of deferred tax

Under IAS 12, a deferred tax asset should be recognised for

all deductible temporary differences and tax losses to the

extent that it is probable that taxable profit will be available

against which the deductible temporary difference or tax

losses can be utilised. While the Board-approved forecasts

project the UK to be in a taxable profit position for the year

ended 31 December 2025 and beyond, there are risks to

achieving this forecast and as a result it is not considered

highly probable. Management has used its judgement in

determining whether there is sufficient certainty to recognise

a deferred tax asset. The European Securities and Markets

Authority (“ESMA”) has previously issued guidance relating

to the recognition of deferred tax assets in response to

companies recognising assets too early only to subsequently

write them off. One of the key indicators suggested by ESMA

for the recognition of deferred tax is whether taxable profit

is being recognised from which an entity has begun to offset

losses. This is not yet the case for the UK business for a

sustained period and management has determined not to

recognise a deferred tax asset as a result. Had management

determined a different level of certainty regarding the

taxable profits of the UK for the year end and beyond,

then a deferred tax asset may have been recognised.

Key sources of estimation uncertainty

The following are the key sources of estimation

uncertainty that the Directors have identified in the

process of applying the Group’s accounting policies

and have the most significant effect on the amounts

recognised in the financial statements.

Expected credit loss impairment of FlexiPay lines of

credit (note 16)

At 31 December 2024, the Group held £110.0 million

of drawn FlexiPay lines of credit and £278.7 million of

undrawn lines of credit, gross of expected credit loss

impairment allowances.

While other financial assets of the Group are held at

amortised cost, the FlexiPay lines of credit are the most

sensitive to estimation uncertainty due to the higher

balance outstanding and more limited historical data.

An expected credit loss impairment allowance is held against

the lines of credit of £15.6 million (£12.9 million related to

drawn lines of credit and £2.7 million related to undrawn).

The Group estimates the expected credit loss allowance

following IFRS 9 through modelling the exposure at

default based on observed trends related to the overall

line of credit facility and the proportion drawn at the time

of default. The probability of default is estimated utilising

observed trends and combining these with forward-

looking information including different macroeconomic

scenarios which are probability weighted. The loss given

default is driven by assumptions regarding the level of

recoveries collected after defaults occur.

The area most sensitive to estimation uncertainty is

the probability of default (“PD”) related to stage 1 lines

of credit which is based on actual experience and the

probability weighting of the forward-looking scenarios

utilised. Currently a baseline scenario, upside scenario

and downside scenario are utilised which are probability

weighted 60% baseline, 10% upside and 30% downside,

which provide a blended stage 1 probability of default

of 3.6%. It is also noted that the downside scenario has

peak unemployment of 6.9% in December 2027 and

upside scenario has a trough unemployment of 3.6% from

September 2026 relative to 4.4% in December 2024. Given

the stage 1 PD is based on 12 month expected credit losses,

the respective peak and trough of these scenarios has a low

impact on the stage 1 ECL as at 31 December 2024 given

the time horizon to reaching the respective peak and trough.

If 100% probability weighting was to be applied to the

upside scenario and the lowest point of the upside

scenario unemployment forecast was solely applied for

calculating the PD, the weighted PD related to stage 1

lines of credit would decrease by 60 bps to 3.0% and

the expected credit loss impairment provision would

decrease by £0.8 million (£0.4 million on drawn lines of

credit and £0.4 million on undrawn lines of credit).

If a 100% probability weighting was to be applied to the

downside scenario and the highest point of the downside

scenario unemployment forecast was solely applied for

calculating the PD, the weighted PD related to stage 1

lines of credit would increase by 120 bps to 4.8% and the

expected credit loss impairment would increase by £1.8

million (£0.9 million on drawn lines of credit and £0.9

million on undrawn lines of credit). It is considered that

the above sensitivities represent the range of reasonably

possible outcomes in relation to the probability of default

on stage 1 FlexiPay lines of credit.

The loss given default (“LGD”) of the expected credit loss

impairment allowance is estimated based on observation

of the blended portfolio recoveries to date on defaulted

lines of credit projected out into the future using a 84.4%

LGD. While the LGD expectation is based on the trajectory

of recoveries to date, the lifetime LGD may differ from the

estimated amount. A +/- 500 bps increase/decrease in

the estimated lifetime LGD would increase/decrease the

expected credit loss impairment allowance by £0.9 million/

(£0.9 million). It is considered that the above sensitivities

represent the range of reasonably possible outcomes in

relation to the LGD on FlexiPay lines of credit.

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Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

3. Discontinued operations

The Group announced on 7 March 2024 its intention to divest of the US business. As of this date, the US business

was considered to form a disposal group and was reclassified as a discontinued operation. An agreement was signed

on 24 June 2024 to sell the business to iBusiness Funding, LLC and the transaction completed as of 1 July 2024. As a

result, Group retained control of the US business until 1 July 2024, at which point it was deconsolidated.

The current and comparative loss for the year from discontinued operations, segmental results, cash flows from

discontinued operations and component elements of the gain on disposal are detailed below.

Discontinued operations

		Before		31 December	31 December
		exceptional	Exceptional	2024	2023
	Note	items	items	£m	£m
Transaction fees		10.3	—	10.3	23.4
Servicing fees		2.1	—	2.1	3.4
Interest income		0.7	—	0.7	1.3
Other fees		0.2	—	0.2	0.6
Operating income		13.3	—	13.3	28.7
Investment income		0.7	—	0.7	4.4
Investment expense		—	—	—	(0.6)
Net investment income		0.7	—	0.7	3.8
Total income		14.0	—	14.0	32.5
Fair value gains		2.2	—	2.2	5.6
Net income		16.2	—	16.2	38.1
People costs		(16.0)	1.7	(14.3)	(28.9)
Marketing costs		(3.7)	—	(3.7)	(11.3)
Depreciation, amortisation, impairment
and modification gains/(losses)	10, 11	(0.3)	—	(0.3)	(10.3)
(Charge)/credit for expected credit losses	15, 16	(0.1)	—	(0.1)	0.1
Other costs		(6.2)	—	(6.2)	(11.0)
Operating expenses		(26.3)	1.7	(24.6)	(61.4)
Realised FX recycled from foreign currency
translation		—	8.7	8.7	—
Gain on disposal of US business		—	8.1	8.1	—
(Loss)/profit before taxation		(10.1)	18.5	8.4	(23.3)
Income tax	8	(0.1)	—	(0.1)	(6.8)
(Loss)/profit for the year from discontinued operations		(10.2)	18.5	8.3	(30.1)
Other comprehensive income/(expense)
Exchange differences on translation of foreign	19	(0.2)	(8.7)	(8.9)	(2.7)
operations – discontinued operations
Total comprehensive (expense)/income for the year attributable to owners of the Parent		(10.4)	9.8	(0.6)	(32.8)
Earnings per share
Basic and diluted (loss)/earnings per share
from discontinued operations	9	(3.0)p		2.4p	(8.7)p
Basic and diluted (loss)/earnings per share	9	(3.0)p		2.2p	(8.7)p
from discontinued operations

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3. Discontinued operations continued

Segmental Adjusted EBITDA from discontinued operations

	31 December	31 December
	2024	2023
	£m	£m
Adjusted EBITDA	(8.7)	(10.6)
Discount unwind on lease liabilities	(0.2)	(0.4)
Depreciation, amortisation, impairment and modification gains/(losses)	(0.3)	(10.3)
Exceptional items	18.5	—
Share-based payments and social security costs	(1.0)	(1.8)
Foreign exchange gains/(losses)	0.1	(0.2)
Profit/(loss) before tax	8.4	(23.3)

Cash flow

	31 December	31 December
	2024	2023
	£m	£m
Cash and cash equivalents at the beginning of the year	22.3	13.8
Net cash outflow from operating activities	(8.6)	(12.3)
Net cash (outflow)/inflow from investing activities	(13.3)	64.8
Net cash outflow from financing activities	(0.6)	(43.2)
Net (decrease)/increase in cash generated	(0.2)	23.1
Effect of foreign exchange rate changes	0.2	(0.8)
Cash and cash equivalents at the end of the year	—	22.3

Details of the sale of the US business (exceptional items):

	£m
Consideration received:
Cash consideration at prevailing exchange rate	32.6
Net assets disposed on (including cash and cash equivalents of £23.1 million)	(22.2)
Gross gain on sale	10.4
Direct transaction costs for legal, advisory and other costs	(2.3)
Net impact of (early vesting)/lapsing US share options	1.7
Other disposal related costs	(0.6)
Gain on sale	9.8
Reclassification of foreign currency translation reserve	8.7
Total gain as a result of disposal after reclassification of foreign currency translation reserve	18.5

4. Exceptional items

The Group reflects its underlying financial results in the “before exceptional items” column of the consolidated

statement of comprehensive income in order to provide a clear and consistent view of trading performance.

As part of its ongoing commitment to profitability, the Group launched a redundancy and cost efficiency programme

during the year. This process will result in a simpler, leaner and better positioned UK-focused operation. This resulted

in redundancy costs of £2.3 million and impairment of capitalised development spend intangible assets of £0.3 million

which were treated as exceptional items.

The Group disposed of its investment in the US business on 1 July 2024, as detailed in note 3.

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Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

5. Segmental information

IFRS 8 Operating Segments requires the Group to determine its operating segments based on information which is

used internally for decision making. Based on the internal reporting information and management structures within the

Group, it has been determined that there are two continuing business and one discontinued US business operating

segments. Reporting on this basis is reviewed by the Executive Committee (“ExCo”), formerly known as the Global

Leadership Team (“GLT”), which is the chief operating decision maker (“CODM”). The ExCo is made up of the Executive

Directors and other senior management and is responsible for the strategic decision making of the Group.

The Other segment historically included the Group’s Term Loans businesses in Germany and the Netherlands. The

Other segment has been presented within UK Term Loans for the year ended 31 December 2024 on the basis it is no

longer individually material. The comparative year to 31 December 2023 has not been re-presented as it is immaterial.

The ExCo measures the performance of each segment primarily by reference to profit before tax. Additionally, the

ExCo utilises a non-GAAP measure, Adjusted EBITDA, which is defined as profit/loss for the year before finance costs

(being the discount unwind on lease liabilities), taxation, depreciation, amortisation and impairments (“AEBITDA”),

and additionally excludes share-based payment charges and associated social security costs, foreign exchange and

exceptional items. AEBITDA is a measure of Group performance as it allows better comparability of the underlying

performance of the business. The segment reporting, including AEBITDA, excludes the impact of the Group’s transfer

pricing arrangements as this is not information presented to, or used by, the CODM in decision making or the allocation

of resources.

		31 December 2024 1				31 December 2023 1
		Continuing operations				Continuing operations
		United Kingdom	Total		United Kingdom	Other	Total
	Term Loans	FlexiPay	Total	Term Loans	FlexiPay	Term Loans	Total
	£m	£m	£m	£m	£m	£m	£m
Transaction fees	84.7	0.6	85.3	65.2	0.1	—	65.3
Servicing fees	37.5	—	37.5	38.8	—	0.2	39.0
Interest income	8.3	22.6	30.9	7.5	7.8	0.1	15.4
Other fees	5.1	0.1	5.2	6.3	—	0.1	6.4
Operating income	135.6	23.3	158.9	117.8	7.9	0.4	126.1
Net investment income	2.8	—	2.8	3.6	—	—	3.6
Total income	138.4	23.3	161.7	121.4	7.9	0.4	129.7
Fair value gains	4.2	—	4.2	3.1	—	—	3.1
Cost of funds	—	(5.8)	(5.8)	—	(2.7)	—	(2.7)
Net income	142.6	17.5	160.1	124.5	5.2	0.4	130.1
Adjusted EBITDA	37.0	(12.5)	24.5	21.3	(14.4)	(0.2)	6.7
Discount unwind on lease liabilities	(0.6)	—	(0.6)	(0.2)	—	—	(0.2)
Depreciation, amortisation, impairment and modification
(gains/losses)	(11.4)	(1.8)	(13.2)	(11.3)	(1.3)	—	(12.6)
Share-based payments and social
security costs	(6.5)	(1.3)	(7.8)	(3.3)	(0.5)	—	(3.8)
Exceptional items	(2.3)	(0.3)	(2.6)	—	—	—	—
Foreign exchange gains	0.5	—	0.5	—	—	—	—
Profit/(loss) before tax	16.7	(15.9)	0.8	6.5	(16.2)	(0.2)	(9.9)

1. The segmental results of the US business are not presented above and are presented within note 3 – discontinued operations.

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6. Operating expenses

		Before
		exceptional	Exceptional	31 December	31 December
		items	items 1	2024	2023
	Note	£m	£m	£m	£m
Continuing operations
Depreciation	11	3.0	—	3.0	3.5
Amortisation and impairment	4, 10	10.6	0.3	10.9	9.1
Modification gains	11	(0.4)	—	(0.4)	—
Rental income and other recharges		—	—	—	(0.2)
Employment costs (including contractors)	7	68.1	2.3	70.4	65.5
Marketing costs – (excluding employment costs)		45.6	—	45.6	37.1
Data and technology		7.2	—	7.2	6.8
Expected credit loss impairment charge	16, 27	8.6	—	8.6	4.5
Other expenses		14.0	—	14.0	13.7
Total operating expenses from continuing operations		156.7	2.6	159.3	140.0

1. See note 4 for details on exceptional items.

Auditors’ remuneration

	31 December	31 December
	2024	2023
	£m	£m
Audit fees
Continuing operations
– Fees payable to the Company’s auditors for the audit of the Parent Company and consolidated
financial statements	0.4	0.5
– Fees payable to the Company’s auditors and its associates for the statutory audit of the financial statements of subsidiaries of the Company	0.5	0.5
Total audit fees	0.9	1.0
Non-audit service fees
– Audit-related assurance services	0.3	0.3
– Other assurance services	0.1	0.1
Total non-audit service fees	0.4	0.4

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Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

7. Employees

The average monthly number of employees (including Directors) during the year was:

	2024	2023
	Number	Number
Continuing operations
Term Loans	628	666
FlexiPay	88	81
Other	5	9
Total continuing operations	721	756
Discontinued operations 1
US	106	203
Total discontinued operations	106	203
Total	827	959

In addition to the employees above, the average monthly number of contractors during the year was 80 (2023: 115),

of which 13 (2023: 26) related to the US

1. Average monthly numbers are calculated over 12 months and for the 2024 US discontinued operations includes 6 months following the sale of the US business

where the employee number was nil.

Employment costs (including Directors’ emoluments) during the year were:

				31 December
		31 December 2024		2023
	Before
	exceptional	Exceptional
	items	items 1	Total	Total
Continuing operations	£m	£m	£m	£m
Wages and salaries	56.0	—	56.0	55.6
Social security costs	6.3	—	6.3	6.0
Pension costs	2.1	—	2.1	2.1
Share-based payments	7.8	—	7.8	3.8
Exceptional costs	—	2.3	2.3	—
	72.2	2.3	74.5	67.5
Contractor costs	4.9	—	4.9	7.2
Less: capitalised development costs	(9.0)	—	(9.0)	(9.2)
Employment costs net of capitalised development costs	68.1	2.3	70.4	65.5

1. See note 4 for details of exceptional items.

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8. Income tax charge/(credit)

The Group is subject to all taxes applicable to a commercial company in its countries of operation. The UK (losses)/

profits of the Company are subject to UK income tax at the standard corporation tax rate of 25% (23.5% is applied to

the table below for 2023 as a blended rate for the year, as the increase in the statutory corporation tax rate to 25% was

effective from 1 April 2023).

	31 December	31 December
	2024	2023
	£m	£m
Current tax
Continuing operations
UK
Current tax on profits/(losses) for the year	0.5	0.3
Adjustment in respect of prior years	—	(2.0)
	0.5	(1.7)
Other Current tax on (losses)/profits for the year	—	—
Adjustment in respect of prior years	—	—
	—	—
Total current tax charge/(credit) from continuing operations	0.5	(1.7)
Discontinued operations
US
Current tax on (losses)/profits for the year	0.1	0.3
Adjustment in respect of prior years	—	(0.1)
Total current tax charge from discontinued operations	0.1	0.2
Total current tax charge/(credit)	0.6	(1.5)
Deferred tax
Continuing operations
UK
Deferred tax on profits/(losses) for the year	—	—
Adjustments in respect of prior years	—	—
	—	—
Other Deferred tax on (losses)/profits for the year	—	—
Adjustments in respect of prior years	—	—
	—	—
Total deferred tax charge/(credit) from continuing operations	—	—
Discontinued operations
US
Deferred tax on (losses)/profits for the year	—	6.6
Adjustments in respect of prior years	—	—
Total deferred tax charge from discontinued operations	—	6.6
Total deferred tax charge	—	6.6
Total tax charge	0.6	5.1

The above current tax charge/(credit) represents the expected tax on the Research and Development Expenditure

Credit (“RDEC”) receivable for 2024 and US state taxes from 1 January 2024 to the date of disposal of the US business.

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Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

8. Income tax charge/(credit) continued

In the prior year, the tax charge represents the tax liability on the Group’s taxable profit, including state taxes, and the

amount of tax deducted from the RDEC receivable for 2023.

Based on the Group’s current financial projections, the estimate of the deferred tax asset in respect of the losses

arising in the UK was £nil at 31 December 2024 (31 December 2023: £nil).

The US business at 31 December 2024 is represented as discontinued operations.

The Group charge/(credit) for the year can be reconciled to the profit/(loss) before tax shown per the consolidated

statement of comprehensive income as follows.

Factors affecting the tax charge/(credit) for the year

	31 December	31 December
	2024	2023
	£m	£m
Profit/(loss) before taxation for the Group	9.2	(33.2)
Taxation on profit/(loss) at 25.0% (2023: 23.5%)	2.3	(7.8)
Effects of:
Research and development	0.4	0.3
Effect of foreign tax rates	0.1	0.3
Non-taxable/non-deductible expenses	0.3	0.7
Unrecognised timing differences	(0.1)	1.7
Unrecognised tax losses accumulated	1.1	5.6
Adjustment in respect of prior years	—	(2.1)
Deferred tax assets derecognised	—	6.6
Impairment charge	(3.5)	(0.2)
Total tax charge	0.6	5.1
Total tax charge/(credit) from continuing operations	0.5	(1.7)
Total tax charge from discontinued operations	0.1	6.8

There was no tax charge/(credit) in the current or prior year related to exchange differences on translation of foreign

operations in other comprehensive income or the recycling of these into profit and loss.

The Group is taxed at different rates depending on the country in which the profits arise.

The key applicable tax rates for 2024 include the UK 25%, and the US 21%. The effective tax rate for the year was

4.87% (2023: -15.4%).

	31 December	31 December
	2024	2023
	£m	£m
Property, plant and equipment	—	(1.5)
Carry forward losses (UK)	—	1.5
Carry forward losses (US)	—	—
Recognised deferred tax	—	—

Unrecognised deferred tax

	31 December	31 December
	2024	2023
	£m	£m
Property, plant and equipment	6.9	22.8
Carry forward losses	125.0	183.4
Deferred stock options	22.5	20.5
US R&D credit	—	2.2
US fair value adjustments	—	40.7
Other	0.2	0.4
Unrecognised deferred tax 1	154.6	270.0

1. Balances presented in the table above are gross timing differences and are not tax effected.

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8. Income tax charge/(credit) continued

Unrecognised deferred tax continued

Based on the temporary differences, there are total unrecognised deferred tax assets of £38.7 million (2023: £62.2 million).

In addition, there is an unrecognised deferred tax asset in relation to R&D expenditure credit set-off amounts of £2.0 million

(2023: £1.7 million).

The Group has unrelieved tax losses of £125.0 million (2023: £183.4 million) that are available for offset against future

taxable profits.

Factors affecting the tax charge in future years

Factors that may affect the Group’s future tax charge include the geographic location of the Group’s earnings

(including changes in transfer pricing arrangements), the tax rates in those locations, changes in tax legislation and the

use of brought-forward tax losses. The calculation of the Group’s total tax charge involves a degree of estimation and

judgement with respect to the recognition of any deferred tax asset.

9. Earnings/(loss) per share

Basic earnings/(loss) per share amounts are calculated by dividing the profit/(loss) for the year attributable to ordinary

equity holders of the Company by the weighted average number of ordinary shares outstanding during the year.

For diluted earnings/(loss) per share, the weighted average number of ordinary shares in issue is adjusted to assume

conversion of all dilutive potential ordinary shares. The dilutive potential ordinary shares include those share options

granted to employees under the Group’s share-based compensation schemes which do not have an exercise price or

where the exercise price is less than the average market price of the Company’s ordinary shares during the year.

Where loss per share is presented, there is no difference in the weighted average number of shares used in the

calculation of basic and diluted loss per share as the effect of all potentially dilutive shares outstanding was anti-dilutive.

The following table reflects the profit/(loss) and share data used in the basic and diluted earnings/(loss) per

share computations:

		31 December
		2024
	31 December	Before
	2024	exceptional	31 December
	Total	items	2023
	£m	£m	£m
Profit/(loss) for the year from continuing operations	0.3	2.9	(8.2)
Basic weighted average number of ordinary shares in issue (million)	342.4	342.4	344.8
Basic earnings/(loss) per share from continuing operations	0.1p	0.8p	(2.4)p
Profit/(loss) for the year from continuing operations	0.3	2.9	(8.2)
Diluted weighted average number of ordinary shares in issue (million)	382.2	382.2	344.8
Diluted earnings/(loss) per share from continuing operations	0.1p	0.8p	(2.4)p

		31 December
		2024
	31 December	Before	31 December
	2024	exceptional	2023
	Total	items	Total
	£m	£m	£m
Profit/(loss) for the year from discontinued operations	8.3	(10.2)	(30.1)
Basic weighted average number of ordinary shares in issue (million)	342.4	342.4	344.8
Basic earnings/(loss) per share from discontinued operations	2.4p	(3.0)p	(8.7)p
Profit/(loss)for the year from discontinued operations	8.3	(10.2)	(30.1)
Diluted weighted average number of ordinary shares in issue (million)	382.2	342.4	344.8
Diluted earnings/(loss) per share from discontinued operations	2.2p	(3.0)p	(8.7)p

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024150

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

10. Intangible assets

	Capitalised
	development	Computer	Other
	costs	software	intangibles	Total
	£m	£m	£m	£m
Cost
At 1 January 2023	54.8	0.8	1.2	56.8
Exchange differences	(0.8)	—	—	(0.8)
Additions	11.3	0.2	—	11.5
Disposals	(4.1)	(0.6)	—	(4.7)
At 31 December 2023	61.2	0.4	1.2	62.8
At 1 January 2024	61.2	0.4	1.2	62.8
Exchange differences	0.2	—	(0.1)	0.1
Additions	9.0	—	—	9.0
Disposals	(4.4)	(0.3)	—	(4.7)
De-recognition of assets of discontinued operations	(15.7)	—	—	(15.7)
At 31 December 2024	50.3	0.1	1.1	51.5
Accumulated amortisation
At 1 January 2023	26.8	0.6	1.2	28.6
Exchange differences	(0.5)	0.1	—	(0.4)
Charge for the year	12.3	0.1	—	12.4
Impairment	3.9	—	—	3.9
Disposals	(4.1)	(0.6)	—	(4.7)
At 31 December 2023	38.4	0.2	1.2	39.8
At 1 January 2024	38.4	0.2	1.2	39.8
Exchange differences	0.1	—	(0.1)	—
Charge for the year	9.7	0.1	—	9.8
Impairment (exceptional item)	0.3	—	—	0.3
Impairment	0.7	0.1	—	0.8
Disposals	(4.4)	(0.3)	—	(4.7)
De-recognition of assets of discontinued operations	(15.7)	—	—	(15.7)
At 31 December 2024	29.1	0.1	1.1	30.3
Carrying amount
At 31 December 2024	21.2	—	—	21.2
At 31 December 2023	22.8	0.2	—	23.0

During the year ended 31 December 2024 £0.3 million (2023: £nil) of intangible assets were impaired in the FlexiPay

Business Unit related to projects discontinued as a result of the simplification of the Group. These were treated as

an exceptional item (see note 4). A further £0.8 million of intangibles were impaired in 2024 related to capitalised

development spend and software no longer in use. In the prior year intangible assets of £3.9 million predominantly

related to the US business were fully impaired. This was as a result of the annual impairment review assessment of

each cash-generating unit.

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Funding Circle Holdings plc | Annual Report and Accounts 2024 151

11. Property, plant and equipment, right-of-use assets and lease liabilities

The Group has right-of-use assets which comprise property leases held by the Group. Information about leases for

which the Group is a lessee is presented below.

Analysis of property, plant and equipment between owned and leased assets

	31 December	31 December
	2024	2023
	£m	£m
Property, plant and equipment (owned)	2.9	1.7
Right-of-use assets	6.7	3.3
	9.6	5.0

Reconciliation of amount recognised in the balance sheet

				Right-of-use
	Leasehold	Computer	Furniture and	assets
	improvements	equipment	fixtures	(property)	Total
	£m	£m	£m	£m	£m
Cost
At 1 January 2023	5.2	3.0	2.1	32.7	43.0
Disposals	—	(1.1)	—	—	(1.1)
Additions 1	—	0.7	—	0.2	0.9
Exchange differences	—	—	—	(0.6)	(0.6)
At 31 December 2023	5.2	2.6	2.1	32.3	42.2
At 1 January 2024	5.2	2.6	2.1	32.3	42.2
Disposals	(3.7)	(0.4)	(0.7)	(9.6)	(14.4)
Lease modification	—	—	—	5.7	5.7
Additions 1	2.3	0.5	0.1	—	2.9
Exchange differences and other non-cash
movements	(0.4)	—	—	0.1	(0.3)
Derecognition of assets of discontinued operations	(0.2)	(1.0)	(0.7)	(10.2)	(12.1)
At 31 December 2024	3.2	1.7	0.8	18.3	24.0
Accumulated depreciation
At 1 January 2023	3.9	1.9	1.8	25.4	33.0
Disposals	—	(1.1)	—	—	(1.1)
Charge for the year	0.7	0.8	0.1	2.7	4.3
Impairment	—	0.1	0.1	1.3	1.5
Exchange differences	(0.1)	—	—	(0.4)	(0.5)
At 31 December 2023	4.5	1.7	2.0	29.0	37.2
At 1 January 2024	4.5	1.7	2.0	29.0	37.2
Disposals	(3.7)	(0.4)	(0.7)	(9.6)	(14.4)
Charge for the year	0.5	0.6	0.1	2.0	3.2
Impairment	—	0.1	—	—	0.1
Exchange differences	—	—	—	0.1	0.1
Derecognition of assets of discontinued operations	(0.2)	(1.0)	(0.7)	(9.9)	(11.8)
At 31 December 2024	1.1	1.0	0.7	11.6	14.4
Carrying amount
At 31 December 2024	2.1	0.7	0.1	6.7	9.6
At 31 December 2023	0.7	0.9	0.1	3.3	5.0

1. Leasehold improvement and right-of-use asset additions in the year are non-cash in nature.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

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Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

11. Property, plant and equipment, right-of-use assets and lease liabilities continued

Reconciliation of amount recognised in the balance sheet continued

In February 2024, the Group signed an amendment to shorten the lease term on one of the UK office floors to

30 June 2024 and extend the term on the other floor. The modification of the lease which was shortened resulted

in a net modification gain of £0.4 million (with a £1.1 million reduction in lease liability and £0.7 million reduction in

right- of-use asset), and the lease liability and right of use asset net of accumulated depreciation were derecognised at

30 June 2024. The extension of the term on the other floor resulted in an increase to the lease liability of £6.4 million

and right of use asset of £6.4 million before depreciation. Leasehold improvement additions associated with re-fitting

the retained floor totalled £1.5 million.

Certain right-of-use assets related to the US San Francisco office had been sublet under an operating sublease. Due

to a further weakening of the San Francisco commercial property market, the estimated cash flows on the sublet no

longer support the carrying value of the asset. As a result, an impairment of £1.3 million was recognised in the previous

year ended 31 December 2023.

Property, plant and equipment of £0.1 million (2023: £0.2 million) related to the US business was fully impaired

in the year.

Lease liabilities

Amounts recognised on the balance sheet were as follows:

	31 December	31 December
	2024	2023
	£m	£m
Current	1.8	7.2
Non-current	5.8	5.4
Total	7.6	12.6

Amounts recognised in the statement of comprehensive income were as follows:

	31 December	31 December
	2024	2023
Continuing operations	£m	£m
Depreciation charge of right-of-use assets (property)	1.9	2.1
Gain on modification of lease liability	(0.4)	—
Interest expense (included in operating expenses)	0.6	0.2

The total cash outflow for leases (excluding short-term and low value leases) in 2024 was £3.6 million (2023: £7.2 million).

A maturity analysis illustrating the undiscounted contractual cash flows of lease liabilities is included within the liquidity

risk disclosure within note 16.

As at 31 December 2024, the potential future undiscounted cash outflows that have not been included in the lease

liability due to lack of reasonable certainty the lease extension options might be exercised, amounted to £8.8 million

(2023: £nil).

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Funding Circle Holdings plc | Annual Report and Accounts 2024 153

12. SME loans and lines of credit

	31 December	31 December
	2024	2023
	£m	£m
Non-current
SME loans – amortised cost	1.4	5.6
Investment in trusts and co-investments – FVTPL	17.8	25.2
Total non-current	19.2	30.8
Current
SME loans – amortised cost	0.7	1.1
Lines of credit – amortised cost 1	97.1	50.0
SME loans – FVTPL	1.2	18.6
Total current	99.0	69.7
Total	118.2	100.5

1. Included in Lines of credit are £7.2 million related to Cashback credit card balances net of ECL impairment.

13. Trade and other receivables

	31 December	31 December
	2024	2023
	£m	£m
Other receivables	—	1.4
Non-current trade and other receivables	—	1.4
Trade receivables	0.4	0.4
Other receivables	4.2	2.7
Tax-related receivables	4.8	4.6
Prepayments	4.7	5.2
Accrued income	5.8	5.3
Rent and other deposits	0.9	2.2
Current trade and other receivables	20.8	20.4
	20.8	21.8

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables

described earlier.

No trade receivables were overdue or impaired.

Included in rent and other deposits are £0.9 million of rental deposits (2023: £1.6 million) in respect of the Group’s

property leases which expire over the next five years.

The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

14. Trade and other payables

	31 December	31 December
	2024	2023
	£m	£m
Trade payables	1.8	2.4
Other taxes and social security costs	7.0	4.2
Other creditors 1	6.5	32.6
Accruals and deferred income	12.5	15.1
	27.8	54.3

1. Other creditors includes £4.4 million (2023: £30.7 million) due to the British Business Bank (BBB) primarily related to scheme lender fees collected from investors

associated with government-guaranteed products.

The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024154

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

15. Provisions and other liabilities

				ECL on
				undrawn
		Loan		lines of credit
	Dilapidation	repurchase	Restructuring 1	and other 2	Total
	£m	£m	£m	£m	£m
At 1 January 2023	1.1	0.5	—	0.5	2.1
Additional provision/liability	—	0.2	—	1.2	1.4
Amount utilised	—	(0.4)	—	(0.3)	(0.7)
Amount reversed	—	(0.2)	—	—	(0.2)
At 31 December 2023	1.1	0.1	—	1.4	2.6
Additional provision/liability	—	—	2.3	2.2	4.5
Amount utilised	(0.3)	(0.1)	(2.3)	—	(2.7)
Amount reversed	(0.2)	—	—	—	(0.2)
At 31 December 2024	0.6	—	—	3.6	4.2

1. The restructuring provision relates to the simplification and streamlining of the Group and has been treated as an exceptional item. See note 4.

2. ECL on undrawn lines of credit and other provisions includes provisions for operational buybacks of £0.9 million and £2.7 million (2023: £1.4 million) of expected

credit loss impairment allowance related to undrawn FlexiPay lines of credit. See notes 16 and 27.

	31 December	31 December
	2024	2023
	£m	£m
Current provisions and other liabilities	3.6	1.5
Non-current provisions and other liabilities	0.6	1.1
	4.2	2.6

The dilapidation provision represents an estimated cost for dismantling the customisation of offices and restoring

the leasehold premises to its original state at the end of the tenancy period. The provision is expected to be

utilised by 2030.

16. Financial risk management

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk

management framework.

The risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate

risk limits and controls and to monitor risks and ensure any limits are adhered to. The Group’s activities are reviewed

regularly and potential risks are considered.

Risk factors

The Group has exposure to the following risks from its use of financial instruments:

l credit risk;

l liquidity risk; and

l market risk (including foreign exchange risk, interest rate risk and other price risk).

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 155

16. Financial risk management continued

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

l SME loans;

l investments in trusts and co-investments;

l lines of credit;

l trade and other receivables;

l cash and cash equivalents;

l trade and other payables;

l bank borrowings;

l lease liabilities; and

l loan repurchase liabilities.

Categorisation of financial assets and financial liabilities

The tables show the carrying amounts of financial assets and financial liabilities by category of financial instrument as

at 31 December 2024:

			31 December 2024				31 December 2023
	Fair value				Fair value
	through				through
	profit	Amortised			profit	Amortised
	and loss	cost	Other	Total	and loss	cost	Other	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Assets
SME loans held at amortised
cost	—	2.1	—	2.1	—	6.7	—	6.7
SME loans held at fair value through profit and loss	1.2	—	—	1.2	18.6	—	—	18.6
Lines of credit	—	97.1	—	97.1	—	50.0	—	50.0
Investment in trusts and co-investments	17.8	—	—	17.8	25.2	—	—	25.2
Trade and other receivables	0.6	10.7	—	11.3	0.8	11.2	—	12.0
Cash and cash equivalents	136.3	51.3	—	187.6	150.1	71.3	—	221.4
	155.9	161.2	—	317.1	194.7	139.2	—	333.9
Liabilities
Trade and other payables	—	(8.3)	—	(8.3)	—	(35.0)	—	(35.0)
Loan repurchase liability	—	—	—	—	—	—	(0.1)	(0.1)
Bank borrowings	—	(101.9)	—	(101.9)	—	(56.9)	—	(56.9)
Lease liabilities	—	(7.6)	—	(7.6)	—	(12.6)	—	(12.6)
	—	(117.8)	—	(117.8)	—	(104.5)	(0.1)	(104.6)

Financial instruments measured at amortised cost

Financial instruments measured at amortised cost, rather than fair value, include cash and cash equivalents, trade and

other receivables, SME loans held at amortised cost, FlexiPay lines of credit, bank borrowings, lease liabilities and trade

and other payables. Due to their nature, the carrying value of each of the above financial instruments approximates to

their fair value.

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Funding Circle Holdings plc | Annual Report and Accounts 2024156

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

16. Financial risk management continued

Other financial instruments

Loan repurchase liabilities are measured at the amount of loss allowance determined under IFRS 9.

Financial instruments measured at fair value

IFRS 13 requires certain disclosures which require the classification of financial assets and financial liabilities measured

at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value

measurement.

Disclosure of fair value measurements by level is according to the following fair value measurement hierarchy:

l level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can

access at the measurement date;

l 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

l level 3 inputs are unobservable inputs for the assets or liabilities.

The fair value of financial instruments that are not traded in an active market (for example, investments in SME loans)

is determined by using valuation techniques. These valuation techniques maximise the use of observable market data

where it is available and rely as little as possible on entity-specific estimates. If all significant inputs required to fair

value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs are

not based on observable market data, the instrument is included in level 3. An assessment that the level applied to

financial instruments is appropriate and whether a transfer between levels is required is undertaken at the end of each

accounting period. There were no transfers between levels during the year or prior year.

The Finance department of the Group performs the valuations of items required for financial reporting purposes,

including level 3 fair values. This team reports to the Chief Financial Officer (“CFO”). Discussions of valuation processes

and results are held regularly at Balance Sheet Management and Impairment and Valuation Committees along with

regular updates provided to the Audit Committee.

				Fair value measurement using
		31 December 2024			31 December 2023
	Quoted			Quoted
	prices	Significant	Significant	prices	Significant	Significant
	in active	observable	unobservable	in active	observable	unobservable
	markets	inputs	inputs	markets	inputs	inputs
	(level 1)	(level 2)	(level 3)	(level 1)	(level 2)	(level 3)
	£m	£m	£m	£m	£m	£m
Financial assets
SME loans held at fair value through profit
and loss	—	—	1.2	—	—	18.6
Trade and other receivables	0.6	—	—	0.8	—	—
Investment in trusts and co-investments	—	—	17.8	—	—	25.2
Cash and cash equivalents	136.3	—	—	150.1	—	—
	136.9	—	19.0	150.9	—	43.8

The fair value of all SME loans held at fair value has been estimated by discounting future cash flows of the loans

using discount rates that reflect the changes in market interest rates and observed market conditions at the reporting

date. The estimated fair value and carrying amount of the SME loans held at fair value through profit and loss was

£1.2 million at 31 December 2024 (2023: £18.6 million).

Investment in trusts and co-investments represents the Group’s investment in the trusts and other vehicles used

to fund CBILS, RLS, GGS and certain commercial loans and is measured at fair value through profit and loss. The

government-owned British Business Bank will guarantee up to 80% of the balance of CBILS loans in the event of default

(and between 70% and 80% of RLS loans and 70% for GGS loans). The estimated fair value and carrying amount of the

investment in trusts and co-investments was £17.8 million at 31 December 2024 (2023: £25.2 million).

The most relevant significant unobservable inputs relate to the default rate estimate and discount rates applied to the

fair value calculation. However, it was determined that the reasonably possible range of outcomes from these inputs

into the estimates are not material to the accounts.

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Funding Circle Holdings plc | Annual Report and Accounts 2024 157

16. Financial risk management continued

Financial instruments measured at fair value continued

Since 31 December 2023, the assumptions related to estimating fair value have been marginally updated. The

expected stress in defaults due to the macro environment of inflationary cost pressures experienced by SMEs and their

customers in the year did not materialise to the extent expected as base rates peaked, plateaued and began to fall

and borrowers remained largely resilient. This has led to some favourable observed performance with lower defaults

and stable recoveries relative to expectations on many of the portfolios particularly the legacy SME loans (securitised)

in the US prior to their sale along with the US business. The expectation of a macro stress is now expected to be

less pronounced but last longer. This has led to a lower lifetime cumulative default expectation and a higher relative

estimation of fair value compared to the carrying value of the loans than at 31 December 2023. However, due to the

amortising nature of these loans and the sale of the US loans, there is less sensitivity to default assumptions given

the lower relative remaining value on the book year on year.

During the year, certain warehouses invested in trusts in which Funding Circle is a minority co-investor sold their loan

assets to a third party and Funding Circle partially re-invested alongside the purchaser. As a result of the transaction,

the net cash flows from the investment were realised sooner and a net fair value gain of £2.2 million was recognised

through fair value gains in the consolidated statement of comprehensive income. The cash flows related to the transaction

are presented net within “Cash receipts from investment in trusts and co-investments” in the statement of cash flows,

reflecting the net settlement of the realisation and re-investment.

There has additionally been decreases in discount rates used to discount the estimated cash flows in the year, primarily

driven by decreases in the risk free rate, due to central bank interest rates falling and expectations of rate cuts priced

into swaps. Many of the investments in leveraged investment in trust structures have experienced a reduction in discount

rates due to de-leveraging of the vehicles as senior lenders debt has been paid down. The repayment of senior debt

and the passage of time has additionally led to fair value gains as a result of the discount unwind as projected future

cash flows of the investments which tend to be backloaded in the structure become are nearer in time to the balance

sheet date. This, in turn, has led to a higher relative estimation of fair value in the year.

The result of the various factors outlined above is a £6.4 million net fair value gain during the year (of which £2.2 million

relates to discontinued operations) primarily driven by favourable performance of legacy securitisation loans relative to

expectations of stressed performance over the year; however, as these loans continue to amortise they are expected

to become less sensitive to estimation uncertainty.

Sensitivities to unobservable assumptions in the valuation of SME loans and money market funds within cash and cash

equivalents are not disclosed as reasonably possible changes in the current assumptions inclusive of default rates,

discount rates and recovery rates would not be expected to result in material changes in the carrying values.

Fair value movements on SME loans held at fair value through profit and loss and investments in trusts and co-investments

are recognised through the profit and loss account in fair value gains/(losses).

A reconciliation of the movement in level 3 financial instruments is shown as follows:

	SME loans
	held at fair	Investment in
	value through	trusts and
	profit and loss	co-investments
	£m	£m
Balance as at 1 January 2023	69.1	28.7
Additions	11.9	1.8
Repayments	(37.6)	(6.6)
Disposal	(30.4)	—
Net gain on the change in fair value of financial instruments at fair value through profit or loss	7.4	1.3
Foreign exchange loss	(1.8)	—
Balance as at 31 December 2023	18.6	25.2
Additions	—	4.1
Repayments	(13.5)	(14.6)
Net gain on the change in fair value of financial instruments at fair value through profit or loss	2.6	3.8
Other non-cash movements	(0.7)	—
Disposal of discontinued operations	(5.8)	(0.7)
Balance as at 31 December 2024	1.2	17.8

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024158

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

16. Financial risk management continued

Financial risk factors

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet

its contractual obligations, and arises principally from the Group’s receivables from customers and cash and cash

equivalents held at banks.

The Group’s maximum exposure to credit risk by class of financial asset is as follows:

	31 December	31 December
	2024	2023
	£m	£m
Non-current
SME loans held at amortised cost	1.4	5.6
Investment in trusts and co-investments	17.8	25.2
Trade and other receivables:
– Other receivables	—	1.4
Current
SME loans held at amortised cost	0.7	1.1
SME loans held at fair value through profit and loss	1.2	18.6
Lines of credit	97.1	50.0
Trade and other receivables:
– Trade receivables	0.4	0.4
– Other receivables	4.2	2.7
– Accrued income	5.8	5.3
– Rent and other deposits	0.9	2.2
Cash and cash equivalents	187.6	221.4
Total gross credit risk exposure	317.1	333.9
Less bank borrowings 1	(101.9)	(56.9)
Total net credit risk exposure	215.2	277.0

1. Included within bank borrowings are £nil (2023: £2.2 million) in relation to drawdowns on the PPPLF and £101.9 million (2023: £54.7 million)

related to the FlexiPay warehouse.

In addition, the Group was subject to certain financial guarantees in its legacy European operations which it had issued

to buy back loans. The Group’s maximum exposure to credit risk on these financial guarantees were every eligible loan

required to be bought back would be £nil (2023: £0.4 million).

An expected credit loss allowance related to undrawn lines of credit on the FlexiPay product of £2.7 million

(2023: £1.4 million) is held within provisions and other liabilities. The Group’s maximum exposure to credit risk on the

undrawn lines of credit if they were all to be fully drawn would be £278.7 million (2023: £157.3 million). The Group has

the ability to freeze, reduce or withdraw lines of credit as a way of managing associated credit risk.

Credit risk associates with SME loans held at amortised cost and lines of credit

Under IFRS 9, the Group is required to provide for loans measured at amortised cost under the expected credit loss

(“ECL”) model. The impairment related to each loan is based on the ECLs associated with the probability of default of

that loan in the next 12 months unless there has been a significant increase in credit risk of that loan since origination.

The below factors are used in estimating the impairment:

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 159

16. Financial risk management continued

Financial risk factors continued

Credit risk continued

Credit risk associates with SME loans held at amortised cost and lines of credit continued

Factor	Description
Probability of	The Group has developed PD models tailored to each Term Loan or line of credit product to assess the
Default (“PD”)	likelihood of default within the next 12 months and over the lifetime. The models estimate PD based on the
	latest payment behaviour of the customers and observed historical trends. The PD model also includes an
	estimate of the future macroeconomic effect.
Exposure at	The Group has developed an EAD model for line of credit products to assess the likely exposure at default.
Default (“EAD”)	The model calculates estimates of EAD based upon the latest payment behaviour of the customer, the credit
	limit utilisation, and applying a credit conversion factor approach.
Loss Given	The Group has developed LGD models tailored to each Term Loan or line of credit product to assess the likely
Default (“LGD”)	financial loss given an account defaults. The models calculate estimates of LGD based on historical data on
	observed recoveries against defaulted accounts.
Discount rate	The Group uses account-level effective interest rate which is calculated based on line of credit amount or
	loan amount, interest and fees, expected repayments including pre-payments and term.

Significant increase in credit risk

: The Group assumes there has been a significant increase in credit risk if the loan or

line of credit is overdue, or if the line of credit has been frozen due to identification of risk from sources such as bureau

data indicating they have become overdue on a third party debt for example, or if the borrower is late on another FC

product. A backstop is applied for any outstanding amounts on the loan investment exceed 30 days, in line with the

rebuttable presumption per IFRS 9.

Forecast period:

We estimate PD, EAD and LGD for the duration of the lifetime of the Term Loan or line of credit. Term

Loans utilise the contractual term of the Term Loan. For lines of credit, the duration of the lifetime is estimated to be

five years.

Definition of default

: The Group defines a default, classified within non-performing, as a loan investment with any

outstanding amounts exceeding a 90-day due date, which reflects the point at which the loan is considered to be

credit-impaired. In some circumstances where loans are bought back by the Group, the financial asset associated with

the purchase meets the definition of purchased or originated credit-impaired (“POCI”); this element of the impairment

is therefore based on lifetime ECLs.

Lines of credit utilises the same default definition and probability of default under IFRS 9; however, they are assessed

based on 12-month probability of default at the overall available line of credit level, estimating the expected utilisation

of the line of credit at the estimated point of default. The expected credit loss impairment associated with undrawn

lines of credit is disclosed within other liabilities in note 15 and in note 27.

SME loans held at amortised cost included PPP loans funded by the use of the PPPLF. The loans were guaranteed by

the US government in the event of default and the loans were anticipated to be forgiven. At the point of default and

subsequent collection of the guarantee or point of forgiveness, the loan and the respective borrowings under the

PPPLF were extinguished. SME loans held at amortised cost also include loans which have been bought back from

investors with the intention of collecting contractual cash flows.

Lines of credit comprises £97.1 million (2023: £50.0 million) of drawn amounts through the FlexiPay product net of

expected credit loss impairment.

The gross principal value of SME loans held at amortised cost is £11.3 million (2023: £21.4 million) and drawn lines

of credit is £110.0 million (2023: £55.4 million), totalling £121.3 million (2023: £76.8 million), and an allowance for

expected credit losses of £9.2 million (2023: £14.7 million) and £12.9 million (2023: £5.4 million) respectively, totalling

£22.1 million (2023: £20.1 million), is held against these loans and drawn lines of credit as detailed below.

An impairment charge of £7.0 million (2023: impairment charge of £3.3 million) was recognised through the statement

of comprehensive income in the year to 31 December 2024 within (provision)/credit for expected credit losses in the

income statement related to drawn lines of credit and SME loans held at amortised cost.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024160

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

16. Financial risk management continued

Financial risk factors continued

Credit risk continued

Credit risk associates with SME loans held at amortised cost and lines of credit continued

Additionally, an expected credit loss impairment charge was recognised relating to undrawn FlexiPay lines of credit of

£1.3 million (31 December 2023: £1.1 million) and an expected credit loss impairment charge of £nil (31 December 2023:

credit of £0.4 million) related to the loan repurchase liability and an expected credit loss impairment charge related to

operational buybacks of £0.4 million (2023: £nil) were recognised as detailed in notes 15 and 27.

The Group bands each loan investment at origination using an internal risk rating and assesses credit losses on a

collective portfolio basis by product. Credit risk grades are not reported to management on an ongoing basis and the

only borrower specific information that is produced and used is past due status. There is no significant concentration

of credit risk to specific industries or geographical regions.

	Stage 1	Stage 2	Stage 3
	Performing:	Underperforming:	Non-performing:	POCI:
	12-month ECL	Lifetime ECL	Lifetime ECL	Lifetime ECL	Total
Reconciliation of opening to closing ECL	£m	£m	£m	£m	£m
At 1 January 2023	1.1	0.3	0.9	14.1	16.4
Impairment against new lending and purchased assets	12.6	0.1	0.1	0.6	13.4
Exchange differences	—	—	—	(0.5)	(0.5)
Impairment against loans transferred between stages	(0.3)	0.5	2.5	—	2.7
Loans repaid	(10.5)	—	(0.2)	(0.9)	(11.6)
Change in probability of default or loss given
default assumptions	(1.3)	0.1	0.4	0.5	(0.3)
At 31 December 2023	1.6	1.0	3.7	13.8	20.1
Impairment against new lending and purchased assets	12.7	—	—	—	12.7
Exchange differences	—	—	(0.1)	(0.3)	(0.4)
Impairment against loans transferred between stages	(0.2)	3.9	7.1	—	10.8
Loans repaid	(11.2)	(3.3)	(0.4)	(0.7)	(15.6)
Impairment provision derecognised related to written off loans	—	—	—	(0.3)	(0.3)
Change in probability of default or loss given
default assumptions	(0.1)	(0.2)	(0.8)	0.6	(0.5)
Derecognition of impairment associated with assets
of discontinued operations	—	—	(0.1)	(4.6)	(4.7)
At 31 December 2024	2.8	1.4	9.4	8.5	22.1

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 161

16. Financial risk management continued

Financial risk factors continued

Credit risk continued

Credit risk associates with SME loans held at amortised cost and lines of credit continued

			Gross lines
			of credit and
		Basis for	SME loans held	Provision for
	Expected credit	recognition of	at amortised	expected	Net carrying
	loss coverage	expected credit	cost	credit loss	amount
	%	loss impairment	£m	£m	£m
As at 31 December 2023
Stage 1 – Performing	2.9	12-month ECL	55.8	(1.6)	54.2
Stage 2 – Underperforming	50.0	Lifetime ECL	2.0	(1.0)	1.0
Stage 3 – Non-performing	86.0	Lifetime ECL	4.3	(3.7)	0.6
POCI (90+ days overdue)	93.9	Lifetime ECL	14.7	(13.8)	0.9
		Total	76.8	(20.1)	56.7
As at 31 December 2024
Stage 1 – Performing	2.8	12-month ECL	99.1	(2.8)	96.3
Stage 2 – Underperforming	43.8	Lifetime ECL	3.2	(1.4)	1.8
Stage 3 – Non-performing	90.4	Lifetime ECL	10.4	(9.4)	1.0
POCI	98.8	Lifetime ECL	8.6	(8.5)	0.1
		Total	121.3	(22.1)	99.2

		Basis for		Provision for
	Expected credit	recognition of	Gross lines	expected	Net carrying
	loss coverage	expected credit	of credit	credit loss	amount
Of which is drawn FlexiPay lines of credit	%	loss impairment	£m	£m	£m
As at 31 December 2023
Stage 1 – Performing	2.8	12-month ECL	50.3	(1.4)	48.9
Stage 2 – Underperforming	52.6	Lifetime ECL	1.9	(1.0)	0.9
Stage 3 – Non-performing	93.8	Lifetime ECL	3.2	(3.0)	0.2
POCI	—	Lifetime ECL	—	—	—
		Total	55.4	(5.4)	50.0
As at 31 December 2024
Stage 1 – Performing	2.8	12-month ECL	97.0	(2.7)	94.3
Stage 2 – Underperforming	43.8	Lifetime ECL	3.2	(1.4)	1.8
Stage 3 – Non-performing	89.8	Lifetime ECL	9.8	(8.8)	1.0
POCI	—	Lifetime ECL	—	—	—
		Total	110.0	(12.9)	97.1

The risk and finance functions of the Group monitor the performance of the FlexiPay lines of credit and SME loans held

at amortised cost and calculate the ECL estimate required for financial reporting purposes. These teams report to the

Chief Financial Officer (“CFO”) and Chief Risk Officer (“CRO”). Discussions of estimates processes and results are held

regularly at Balance Sheet Management and Impairment and Valuation Committee meetings along with regular updates

provided to the Audit Committee.

Forward-looking information and scenarios

: The allowance for expected credit losses required estimation to assess

individual loans or when applying statistical models for collective assessments based on the Group’s past experience of

historical delinquencies and loss trends, as well as forward-looking information in the form of macroeconomic scenarios

governed by an impairment committee, which considers macroeconomic forecasts such as changes in interest rates,

GDP and inflation which are considered for incorporation into scenarios and probability weighted. These scenarios are

utilised to derive a default stress multiplier in the unstressed PD projections established from historical experience .

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024162

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

16. Financial risk management continued

Financial risk factors continued

Credit risk continued

Credit risk associates with SME loans held at amortised cost and lines of credit continued

Key changes to scenarios used in 2024

: During the year, the business moved away from using macroeconomic

scenarios derived from US macroeconomic data (primarily GDP which correlated well to US charge off rates) toward

a focus on the UK macro economic data aligning with the disposal of the US business.

UK-specific forecast data was obtained from a third party economics provider for three scenarios; a baseline, upside

and downside scenario. A number of data points were obtained and considered by Funding Circle including GDP,

real estate prices, unemployment rates, among others, however unemployment held the strongest correlation to

UK insolvency rates and was determined to be more suitable under statistical modelling techniques. As a result

unemployment was used as a single factor forecast input for determining scenarios utilised for PD stress multipliers.

The scenarios used were as follows:

Macroeconomic drivers		2025	2026	2027	2028	2029
(average for the forecast year)	ECL scenarios	%	%	%	%	%
Unemployment rate %	Upside	3.97	3.65	3.62	3.63	3.64
	Base case	4.40	4.31	4.18	4.06	4.00
	Downside	5.15	5.98	6.71	6.71	6.48

A sensitivity to these assumptions on the estimated ECL is disclosed within note 2.

The nature of the stress forecasts was lower than those used in the previous year where there was a shift away

from shorter, sharper stress forecast expectations associated with sharp inflation and supply chain issues to a more

“traditional” gradual but longer lasting stress. In combination with this more muted stress multiplier derived from the

scenarios FC shifted its benchmark weighting from 70% baseline, 20% downside, 10% upside from FY 2023 to 60%

baseline, 30% downside and 10% upside in 2024 because in Funding Circle’s judgement the more subtle downside

impact is more probable than the higher stress used under the prior year’s scenarios having considered possible weightings.

Credit risk associated with other financial assets:

SME loans held at fair value through profit and loss relate to the underlying pool of SME loans from the legacy

warehouses and SPVs that have since been purchased or novated into other Funding Circle entities, but remain held

at FVTPL with the business model of holding the loans for sale. Additionally loans originated by the Group with the

intention of selling onwards are included in this category.

Trade receivables represent the invoiced amounts in respect of servicing fees due from institutional investors.

The risk of financial loss is deemed minimal because the counterparties are well established financial institutions.

Ongoing credit evaluation is performed on the financial condition of other receivables and, where appropriate,

a provision for expected credit losses is recorded in the financial statements.

Other receivables include net investment in subleases of offices representing the present value of future sublease

payments receivable. Where appropriate, impairment is recorded where the receivable is in doubt.

Individual risk limits for banks and financial institutions are set by the Group with reference to external rating agencies.

The Group’s treasury policy has set limits and quantities that the Group must remain within. No credit or counterparty

limits were exceeded during the year. The Group’s cash and cash equivalents split by S&P counterparty rating were

A/A- rated: £51.4 million (2023: £71.3 million), A+ or better rated: £136.3 million (2023: £150.1 million) and below

A-rated: £nil (2023: £nil).

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 163

16. Financial risk management continued

Financial risk factors continued

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s

approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient financial resources

to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or

risking damage to the Group’s position.

The Group’s liquidity position is monitored and reviewed on an ongoing basis by the Directors.

The amounts disclosed in the following tables are the contractual undiscounted cash flows. The liquidity requirements

of bank borrowings are met from cash flows generated by investment in FlexiPay lines of credit.

The maturity analysis of financial instruments at 31 December 2024 and 31 December 2023 is as follows:

		Between			Total
	Less than	3 months and	Between 1	Over	undiscounted	Impact of	Carrying
	3 months	1 year	and 5 years	5 years	cash flows	discounting	amount
At 31 December 2024	£m	£m	£m	£m	£m	£m	£m
Financial liabilities
Trade and other payables	(8.3)	—	—	—	(8.3)	—	(8.3)
Bank borrowings	—	(101.9)	—	—	(101.9)	—	(101.9)
Loan repurchase
liability 1	—	—	—	—	—	—	—
Lease liabilities	(0.5)	(1.4)	(7.4)	—	(9.3)	1.7	(7.6)
	(8.8)	(103.3)	(7.4)	—	(119.5)	1.7	(117.8)

		Between			Total
	Less than	3 months and	Between 1	Over	undiscounted	Impact of	Carrying
	3 months	1 year	and 5 years	5 years	cash flows	discounting 2	amount
At 31 December 2023	£m	£m	£m	£m	£m	£m	£m
Financial liabilities
Trade and other payables	(34.8)	—	(0.2)	—	(35.0)	—	(35.0)
Bank borrowings	—	(54.7)	(2.2)	—	(56.9)	—	(56.9)
Loan repurchase
liability 1	(0.1)	—	—	—	(0.1)	—	(0.1)
Lease liabilities	(1.8)	(5.5)	(5.9)	—	(13.2)	0.6	(12.6)
	(36.7)	(60.2)	(8.3)	—	(105.2)	0.6	(104.6)

1. Financial guarantees provided for in the loan repurchase liability are allocated to the earliest period in which the guarantee could possibly be called.

Bank borrowings comprise the drawn balance on a committed lending facility in the FlexiPay warehouse of £101.9 million

(2023: £54.7 million) at a floating rate of interest based on SONIA plus a margin. They previously also comprised of

drawn amounts in the US of $2.8 million in 2023 on the PPP Liquidity Facility available from the Federal Reserve Bank

at a fixed interest rate of 0.35%.

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 Group’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 fair value of the SME loans which are held at fair value through profit and loss can fluctuate depending on market

pricing of relative interest rates and credit risk. This is reflected in the discount rate used to derive a valuation for the

loan assets. The discount rates used in the valuation of the assets measured at fair value through profit and loss are

not considered to be a material source of estimation uncertainty and a sensitivity analysis has not been disclosed.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024164

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

16. Financial risk management continued

Financial risk factors continued

Market risk continued

b) Interest rate risk

The Group is exposed to interest rate risk in relation to financial liabilities through drawn committed borrowing facilities

and on financial assets through investment in SME loans.

Non-trading interest rate risk

The Group’s interest risk on financial instruments is limited to interest receivable on loan note investments, cash and

cash equivalent balances and interest on bonds and bank borrowings. The maturities of financial instruments subject

to interest rate risk are as follows:

	Less than 3 months			Between 3 months and 1 year	Between 1 and 5 years
	2024	2023	2024	2023	2024	2023
At 31 December	£m	£m	£m	£m	£m	£m
Fixed rate
SME loans at amortised cost	0.2	1.1	0.1	0.6	1.8	5.0
Investment in trusts and co-investments	—	—	—	—	17.8	25.2
Lines of credit	49.8	50.0	47.3	—	—	—
SME loans fair value through profit
and loss 1	0.7	0.6	—	13.5	0.5	4.5
Bank borrowings 2	—	—	—	—	—	(2.2)
Floating rate
Cash and cash equivalents	187.6	221.4	—	—	—	—
Bank borrowings 2	—	—	(101.9)	(54.7)	—	—
	238.3	273.1	(54.5)	(40.6)	20.1	32.5

1. The SME loans held at fair value through profit and loss are classified as current on the balance sheet, reflecting that the position is held to sell. The above table

represents the contractual maturities.

2. In the comparative year ended 31 December 2023, the fixed rate bank borrowings and SME loans held at amortised cost included the Group’s drawing of the PPP

Liquidity Facility in the US in order to fund PPP loan originations. These were classified as non-current on the balance sheet, and the above table represents the

contractual maturities, although the PPP loans could have been forgiven by the SBA and the associated liability could have been repaid from the proceeds within

12 months of the balance sheet date. The floating rate bank borrowings represent the facility in the FlexiPay warehouse used to originate lines of credit.

There are no financial assets or liabilities with a maturity of over five years.

Interest rate risk sensitivity analysis – non-trading interest (fixed rate)

Interest on SME loans and on the PPPLF borrowings (in the US) was fixed until the maturity of the investment and is not

impacted by market rate changes. All remaining US bond liabilities were repaid during the year to 31 December 2023

and all other US SME loan assets sold in the year ended 31 December 2024. The level of future interest rate receivable

would be similar to that received in the year and the impact of movements in interest rates on the value of the assets is

considered immaterial to the Group’s overall performance for the year.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 165

16. Financial risk management continued

Financial risk factors continued

Market risk continued

b) Interest rate risk continued

Interest rate risk sensitivity analysis – non-trading interest (floating rate)

Interest on cash and cash equivalent balances is subject to movements in base rates. The Directors monitor interest

rate risk and note that base rates are anticipated to decrease in the near term. A 100bps decrease in annualised

interest rates applied to cash and cash equivalent balances FC holds in interest bearing accounts at 31 December 2024

would decrease interest income by £5.1 million.

Interest on bank borrowings related to the FlexiPay lines of credit are subject to movements in the Sterling Overnight

Index Average Rate (“SONIA”). The Group has partially protected itself through the use of an interest rate cap with a

strike price of 6.5% and a notional amount that increases in line with the projected drawdowns on the senior borrowing

facility. The fair value of the interest rate cap is not material to the Group.

If SONIA were to increase by 100 bps, based on the drawn balance at 31 December 2024, the annualised interest

expense recognised in borrowing costs would increase by £1.0 million (2023: £0.5 million) (including any impact of the

interest rate cap). Additionally, while the fees charged on FlexiPay lines of credit are fixed for the duration of individual

drawdowns, due to the short-term and revolving nature of the product, the Group can reprice the fees charged on

drawdowns at short notice in order to manage interest rate risk of the floating rate borrowings. Interest charged on

Cashback credit card balances outstanding is regularly updated to align with prevailing market rates of interest and are

also short-term in nature. As a result there is not considered to be significant interest rate risk.

Some of the Group’s investment in trusts are through warehouse vehicles where the Group is a minority equity investor.

The senior borrowing facilities utilised in these vehicles receive interest on borrowings in priority to payments to the

equity investors at SONIA plus a margin. As a result of the increase in SONIA since the inception of these vehicles,

the increased borrowing costs have reduced the expected cash returns to the equity investors of the investment

held at fair value through profit and loss. The impact is recognised in fair value gains and losses in the statement of

comprehensive income. Some, but not all of the vehicles, had interest rate caps or interest rate swaps within their

structures which can mitigate the impact of future rate rises. The remaining leveraged warehouse vehicles, which

previously did not hold hedging instruments, entered into cap or swap agreements during the year ended 31 December

2024 and 2023.

The fair value of investments in trusts and co-investments are no longer considered to be sensitive to further increases

in SONIA or the projected SONIA rates as a result of hedging in place.

c) Sensitivity analysis

IFRS 7 requires disclosure of sensitivity analysis for each type of market risk to which the entity is exposed at the report

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 Group does not have significant exposure to price or cash flow risk and therefore no

sensitivity analysis for those risks has been disclosed.

d) Foreign exchange risk

The Group operated internationally and is exposed to foreign exchange risk arising from various currency exposures,

primarily with respect to the US dollar, the UK pound sterling and the euro. Foreign exchange risk arises from future

commercial transactions, recognised assets and liabilities and net investments in foreign operations.

The Group’s policy is, where possible, to allow Group entities to settle liabilities denominated in their functional

currency with the cash generated from their own operations in that currency. Where Group entities have liabilities

denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle

them), cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group.

Apart from these particular cash flows, the Group aims to fund expenses and investments in the respective currency

and to manage foreign exchange risk at a local level by matching the currency in which income is generated and

expenses are incurred.

The Group had certain investments in foreign operations, whose net assets are exposed to foreign currency

translation risk.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024166

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

16. Financial risk management continued

Financial risk factors continued

Market risk continued

d) Foreign exchange risk continued

The table below sets out the Group’s currency exposures from financial assets and liabilities held by Group companies

in currencies other than their functional currencies and resulting in exchange movements in the income statement and

balance sheet.

		31 December 2024				31 December 2023
	USD	GBP	EUR	Total	USD	GBP	EUR	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Cash and cash
equivalents	—	—	—	—	0.2	—	—	0.2
Intra-group assets	—	—	0.1	0.1	—	—	0.2	0.2
Intra-group
liabilities	—	—	(0.5)	(0.5)	(45.5)	—	(0.3)	(45.8)

The Group assessed the sensitivity to a 10% depreciation and 10% appreciation in pound sterling against the relevant

foreign currencies. While 5% is the sensitivity rate used when reporting foreign currency risk internally to senior

management personnel, in light of recent fluctuations in foreign exchange rates, 10% represents management’s

current assessment of a reasonably possible change in foreign exchange rates. The sensitivity analysis to the income

statement includes only outstanding foreign currency-denominated monetary items and adjusts their translation at

the year end for a 10% change in foreign currency rates. The sensitivity analysis illustrates the impact on the foreign

currency translation reserve within equity of the retranslation of quasi-equity loans to foreign operations within the

Group and net investment in foreign operations of the Group.

The Group’s sensitivity to fluctuations in foreign currencies is related to the US dollar and euro amounts held in the

Parent Company. The impact of a 10% change in foreign currency rates is as follows:

			Appreciation in pound sterling				Depreciation in pound sterling
	Income		Income		Income		Income
	statement	Equity	statement	Equity	statement	Equity	statement	Equity
	2024	2024	2023	2024	2024	2024	2023	2024
At 31 December	£m	£m	£m	£m	£m	£m	£m	£m
US dollars	—	—	—	(3.0)	—	—	—	3.7
Euros	—	(1.0)	—	0.9	—	0.8	—	(1.1)
	—	(1.0)	—	(2.1)	—	0.8	—	2.6

Impairment of net investment in subleases:

Certain right-of-use assets related to the US San Francisco office were sublet under a financing sublease and were

represented as net investments in subleases within other receivables. Due to a reduction in market values since

inception of the sublet, the estimated cash flows expected on expiry of the existing sublet and expectations of further

sublet were lower and as a result an impairment of £0.8 million was recognised in the prior year ended 31 December 2023.

The impairment is disclosed in the consolidated statement of comprehensive income within depreciation, amortisation

and impairment.

Capital management

The Group considers its capital to comprise its ordinary share capital, share premium, foreign exchange reserve, share

options reserve and retained earnings. Quantitative detail is shown in the consolidated statement of changes in equity.

The Directors’ objective when managing capital is to safeguard the Group’s ability to continue as a going concern in

order to provide returns for the shareholders and benefits for other stakeholders and to maintain an optimal capital

structure to reduce the cost of capital.

The Directors monitor a number of KPIs at both the Group 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 Group. 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 whether the Group has

adequate resources to meet its working capital requirements.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 167

16. Financial risk management continued

Capital management continued

The Group is subject to externally imposed capital requirements by the Financial Conduct Authority but these are lower

than internally set requirements. During the year, the Group complied with all externally imposed requirements.

17. Share capital

	31 December	31 December	31 December	31 December
	2024	2024	2023	2023
	Number	£	Number	£
Called up, allotted and fully paid
Ordinary shares of £0.001 at beginning of the year	361,303,143	361,303	361,303,143	361,303
Share buybacks	(33,367,364)	(33,367)	—	—
Ordinary shares of £0.001 at end of the year	327,935,779	327,936	361,303,143	361,303

No ordinary shares were issued in 2024 or 2023 in connection with employee share schemes.

The share capital reduced by £0.1 million in the year (2023: £nil) as a result of share buybacks and cancellations.

Included in the total number of ordinary shares outstanding are 8,038,483 (2023: 16,614,054) shares held by the

Group’s Employee Benefit Trust, which includes 7,897,659 shares (2023: 16,473,230) that were purchased (nil purchased

(2023: 3,290,000) and 8,575,571 (2023: 3,288,009) utilised to satisfy employee share option plans) and 4,051,362

(2023: 5,428,551) shares held by the Group’s Share Incentive Plan Trust.

18. Share premium account

	2024	2023
	£m	£m
At 1 January	293.1	293.1
Exercise of options – proceeds received	0.5	—
Capital reduction	(293.5)	—
At 31 December	0.1	293.1

On 12 December 2024, the Group completed a capital reduction exercise under section 641 of the Companies Act

2006. As a result, the entire share premium balance at that date of £293,486,755 was cancelled and created an

accumulated profit within the Group’s profit and loss account and now constitutes a distributable reserve.

19. Foreign exchange reserve

	£m
At 1 January 2023	16.9
Exchange difference on translating the net assets of foreign operations	(2.7)
At 31 December 2023	14.2
Exchange difference on translating the net assets of foreign operations	(0.2)
Reclassification to profit and loss on disposal of discontinued operations	(8.7)
At 31 December 2024	5.3

Exchange differences relating to the translation of the net assets of the Group’s subsidiaries from their functional

currency into the Company’s functional currency are recognised directly in the foreign exchange reserves within equity.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024168

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

20. (Accumulated losses)/retained earnings

	£m
At 1 January 2023	(48.6)
Transfer of share option costs	3.8
Purchase of own shares	(1.8)
Loss for the year	(38.3)
At 31 December 2023	(84.9)
Transfer of share option costs	6.6
Buyback and cancellation of own shares	(33.6)
Capital reduction	293.5
Loss for the year	8.6
At 31 December 2024	190.2

The transfer of share option costs is in relation to the exercise of share options during the year and their associated

costs in the share options reserve which are transferred to (accumulated losses)/retained earnings.

During the year ended 31 December 2024, £nil (2023: £1.8 million) of ordinary shares were purchased by the EBT

for the purposes of satisfying employee share option plans. The number of shares purchased was nil and the average

purchase price was £nil (2023: 3.3 million and £0.53). All shares have a nominal value of £0.001.

The Group commenced a share buyback programme in March 2024 to buy and cancel up to £25 million of shares in

order to return value to shareholders. The nominal cost of the shares cancelled reduces the Group’s share capital

with an equal increase in the capital redemption reserve. The full cost of the buyback inclusive of stamp duty and

broker fees is debited to retained earnings. This programme was completed on 15 October 2024 with the purchase

of 27,308,339 ordinary shares, and the programme was extended to up to a further £25 million of shares. In the year

to 31 December 2024, 33.5 million shares were purchased for consideration of £33.7 million inclusive of fees and

expenses under the programme representing 9.3% of the called up share capital. 0.2 million of the purchased shares

were pending cancellation as at 31 December 2024.

On 12 December 2024, the Group completed a capital reduction exercise under section 641 of the Companies Act

2006. As a result, the entire share premium balance at that date of £293,486,755 was cancelled and created an

accumulated profit within the Group’s profit and loss account and now constitutes a distributable reserve.

21. Share-based payment

The Company operates share schemes for all employees of the Group. The terms of the main current schemes from

which the Group’s employees benefit are set out below.

Post-IPO employee share plans

Since the Company’s admission on the London Stock Exchange, the Company has operated a discretionary

share-based Long-Term Incentive Plan (“LTIP”). In November 2020, the Company introduced a Share Incentive Plan

(“SIP”) approved by HMRC, which includes partnership shares and matching shares. This plan is now only relevant for

UK-based employees.

The main features of the LTIP and SIP are set out below.

Post-IPO – LTIP

Form of LTIP Awards

The Board grants awards in the form of restricted stock units at no cost or options to acquire shares at no cost

(a nil-cost option).

Performance conditions

LTIP Awards are not currently subject to performance conditions with the exception of LTIP Awards granted to

Executive Directors which are subject to performance conditions. Refer to the Remuneration Report for further details.

Any performance condition may be amended or substituted if one or more events occur which cause the Board to

reasonably consider that an amended or substituted performance condition would be more appropriate and would not

be materially less difficult to satisfy than originally intended.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 169

21. Share-based payment continued

Post-IPO employee share plans continued

Post-IPO – LTIP continued

Vesting and release of LTIP Awards

LTIP Awards granted to employees, excluding Executive Directors, currently vest subject to continued service only

(“Time-Based Vesting”) in accordance with a vesting schedule set at grant.

LTIP Awards granted to Executive Directors vest at the end of three years subject to achievement of performance

conditions. Further details are shown in the Remuneration Report.

The Board may determine at grant that an LTIP Award is subject to an additional holding period following vesting

(a “Holding Period”). LTIP Options will be exercisable from the date of vesting or, if applicable, the end of the Holding

Period until the tenth anniversary of the grant date, or such earlier date as the Board determines.

Cessation of employment

LTIP Options may normally be exercised to the extent vested for a period of six months after ceasing employment or

12 months after death (or such other period as the Board may determine).

Post-IPO – SIP

Form of SIP Awards

The Board grants awards in the form of partnership shares and matching shares.

Performance conditions

There are no performance conditions attached to partnership shares and matching shares.

Free shares

Until 2022 under the SIP, all UK employees were eligible to receive up to a maximum of £3,600, or 10% of annual salary

if less, of free shares per tax year. Free shares were awarded annually with a forfeiture period of two years and a

holding period of three years.

Matching shares

UK employees are invited to buy partnership shares from pre-tax salary with a maximum investment in each tax year

of £1,800, or 10% of annual salary if less. Partnership shares are purchased every month. Employees can withdraw

partnership shares from the SIP at any time although there are tax advantages if the shares are retained in the SIP for

at least three years.

Up to 2022 participants were awarded one matching share for every one partnership share they purchased, and from

2023 this was increased to two matching shares for every partnership share purchased. There are tax advantages to

participants if the matching shares are retained in the SIP for at least three years.

Whilst employed by the Company, a participant will forfeit a corresponding number of matching shares if they choose

to transfer partnership shares out of the SIP within three years of the date of purchase.

Under normal circumstances, if a participant leaves the Company before the second anniversary of the date of award,

they will forfeit their matching shares. If they leave between two and three years of the date of award, they retain

their matching shares but those shares must be removed from the SIP and any tax advantages are lost. If a participant

leaves under special circumstances, they will retain all of their matching shares, regardless of how long they have been

held in the SIP.

Pre-IPO employee share plans

EMI Options

Prior to June 2014, the Company issued options to UK subsidiary undertakings’ employees under the EMI Options

Scheme. Since then, the Company is not eligible to issue under the scheme.

Unapproved Options

The Company had an Unapproved Options Scheme for all employees of the Group. In accordance with standard

vesting terms, the full award vested four years after the vesting start date, with 25% vesting on the first anniversary of

the vesting date and 6.25% every three months thereafter. If the options remain unexercised after a period of ten years

from the date of grant, the options expire.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024170

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

21. Share-based payment continued

Pre-IPO employee share plans continued

US Options Scheme 2

Options granted under the US Options Scheme 2 are Unapproved Options granted to US employees as either

non-qualifying options or incentive stock options. The US Options Scheme 2 has the same vesting period as

Unapproved Options. If the options remain unexercised after a period of ten years from the date of grant, the options

expire. Unvested options are forfeited if the employee leaves the Group before the options vest. New grants under this

scheme ceased in 2018 upon IPO.

All share-based incentives are subject to service conditions. Such conditions are not taken into account in the fair

value of the service received. The fair value of services received in return for share-based incentives is measured

by reference to the fair value of share-based incentives granted. The estimate of the fair value of the share-based

incentives is measured using market prices. When market prices do not exist for shares or rights to shares with similar

characteristics, fair value is determined by using a valuation technique (either the Monte Carlo or Black-Scholes pricing

model as is most appropriate for each scheme).

Charge for the year

Included in operating expenses of the Group is a charge for share-based payments and associated social security

costs of £7.8 million (2023: £3.8 million) that arises from transactions accounted for as equity-settled share-based

payment transactions from continuing operations and £1.0 million (2023: £1.8 million) from discontinued operations.

Additionally, an exceptional credit of £1.7 million (2023: £nil) is included within discontinued operations relating to

lapses of share-based payments on the sale of the US business.

Movements in share plans

Details of movements in the share schemes during the year are as follows:

					Free shares
				Unapproved	and matching					US Options
		EMI Options		Options	shares			LTIP Awards		Schemes	Total
		Number and WAEP 1		Number and WAEP	Number and WAEP			Number and WAEP		Number and WAEP	Number and WAEP
	Number	£m	Number	£m	Number	£m	Number	£m	Number	£m	Number	£m
Outstanding
at 1 January
2023	141,300	0.026	5,009,896	0.314	4,833,226	—	19,860,718	—	2,816,272	0.431	32,661,412	0.097
Granted
during the year	—	—	—	—	653,742	—	21,443,472	—	—	—	22,097,214	—
Exercised
during the year	(96,000)	0.027	(386,367)	0.143	(383,116)	—	(2,971,351)	—	(3,034)	0.516	(3,839,868)	0.014
Forfeited
during the year	—	—	(938)	0.440	(711,218)	—	(4,792,300)	—	(40,888)	0.522	(5,545,344)	0.004
Outstanding
at 31
December
2023	45,300	0.024	4,622,591	0.328	4,392,634	—	33,540,539	—	2,772,350	0.429	45,373,414	0.068

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 171

21. Share-based payment continued

Movements in share plans continued

					Free shares
				Unapproved	and matching						US Options
	EMI Options			Options			shares		LTIP Awards		Schemes	Total
	Number and WAEP 1			Number and WAEP		Number and WAEP			Number and WAEP		Number and WAEP	Number and WAEP
	Number	£m	Number	£m	Number	£m		Number	£m	Number	£m	Number	£m
Outstanding
at 1 January
2024	45,300	0.024	4,622,591	0.328	4,392,634	—		33,540,539	—	2,772,350	0.429	45,373,414	0.068
Granted
during the year	—	—	—	—	469,010	—		12,313,814	—	—	—	12,782,824	—
Exercised
during the year	(45,300)	0.024	(951,535)	0.360	(826,552)	—		(6,733,720)	—	(741,224)	0.294	(9,298,331)	0.061
Forfeited
during the year	—	—	(141)	0.440	( 717,48	—	0)	(13,159,091)	—	(16,093)	0.245	(13,892,805)	—
Outstanding
at 31
December
2024	—	—	3,670,915	0.319		—	3,317,612	25,961,542	—	2,015,033	0.480	34,965,102	0.072

1. Weighted average exercise price.

The following table summarises information about the share awards outstanding at 31 December 2024:

						Free shares
				Unapproved		and matching					US Options
		EMI Options		Options		shares			LTIP Awards		Schemes			Total
Range of exercise	Number and WARCL 1			Number and WARCL	Number and WARCL			Number and WARCL			Number and WARCL		Number and WARCL
prices	Number	Years	Number	Years	Years	Number		Years	Number	Number	Years	Number	Years
£0–£0.008	—	—	2,190,017	3.4	—	3,317,612	25,961,542	8.0		—	—		6.8	31,469,171
£0.009–
£0.176	—	—	2,033	—	—	—	—	—		—	—		—	2,033
£0.177–
£0.471	—	—	1,110,227	2.6	—	—	—	—		1,417,650	0.9		1.7	2,527,877
£0.472–
£1.75	—	—	368,638	3.4	—	—	—	—		597,383	3.4		3.4	966,021
	—	—	3,670,915	3.2	—	3,317,612	25,961,542	8.0		2,015,033	1.7		6.4	34,965,102

1. Weighted average remaining contractual life.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024172

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

21. Share-based payment continued

Movements in share plans continued

The following table summarises information about the share awards outstanding at 31 December 2023:

						Free shares
				Unapproved		and matching				US Options
		EMI Options		Options		shares		LTIP Awards		Schemes		Total
Range of exercise		Number and WARCL 1	Number and WARCL		Number and WARCL			Number and WARCL		Number and WARCL	Number and WARCL
prices	Number	Years	Years	Number	Years	Number	Number	Years	Number	Years	Years	Number
£0–£0.008	—	—	4.4	2,190,017	—	4,392,634	33,540,539	8.4	—	—	7.3	40,123,190
£0.009–
£0.176	45,300	0.4	1.1	18,438	—	—	—	—	24,302	0.4	0.5	88,040
£0.177–
£0.471	—	—	3.2	2,045,498	—	—	—	—	2,150,665	1.8	2.4	4,196,163
£0.472–
£1.75	—	—	4.5	368,638	—	—	—	—	597,383	4.5	4.5	966,021
	45,300	0.4	3.8	4,622,591	—	4,392,634	33,540,539	8.4	2,772,350	2.3	6.7	45,373,414

1. Weighted average remaining contractual life.

Unapproved Options Scheme

There have been no Unapproved Options granted since IPO in 2018. The weighted average fair values of options

granted under the Unapproved Options Scheme and the US Options Scheme ranged between £0.73 and £1.80 per

option respectively in the previous year. These values were determined using the Black-Scholes valuation model.

The significant inputs into the model are as follows:

	31 December
Unapproved Options Scheme	2019
Share price (various times during the year)	£1.89
Exercise price	£nil–£0.44
Expected life	4 years
Expected volatility	48%
Risk-free interest rate (between)	0.93%–1.02%
Dividend yield	Nil
Forward exchange rate – US Options (between)	0.769

LTIP Awards

Since all LTIP Awards were made post-IPO, the Company has used its share price at grant date as the fair value of the

LTIP Awards granted during the year to employees.

Free shares and matching shares

The Company has used its share price at grant date as the fair value of free shares and matching shares granted during

the year to employees.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 173

22. Notes to the consolidated statement of cash flows

Cash outflow from operating activities

	31 December	31 December
	2024	2023
	£m	£m
Profit/(loss) before taxation
Continuing operations	0.8	(9.9)
Discontinued operations	8.4	(23.3)
Total operations	9.2	(33.2)
Adjustments for:
Depreciation of property, plant and equipment	3.2	4.3
Amortisation of intangible assets	9.8	12.4
Modification gain	(0.4)	—
Impairment of property, plant and equipment, intangible assets, ROU assets and investment in sublease	0.9	6.2
Impairment of intangibles (exceptional item)	0.3	—
Interest payable	0.8	0.6
Non-cash employee benefits expense – share-based payments and associated
social security costs	8.1	5.6
Fair value adjustments	(6.4)	(8.7)
Movement in loan repurchase liability	(0.1)	(0.4)
Movement in other provisions	1.7	0.9
Share of gains of associates	—	(0.1)
ECL impairment	8.7	4.4
Profit on sale of the US subsidiary (exceptional item)	(9.8)	—
Recycling of foreign exchange reserve on sale of subsidiary (exceptional item)	(8.7)	—
Other non-cash movements	(0.2)	0.7
Changes in working capital
Movement in trade and other receivables	(3.1)	(13.5)
Movement in trade and other payables	(26.6)	34.7
Tax paid	(0.1)	(0.6)
Originations of lines of credit	(467.0)	(230.4)
Cash receipts from lines of credit	412.3	191.5
Net cash outflow from operating activities	(67.4)	(25.6)

Cash and cash equivalents

	31 December	31 December
	2024	2023
	£m	£m
Cash and cash equivalents	187.6	221.4

The cash and cash equivalents balance is made up of cash and money market funds. The carrying amount of

these assets is approximately equal to their fair value. Included within cash and cash equivalents above is a total of

£37.1 million (2023: £51.8 million) in cash which is restricted in use. Of this, £nil (2023: £1.1 million) is restricted in use

in the event of rental payment defaults and is therefore restricted in its use. £5.0 million (2023: £31.1 million) of cash is

held which is restricted in use to repaying investors in CBILS and RLS loans and paying CBILS and RLS-related costs to

the UK government. A further £32.1 million (2023: £19.6 million) of cash is held which is restricted for use in the FlexiPay

warehouse.

At 31 December 2024, money market funds totalled £136.3 million (2023: £150.1 million).

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024174

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

22. Notes to the consolidated statement of cash flows continued

Analysis of changes in liabilities from financing activities

	1 January		Exchange	Other non-cash	31 December
	2023	Cash flow	movements	movements	2023
	£m	£m	£m	£m	£m
Bank borrowings	(22.6)	(34.9)	0.6	—	(56.9)
Bonds	(23.7)	23.4	0.6	(0.3)	—
Lease liabilities	(19.8)	7.2	0.6	(0.6)	(12.6)
Liabilities from financing activities	(66.1)	(4.3)	1.8	(0.9)	(69.5)

					Derecognition
					of liabilities
					related to
	1 January		Exchange	Other non-cash	discontinued	31 December
	2024	Cash flow	movements	movements	operations	2024
	£m	£m	£m	£m	£m	£m
Bank borrowings	(56.9)	(46.6)	—	—	1.6	(101.9)
Lease liabilities	(12.6)	3.6	(0.3)	(5.8)	7.5	(7.6)
Liabilities from financing activities	(69.5)	(43.0)	(0.3)	(5.8)	9.1	(109.5)

23. Operating lease arrangements

As disclosed in notes 1 and 11, leases of low value items or short-term leases continue to be treated as

operating leases.

	31 December	31 December
	2024	2023
	£m	£m
Lease payments under operating leases recognised as an expense in the year 1	0.2	0.4

1. The current and comparative lease expense relates to discontinued operations.

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-

cancellable operating leases of £0.1 million (2023: £0.3 million).

Operating lease payments represent payments for lease assets that are individually considered low value.

24. Dividends per share

No ordinary dividends were declared or paid in the current or previous financial years.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 175

25. Related party transactions

Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated

on consolidation and are not disclosed in this note.

Compensation of key management personnel

Key management personnel are those persons having authority and responsibility for planning, directing and

controlling the activities of the Group. The Group’s key management personnel comprises the Executive Committee

(“ExCo”), formerly known as the Global Leadership Team (“GLT”), which is made up of the Executive Directors and other

senior management, as defined in note 5, as the chief operating decision maker (“CODM”) and the Non-Executive

Directors of the Group.

	31 December	31 December
	2024	2023
	£m	£m
Salaries and short-term benefits	5.0	4.8
Equity-based compensation	1.3	2.0
Post-employment benefits	0.1	0.1
	6.4	6.9

Further details on Directors’ remuneration are disclosed in the Remuneration Report in the Corporate Governance

section of the Annual Report and Accounts on pages 101 to 111.

Transactions with other related parties

During the year, the Group received capital redemptions of £0.9 million (2023: £1.1 million) and received dividends of

£nil (2023: £0.1 million) from entities accounted for as associates.

During the year, the Group received service fees from loans held by Throgmorton Lending Designated Activity

Company of £0.1 million (2023: £0.3 million). This entity is a subsidiary of the Group’s associate, as detailed in note 29.

26. Ultimate controlling party

In the opinion of the Directors, the Group does not have a single ultimate controlling party.

27. Contingent liabilities and commitments

As part of the ongoing business, the Group has operational requirements with its investors. At any point in time,

it is possible that a particular investor may expect the Group to purchase their loan in the event of a breach of

representation or warranty, operational errors or control issues or where agreed eligibility criteria have not been

complied with. Where a loan is purchased it is presented within SME loans held at amortised cost on the face of the

consolidated balance sheet and held at amortised cost under IFRS 9.

In common with other businesses, the Group is involved from time to time in disputes in the ordinary course of

business. There are no active cases expected to have a material adverse financial impact on the Group.

The Group has commitments related to undrawn amounts on issued FlexiPay lines of credit. At 31 December 2024,

there were undrawn commitments of £278.7 million (2023: £157.3 million). An expected credit loss impairment

allowance is held within other provisions by the Group of £2.7 million (2023: £1.4 million) in relation to the estimated

credit losses the Group may be exposed to on these undrawn lines of credit.

28. Subsequent events

There have been no subsequent events since the balance sheet date.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024176

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

29. Interests in other entities

Investments in subsidiaries

The Group had the following subsidiaries, all of which have been included in these consolidated financial statements.

The proportion of the voting rights in subsidiary undertakings held directly by the Company does not differ from the

proportion of ordinary shares held.

	Place of
	incorporation
	and principal	Proportion of	Directly/
	place of	ownership	indirectly
Subsidiary undertakings	business	interest	held	Registered office address
Funding Circle Ltd	UK	100%	Directly	71 Queen Victoria Street, London EC4V 4AY
Funding Circle BB Limited	UK	100%	Indirectly	71 Queen Victoria Street, London EC4V 4AY
Funding Circle Eclipse Lending Limited	UK	100%	Indirectly	71 Queen Victoria Street, London EC4V 4AY
Funding Circle Focal Point Lending	UK	100%	Indirectly	71 Queen Victoria Street, London EC4V 4AY
Limited
Funding Circle Global Partners Limited	UK	100%	Directly	71 Queen Victoria Street, London EC4V 4AY
Funding Circle Trustee Limited	UK	100%	Indirectly	71 Queen Victoria Street, London EC4V 4AY
Made To Do More Limited	UK	100%	Indirectly	71 Queen Victoria Street, London EC4V 4AY
Funding Circle Horizon Lending Limited	UK	100%	Indirectly	71 Queen Victoria Street, London EC4V 4AY
Funding Circle Polaris Lending Limited	UK	100%	Indirectly	71 Queen Victoria Street, London EC4V 4AY
Funding Circle CE GmbH	Germany	100%	Directly	Rheinstraße 11, 14513 Teltow
Funding Circle Deutschland GmbH	Germany	100%	Indirectly	Rheinstraße 11, 14513 Teltow
Funding Circle Connect GmbH	Germany	100%	Indirectly	Rheinstraße 11, 14513 Teltow
FC Forderungsmanagement GmbH	Germany	100%	Indirectly	Rheinstraße 11, 14513 Teltow
Funding Circle Nederland B.V.	Netherlands	100%	Indirectly	71 Queen Victoria Street, London EC4V 4AY
Subsidiary undertakings disposed
of in the year
Funding Circle USA, Inc. 1	USA	100%	Directly	707 17th Street, Suite 2200 Denver, CO 80202
Funding Circle Notes Program, LLC 1	USA	100%	Indirectly	707 17th Street, Suite 2200 Denver, CO 80202
FC Marketplace, LLC 1	USA	100%	Indirectly	707 17th Street, Suite 2200 Denver, CO 80202
Funding Circle Investor Funds, LLC 1	USA	100%	Indirectly	707 17th Street, Suite 2200 Denver, CO 80202
FC Depositor US LLC 1	USA	100%	Indirectly	707 17th Street, Suite 2200 Denver, CO 80202
FC Capital US III LLC 1	USA	100%	Indirectly	707 17th Street, Suite 2200 Denver, CO 80202
FC SBA Lending LLC 1	USA	100%	Indirectly	707 17th Street, Suite 2200 Denver, CO 80202

1. All US subsidiaries were disposed of on 1 July 2024.

Investments in associates

Set out below are the associates of the Group as at 31 December 2024 which, in the opinion of the Directors, are

material to the Group. The entities listed below have share capital consisting solely of ordinary shares, which are held

directly by the Group. The country of incorporation or registration is also their principal place of business, and the

proportion of ownership interest is the same as the proportion of voting rights held.

		Proportion of	Directly/
	Place of	ownership	indirectly
Associate entity name	incorporation	interest	held	Registered office address
Funding Circle UK SME Direct	Ireland	8%		Indirectly 70, Sir John Rogerson’s Quay, Dublin 2, Ireland
Lending Fund¹

1. Private sub-fund held via the Funding Circle ICAV, an Irish collective asset-management vehicle constituted as an umbrella fund with registered office address

of 70, Sir John Rogerson’s Quay, Dublin 2, Ireland.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 177

29. Interests in other entities continued

Investments in associates continued

The associates outlined above directly hold investments in subsidiary entities as detailed below, which are considered

to be related parties of the Group.

			Proportion of	Directly/
	Place of		ownership	indirectly
Other related party name	incorporation	Relationship	interest	held	Registered office address
Throgmorton Lending Designated	Ireland	Subsidiary	100%	Indirectly	70, Sir John Rogerson’s Quay,
Activity Company		of associate			Dublin 2, Ireland

The tables below provide summarised financial information for those associates that are material to the Group.

The information disclosed reflects the amounts presented in the financial statements of the relevant associates and

not Funding Circle Holdings plc’s share of those amounts. They have been amended to reflect adjustments made

by the entity when using the equity method, including modifications for differences in accounting policy. While the

Group holds less than 20% ownership in Funding Circle UK SME Direct Lending Fund I, the Group considers that it

has significant influence over the entity through representation on its Board and so continues to account for it as an

associate instead of a trade investment.

The associates are sub-funds which invest in SME loans, and the Group is exposed to default and prepayment risk

with respect to the performance of the underlying loans in the associates, to the extent that the share of profit from

associates may diminish. The table below illustrates the Group’s maximum exposure to the investment in associates

which represents the value on the Group balance sheet. The value of the investment is derived from net asset value

statements from the sub-funds; however, being private, these are not from observable market data, and therefore the

fair value is considered to be aligned to the carrying value.

	Funding Circle	Funding Circle
	UK SME Direct	UK SME Direct
	Lending Fund I	Lending Fund I
	31 December	31 December
	2024	2023
Summarised balance sheet (Group’s share)	£m	£m
Non-current assets	0.4	1.2
Current assets	0.2	0.3
Current liabilities	—	—
Non-current liabilities	—	—
Net assets	0.6	1.5

Reconciliation of associates’ total shareholders’ equity to carrying amount in Funding Circle Holdings plc’s

consolidated financial statements

	Funding Circle	Funding Circle
	UK SME Direct	UK SME Direct
	Lending Fund I	Lending Fund I
	31 December	31 December
	2024	2023
	£m	£m
Opening net assets as at 1 January	18.3	32.5
Profit for the year	0.4	1.1
Exchange differences	—	—
Other comprehensive income	—	—
Capital redemptions in the year	(11.1)	(13.8)
Dividends paid in the year	(0.4)	(1.5)
Closing net assets as at 31 December	7.2	18.3
Group’s share in %	8.3%	8.3%
Group’s share of net assets as at 31 December	0.6	1.5
Accounting policy alignment	—	—
Group’s carrying amount	0.6	1.5

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024178

Notes forming part of the consolidated financial statements continued

for the year ended 31 December 2024

29. Interests in other entities continued

Reconciliation of associates’ total shareholders’ equity to carrying amount in Funding Circle Holdings plc’s

consolidated financial statements continued

	Funding Circle	Funding Circle
	UK SME Direct	UK SME Direct
	Lending Fund I	Lending Fund I
	31 December	31 December
	2024	2023
Summarised statement of comprehensive income (Group’s share)	£m	£m
Gross income	0.1	0.2
Profit for the year	—	0.1
Other comprehensive income	—	—
Total comprehensive income	—	0.1
Dividends received from associates	—	0.1
Capital redemptions received from associates	0.9	1.1

Interest in other entities

Stichting Derdengelden Funding Circle is not a direct or indirect subsidiary of Funding Circle Holdings plc but is an

independent special purpose foundation which is required in the Netherlands to safeguard borrower and investor funds

and is consolidated as it is controlled by the Group. The registered office address is Atrium, Strawinskylaan 3075,

4th Floor, 1077 ZX Amsterdam.

The Funding Circle Holdings Employee Benefit Trust was established on 14 September 2018. The purpose of the trust

is to facilitate the acquisition of shares in the Company by, or for the benefit of, existing and future employees of the

Company and Group subsidiaries and is consolidated as it is controlled by the Group.

Consolidated structured entities: Small Business Origination Loan Trust 2019-3 DAC, Great Trinity Lending 1 DAC,

Small Business Lending Trust 2019-A, Small Business Lending Grantor Trust 2019-A, Small Business Lending Trust

2020-A and Small Business Lending Grantor Trust 2020-A were consolidated structured warehouse and securitisation

entities which either hold SME loan assets in a warehouse or hold the portfolio of SME loans and issued bonds after

securitisation has occurred.

Kanaloa 2 Limited (“K2”) is a consolidated UK leveraged SPV warehouse that has been set up with the intention of

funding FlexiPay lines of credit through the use of a senior lending facility.

The entities are, or were, bankruptcy remote special purpose vehicles and as such there is no requirement for the

Group to provide financial support to the entities. The entities’ activities are not governed by voting rights and the

Group has assessed that it has power over the entities based on the purpose and design of the entity and ability to

direct the relevant activities of the entity, the nature of the relationship with the entity and the size of its exposure to

the variability of the returns from each entity.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 179

29. Interests in other entities continued

Interest in other entities continued

As explained in note 16, the Group experiences credit risk in relation to the SME loan assets and FlexiPay lines of credit

net of bank borrowings, and interest rate risk in relation to the warehouse loan facilities which is partially mitigated

through the use of derivative financial instruments.

The principal activities of the Group’s most significant subsidiary undertakings are set out below. These are considered

significant in the context of the Group’s business, results and financial position.

Subsidiary undertakings	Principal activity
Funding Circle Ltd	Acts as facilitator and performs intermediary services in respect of all loans made through the
	Funding Circle platform in the UK and FlexiPay lines of credit.
Funding Circle USA, Inc.	The US operating subsidiary of Funding Circle. Acts as the administrator of the Funding Circle
	platform in the US. This was disposed of on 1 July 2024.
FC Marketplace, LLC	Acts as originator and servicer of all loans made through the Funding Circle platform in the US.
	FC Marketplace, LLC sells each loan it originates, on a servicing retained basis, to third party
	institutional investors or to affiliates (e.g. Funding Circle Notes Program, LLC) on an arm’s
	length basis. This was disposed of on 1 July 2024.
Funding Circle execs	A special purpose bankruptcy remote entity which issues loan payment dependent debt
Program, LLC	securities to accredited investors. It uses the proceeds to purchase a specific corresponding
	loan made through the Funding Circle platform from FC Marketplace, LLC. The entity retains
	the contractual rights to receive the cash flows from the loan assets it has purchased, but has
	assumed a contractual obligation to pay those cash flows to the holders of the debt securities.
	The eligibility criteria have been met to derecognise the loan assets and associated issued
	debt securities as a pass-through arrangement under IFRS 9. This was disposed of on
	1 July 2024.
Funding Circle Focal Point	Subsidiary via which CBILS loans are originated and which holds legal title to loans which are
Lending Limited	held via trust structures for the beneficial ownership of institutional investors.
Funding Circle Eclipse	Subsidiary via which RLS loans are originated and which holds legal title to loans which are
Lending Limited	held via trust structures for the beneficial ownership of institutional investors.
Funding Circle Polaris	Subsidiary via which RLS and GGS loans are originated and which holds legal title to loans
Lending Limited	which are held via trust structures for the beneficial ownership of institutional investors.
Funding Circle Deutschland	Operated the Funding Circle platform in Germany and services loans.
GmbH
Funding Circle Nederland B.V.	Operated the Funding Circle platform in the Netherlands and services loans.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024180

Note

31 December

2024

£m

31 December

2023

£m

Non-current assets

Investments in subsidiary undertakings 5 258.2 310.6

258.2 310.6

Current assets

Loans due from subsidiary undertakings 7 0.1 0.1

Trade and other receivables 6 0.6 0.4

Cash and cash equivalents 2, 11 97.2 48.2

97.9 48.7

Total assets 356.1 359.3

Current liabilities

Trade and other payables 8 2.4 1.8

Total liabilities 2.4 1.8

Equity

Share capital 9 0.3 0.4

Share premium account 9 0.1 293.1

Share options reserve 20.6 24.0

Retained earnings 10 332.7 40.0

Total equity 353.7 357.5

Total equity and liabilities 356.1 359.3

The Company’s profit for the year was £26. 2 million (2023: loss of £28.7 million).

The financial statements on pages 180 to 192 were approved by the Board and authorised for issue on 6 March 2025.

They were signed on behalf of the Board by:

Tony Nicol

Director

Company registration number 07123934

The notes on pages 183 to 192 form part of these financial statements.

Company balance sheet

as at 31 December 2024

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 181

Company statement of changes in equity

for the year ended 31 December 2024

Note

capital

£m

Share premium

account

£m

Share options

reserve

£m

Retained

earnings

£m

Total

equity

£m

Balance at 1 January 2023 0.4 293.1 22.2 66.7 382.4

Loss and total comprehensive expense for

the year 10 — — — (28.7) (28.7)

Transactions with owners

Transfer of share option costs — — (3.8) 3.8 —

Purchase of own shares — — — (1.8) (1.8)

Employee share schemes

– value of employee services — — 5.6 — 5.6

Balance at 31 December 2023 0.4 293.1 24.0 40.0 357.5

Profit and total comprehensive income for

the year 10 — — — 26.2 26.2

Transactions with owners

Transfer of share option costs — — (6.6) 6.6 —

Issue of share capital/exercise of share

options 9 — 0.5 — — 0.5

Buyback and cancellation of own shares 1, 10 (0.1) — — (33.6) (33.7)

Capital reduction 1, 10 — (293.5) — 293.5 —

Employee share schemes

– value of employee services — — 3.2 — 3.2

Balance at 31 December 2024 0.3 0.1 20.6 332.7 353.7

The notes on pages 183 to 192 form part of these financial statements.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024182

Note

31 December

2024

£m

31 December

2023

£m

Net cash inflow/(outflow) from operating activities 11 1.0 (1.1)

Investing activities

Loans advanced to subsidiary undertakings 7 — (7.8)

Repayment of loans and receivables from subsidiary undertakings 12 49.8 7.8

Capital redemptions from subsidiary undertakings 5 0.8 1.0

Proceeds from the sale of subsidiary 5 32.6 —

Direct selling costs associated with sale of subsidiary 5 (2.0) —

Net cash inflow from investing activities 81.2 1.0

Financing activities

Proceeds on the issue of shares from the exercise of share options 0.5 —

Purchase of own shares — (1.8)

Share buyback (33.7) —

Net cash outflow from financing activities (33.2) (1.8)

Net increase/(decrease) in cash and cash equivalents 49.0 (1.9)

Cash and cash equivalents at the beginning of the year 48.2 50.1

Cash and cash equivalents at the end of the year 11 97.2 48.2

The notes on pages 183 to 192 form part of these financial statements.

Company statement of cash flows

for the year ended 31 December 2024

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 183

Notes forming part of the Company financial statements

for the year ended 31 December 2024

1. Material 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 the United

Kingdom. The address of its registered office is given

on page 198.

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 material 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

facilitator of finance for SMEs.

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 £26.2 million (2023: comprehensive loss of

£28.7 million).

The financial statements are prepared on a going concern

basis as the Directors are satisfied that the Company has

the resources to continue in business for the foreseeable

future (which has been taken as 15 months from the date

of approval of the financial statements to 30 June 2026).

See going concern statement on pages 64 and 128.

Significant changes in the current reporting year

Sale of investment in subsidiary US business

As was previously announced in the 31 December 2023

financial results, the Company sought to divest of the US

business. A competitive bid process was undertaken with

interested parties and a sale agreement was signed on 24

June 2024 to sell the business to iBusiness Funding, LLC

and completion occurred on 1 July 2024. The Company

recognised a gain on sale of £25.9 million which is treated

as an exceptional item. Further details related to the sale

can be found in note 5.

Launch of share buyback programme

As was previously announced, the Company commenced

a share buyback programme in March 2024 to buy and

cancel up to £25 million of shares in order to return

value to shareholders. This programme was completed

on 15 October 2024 with the purchase of 27,308,339

ordinary shares, and the programme was extended to

up to a further £25 million of shares. The nominal cost

of the shares cancelled reduces the Company’s share

capital with an equal increase in the capital redemption

reserve. The full cost of the buyback inclusive of stamp

duty and broker fees is debited to retained earnings. In

the year to 31 December 2024, 33.5 million shares were

purchased for consideration of £33.7 million inclusive of

fees and expenses under the programme representing

10.3% of the called up share capital as at 31 December

2024. 0.2 million of the purchased shares were pending

cancellation as at 31 December 2024.

Capital reduction

In November 2024 shareholders approved a capital

reduction at a general meeting held by the Company,

being the cancellation of the entire amount standing

to credit the Company’s share premium account. The

capital reduction process was completed in December

2024 and resulted in the reclassification of the share

premium into retained earnings by £293.5 million. This

increased the distributable reserves of the Company to

help facilitate ongoing capital actions and return of value

to shareholders.

Summary of existing accounting policies

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 or key sources

of estimation uncertainty in the year ended 31 December

2024. In the prior year ended 31 December 2023 the

impairment of investment in subsidiaries was considered

a key source of estimation uncertainty particularly with

regards to the US business. Due to the sale of the US

business, the source of estimation uncertainty has

been removed. The Company assessed the remaining

investments in subsidiaries for any indicators of

impairment and determined there were none for the

year ended 31 December 2024.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024184

Notes forming part of the Company financial statements continue d

for the year ended 31 December 2024

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:

l credit risk;

l liquidity risk;

l market risk (including currency risk, interest rate risk and other price risk); and

l foreign exchange risk.

Principal financial instruments

The principal financial assets and liabilities of the Company, from which financial instrument risk arises, are as follows:

l loans due from related undertakings;

l trade and other receivables;

l cash and cash equivalents; and

l 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 2024:

Carried at amortised cost Carried at fair value

Carrying

amount

£m

Fair value

£m

Level 1-

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 0.5 0.5 — —

Cash and cash equivalents 0.9 0.9 96.3 —

1.5 1.5 96.3 —

Liabilities

Trade and other payables — — — —

— — — —

IFRS 13 requires certain disclosures which require the classification of financial assets and financial liabilities

measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair

value measurement.

Disclosure of fair value measurements by level is according to the following fair value measurement hierarchy:

l level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can

access at the measurement date;

l 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

l 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.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 185

2. Financial risk management continued

Categorisation of financial assets and financial liabilities continued

The table shows the carrying amounts and fair values of financial assets and financial liabilities by category as at

31 December 2023:

Carried at amortised cost Carried at fair value

Carrying

amount

£m

Fair value

£m

Level 1-

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 0.2 0.2 — —

Cash and cash equivalents 1.2 1.2 47.0 —

1.5 1.5 47.0 —

Liabilities

Trade and other payables (0.2) (0.2) — —

(0.2) (0.2) — —

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

2024

£m

31 December

2023

£m

Current

Loans due from related undertakings 0.1 0.1

Trade and other receivables:

– Amounts due from related undertakings 0.1 —

– Accrued interest 0.4 0.2

Cash and cash equivalents 97.2 48.2

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024186

Notes forming part of the Company financial statements continue d

for the year ended 31 December 2024

2. Financial risk management continued

Financial risk factors continued

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.

The maturity analysis of financial assets and liabilities at 31 December 2024 and 31 December 2023 is as follows:

At 31 December 2024

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 0.5 — — —

Cash and cash equivalents 97.2 — — —

Loans due from related undertakings 0.1 — — —

97.8 — — —

Financial liabilities

Trade and other payables — — — —

— — — —

At 31 December 2023

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 0.2 — — —

Cash and cash equivalents 48.2 — — —

Loans due from related undertakings 0.1 — — —

48.5 — — —

Financial liabilities

Trade and other payables (0.2) — — —

(0.2) — — —

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 187

2. Financial risk management continued

Financial risk factors continued

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 other price 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 are expected fall in the near term. A 200 bps decrease in base rates could decrease the

annual interest earned by c.£2.0 million (2023: 200 bps decrease and c.£1.0 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.

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 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 whether the Company has

adequate resources to meet its working capital requirements.

Decisions related to capital allocation are discussed and monitored by the Board who considers the balance of

returning value to shareholders while maintaining sufficient capital thresholds to ensure liquidity and to ensure

sustainable growth of the Group’s business. The Company has taken measures to ensure sufficient distributable

reserves are available to support capital activities, including the filing of Interim accounts and undertaking a capital

reduction process in 2024. Distributable reserves are monitored regularly to ensure programmes such as the share

buyback programme are supportable.

3. Company profit/(loss) for the year

The Company made a comprehensive profit for the year of £26.2 million (2023: comprehensive loss of £28.7 million).

4. Employees

The Company had no employees during the current or prior year other than Directors who numbered eight

(2023: eight). 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 £1.9 million (2023: £1.9 million).

For further information, see the Remuneration Report on page 103.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024188

Notes forming part of the Company financial statements continue d

for the year ended 31 December 2024

5. Investments in subsidiary undertakings

2024

£m

2023

£m

Balance at 1 January 310.6 333.3

Capital contribution regarding employee services in subsidiaries 2.6 5.4

Capital additions — —

Return of capital (50.6) (1.0)

Disposal of investment in subsidiary (4.4) —

Impairment — (27.1)

Balance at 31 December 258.2 310.6

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.

Year ended 31 December 2024:

Subsidiary investment

Opening

investment

balance

£m

Capital

contribution/

(redemption)

regarding

employee

services

£m

Capital

allocation

£m

Return of

capital

£m

Impairment

in year

£m

Disposal

investment

£m

Closing

investment

balance

£m

Dividends

recognised

in year

£m

Funding Circle UK 254.7 3.5 — — — — 258.2 —

Funding Circle Global Partners

Limited 0.8 — — (0.8) — — — 1.0

Funding Circle USA, Inc. 55.1 (0.9) — (49.8) — (4.4) — —

Funding Circle CE — — — — — — — —

Total 310.6 2.6 — (50.6) — (4.4) 258.2 1.0

Year ended 31 December 2023:

Subsidiary investment

Opening

investment

balance

£m

Capital

contribution

regarding

employee

services

£m

Capital

allocation

£m

Return of

capital

£m

Impairment

in year

£m

Disposal

investment

£m

Closing

investment

balance

£m

Dividends

recognised

in year

£m

Funding Circle UK 251.0 3.7 — — — — 254.7 —

Funding Circle Global Partners

Limited 1.8 — — (1.0) — — 0.8 —

Funding Circle USA, Inc. 80.5 1.7 — — (27.1) — 55.1 —

Funding Circle CE — — — — — — — —

Total 333.3 5.4 — (1.0) (27.1) — 310.6 —

During the year ended 31 December 2024 the Company sold its investment in the US business for cash consideration

of £32.6 million relative to a carrying value of £4.4 million. Associated selling costs and related costs of disposal were

£2.3 million, resulting in a net gain on disposal of £25.9 million treated as being exceptional in nature.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 189

5. Investments in subsidiary undertakings continued

During the year the Company received £0.8 million cash capital redemptions (2023: £1.0 million) and £1.0 million cash

dividends (2023: £nil) from Funding Circle Global Partners Limited. The Company received £49.8 million non-cash

capital redemptions (2023: £nil) from Funding Circle USA, Inc. in exchange for a receivable from Funding Circle Ltd.

In addition to the above, the Company recognised a capital contribution of £2.6 million (2023: £5.4 million) representing

the service cost for the employees of its subsidiaries, under the Company’s share option schemes.

During the year ended 31 December 2024, the Company identified impairment of £nil (2023: impairment of £27.1 million)

in relation to the Company’s investment in Funding Circle USA, Inc. Refer to note 1: Key sources of estimation uncertainty.

The cumulative amount of impairment losses in relation to investment in subsidiaries is £80.2 million

(2023: £217.9 million). The reduction in the year of £137.7 million related to subsidiaries disposed of in 2024.

Details of the sale of the US subsidiary investment: £m

Consideration received:

Cash consideration at prevailing exchange rate 32.6

Carrying value of investment disposed of (4.4)

Gross gain on sale 28.2

Direct transaction costs for legal, advisory and other costs (2.3)

Other disposal related costs (2.3)

Gain on sale 25.9

6. Trade and other receivables

31 December

2024

£m

31 December

2023

£m

Amounts due from related undertakings 0.1 —

Prepayments 0.1 0.2

Accrued income 0.4 0.2

0.6 0.4

The Directors consider that the carrying amount of trade and other receivables is approximately equal to their

fair value.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024190

Notes forming part of the Company financial statements continue d

for the year ended 31 December 2024

7. Loans due from subsidiary undertakings

31 December

2024

£m

31 December

2023

£m

Stichting Derdengelden Funding Circle 0.1 0.1

Current portion 0.1 0.1

Amount due from Group undertakings

31 December 2024 31 December 2023

Group undertaking

Facility

size and

type Term Expiry

Drawn in

year

£m

Repaid

in year

£m

Interest

recognised

in year

£m

Drawn

balance

at the

balance

sheet

date

£m

Drawn

year

£m

Repaid

in year

£m

Interest

recognised

in year

£m

Drawn

balance

at the

balance

sheet

date

£m

Stichting

Derdengelden

Funding Circle

Loan facility

€0.1 million

Undefined None but

repayable

on demand

— — — 0.1 — — — 0.1

Funding Circle

Ltd

Loan facility

£20.0 million

5 years 5 August

2025

— — — — — — — —

Funding Circle

CE GmbH

Revolving

credit facility

€2.0 million

5 years 18 July

2024

— — — — — — — —

Funding Circle

USA, Inc.

Term loan

facility £7.7

million

5 years 13 January

2025

— — — — — — — —

Funding Circle

USA, Inc.

Revolving

credit facility

$3.0 million

5 years 27 January

2025

— — — — — — — —

Funding Circle

USA, Inc.

Revolving

credit facility

£10.0 million

5 years 21 January

2026

— — — — 7.8 (7.8) — —

1. All drawn balances on loan facilities bear interest at 3.5% above the base rate of the Bank of England (except Stichting Derdengelden Funding Circle which is 4%

above the base rate) and is repayable with the principal amount at the end of the facilities term.

2. All loans to Funding Circle USA,Inc. were terminated prior to the sale of the subsidiary business in 2024.

8. Trade and other payables

31 December

2024

£m

31 December

2023

£m

Accruals 1.3 1.2

Taxes and social security costs 1.1 0.4

Other creditors — 0.2

Amounts due to related undertakings — —

2.4 1.8

The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

9. Share capital and share premium account

The movement on these items is disclosed in notes 17 and 18 to the consolidated financial statements.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 191

10. Retained earnings

£m

At 1 January 2023 66.7

Transfer of share option costs 3.8

Purchase of own shares (1.8)

Loss for the year (28.7)

At 31 December 2023 40.0

Transfer of share option costs 6.6

Buyback and cancellation of own shares (33.6)

Capital reduction 293.5

Profit for the year 26.2

At 31 December 2024 332.7

11. Notes to the Company statement of cash flows

Cash inflow/(outflow) from operating activities

Year ended

31 December

2024

£m

Year ended

31 December

2023

£m

Profit/(loss) before taxation 26.2 (28.7)

Adjustments for:

Non-cash employee benefits expense – share-based payments 1.4 —

Impairment charge — 27.1

Net proceeds from sale of US subsidiary (see note 5) (25.9) —

Other non-cash movements — 0.1

Changes in working capital

Movement in trade and other receivables (0.3) 0.1

Movement in trade and other payables (0.4) 0.3

Net cash inflow/(outflow) from operating activities 1.0 (1.1)

Cash and cash equivalents

2024

£m

2023

£m

Balance at 1 January 48.2 50.1

Cash flow 49.0 (1.9)

Balance at 31 December 97.2 48.2

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

2024, money market funds totalled £96.3 million (2023: £47.0 million).

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024192

Notes forming part of the Company financial statements continue d

for the year ended 31 December 2024

12. Related parties

Amounts owed by related parties Amounts owed to related parties

31 December

2024

£m

31 December

2023

£m

31 December

2024

£m

31 December

2023

£m

Short-term payables/receivables

Funding Circle Ltd 0.1 — — —

Intercompany loans

Stichting Derdengelden Funding Circle 0.1 0.1 — —

0.2 0.1 — —

During the year, the Company made payment of expenses for amounts of £0.1 million (2023: received payment of

expenses for amounts of £0.5 million) from Funding Circle Ltd.

During the year, the Company received a return of capital of £0.8 million (2023: £1.0 million) from Funding Circle Global

Partners Limited and dividends of £1.0 million (2023: £nil).

During the year, Funding Circle USA, Inc. made a non-cash return of capital to the Company of £49.8 million in

exchange for the assignment of the subsidiary’s intercompany receivable from Funding Circle Ltd. The intercompany

balance was subsequently cash settled by Funding Circle Ltd during the same year in full.

As at the year end, the Company was owed a cumulative amount of £0.1 million (2023: £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 BB Limited 12593368

Funding Circle Eclipse Lending Limited 12570773

Funding Circle Focal Point Lending Limited 12407296

Funding Circle Global Partners Limited 10554628

Funding Circle Polaris Lending Limited 13216286

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 entities, which are 100% owned by the Group, are exempt from the requirement to prepare accounts

by virtue of section 394A and section 448A of the Companies Act 2006 relating to the individual accounts of dormant

subsidiaries:

Company Registration number

Funding Circle Horizon Lending Limited 13451185

Made To Do More Limited 10575978

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 FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 193

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 5. Profit for the year before finance costs (being

the discount unwind on lease liabilities), taxation,

depreciation and amortisation and impairment

(“AEBITDA”) and additionally excludes share-based

payment charges and associated social security

costs, foreign exchange and exceptional items.

Net investment

income

Net income. Refer to Finance Review. Net investment income represents investment

income less investment expense.

Cash flow

Free cash flow Cash generated from

operating activities.

Refer to Finance Review. 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 warehouse and securitisation financing

and funding cash flows and excludes cash flows on

drawdowns and repayment of FlexiPay lines of credit.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024194

Glossary

Term Definition

Amortisation

In lending terms, the process by which the outstanding balance on a loan reduces through repayments

made by the 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.

BBB

British Business Bank. A state-owned economic development bank established by the UK government.

Its aim is to 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 Business, Energy & Industrial Strategy.

Balances under

management

Includes LuM and drawn lines of credit balances along with Cashback credit card spend balances. It

excludes defaulted balances and excludes unallocated cash collections. It is a measure of the balances

serviced by the Group at a point in time.

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 non-government-guaranteed lending customers and Group total lending under the scheme

amounted to c.£35 million.

Beta testing

(“beta”)

The second phase of testing a new product using real customers in a live but restricted environment.

Borrowers

Actual or prospective borrowers participating on the Group’s lending platform.

Cashback credit

card

Cashback credit card refers to Funding Circle’s business credit card offering launched in H2 2024.

Cardholders can spend earning cashback of 2% for an introductory period before reducing to 1%

thereafter.

Capital Markets

A functional division within Funding Circle that deals with all relations and activities associated with

institutional investors.

CBILS

Coronavirus Business Interruption Loan Scheme. UK government-backed loan scheme intended to

provide support for SMEs (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 for the 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 90 accredited providers, facilitating c.£3 billion of loans.

Transaction fee yields on CBILS loans were fixed at 4.75%.

Circlers

A term used by the Group to refer to its employees.

Cohorts

A 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.

Credit bureau

(“bureau”)

A company that collects information relating to credit ratings of companies and/or individuals and

makes this available to other financial institutions.

Credit extended

This includes Term Loan Originations and FlexiPay line of credit and Cashback credit card transactions.

It is a measure of the volume of new transactions and lending to SMEs over a period of time.

Credit model

A mathematical model used to estimate the probability for a customer to default on a loan.

Default

A 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 of the 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

A 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.

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 195

Term Definition

Developing Markets

(“Other Term

Loans”)

The name formerly used for the primary reporting segment for the Group subsequently referred

to as “Other Loans” and now reported within the UK Term Loans segment on the basis of materiality,

consisting of operations in Germany, the Netherlands and Spain (all of which the Group has now

exited and are in wind down).

EBT

Employee Benefit Trust. A trust under which shares in the Company are held on behalf of

the employees.

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.

FCA

Financial Conduct Authority. The UK institution responsible for regulating financial institutions.

FlexiPay

FlexiPay is Funding Circle’s line of credit product that allows businesses to make purchases and then

spread the cost over between three and twelve 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.

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.

FVTPL

Fair Value Through Profit or Loss. A term used to describe those securities where the business model

under which these 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

A 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.

Growth guarantee

scheme (“GGS”)

Growth Guarantee scheme. A UK government-backed loan scheme and successor to RLS with similar

terms (see below).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.

IFRS

International Financial Reporting Standards, as adopted by the European Union.

Institutional

investors

Actual or prospective institutional investors participating on the Group’s platform who provide the

funds to lend to SME borrowers, and who also take the credit risk associated with the loans.

Invested capital

Investment in Funding Circle lending products the Group has strategically made and retains on its

balance sheet net of related borrowing liabilities. Invested capital can be monetised if liquidity

needs arise.

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 and excludes unallocated

cash collections.

LTIP

Long-term Incentive Plan. A scheme used to reward employees.

Marketplace

A 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.

Ninth-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 a ninth generation credit model.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

Funding Circle Holdings plc | Annual Report and Accounts 2024196

Term Definition

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.

Origination

A term used to describe the process of a loan taken out by a borrower.

Peer-to-peer

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 were able to apply for forgiveness on

these loans where they could prove that the proceeds have been spent on payroll costs and other

eligible expenses. The scheme closed to new business on 31 May 2021. Accounting for PPP loans

differed to normal loans with transaction fees spread over the expected life of the loans under IFRS 9

(as the loans had to be held on balance sheet at amortised cost until forgiven), and with no servicing

fees earned on PPP loans. The PPP loans were deconsolidated with the sale of the US business in 2024.

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. A US governmental institution established in 1953 to help SMEs succeed

by providing counselling, capital, contracting expertise, information resources and a voice for SMEs.

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 Term Loans, and FlexiPay being the continuing

operations segments and US Term Loans being the discontinued operation segment, presented

separately in discontinued operations. The Other segment historically included the Group’s Term Loans

businesses in Germany and the Netherlands. The Other segment has been presented within UK Term

Loans for the year ended 31 December 2024 on the basis it is no longer individually material. See note

5 of the financial statements.

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.

SME

Small and medium-sized enterprises. A term used in the UK to represent smaller businesses.

SONIA

Sterling Overnight Index Average. A UK interest rate benchmark that came in as a replacement for

LIBOR (London Interbank Offer Rate).

SPV

Special Purpose Vehicle. A subsidiary created by a company to isolate a financial risk. The Group has

held a number 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

A 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

A 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.

Glossary continued

STRATEGIC REPORT FINANCIAL STATEMENTSCORPORATE GOVERNANCE

Funding Circle Holdings plc | Annual Report and Accounts 2024 197

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. To set 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.

Registrar

The Company’s registrar is Equiniti Limited.

Equiniti provides a range of services to shareholders.

Extensive information including many

answers to frequently asked questions can

be found online.

Use the QR code to register for FREE or

visit www.shareview.co.uk

Equiniti’s registered address is:

Highdown House, Yeoman Way, Worthing,

West Sussex, BN99 3HH

Tel*: +44 (0) 371 384 2030

* Lines are open from 8.30am to 5.30pm, UK time Monday to Friday

(excluding public holidays in England and Wales).

Please use the country code when dialling from

outside the UK.

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 telephone number above.

Annual shareholder calendar

Final results announced 6 March 2025

Annual Report published April 2025

Annual General Meeting 15 May 2025

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 2024 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.

CORPORATE GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

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