Taking action Annual Report and Financial Statements 2020 We make a difference in our customers’ lives by providing access to affordable credit in a respectful, responsible and straightforward way. We play an important role in society serving our home credit and digital products to 1.7 million customers who might otherwise be financially excluded. Resilient performance delivered in challenging times Customers (‘000) Credit issued (£m) Revenue (£m) 1,682 £772.2m £661.3m 889.1 2,521 866.4 1,360.6 1,353.0 825.8 1,301.5 2,301 2,290 756.8 2,109 1,145.0 661.3 1,682 772.2 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Pre-exceptional profit/ Profit/(loss) before tax Earnings/(loss) per share (loss) before tax (£m) (£m) (p) (£28.8m) (£40.7m) (28.9p) 114.0 114.0 109.3 109.3 105.6 105.6 96.0 96.0 33.8 32.2 33.7* 32.2 20.2 (28.8) (40.7) (28.9) 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 * 2017 pre-exceptional EPS Alternative Performance Measures This Annual Report and Financial Statements provides alternative performance measures (APMs) which are not defined or specified under the requirements of International Financial Reporting Standards. We believe these APMs provide readers with important additional information on our business. To support this, we have included an accounting policy note on APMs on page 115, a reconciliation of the APMs we use where relevant and a glossary on pages 154 to 155 indicating the APMs that we use, an explanation of how they are calculated and why we use them. Percentage change figures for all performance measures, other than profit or loss before taxation and earnings per share, unless otherwise stated, are quoted after restating prior year figures at a constant exchange rate (CER) for 2020 in order to present the underlying performance variance. International Personal Finance plc (IPF). Company number: 6018973. Taking action to protect our people, prioritise our loyal customers and protect our business Covid-19 created an extremely challenging environment for us all. From the onset we responded quickly and took the strategic decision to protect our people, prioritise our loyal customers and protect our business. Thanks to the hard work of our dedicated teams we have continued to serve our customers responsibly, proven the resilience of the business and created a clear path to return to profitability and long-term growth. Follow us on Twitter and Instagram @ipfplc Find out more at www.ipfin.co.uk SR Strategic Report DR Directors’ Report FS Financial Statements Performance Chairman’s introduction 58 Independent Auditor’s report 101 IPF at a glance 2 Our Board and Committees 60 Consolidated income statement 110 An agile response to Covid-19 4 Governance at a glance 62 Statements of comprehensive income 110 Chairman’s statement 8 Role of the Board and its Committees 64 Balance sheets 111 Delivering our social purpose 10 Nomination Committee Report 76 Statements at changes in equity 112 Customer journeys 12 Audit and Risk Committee Report 78 Cash flow statements 114 Business model 14 Technology Committee Report 84 Accounting policies 115 Market review 16 Directors’ Remuneration Report 86 Notes to the Financial Statements 124 Chief Executive Officer’s review 18 Directors’ Responsibilities 100 Our strategy 22 Supplementary Information Alternative performance measures 154 Key performance indicators 24 Shareholder information 158 Operational review 26 Financial review 32 Stakeholder review 37 Non-financial information statement 47 Principal risks and uncertainties 48 Annual Report and Financial Statements 2020 1 SR IPF at a glance A leading international lender of consumer finance We provide affordable credit to customers with low to medium incomes who find it difficult to obtain finance from banks and who prefer a personal agent service or a quick online process to access credit. We serve our customers through our home credit and digital channels. We play an important role in extending financial inclusion to our customers so they can afford to buy one-off goods and manage the ups and downs of their household budget. A robust investment proposition Notwithstanding the impact of the pandemic, we are a resilient, well-funded consumer finance business with a longstanding track record of meeting the needs of underserved customers responsibly. Our long-term success and financial performance is founded on the fact that we make a positive difference in the lives of our customers and we treat them fairly. Our purpose is to Highly responsible and financially inclusive 1.7m • We lend responsibly to customers who customers make a difference are underserved by banks and have in the lives of our a limited credit history. Resilient, geographically diversified customers by business models 11 • Long-established home credit business markets offering simple, model has proven resilient to economic downturns and digital lending business has operated successfully for more than personalised 15 years. financial solutions. Effective risk management • Successful track record of managing 37.4% key risks including credit, regulation, impairment as a competition and liquidity. percentage of • Well-developed risk management revenue framework and processes aligned to the strategic objectives. Strong financial profile Read about our values in the Chairman’s • Strong historical financial performance, 55.4% statement on page 8 robust balance sheet and refinancing equity to completed in 2020 delivered funding receivables Read about our social purpose on page 10 foundation to support long-term growth. Experienced management team • Highly experienced Board and senior 200+ management team with a broad range years’ of financial services experience experience in combined with international home financial services credit and digital lending expertise. Clear path to rebuild and generate returns £1bn • Cost base reduced significantly profit since 2010 and implementing strategy to deliver return to full-year profitability and long-term growth. 2 International Personal Finance plc What we do FINLAND ESTONIA LATVIA LITHUANIA GROUP HEAD OFFICE POLAND CZECH REPUBLIC HUNGARY ROMANIA SPAIN MEXICO Home credit IPF Digital AUSTRALIA Home credit and IPF Digital Home credit IPF Digital We serve unsecured cash loans to customers who Our digital businesses serve the growing number want to borrow small amounts for everyday necessities. of consumers who want to access affordable credit Our agents, who visit customers at home within the quickly through an end-to-end digital service. It is quick communities they live, understand their needs in a way and simple for customers to apply for and manage that is not possible for remote lenders. This regular their finances conveniently on their mobile, tablet or PC, personal touch differentiates us and drives customer wherever they may be. Our innovative products, satisfaction, retention and growth. Responsible lending leading-edge digital capabilities and advanced credit is built into the business model. We carefully assess assessment tools ensure a great customer experience affordability and creditworthiness, and agents are which enhances retention. Our new mobile wallet with rewarded primarily on collections so it is not in their banking-like features and value-added services offers interest to overburden their customers. a competitive advantage within our customer segment. Products and features Products and features • Home credit cash loans with agent service • Revolving credit line products • Money transfer loans direct to bank account • Mobile wallet • Micro-business loans • Instalment loans with terms up to three years • Home, medical and life insurances • Monthly repayments • Provident-branded digital loans • Fast online application and credit decision • Weekly and monthly repayments • Average customer outstanding balance c.£1,100 • Typical loan term around 18 months • Customers served online and through selected • Typical loan value £500 sales partners Europe: Established markets: Poland, Czech Republic, Hungary, Romania Finland, Estonia, Latvia and Lithuania 860,000 £363m 116,000 £72m customers revenue customers revenue New markets: Mexico: Poland, Spain, Australia and Mexico 599,000 £157m 107,000 £69m customers revenue customers revenue Annual Report and Financial Statements 2020 3 SR An agile response to Covid-19 Taking action to protect the business Our strong start to 2020 was interrupted by the onset of the Covid-19 pandemic. We took immediate action and despite the challenges, we are confident that we will emerge from this period in a strong competitive and financial position to fulfil the significant demand for affordable credit. Effective Covid-19 response The pandemic created a rapidly changing and challenging Our Covid-19 response priorities operational landscape in our markets. Supported by the Board, we mobilised immediately and took the strategic decision to establish three principles to guide decision- Protect our people making through this turbulent period – to protect our people, Ensured the health and wellbeing of our to prioritise our loyal customers and to protect our business. colleagues by providing PPE and safety With clear direction from the Group leadership team, guidance to keep them safe, and market-based business continuity teams implemented plans, transitioned more than 6,000 people managed events and reported progress. This approach and to work remotely within two weeks. the exceptional dedication of our workforce safeguarded the core assets of the businesses and allowed us to continue Prioritise our loyal customers serving our customers within a culture of safety. Ensured our most loyal, high-quality Safeguarding our people and customers customers had access to credit and implemented remote payment facilities We deployed our Global Care Plan, a people-focused so all customers could make repayments framework, to deliver personal protective equipment (PPE), if their agent was unable to visit. safety and wellbeing guidance, support for home working and outplacement provision to those affected Protect our business by redundancy. We entered the crisis with a strong balance We made it possible for customers to make repayments sheet.