Funding Circle Holdings plc

Full Year 2021 Results

Embargoed until 7.00am, 10 March 2022

THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014

Funding Circle Holdings plc ("Funding Circle") today announces results for the year ended 31 December 2021.

Lisa Jacobs, CEO, said:

"2021 was a successful year for Funding Circle. We continued to deliver a superior customer experience through our world-class technology, with over 70% of UK applications now receiving an instant decision. SMEs are increasingly using digital channels to manage all aspects of their business and this trend is here to stay.

Our focus for the last two years has been on profitable growth and today's results highlight the excellent progress we have made. I am particularly proud to announce AEBITDA of £92 million and £64 million of operating profit, exceeding our previous guidance.

We are in a strong position as a business and as we look ahead to the rest of 2022 and beyond, there is a bright future ahead of us.  A decade of R&D is now coming to fruition as we begin to empower small businesses to not only borrow, but pay and spend as well".

Performance highlights

Financial summary:

·      Operating income of £165.5 million (2020: £155.7 million) up 6.3% driven by higher servicing fees.

·      Investment income of £41.4 million (2020: £66.3 million) down 38% as investments were monetised in line with strategy.

·      Total income of £206.9 million (2020: £222.0 million) down 7% as a result of anticipated lower investment income.

·      Fair Value gain of £28.6 million (2020: losses of £118.3 million) due to positive revaluations, reflecting underlying credit performance.

·      Net Income of £235.5 million (2020: 103.7 million) up 127% reflecting positive revaluations in Fair Value.

·      Loans under management of £4.46 billion (2020: £4.21 billion) up 5.8% and originations of £2.30 billion (2020: £2.74 billion) down 16% year-on-year, reflecting the conclusion of CBILS and PPP.

·      AEBITDA of £91.8 million (2020: negative £63.8 million), UK business AEBITDA of £61.9 million (2020: £6.5 million).

·      Operating expenses reduced 12% to £167.4 million (2020: £191.3 million) following cost management initiatives.

·      Operating profit of £64.2 million (2020: negative £106.3 million), UK business: £44.3 million operating profit (2020: negative £7.9 million).

·      Net assets of £288.0 million (2020: £217.6 million), up 32% and comprising £224.0 million cash (2020: £103.3 million).

[1] Net investment income refers to investment income less investment expense.

[2] ("AEBITDA") Adjusted EBITDA represents operating profit/(loss) before depreciation and amortisation, share-based payment charges, associated social security costs, foreign exchange gains/(losses), and exceptional items. A reconciliation between AEBITDA and operating profit/(loss) is shown in the Business Review.
 

Operating and Strategic Summary:

·      We have a proven business model:

o  The quality and resilience of the loans Funding Circle originates has been proven through the cycle.

o  All UK and US cohorts expected to deliver positive annualised returns with projections for Covid-affected cohorts upgraded.

o  We continue to see strong demand from investors to fund loans in the UK and US.

o  Covid has led to a rapid acceleration in the shift towards online in small business lending and this increased digital usage is here to stay. 68% of SMEs are looking to manage as many aspects of their business via digital channels as possible going forward[3].

·      We have a strong leadership position in the UK:

o  Funding Circle is the leading SME loans platform in the UK and has over 10 years' experience of lending to SMEs.

§  Approximately £4bn of loans under management in the UK (Dec 20: £3.3bn).

o  The superior experience we deliver to customers leads to high customer advocacy and stable repeat rates.

§  Net promoter score of 82 in the UK.

§  On average, UK customers take out 2 loans every 5 years.

·      Our world-class technology continues to deliver a superior customer experience:

o  At Funding Circle we are reinventing small business lending through technology and machine learning.

o  Our world-class tech platform delivers significant customer benefits and creates a deep moat around our business.

o  Over the past 10 years, we've built the capability for SMEs in the UK to receive an instant lending decision. Today, more than 70% of applications receive an instant decision in the UK. This figure is up from c.60% at our Half Year results in September.

o  In the UK, our 8^th generation risk models significantly outperform traditional bureau scores, optimising access whilst delivering strong investor returns.

o  Our Decision Engine platform generates personalised customer journeys, pricing and propositions which helps to increase conversion.

o  Our data lake has over 2 billion data points on SMEs across the UK and US enabling us to build accurate and predictive models.

·      We have ambitious growth opportunities over the medium-term:

o  A combination of our strong financial position, world-class technology and superior customer experiences has meant that today we are at an inflection point.

o  Our medium term plan is focused on empowering small businesses to not only borrow, but pay and spend as well. This will make Funding Circle a multi-product platform, serving a direct and embedded audience.

o  In order to deliver on this opportunity we are focused on three pillars:

§  Attract more businesses: strengthen direct and indirect channels, and embed natively in more partner environments through our API.

§  Say yes to more businesses: optimise our platform, expand our products, and leverage our marketplace for everyone else.

§ #1 in new products: empower small businesses to not only borrow, but pay and spend as well.

Launch of Funding Circle's Economic Impact Report:

Alongside today's results, Funding Circle, in partnership with Oxford Economics, today publishes its 2021 Economic Impact Report. Key findings from the report include:

·      In 2021, lending through Funding Circle's UK platform helped generate more than £7bn in GDP while creating and sustaining 100,000 jobs.

·      The share of SMEs intending to grow has doubled since Q2 2020 and is now at pre-pandemic levels.

·      60% of SMEs that took a Funding Circle loan in 2021 were first-time users of online finance; almost eight out of ten of these say they will come back to Funding Circle first in future.

·      Three-quarters of Funding Circle's customers expect to require further finance and 40% have said they expect to require finance in the next 12 months, primarily for growth or investment. The proportion of SMEs happy to use finance to meet their growth aspirations is at its highest level since 2016.

·      The full report can be found here: https://www.fundingcircle.com/uk/impact 

Outlook:

The business is in the strongest position it has been and we have proven the resilience of our model over the last two years. The economic environment is uncertain and, as previously highlighted, the market continues to be distorted as a result of Covid Government loan schemes. However, as demand returns to pre-Covid levels through 2022, we are well placed to capture the opportunity going forward.

2022 FY guidance

·      Group operating income will be in the range of £145m - £155m as we start to see demand normalising.

·      Group investment income will continue to decline. Investment income will be in the £10m - £15m range.

·      Group total income will therefore be in the range of £155m - £170m.

·      The business will continue to be AEBITDA positive with a skew to H2.

2025 guidance

·      By 2025 we expect UK total income (primarily operating income) of at least £220m. 2025 AEBITDA margins at 30-35%.

·      We anticipate at least £70m of US total income (primarily operating income) by 2025 having reached AEBITDA breakeven during 2024 (incurring maximum cumulative AEBITDA losses of c.£25m to get to breakeven).

·      For FlexiPay (including FlexiPay Card), we see significant growth opportunities between now and 2025 but it remains early to be precise on income expectations.

·      By 2025, all segments of the Group to be profitable.

Board changes:

As announced at the Half Year results in September 2021, Samir Desai stepped down from his role as CEO on January 1^st and was replaced by Lisa Jacobs as CEO. Samir remains a Non-Executive Director on the Board.

Changes to retail lending:

Today we have confirmed to customers that we are permanently closing the retail platform to new investments. Retail lending represents only c.5% of Funding Circle's total loans under management and has been closed since March 2020.

Retail investors in the UK will continue to receive repayments of interest and principal every month and can withdraw these funds at any time. Since launch in 2010, retail investors have earned average net returns (after fees and bad debts) of c.5% annually lending to businesses on the platform.

Analyst presentation:

A presentation for analysts will be held today via webcast at 9:30am. Please contact IR@fundingcircle.com if you wish to attend.

An on-demand replay will also be available on the Funding Circle website (corporate.fundingcircle.com) following the presentation.

[3] https://www.ey.com/en_gl/banking-capital-markets/the-five-step-journey-to-sme-banking-transformation 

Investor relations and media relations:

Investor Relations

David de Koning - Director of Investor Relations and Communications (0203 927 3893)

Media relations

Headland Consultancy: Mike Smith / Stephen Malthouse (0203 805 4822)

About Funding Circle:

Funding Circle (LSE: FCH) is a small and medium enterprise ("SME") loans platform. Since launching in 2010, investors and lenders across Funding Circle's geographies - including banks, asset management companies, insurance companies, government-backed entities, retail investors and funds - have lent more than £14 billion to more than 120,000 businesses globally.

Forward looking statements and other important information:

This document contains forward looking statements, which are statements that are not historical facts and that reflect Funding Circle's beliefs and expectations with respect to future events and financial and operational performance. These forward looking statements involve known and unknown risks, uncertainties, assumptions, estimates and other factors, which may be beyond the control of Funding Circle and which may cause actual results or performance to differ materially from those expressed or implied from such forward-looking statements.  Nothing contained within this document is or should be relied upon as a warranty, promise or representation, express or implied, as to the future performance of Funding Circle or its business. Any historical information contained in this statistical information is not indicative of future performance.

The information contained in this document is provided as of the dates shown.  Nothing in this document should be construed as legal, tax, investment, financial, or accounting advice, or solicitation for or an offer to invest in Funding Circle. 

Business Review

At Funding Circle we deliver an amazing customer experience through technology, machine learning and data science.

Over the past 10 years, we've revolutionised SME lending and built the capability for SMEs in the UK to receive an instant lending decision. This is a first in SME term lending.

Today, as the leading global platform for small business loans we have helped more than 120,000 small businesses to access more than £14 billion. Our investment in technology has resulted in strong customer satisfaction scores and high repeat rates, helping us to grow alongside our small businesses. Our proven model has been demonstrated through the cycle as seen by the fact that every cohort of loans is expected to deliver positive returns to investors. This resilience of the loan portfolio has proven attractive to institutional investors, with high levels of demand to fund loans in both the UK and US.

We believe that, as we get bigger and help more small businesses access the finance they need to grow, we will create a stronger platform that drives significant competitive advantage. This creates a virtuous circle that will enable us to continue to help thousands of small businesses around the world and drive market share.

2021 overview

During the first half of 2021 we continued to provide loans through SME government-guarantee schemes in both the UK and US. The Coronavirus Business Interruption Loan Scheme ("CBILS") in the UK ended on 31 March 2021 with applications received by that date continuing to be processed until June 2021. The Paycheck Protection Program ("PPP") through the Small Business Administration ("SBA") in the US closed on 4 May 2021.

Following the end of these schemes, in the UK we relaunched our core product alongside the Recovery Loan Scheme ("RLS"), a new 80% government-guaranteed scheme introduced following CBILS. RLS is expected to cease in June 2022 and we will transition to operating solely our core product by the end of H1. In the US we also relaunched our core product for SMEs following the completion of PPP.

As a result of these schemes running through 2021, originations for the year were weighted towards the first half of the year. Following the relaunch of core loans in both the UK and US, we saw continued growth quarter on quarter from June 2021.

The loans under each of the government schemes have different characteristics, and therefore the income that Funding Circle earns on them is different:

-       CBILS - for loans issued under this scheme, the British Business Bank ("BBB") provided an 80% guarantee to lenders, should the loan default, in exchange for a fee from the investors. The BBB paid the origination fees on behalf of borrowers together with the interest due on the loans for the first year. No principal repayments were required in the first year. Thereafter borrowers pay the interest and principal repayments. Investors continue to pay servicing fees.

-       RLS - for loans under this scheme, the BBB continued to provide a guarantee to lenders to ensure that there was sufficient availability from lenders to support small businesses, again in exchange for a fee from the investors (which in Funding Circle's case, as with CBILS, was shared proportionately among Funding Circle and its applicable investors, with Funding Circle's share of both the loan amounts and fee being approximately 1% of the total). The loans then had characteristics similar to the core loan product with borrowers paying the origination fees, interest and repayments and investors paying the servicing fees. However the borrower, not the BBB, pays the fees and interest in the first year.

-       PPP - the loans issued under the PPP scheme have very different characteristics to those under CBILS or RLS. Under this scheme, Funding Circle earns an origination fee, paid by the SBA, but there are no servicing fees associated with the loans. This is because borrowers are allowed to apply for the loans to be forgiven by the SBA if the funds are used to pay eligible expenses such as payroll costs of employees.

Loans under management were £4,457 million at 31 December 2021, up 6% on the prior year. This was driven by the strong origination performance in the UK during the year, especially in H1. The loans under management in the US declined in the year as previously originated loans continued to repay and borrowers who had taken out PPP loans were applying for and getting forgiveness of those loans.

Geographic highlights

United Kingdom

During the year, the UK originated £1,972 million (2020: £2,111 million), with loans under management growing by 21% to £3,944 million. Whilst transaction fees were 7% lower than 2020, in line with originations, the strong growth in loans under management drove higher servicing fees and resulted in operating income of £137.7 million (2020: £123.9 million).

Investment income was lower than in 2020, driven by the continuing paying down of loans in the investment vehicles and, in November 2021, the UK sold the loans held within its warehouse vehicle, crystallising c.£32 million of cash after paying off the bank debt associated with the vehicle.

The SME loans that are held in the investment vehicles are carried on the balance sheet at fair value. With improved actual performance and prospects for small businesses, as the economy has opened up, compared to the expectations at 31 December 2020 when the country was still under a full lockdown, the fair value of the loans has improved materially resulting in a fair value gain of £10.5 million (2020: loss of £43.8 million). This helped drive net income to £169.9 million (2020: £109.1 million).

Marketing costs remained at similar levels to 2020 of c.29% of operating income with other costs remaining consistent year-on-year. The UK generated adjusted EBITDA of £61.9 million (2020: £6.5 million) and an operating profit of £44.3 million (2020: loss of £7.9 million).

United States

The US had a strong first six months of trading in 2021 as it continued to originate PPP loans before reverting to its core product in June 2021 as PPP ended.

In July 2020, the US business was granted access to the use of the Federal Reserve's PPP liquidity facility ("PPPLF") although PPP was paused between September and December 2020 in the run up to the US elections, before relaunching in January 2021.

Using the PPPLF allowed for lending to be undertaken with funds coming directly from this facility. Prior to that date, all PPP lending was done through our marketplace (referral) model for which we earned reduced origination fees.

Accordingly, whilst total origination in 2021 totalled £316 million compared to £581 million in 2020, operating income for the US business remained at consistent levels to 2020 at £25.1 million.

Consistent with the UK, the investment vehicles continued to amortise down and in June 2021, the US business sold loans held in the US warehouse for c.£38 million of net cash proceeds. Together these led to investment income reducing to £19.7 million (2020: £37.3 million).

The improved economic outlook in the US compared to the view as at 31 December 2020, together with the strength and resilience of our borrowers, led to material improvements in fair value with a fair value gain of £18.1 million (2020: loss of £74.5 million) and drove investment AEBITDA (being net investment income and fair value gains/(losses)) to £37.8 million (2020: loss of £37.1 million). Operating profit was £18.5 million (2020: loss of £83.6 million).

In the prior year, the Group announced that it was restructuring the US operations, downsizing the premises in San Francisco and reducing the headcount across the business. This, coupled with reduced investor incentives paid in the early stages of PPP, led to reduced costs of c.£13 million and an improvement in the operating AEBITDA loss, reducing to a loss of £9.4 million compared to a loss in 2020 of £25.3 million. This reduction was also impacted by a stronger pound with the average $:£ exchange rate of $1.37:£1 in 2021 compared to $1.28:£1 in 2020.

[4] Investment AEBITDA is defined as investment income, investment expense and fair value adjustments, and operating AEBITDA represents AEBITDA excluding investment AEBITDA.
 

Announcement of Medium Term Plan

Today we are announcing our new medium term plan which is focused on helping small businesses to not only borrow, but pay and spend as well. This will make Funding Circle a multi-product platform, serving a direct and embedded audience.

The new medium-term plan is based on three strategic pillars:

·      attract more businesses

·      say yes to more businesses

·      #1 in new products

Attract more businesses

Strengthen direct and indirect channels, and embed natively in more partner environments through our API.

We're working on a number of areas, including growing and improving our existing distribution channels, and leveraging our market-leading technology. We're particularly excited about embedding our services into our partners' environments in both the UK and the US.

In the UK, we've created a new capability to enable partners to seamlessly offer Funding Circle loans to SMEs within their own website and we announced two new partners - Capitalise and Funding Options - in 2021, with more to follow in 2022. In the US, we're developing our Lending as a Service ("LaaS") partnership programme with banks and other large SME providers who are looking to leverage our technology platform to provide small business loans to their customers.

Through these developments, we're deepening key relationships and increasing our distribution potential. It's a unique proposition that will help us extend our reach and attract more businesses in the UK and the US.

Say yes to more businesses

Optimise our platform, expand our products and leverage our marketplace for everyone else.

As part of our focus on saying yes to more customers, we want to offer every customer that comes to Funding Circle a personalised journey that suits their needs, ensuring we deliver the right product to every applicant. This will mean we increase the conversion of the quality applications we receive today.

In order to deliver the right product to every applicant we will launch new risk segments and expand our marketplace offering in both the UK and US. This will connect borrowers with other lenders in the market, offering further products beyond our current range, such as larger loans, asset finance and invoice finance.

#1 in new products

Empower small businesses to not only borrow, but to pay and spend as well.

Since launching in August 2021, our beta trial of FlexiPay has exceeded our expectations and we have seen high levels of engagement from c.850 trial customers.

·      Total value of credit limits approved: £11.8m with £7.6m originated. 

·      Average FlexiPay payment is 20% higher than expected.

·      Average value of transactions is double our initial expectations.

In 2022, we expanded the trial to new customers and will launch in full in Q3 2022.

We will also launch FlexiPay Card in the UK to help SMEs settle regular payments and meet expenditure needs. We expect to launch to a selection of our existing customers by the end of 2022.

Finance review

Overview

The financial year has seen significant growth in net income and operating profit compared to the previous year. The Group's operating profit of £64.2 million compared to a loss of £106.3 million in 2020.

The drivers for this are strong originations, record loans under management, cost actions and the quality of our underwriting coming through. The results also benefited from the improved economic outlook and the positive impact this has had on the value of the SME loans held on balance sheet and the corresponding fair value gains/(losses). The prior year included one-off exceptional items following the reorganisation of the US and Developing Markets businesses.

Profit and loss

Total income which consists of operating income and investment income less investment expense, totalled £206.9 million (2020: £222.0 million). The reduction was principally due to the reduced net investment income.

Operating income which includes transaction fees, service fees and other income, was £165.5 million (2020: £155.7 million).

-       Transaction fees, being the fees Funding Circle earns on originations, were £115.0 million compared to £122.5 million in 2020. This small reduction reflects the 7 months of CBILS originations in 2020 from May 2020 onwards compared to 5 months during 2021 up until May 2021.

The yields on CBILS loans in the UK were set at 4.75% and yields on subsequent UK lending have been at similar levels. The yields on the US PPP loans were nearly 9% in 2021 driven by i) the use of the PPP liquidity facility to originate loans directly rather than referring them to our partners for a referral fee and ii) following the extension of the programme, PPP loans in 2021 were generally lower value loans which attracted a higher yield. Yields post-PPP in the US have normalised to c.4.50%.

-       Servicing fees, being the annual fees for servicing loans under management, increased to £47.0 million following the strong origination levels in the UK which increase loans under management. Servicing yields on CBILS loans were fixed at 1.25% although there are no servicing fees earned on PPP loans.

-       Other income represents a fee premium we receive from certain institutional investors in respect of buying back defaulted loans under a historical loan purchase commitment together with collection fees where we are able to charge a fee to investors for recovering monies on defaulted loans. Other income remained consistent with 2020.

Net investment income represents the investment income, less investment expense, on loans invested within Funding Circle's investment vehicles. No new loans were originated in the securitisation vehicles during the year and the net investment income earned has continued to reduce as loans paid down. Additionally the reduction was accelerated following the monetisation of the warehouse vehicles through selling of the loans and the repayment of the associated bank debt.

Fair value gains/(losses) represent the gains or losses arising on the Group's investments in SME loans held on balance sheet that are carried at fair value. The investments are valued using discounted cash flows that take into account projected cash flows from the underlying SME loans including principal and interest repayments, prepayment rates and expected levels of defaults and recoveries.

At 31 December 2020, the UK was still in lockdown with significant uncertainties for the prospects of SME businesses. Since then, there has been an overall improved view of the economic outlook and accordingly there has been a more favourable view on the expected default levels and recoveries with consequential improvements to the valuation of the loans held on balance sheet. As a result, fair value gains in the year were £28.6 million (2020: loss of £118.3 million).

Net income, defined as total income after fair value adjustments was £235.5 million (2020: £103.7 million).

Operating expenses

Operating expenses have reduced overall by £38.7 million to £171.3 million. Some of this reduction is caused by reduced exceptional costs. When these costs are excluded, operating expenses have dropped by £23.9 million. This reduction was largely a result of the annualisation of cost savings following the reorganisation of the US and Developing Markets businesses in 2020.

People costs (including contractors) remain the Group's largest cost. Before capitalised development spend is taken into account, the total wage bill (including contractors) was £85.9 million (2020: £94.7 million). This reduction was a result of savings from the reduced headcount following the reorganisation of the US and Developing Markets during 2020. This was a further reduction from 2019 when people costs totalled £104.6 million. People costs includes share-based payments of £8.9 million (2020: £5.6 million).

Marketing costs, which consist of online and direct mail, TV and brand campaigns and broker commissions, remained flat year-on-year with overall marketing spend just under 30% of operating income.

Depreciation, amortisation and impairment costs were £17.8 million (2020: £30.9 million). This includes impairments of the right-of-use property-related assets in the US and Developing Markets following the reorganisations. Once these are excluded, the charge was £13.9 million (2020: £17.2 million), the reduction being caused by the downsizing of the San Francisco office.

Loan repurchase charges relate to the Developing Markets, where Funding Circle entered into arrangements to buyback certain defaulted loans from certain financial institutions under a loan purchase commitment. In return, the business received a fee premium (reflected in other income).

Under IFRS 9 this commitment is accounted for under the expected credit loss model. Following the impact of Covid-19 in 2020, the loan repurchase charge in the prior year was £6.2 million reflecting the increased likelihood that there would be further defaulted loans to buy back. No further charge was required in 2021.

Other costs, which include cost of sales, data and technology costs and property costs, reduced from £40.8 million to £29.0 million, largely due to additional cost of sales and investor incentives that were required in 2020 in the early stages of PPP but were not required in 2021.

Balance sheet and investments

Following the strong trading performance during the year, coupled with improvements in the economic outlook for SMEs compared to those expected at 31 December 2020, the net assets of the Group have increased from £217.6 million to £288.0 million. 

With the monetisation of the warehouses in the UK and US during the year, the Group now holds £224.0 million of cash, of which £24.6 million is restricted in use, principally as it is held within the securitisation SPVs. Additionally the Group has £70 million of net equity in the remaining investment vehicles. The following table sets out the split of the Group's net equity:

Our investment in the securitisation SPVs is split between two types:

i)     The vertical tranches where we are required by regulation to retain a 5% equal participation in all classes of bonds issued. These have continued to pay down and are now valued at £6 million (2020: £12 million).

ii)    The horizontal tranches - once loans are securitised, we held the residual horizontal tranches with the intention to sell once seasoned. These tranches have the potential to earn the greatest returns, but they also absorb losses first. As the loans are valued at fair value using discounted cash flow forecasts, improved economic assumptions have increased the value of the horizontals and they are now valued at £16 million (2020: £4 million).

As part of our participation in the CBILS and RLS programmes we are required to co-invest c.1% alongside institutional investors. As the underlying SME loans are 80% guaranteed our exposure is limited. The growth in these investments has been driven by the strong originations during the year.

Cash flow

The Group had strong cash generation during 2021 with the cash position at 31 December 2021 at £224.0 million (2020: £103.3 million), with unrestricted cash of £199.4 million (2020: £59.1 million). This was driven by strong operational performance and cash generation from the investment vehicles, as well as monetisation of both the UK and US warehouses.

Free cash flow which 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.

Free cash flow has principally improved due to cash flows from operating and investment income with costs down year-on-year, together with the working capital benefit of receiving net £27 million of fees due at 31 December 2020 which were subsequently received in February 2021.

In addition to the paydown of investments in both the warehouses and securitisation vehicles and the subsequent sale of the loans in the UK and US warehouses, the Group's investment in associates has also reduced as capital has been paid back to investors, including Funding Circle. As with the previous year, the Group continued to co-invest in the CBILS loans and subsequently the RLS loans at c.1%.

Statement of Director's responsibilities

The Funding Circle Report and Accounts for year end 31 December 2021 contains a responsibility statement in the following form:

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:

·      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

·      the Strategic report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that they face.

In the case of each Director in office at the date the Directors' report is approved:

·      so far as the Director is aware, there is no relevant audit information of which the Group's and Company's auditors are unaware; and

·      they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Group's and Company's auditors are aware of that information.

By order of the Board

Lisa Jacobs, Chief Executive Officer

Oliver White, Chief Financial Officer

10 March 2022

Consolidated statement of comprehensive income

for the year ended 31 December 2021

1.      Exceptional items are detailed within note 4.

All amounts relate to continuing activities.

Consolidated balance sheet

as at 31 December 2021

¹See note 1.

Consolidated statement of changes in equity

for the year ended 31 December 2021