Vanquis Banking : Report (Moneybarn Limited Statutory Accounts 2024 FINAL)

About this update from Vanquis Banking Group Plc

MONEYBARN LIMITED (Company Number 02766324) ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 CONTENTS Page Directors' report 1 Strategic report 4 Statement of directors' responsibilities 13 Independent auditor's report to the members of Moneybarn Limited 14 Statement of comprehensive income 17 Balance sheet 18 Statement of changes in shareholders' equity 19 Statement of cash flows 20 Statement of accounting policies 21 Financial and capital risk management 27 Notes to the financial statements 29 DIRECTORS' REPORT Moneybarn Limited (the 'Company') is part of Vanquis Banking Group plc. Vanquis Banking Group plc is a public limited company, listed on the London Stock Exchange, which, together with its subsidiaries, forms the Vanquis Banking Group (the 'Group'). The immediate parent of the Company is Moneybarn Group Limited. The following provisions, which the directors are required to report in the Directors' report, have been included in the Strategic report: how the directors have engaged with colleagues, how they have had regard to colleague interests and the effect of that regard, including on the principal decision taken by the Company in the financial year (page 7); and, how the directors have had regard to the need to foster the Company's business relationship with suppliers, customers and others, and the effect of that regard, including on the principal decision taken by the Company in the financial year (pages 5 to 11). Principal activities The principal activity of the Company is to provide customer account management services to other companies in the Group, principally Moneybarn No.1 Limited. During the current year, the board approved a transfer of the business undertakings of the Company to Vanquis Bank Limited, a fellow group subsidiary, through an asset purchase agreement with an effective date of 31 December 2024. Results The Statement of comprehensive income for the year is set out on page 17. The profit for the year of £700,000 (2023: loss of £572,000) has been added to (2023: deducted from) Retained earnings. The Company has net assets of £2,127,000 as at 31 December 2024 (2023: £23,262,000). The key drivers for the results in the current year have been considered in the Business review within the Strategic report. Dividends During the current year, the Company paid a dividend to its immediate parent undertaking of £22,000,000 (2023: £nil). Directors The directors of the Company during the year ended 31 December 2024, all of whom were directors for the whole year then ended and to the date of this report, except where stated, were: I McLaughlin D Watts G Cronin (resigned 27 November 2024) P Estlin (appointed 23 January 2024) Financial risk management The financial and capital risk management reports of the Company are set out on pages 27 to 28. Employee involvement The Company systematically provides employees with information on matters of concern to them, consulting with them or their representatives regularly, so that their views may be taken into account when making decisions that are likely to affect their interests. Employee involvement in the Company is encouraged as a common awareness amongst all employees of the financial and economic factors affecting the Company and Group plays a major role in maintaining its competitive position. The Company encourages the involvement of employees by means of live "stay connected" all colleague question and answer sessions, weekly CEO Video blogs, newsletters, performance updates and regular management team briefings. The Company also carries out regular employee engagement surveys and Save As You Earn (SAYE) and Buy As You Earn (BAYE) share schemes are operated by the Group to reinforce staff involvement in the Group and to encourage an interest in its progress. These schemes are open to all permanent employees of the Company with more than six months' service. Equal opportunities The Company is committed to removing all discrimination and encouraging diversity amongst the workforce. Open, honest and fair interaction is how we treat our people. The Company has worked hard and continue to work hard to create a positive, inclusive atmosphere, based on respect for people's differences. The Company is committed to equality of opportunity and treatment for all those who work for us. The Company is committed to employment policies which follow best practice based on equal opportunities for all employees irrespective of gender, pregnancy, race, colour, nationality, ethnic or national origin, disability, sexual orientation, age, marital or civil partner status, gender reassignment, religion or belief. The Company gives full and fair consideration to applications for employment from disabled persons, having regard to their particular aptitudes and abilities. Appropriate arrangements are made for the continued employment and training, career development and promotion of disabled persons employed by the Company including making reasonable adjustments where required. If members of staff become disabled, every effort is made by the Company to ensure their continued employment, either in the same or an alternative position, with appropriate retraining being given if necessary. Social and community matters The Company's approach to community investment is aligned with the Group's Purpose to deliver caring banking so our customers can make the most of life's opportunities. Community investment activities are delivered through a Group-wide Social Impact Programme. The strategy of this programme is to invest in activities and initiatives which seek to address some of the key factors which, on their own or acting together, can reduce social and/or financial inclusion. This programme delivers community investment activities under the following three workstreams: Customer and vulnerability - working with charities and specialist partners to provide support which addresses issues such as customer vulnerability, product accessibility and financial difficulties; Education - supporting children, young people and adults to boost their education, skills and aspirations in order to participate in society and secure a brighter financial future; and Community - supporting Community Foundations and other partners to address the wide range of social inclusion and social mobility issues that are relevant to our customers and the communities where the Group operates. Colleagues are encouraged to engage with the volunteering programme which encourages participation in company-led volunteering, as well as offering one day per year to volunteer for a voluntary organisation of their choice. Matched funding of up to £500 per annum towards colleagues' own fundraising activities is also available. Health and safety Health and safety standards and benchmarks have been established and compliance is monitored by the Board. An annual health & safety report is reviewed and approved by the Board each year. During 2024 management reported to the Board on the key measures that had been implemented to ensure the health and safety of employees. Climate change A climate-related financial report is included in the Group's Annual Report and Financial Statements 2024 which includes: scope 1 and 2 greenhouse gas (GHG) emissions in tonnes of carbon dioxide equivalent; GHG emissions which related to material scope 3 categories in tonnes of carbon dioxide equivalent; compliance with four recommendations and eleven recommended disclosures of the Taskforce on Climate related financial disclosures (TCFD); a relevant intensity ratio (i.e. kilograms of carbon dioxide equivalent per customer); and information on underlying energy use for 2024. The disclosures are produced in accordance with the UK Government's Streamlined Energy and Carbon Reporting (SECR) policy that has been implemented through the Companies (Directors' Report) and Limited Liability Partnership (Energy and Carbon Report) Regulations 2018. This disclosure covers the greenhouse gas emissions and energy use for the Group and its operating divisions incorporating the Company. In addition, by including a climate-related financial report in the Group's Annual Report and Financial Statements 2024 that is fully consistent with the four pillars and eleven recommended disclosures of the TCFD, the Group complies with the FCA's Listing Rule 9.8.6R(8) and meets the requirements of the Climate-related Financial Disclosure (CFD) Regulations 2022 and the UK Companies Act (that is, sections 414CB(2A)(a to h). Anti-bribery and corruption The Group's Anti-Bribery and Corruption Policy and supporting Gifts and Hospitality Policy reflects the requirements of the Bribery Act 2010 and a corporate hospitality register is maintained using a risk-based approach. Although the risks for the Company arising from the Bribery Act 2010 continue to be assessed as low, all employees are, nevertheless, required to undergo appropriate training and instruction to ensure that there is effective awareness of anti-bribery and corruption policies and procedures. Compliance is regularly monitored by the Risk Committee and is subject to periodic review by the Company's internal audit function. Supply chain responsibility In accordance with the requirements of the Modern Slavery Act 2015, the Group's most recent statement on modern slavery and human trafficking, dated March 2024, sets out the actions that the Group is taking to ensure instances of modern slavery or human trafficking are not occurring directly in its businesses as well as indirectly in the supply chains the Group uses to procure goods and services. The statement also communicates the measures the Group has taken to improve internal understanding and awareness around modern slavery and human trafficking. The statement can be found on the Company's website ( https://www.vanquisbankinggroup.com ). Auditor information In accordance with section 418 of the Companies Act 2006, each person who is a director at the date of this report confirmed that: so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware; and the directors have taken all reasonable steps that he 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 auditor is aware of that information. Auditor Deloitte LLP will continue as auditor to the Company for the next financial year. Approved by the Board and signed on behalf of the Board by: I McLaughlin Director 22 April 2025 MONEYBARN LIMITED (Company Number 02766324) STRATEGIC REPORT Business review The following are considered the Company's Key Performance Indicators: Key Performance Indicators (KPIs) 2024 £'000 2023 £'000 Profit/(loss) before taxation 998 (574) During the year, the Company serviced, on behalf of other Group companies, 38,500 new contracts (2023: 50,800), as well as maintaining the servicing of a portfolio of loan contracts which decreased from 111,700 to 109,500 in the year. Revenue reduced by 2% to £60,094,000 (2023: £61,495,000), primarily as a result of the reduction in receivables within Moneybarn No.1 Limited which resulted in a reduction to intra-group revenue for the Company. Operating costs reduced by 9% to £56,442,000 (2023: £61,732,000) broadly in line with the decrease in Revenue. During the current year, the board approved a transfer of the business undertakings of the Company to Vanquis Bank Limited, a fellow group subsidiary, through an asset purchase agreement with an effective date of 31 December 2024. On 31 December 2024, the Company transferred its trade undertaking and the associated assets and liabilities to Vanquis Bank Limited, a fellow subsidiary undertaking of the ultimate parent undertaking. At the effective date, the respective assets and liabilities were transferred for an amount equal to their net book value. Net assets of £872,000 were transferred for a consideration of £872,000 comprising trade and other receivables (£1,094,000) property, plant and equipment (£527,000), right-of-use assets (£575,000), other intangible assets (£1,232,000), trade and other payables (£1,350,000) and lease liabilities (£1,206,000). The following key assets have been transferred by the Company: employees, supplier contracts, the lease for Athena House and associated documents; and trademarks and domain names. The amounts outstanding between the Company and intermediate holding company have been excluded from the transfer and will remain outstanding. Any intra group receivable balances from other companies in the group have also been excluded. Regulation The Company is regulated and authorised by the Financial Conduct Authority. Principal risks and uncertainties and financial risk management The Company operates a 'three lines of defence' model to articulate key accountabilities and responsibilities for managing risk and to support effective embedding of risk management across the business. The 'first line' consists of line management across the Company, who are responsible for identifying, assessing, monitoring and reporting risk within their respective areas whilst ensuring that appropriate internal controls, processes and systems are in place to deliver against business strategy and objectives. The Risk function of the Company act as the 'second line', in which the Risk Management Framework is established. This function provides independent oversight of governance, risk management and controls to ensure risks are identified, measured, managed and reported appropriately. The 'third line' consists of the Internal Audit function, which provides independent and objective assurance on the design adequacy and operational effectiveness of internal controls and overall effectiveness of the Company and Group's risk governance and risk management practices. Information on the management of specific financial risks including credit, market, liquidity, interest rate, and capital risks is provided on pages 27 to 28. Statement regarding section 172 of the Companies Act 2006 The directors have acted in a way that they considered, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, having regard to the matters set out in section 172(a) - (f) of the Companies Act 2006. The Board met during the reporting period and received regular updates from management on engagement activities with the Company's key stakeholders including regulators, customers and colleagues. The Board is composed of three directors, all of whom are directors of the ultimate parent company which provides direct investor engagement and ensures that investors' views are considered during the Board's discussion and decisions. Our purpose, as part of the Vanquis Banking Group, is predicated on our customers and is underpinned by a number of strategic themes and values. These aim to deliver an appropriate balance between the needs of our customers, our regulators, investors and our employees, in order to ensure that we are successful and sustainable for all of our stakeholders. Our stakeholders are individuals or groups who have an interest in, or are affected by, the activities of our business; our key stakeholders are set out in the table below. We seek to engage with them regularly to ensure that we are aware of their views and concerns with regard to a wide range of issues and we do this in a number of ways, as detailed in the below table. By balancing the interests of our stakeholders, lending responsibly, contributing to wider society and ensuring the appropriate corporate governance arrangements are in place, we can maintain a reputation for high standards of business conduct. You can read about how we have generated and preserved value over the long term in the Strategic report. Our Stakeholders and why we engage with them How? (How management and/or directors engaged with and considered our stakeholders) What? (What were the key topics of engagement and consideration) Key outcomes and actions (What was the impact of the engagement and/or consideration?) Our customers We engage with our customers to determine whether we are delivering our business activities in accordance with our purpose and ensuring that we deliver good outcomes for them throughout their journey with us. Our customers' interests include access to affordable vehicle finance that meet their needs as well as high quality service. Conducting primary and secondary qualitative and quantiative research with both current customers and customers in our target market Bringing the voice of the customer into the organisation through our customer satisfaction (CSAT) programme Group-wide customer call listening sessions Monitoring performance against good customer outcomes, including complaints monitoring Considering the customer experience, customer journeys and outcomes through regular journey reviews and root cause analysis Designing and implementing policies that protect and support customers Management reports to the Board on the above methods of engagement and the outcomes of such engagement Supporting customers through the cost of living crisis, including forbearance measures Customer affordability Customer outcomes aligned with the FCA Consumer Duty Customer outcomes for customers with characteristics of vulnerability Customer satisfaction, service level agreements, care, service and complaints Policy suite including, but not limited to, Anti Money Laundering ('AML'), Data Protection, Complaints Handling, Forbearance, Collections, Customers with Characteristics of Vulnerability and Financial Promotions Continued signposting to Stepchange Access to electric vehicles Group-wide forbearance measures to support customers through the cost-of-living crisis Group-wide oversight of customer complaints operations, outcomes, strategy and customers with characteristics of vulnerability Continued operational outsourcing arrangements to improve the quality of service provided to our customers Our Stakeholders and why we engage with them How? (How management and/or directors engaged with and considered our stakeholders) What? (What were the key topics of engagement and consideration) Key outcomes and actions (What was the impact of the engagement and/or consideration?) Our shareholder The Company is a wholly owned subsidiary of Moneybarn Group Limited, whose ultimate parent is Vanquis Banking Group plc, and as such it is of paramount importance that the Group is kept updated on the Company's progress in delivering the Group's shared purpose, its budget, its strategy, governance, and culture. Direct and regular engagement with our shareholder ensures that the Company has a clear understanding of its role as part of the Group. Our ultimate shareholders' interests include return on investment, long-term growth and good ESG performance. Two of the Company Directors are members of the Group Executive Committee, all are members of the Group Board Board meetings took place four times in the reporting period Financial reporting, strategy and common accounting principles are utilised across the Group to provide alignment The Budget and financial plan are developed as part of the wider Group process The Group has an aligned corporate governance framework and structure and Group wide Delegated Authorities Matrix The Group has a centralised Corporate Responsibility team and a Group-wide approach to Corporate Social Responsibility. Board and Group Board have a corporate governance framework to support effective decision-making, oversight and accountability Strategy and long-term value creation Culture and The Vanquis Way values Financial and operational performance Harmonisation of risk management to provide a consistent and integrated approach to managing risk across the Group Corporate governance arrangements and alignment Corporate responsibility Interactions with the regulators Consideration of credit risk and lending policy in the macro-economic environment, specifically arising from the cost-of-living crisis during the year Operational Resilience ICAAP and ILAAP process input Intragroup funding arrangements Market and competitor landscape Update on the group wide project to simplify the corporate structure referred to as '1VBG' Business model aligned with the Group's purpose Group Board-level oversight over the Group Risk Policy Taxonomy, Group Risk System and Group Enterprise Risk Management function to ensure a consistent approach to risk management across the Group Board approved intra-group funding arrangements to provide more cost-efficient funding across the Group Input into the Group's Internal Capital Adequacy Assessment Process Board and Group Board approved budget and operational plan Board governance manual and aligned delegated authorities matrix 1VBG has delivered a simplified structure for corporate administration Board changes to guarantee relevant skills and expertise Our Stakeholders and why we engage with them How? (How management and/or directors engaged with and considered our stakeholders) What? (What were the key topics of engagement and consideration) Key outcomes and actions (What was the impact of the engagement and/or consideration?) Our colleagues To ensure that they understand the Group's purpose and how they can support its delivery, which we believe helps our customer base. To maintain high levels of colleague engagement in order to enable us to attract, retain and develop the talent we need. Our colleagues' interests include: Career development, remuneration and benefits Company culture, wellbeing, inclusion and diversity, work life balance Tools and resources and supporting our customers A colleague 'Great Place To Work' survey was issued at the year end Colleague Forums with representatives from the Company and other businesses across the Group provided two-way engagement between the Group Board and colleagues Regular Group CEO vlogs and e-communications issued to colleagues on important Group news and updates. Designated Group Non-Executive Director Colleague Champion plays the lead role in Group Board engagement with employees, understanding and representing employee interests across the Group The Group has an active, Executive sponsored, inclusion and diversity programme A confidential, externally facilitated whistleblowing line is available for colleagues to raise concerns Review of colleague survey results Culture, purpose, values and behaviours Group aligned Colleague reward and recognition Group aligned HR Policies Training, leadership development and succession planning Employee engagement Colleague wellbeing at work Inclusion and affinity Group pillars such as gender balance, ethnicity, disability and LGBTQ+ Colleague survey action plans to address any areas for improvement and celebrate areas of achievement Continued an online Development Centre for colleagues including information on training, apprenticeships, management leadership and other professional development programmes Launched a new Learning and Development Hub for colleagues which offers more training and development opportunities to colleagues. Supported the Group's values under The Vanquis Way and linked recognition platform, 'Way to Go, to foster a culture where we say 'thank you' or 'well done' to colleagues who demonstrate our values. Launched BUPA membership for corporate private medical insurance. Our Stakeholders and why we engage with them How? (How management and/or directors engaged with and considered our stakeholders) What? (What were the key topics of engagement and consideration) Key outcomes and actions (What was the impact of the engagement and/or consideration?) Our communities To make a positive difference to the communities we serve in order to improve the lives of our customer base. Our communities' interests include financial education, addressing the key barriers to financial inclusion, social mobility and improving financial awareness. Participation in the Group Social Impact Programme that delivers community investment Group-wide community matters are discussed are overseen by the Group Board Oversight by the Group Board of community matters and the approach to external engagement regarding the Company's purpose and role in society Community contributions and charitable giving Volunteering Matched employee fundraising Relationships with debt charities Group Social Impact programme Group volunteering policy to encourage colleagues to volunteer and make a positive difference in their communities Group approach to external engagement regarding the Company's purpose and role in society Matched employee charitable fundraising The Group Social Impact Programme is aligned to the Group's strategy and purpose and has delivered community investment focused on community, customers and education Continued Group partnership with Plan Numbers, National Numeracy and the Ahead Partnership. Group is the official delivery partner for Bradford UK City of Culture 2025. Directors directly participated in volunteering as part of the 'Step into Tech' event hosted in Bradford. Our Stakeholders and why we engage with them How? (How management and/or directors engaged with and considered our stakeholders) What? (What were the key topics of engagement and consideration) Key outcomes and actions (What was the impact of the engagement and/or consideration?) Our regulators To plan for regulatory change with greater certainty and confidence, to maintain our reputation as a responsible lender and to maintain our sustainable business model. Our regulators' interests include conduct, compliance and fair treatment of stakeholders. Board members and executive management engaged proactively with regulators via regular face to face and telephone meetings throughout the year. Regulatory risk reporting, including horizon scanning, was carried out and reported to the Company Risk Committee and Board as well as to the Group Executive Committee and Group Risk Committee where appropriate Regulatory engagement and correspondence was reported to and discussed by the Board via the Company Chief Risk Officer (CRO) and Group CEO Dialogue and engagement regarding current products, potential products, customer outcomes and digitisation primarily through the Company CRO Management reports to the Board on the above methods of engagement and the outcomes of such engagement Designated Group Non-Executive Director Consumer Duty Champion Customer vulnerability Compliance with Consumer Duty rules to deliver good customer outcomes Affordability assessments Our products, our potential products and digitisation Complaint levels and handling Compliance with the Senior Management & Certification Regime Culture Payment holidays and other forbearance options Regulatory changes and the potential impact on our business model and processes FCA BiFD Plan including ratification of 2021 BiFD Remediation Plan approach Group-wide compliance with the Operational Resilience Regulations, with Board oversight of the project. Group-wide participation in the Consumer Duty programme, with the Company CRO reporting regularly to the Board on implementation and embedding. Business model aligned with regulatory expectations Continued partnership with StepChange SMCR ways of working Framework with Policy updated in 2024 Monitoring of Court of Appeal judement relating to car financing commission calculations Group-wide engagement with the FCA and PRA on an ongoing basis on issues that are material to the business strategy. Group-wide participation in FCA consultations on its Credit Information Market Study. Group-wide engagement with Government bodies and MPs on a range of issues of importance to the firm including financial inclusion and social mobility. Our Stakeholders and why we engage with them How? (How management and/or directors engaged with and considered our stakeholders) What? (What were the key topics of engagement and consideration) Key outcomes and actions (What was the impact of the engagement and/or consideration?) Our suppliers To treat our suppliers fairly and develop strong relationships with them which ensure that we only buy products and services from those who operate responsibly and mitigates risk in our supply chain. Our suppliers' interests include sustainable business, long-term partnerships, and prompt payment. There is an established due diligence process to manage supply chain-based risks and comply with Company policies and Group policies There are standardised contractual terms that we attempt to use with all of our suppliers, to reduce contractual risks when contracting under these terms The Company is a signatory to the Prompt Payment Code, and we publish our Payment Practices Reporting at Companies House Consistent engagement through the Group's Supplier Relationship Management Framework Prompt payment Data Protection Information Security Environment Supplier on-boarding and performance Delegated Authorities Modern Slavery Anti-Bribery and Corruption Continued to engage with suppliers via the Group's due diligence process on the climate risk agenda. Signatories of the Prompt Payment Code Supplier Relationship Management Framework highlighted supplier performance and enabled joint roadmaps Compliance with EBA Outsourcing Guidelines Group Board approved the 2024 Modern Slavery Statement The Group rolled out new Supplier Management Framework activities and standards which continue to standardise the Group's procurement processes and procedures. Carried out a 'voice of the supplier' survey to gauge the Group's performance in relation to a range of supplier satisfaction and procurement satisfaction themes. Our environment The Company supports and participates in actions related to ensuring that the Group submits reports that are fully consistent with the recommendations and recommended disclosures of the Taskforce on Climate-Related Financial Disclosures ("TCFD"). The Company aims to operate a sustainable business and is committed to tackling climate change. Environmental interests include sustainable business and contributing to tackling climate change. The Company utilises and contributes to the Group Environmental Management System (EMS) The Group Board overseas and discusses environmental matters Execution of activities to support Group achievement of ISO 14001 Climate change Environmentally conscious vehicle manufacture Funding of electric vehicles A compliance statement published in respect of the recommendations and recommended disclosures of the Task Force on Climate Related Financial Disclosures which complies with the FCA Listing Rule 9.8.6R(8) Maintenance and compliance with ISO 14001 Science Based Targets As a member of the Group: Continued certification of the Group's environmental management system to ISO14001 Climate risk management and reporting that is consistent with UK regulatory requirements. Continued development of the Group's carbon approach moving from carbon offsetting to carbon capture. Had two science-based targets accepted by the Science Based Targets Initiative Statement regarding section 172 of the Companies Act 2006 (continued) In all of our board papers requiring a decision to be taken, there is a section which presenters have to complete asking them to set out the impact/key matters for the Board to consider in relation to the decision in question on the following factors/stakeholders (where not already set out in the body of their paper) -customers; colleagues; suppliers; regulators/government; investors, communities; environment; reputation; long term considerations. This draws attention to all the factors the directors need to take into account when considering their s. 172 Companies Act 2006 duties, even if there is considered to be no material impact in relation to any specific category of consideration. Going concern The Company is partially funded through intercompany loan facilities made available by the ultimate parent company, Vanquis Banking Group plc. As a result, the ability of the company to continue as a going concern is dependent on the ability and intent of its ultimate parent to continue to make funds available to enable the Company to meet its liabilities as they fall due. In assessing whether the Company is a going concern, the directors have reviewed the Group's corporate plan, as approved in December 2024, in doing so, the Board reviewed detailed forecasts for the three year period to December 2027 and also considered less detailed forecasts for 2028 and 2029. These higher-level outer year forecasts do not contain any information which would cause different conclusions to be reached over the longer-term viability of the Company or Group. The assessment included consideration of the Group's principal risks and uncertainties, with a focus on capital and liquidity and the going concern assessment covers a period of 12 months from the accounts approval date. The directors have also reviewed the Group's stress testing projections which are based on a severe scenario. The stress test scenario envisages that the UK economy enters a period of negative growth with UK unemployment rate reaching 8.1%. The outcome of the pending Supreme Court hearing on Vehicle Finance Commission scheduled for 1-3 April 2025 remains uncertain. A possible scenario has been considered as part of the stress testing. This shows that the Group is able to maintain sufficient capital headroom above minimum requirements. The directors have reviewed the Group's reverse stress testing projections to the point of non-viability, which concluded that the Group's viability only comes into question under an unprecedented macroeconomic scenario. Based on this review, the directors are satisfied that the Company has the required resources to continue in business for a period of at least twelve months following the approval of the Company accounts. For this reason, the directors continue to adopt the going concern basis in preparing the Company accounts. Further details on the basis of preparation is provided on page 21. Approved by the Board and signed on behalf of the Board by: I McLaughlin Director 22 April 2025 The directors are responsible for preparing the Annual report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required to prepare the financial statements in accordance with United Kingdom adopted international accounting standards. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, International Accounting Standard 1 requires that directors: properly select and apply accounting policies; present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; provide additional disclosures when compliance with the specific requirements of the financial reporting framework are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and make an assessment of the company's ability to continue as a going concern. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Report on the audit of the financial statements Opinion In our opinion the financial statements of Moneybarn Limited (the 'company'): give a true and fair view of the state of the company's affairs as at 31 December 2024 and of its profit for the year then ended; have been properly prepared in accordance with United Kingdom adopted international accounting standards; and have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements which comprise: the statement of comprehensive income; the balance sheet; the statement of changes in shareholders' equity; the statement of cash flows; the statement of accounting policies; and the related notes 1 to 22. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom adopted international accounting standards. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council's (the 'FRC's') Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. 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 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. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 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 course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. 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 in this regard. Responsibilities of directors As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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 company or to cease operations, or have no realistic alternative but to do so. Auditor's 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 auditor's 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. A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: https://www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor's report. Extent to which the audit was considered capable of detecting irregularities, including fraud 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. We considered the nature of the company's industry and its control environment, and reviewed the company's documentation of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management and the directors about their own identification and assessment of the risks of irregularities, including those that are specific to the company's business sector. We obtained an understanding of the legal and regulatory framework that the company operates in, and identified the key laws and regulations that: had a direct effect on the determination of material amounts and disclosures in the financial statements. These included the UK Companies Act and tax legislation; and do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty. These included regulations set by the Financial Conduct Authority (FCA). We discussed among the audit engagement team including relevant internal specialists such as tax and IT regarding the opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur in the financial statements. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business. Extent to which the audit was considered capable of detecting irregularities, including fraud (continued) In addition to the above, our procedures to respond to the risks identified included the following: reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements; performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; enquiring of management and legal counsel concerning actual and potential litigation and claims, and instances of non-compliance with laws and regulations; and reading minutes of meetings of those charged with governance and reviewing correspondence with the FCA. Report on other legal and regulatory requirements Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the strategic report and the directors' report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the directors' report. Matters on which we are required to report by exception Under the Companies Act 2006 we are required to report in respect of the following matters if, in our opinion: adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors' remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. We have nothing to report in respect of these matters. Use of our report This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. Kieren Cooper (Senior statutory auditor) For and on behalf of Deloitte LLP Statutory Auditor Birmingham, United Kingdom 22 April 2025 For the year ended 31 December Note 2024 £'000 2023 £'000 Revenue 1 60,094 61,495 Operating costs (56,442) (61,732) Operating profit/(loss) 3,652 (237) Finance costs 2 (2,654) (337) Profit/(loss) before taxation 3 998 (574) Profit before taxation and exceptional items 3 2,983 403 Exceptional items 3 (1,985) (977) Tax (charge)/credit 4 (298) 2 Profit/(loss) and total comprehensive income for the year 700 (572) There is no other comprehensive income/(expense) for the year. The servicing activity in the Statement of Comprehensive Income has been discontinued with effect from 31 December 2024 as the Company transferred its trade and associated assets and liabilities to Vanquis Bank Limited on this date. Interest on intercompany loans from the intermediate holding company and fellow subsidiary undertakings will continue to accrue interest. 17 As at 31 December As at 31 December Note 2024 £'000 2023 £'000 ASSETS Cash and cash equivalents 33 43 Trade and other receivables 8 35,461 57,191 Property, plant and equipment 9 - 1,416 Right-of-use assets 10 - 1,264 Intangible assets 11 - 1,324 Deferred tax asset 13 - 378 Total assets 35,494 61,616 LIABILITIES AND EQUITY Trade and other payables 14 33,367 36,549 Lease liabilities 15 - 1,544 Provisions 16 - 261 Total liabilities 33,367 38,354 Equity attributable to owners of the parent Share capital 18 51 51 Share premium account 164 164 Share-based payment reserve 19 - 626 Retained profit 1,912 22,421 Total equity 2,127 23,262 Total liabilities and equity 35,494 61,616 The financial statements on pages 17 to 45 were approved and authorised for issue by the Board of directors on 22 April 2025 and signed on its behalf by: I McLaughlin D Watts Director Director Share capital Share premium account Share-based payment reserve Retained earnings Total £'000 £'000 £'000 £'000 £'000 At 1 January 2023 51 164 511 22,733 23,459 Loss and total comprehensive expense for the year - - - (572) (572) Transaction with owners: - share-based payment charge (note 19) - - 375 - 375 - transfer of share-based payment reserve - - (260) 260 - At 31 December 2023 51 164 626 22,421 23,262 At 1 January 2024 51 164 626 22,421 23,262 Profit and total comprehensive income for the year - - - 700 700 Dividend (note 5) - - - (22,000) (22,000) Transaction with owners: - share-based payment charge (note 19) - - 165 - 165 - transfer of share-based payment reserve - - (791) 791 - At 31 December 2024 51 164 - 1,912 2,127 For the year ended 31 December Note 2024 £'000 2023 £'000 Cash flow from operating activities Cash generated from/(used in) operations 21 17,192 (38,245) Net cash generated from/(used in) operating activities 17,192 (38,245) Cash flow from investing activities Purchase of property, plant and equipment 9 - (283) Proceeds from disposal of property, plant and equipment 9 - 125 Net cash used in investing activities - (158) Cash flow from financing activities Financing from intermediate holding company 8, 14 5,180 38,794 Finance lease payments 15 (382) (350) Dividend paid to immediate parent undertaking 5 (22,000) - Net cash (used in)/generated from financing activities (17,202) 38,444 Net (decrease)/increase in cash and cash equivalents (10) 41 Cash and cash equivalents at beginning of year 43 2 Cash and cash equivalents at end of year 33 43 General information Moneybarn Limited (the 'Company') is a private limited liability company incorporated in England, United Kingdom under the Companies Act 2006 and domiciled in the United Kingdom. The address of the Company's registered office is Moneybarn, Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ. Basis of preparation The financial statements have been prepared in accordance with international accounting standards as adopted by the United Kingdom (UK), International Financial Reporting Interpretations Committee (IFRIC) interpretations and the Companies Act 2006. The financial statements have been prepared on a going concern basis under the historical cost convention. In preparing the financial statements, the directors are required to use certain critical accounting estimates and are required to exercise judgement in the application of the Company's accounting policies. In assessing whether the Company is a going concern, the directors have reviewed the Group's corporate plan, as approved in December 2024, in doing so, the Board reviewed detailed forecasts for the three year period to December 2027 and also considered less detailed forecasts for 2028 and 2029. These higher-level outer year forecasts do not contain any information which would cause different conclusions to be reached over the longer-term viability of the Company or Group. The assessment included consideration of the Group's principal risks and uncertainties, with a focus on capital and liquidity and the going concern assessment covers a period of 12 months from the accounts approval date. The directors have also reviewed the Group's stress testing projections which are based on a severe scenario. The stress test scenario envisages that the UK economy enters a period of negative growth with UK unemployment rate reaching 8.1%. The outcome of the pending Supreme Court hearing on Vehicle Finance Commission scheduled for 1-3 April 2025 remains uncertain. A possible scenario has been considered as part of the stress testing. This shows that the Group is able to maintain sufficient capital headroom above minimum requirements. The directors have reviewed the Group's reverse stress testing projections to the point of non-viability, which concluded that the Group's viability only comes into question under an unprecedented macroeconomic scenario. Based on this review, the directors are satisfied that the Company has the required resources to continue in business for a period of at least twelve months following the approval of the Company accounts. In addition, due to the Company's position at the period end, the ultimate parent undertaking, Vanquis Banking Group plc, has confirmed its continued support for the Company for a period of at least twelve months from the date of approval of the financial statements. For this reason, the directors continue to adopt the going concern basis in preparing the Company accounts. The financial statements are presented in pounds sterling, which is the currency of the primary economic environment in which the Company operates. Principal accounting policies The Company's principal accounting policies under International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom (UK), which have been consistently applied to all the years presented unless otherwise stated, are set out below. The impact of new standards not yet effective and not adopted by the Company from 1 January 2025 IFRS 18 Presentation and Disclosures in Financial Statements IFRS 18 replaces IAS 1, carrying forward many of the requirements in IAS 1 unchanged and complementing them with new requirements. In addition, some IAS 1 paragraphs have been moved to IAS 8 and IFRS 7. Furthermore, the IASB has made minor amendments to IAS 7 and IAS 33 Earnings per Share. IFRS 18 introduces new requirements to: present specified categories and defined subtotals in the statement of profit or loss provide disclosures on management-defined performance measures (MPMs) in the notes to the financial statements improve aggregation and disaggregation. An entity is required to apply IFRS 18 for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. The amendments to IAS 7 and IAS 33, as well as the revised IAS 8 and IFRS 7, become effective when an entity applies IFRS 18. IFRS 18 requires retrospective application with specific transition provisions. The Company anticipates that the application of these amendments may have an impact on the presentation of its consolidated financial statements in future periods. There are no other new standards not yet effective and not adopted by the Company from 1 January 2025 which are expected to have a material impact on the Company. Revenue Revenue comprises income from fees charged for the origination and servicing of contract purchase agreements on behalf of other companies in the group and is charged to the Statement of comprehensive income in the period to which it relates. Dividends Dividend distributions to the Company's shareholder are recognised in the financial statements when paid. Intangible assets Intangible assets comprise computer software development costs, which represent the costs incurred to acquire or develop the specific software and bring it into use. Directly attributable costs incurred in the development of software are capitalised as an intangible asset if the software will generate future economic benefits. Directly attributable costs include the cost of software development by employees and an appropriate portion of relevant directly attributable overheads. The residual values and economic lives of intangible assets are reviewed by management at each balance sheet date. Amortisation is charged to the Statement of comprehensive income as part of operating costs at the rate of 20.0% per annum on a straight-line basis. An impairment loss is recognised for the amount by which the asset's carrying value exceeds the higher of the asset's value in use and its fair value less costs to sell. Property, plant and equipment Property, plant and equipment is shown at cost less subsequent depreciation and impairment. Cost represents invoiced cost plus any other costs that are directly attributable to the acquisition of the items. Repairs and maintenance costs are expensed as incurred. Property, plant and equipment (continued) Depreciation is calculated to write down assets to their estimated realisable value over their useful economic lives. The following are the principal bases used: % Method Equipment (including computer hardware) 20.0 Straight line Leasehold improvements 15.0 Straight line Motor vehicles 25.0 Straight line The residual values and useful economic lives of all assets are reviewed, and adjusted if appropriate, at each balance sheet date. All items of property, plant and equipment are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying value exceeds the higher of the asset's value in use or its fair value less costs to sell. Gains and losses on disposal of property, plant and equipment are determined by comparing any proceeds with the carrying amount of the asset and are recognised within operating costs in the Statement of comprehensive income. Depreciation is charged to the Statement of comprehensive income as part of operating costs. Leases The Company assess whether a contract contains a lease at inception of a contract. A right of use asset and a corresponding liability are recognised with respect to all lease arrangements where it is a lessee, except for short-term leases (leases with a lease term of 12 months or less) and leases of low-value assets (less than £5,000). For these leases, the lease payment is recognised within operating expenses on a straight-line basis over the lease term. The lease liability is initially measured at the present value of the lease payments at the commencement date, discounted using the rate implicit in the lease. If this rate cannot be readily determined, the incremental borrowing rate is used. This is defined as the rate of interest that the lessee would have to pay to borrow, over a similar term, and with similar security the funds necessary to obtain an asset of a similar value to the right of use asset in a similar economic environment. This is based on the Group's non-bank funding rate. The lease payments included in the measurement of the lease liability comprise: fixed lease payments; variable lease payments; and payment of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease, using the effective interest rate method, and reducing the carrying amount to reflect the lease payments made. The lease liability is remeasured whenever: the lease term has changed, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate; the lease payments change due to changes in an index or rate, in which case the lease liability is remeasured by discounting the revised lease payments using the initial discount rate; and the lease contract is modified and the modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. The Company did not make any such adjustments during the year. Leases (continued) The right of use asset comprises the initial measurement of the corresponding lease liability and is subsequently measured at cost less accumulated depreciation and impairment losses. Right of use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. The lease liability and right of use asset are presented as separate line items on the balance sheet. The interest on the lease and depreciation are charged to the Statement of comprehensive income and presented within finance costs and operating costs respectively. Trade and other receivables and payables Trade and other receivables and payables are held at amortised cost and receivables are assessed for impairment at the balance sheet date based on lifetime expected credit loss (ECL). The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected credit loss allowance for all trade receivables and contract assets. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand. The Group have a centralised Treasury department who look after the cash needs and funding requirements for all divisions within the Group. A Group sweep of the cash balance is performed daily to maximise interest return. Retirement benefits Cash contributions to defined contribution pension schemes are charged to the Statement of comprehensive income on an accruals basis. Share-based payments Equity settled schemes: Vanquis Banking Group plc (formerly Provident Financial plc) grants options under employee savings-related share option schemes (typically referred to as Save As You Earn schemes (SAYE)) and makes awards under the Long Term Incentive Scheme (LTIS), the Restricted Share Plan (RSP) and the Company Share Option Plan (CSOP). All of these schemes are equity settled. The cost of options and awards is based on their fair value. A binomial model is used for calculating the fair value of SAYE options which have no performance conditions attached and the RSP for which vesting is based on the discretion of the Remuneration Committee. No charge has been recognised for the CSOP as it is linked to the RSP awards granted at the same time. Any gains made by an employee in relation to the CSOP reduces the number of shares exercisable under the RSP award. The value of the charge is adjusted at each balance sheet date to reflect lapses and expected or actual levels of vesting, with a corresponding adjustment to the share-based payment reserve within equity. The cost of options and awards is based on their fair value. A binomial model is used for calculating the fair value of SAYE options which have no performance conditions attached and the RSP for which vesting is based on the discretion of the Remuneration Committee. No charge has been recognised for the CSOP as it is linked to the RSP awards granted at the same time. Any gains made by an employee in relation to the CSOP reduces the number of shares exercisable under the RSP award. The value of the charge is adjusted at each balance sheet date to reflect lapses and expected or actual levels of vesting, with a corresponding adjustment to the share-based payment reserve. For LTIS schemes, performance conditions are based on EPS, total shareholder return (TSR) versus a peer group and risk metrics. Employees of the Company also have targets relating to profit before tax of their division. The fair value of awards is determined using a combination of the binomial and Monte Carlo option pricing models. The value of the charge is adjusted at each balance sheet date to reflect lapses and expected or actual levels of vesting. Where the Monte Carlo option pricing model is used to determine fair value of the TSR component, no adjustment is made to reflect expected or actual levels of vesting as the probability of the awards vesting is taken into account in the initial calculation of the fair value of the awards. Cancellations by employees of contributions to the Group's SAYE plans are treated as non-vesting conditions and the Group recognises, in the year of cancellation, the amount of the expense that would have otherwise been recognised over the remainder of the vesting period. Modifications are assessed at the date of modification and any incremental charges are recognised in the Statement of comprehensive income over the remaining vesting period of the scheme. A transfer is made from the share-based payment reserve to retained earnings when options and awards vest, lapse or are cancelled. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Taxation The tax charge represents the sum of current and deferred tax. Current tax is calculated based on taxable profit for the year using tax rates that have been enacted or substantively enacted by the balance sheet date. Taxable profit differs from profit before taxation as reported in the Statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax is also provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the future. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. 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 taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Exceptional items Exceptional items are items which the directors consider should be disclosed separately to enable a full understanding of the Company's results. An exceptional item needs to meet at least two of the following criteria: the financial impact is material; it is one-off and not expected to recur; and it is outside the normal course of business. Examples include, but are not limited to, costs arising from redundancy, acquisition or restructuring activities. Management may also apply judgement to determine whether an item should be classified as an exceptional item and be an allowable adjustment to a statutory measure. Critical accounting judgements and sources of estimation uncertainty No critical judgements or estimates have been identified that affect the reported amounts of assets and liabilities. Moneybarn Limited (the 'Company') is a wholly owned subsidiary of Vanquis Banking Group plc which together with its subsidiaries, forms the Vanquis Banking Group (the 'Group'). The overall financial and risk management framework is the responsibility of the Board with certain responsibilities in respect of internal control and risk management being delegated to various subcommittees who report directly to the Board. The Company also operates within a Group treasury framework and is subject to Group treasury policies including counterparty, liquidity, interest rate, market and capital risk. An overview of the Group's risk management framework can be found in the annual report and financial statements of Vanquis Banking Group plc which do not form part of this report. Credit risk Credit risk is the risk that the Company will suffer loss in the event of a default by a customer, a bank counterparty or the UK Government. A default occurs when the customer or a bank fails to honour repayments as they fall due. Counterparty risk The Company's maximum exposure to credit risk on bank counterparties as at 31 December 2024 was £33,000 (2023: £43,000). Counterparty credit risk arises as a result of cash deposits placed with banks. Counterparty credit risk is managed by the Group's treasury committee and is governed by a Board approved counterparty policy which ensures that the Group's cash deposits and derivative financial instruments are only made with high quality counterparties with the level of permitted exposure to a counterparty firmly linked to the strength of its credit rating. In addition, there is a maximum exposure limit for all institutions, regardless of credit rating. This is linked to the Group's regulatory capital base in line with the Group's regulatory reporting requirements on large exposures to the Prudential Regulation Authority (PRA). Liquidity risk Liquidity risk is the risk that the Company will have insufficient liquid resources available to fulfil its operational plans and/or to meet its financial obligations as they fall due. Liquidity risk is managed on a day-to-day basis by the Group's centralised Treasury function, under the supervision of ALCO and in accordance with a Board-approved Group Funding and Liquidity Policy, which is designed to ensure that the Group is able to continue to fund the growth of the business. The overall responsibility for the management of liquidity risk rests with ALCO, which makes recommendations for the Group's liquidity policy for Board approval. ALCO monitors liquidity risk metrics within limits set by the Board, including meeting regulatory requirements. The Group continues to adopt a prudent approach to managing its funding and liquidity resources within risk appetite, and will optimise these resources when new opportunities become available to the Group. A maturity analysis of the undiscounted contractual cash flows of the Group's bank and other borrowings is set out in the annual report and financial statements of Vanquis Banking Group plc. Interest rate risk Interest rate risk is the risk of potential loss through unhedged or mismatched asset and liability positions, which are sensitive to changes in interest rates. Primarily, the Group is at risk of a change in external interest rates which leads to an increase in the Group's cost of borrowing. The Group's exposure to movements in interest rates is managed by the Treasury Committee, with control and oversight provided by ALCO, and is governed by a Group Board-approved interest rate hedging policy which forms part of the Group's treasury policies. The principal market-set interest rate used by the Group's lenders is the Sterling Overnight Index Average (SONIA). The SONIA index tracks the sterling overnight indexed swaps for unsecured transactions in the market. SONIA is the risk-free borrowing rate which is used to set rates for certain borrowings and swaps. The Group has adopted the standard methodology measurement of interest rate risk. The Group measures and monitors the following market risk drivers under the interest rate risk in the banking book (IRRBB) framework through which risk exposure may arise. Market risk Market risk is the risk that a financial instrument's fair value or future cash flows will fluctuate because of changes in market prices. The Group's exposure to market risk is primarily through interest rate risk. These exposures arise solely through the Group's duration mismatches between its lending and funding activities. The Group's corporate policies do not permit it or the Company to undertake position taking or to run a trading book of this type and therefore neither it nor the Company does so. Capital risk Capital risk is managed by the Group's centralised treasury department. The Group manages capital risk by focussing on capital efficiency and effective risk management. This takes into account the requirements of a variety of different stakeholders including shareholders, policyholders, regulators and rating agencies. A more detailed explanation of the management of capital risk can be found in the annual report and financial statements of Vanquis Banking Group plc within the Pillar 3 disclosures document which do not form part of this report.

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