FOR IMMEDIATE RELEASE                                                                                                                                                   18 May 2026

 

 

Manx Financial Group PLC (the 'Group')

Report and accounts for the year ended 31 December 2025

Manx Financial Group PLC (LSE: MFX), the financial services group which includes Conister Bank Limited, Conister Finance & Leasing Ltd, Payment Assist Limited, Blue Star Business Solutions Limited, Edgewater Associates Limited and MFX Limited presents its audited final results for the year ended 31 December 2025.

Jim Mellon, Executive Chair, commented: "Net interest income increased by 14.3% to £37.5 million (2024: £32.8 million), reflecting both balance sheet growth and an improved funding mix".

 

Financial highlights

·      net assets increased by 16.7% to £43.6 million (2024: £37.3 million). These increases reflect the continuing strength of the Group's financial position.

·      reported profit before tax decreased to £7.3 million (2024: £9.9 million) reflecting a weaker contribution from The Business Lending Exchange Limited together with the impact of non-recurring provisions

·      normalised profit before tax increased to £8.6 million (2024: £8.3 million)

·      basic earnings per share was 5.33 pence (2024: 6.87 pence) and normalised basic earnings per share increased by 10% to 6.28 pence (2024: 5.70 pence)

·      net assets per share rose to 35.4p (2024:31.1p) and tangible net assets per share increased to 22.2p (2024: 17.9p)

·      return on equity was 15.8% (2024: 22.4%) and normalised return on equity was maintained at 18.6% (2024: 18.6%)

·      normalised return on tangible equity remained high at 30.9% (2024: 32.4%)

·      total capital ratio of 15.8% (2024: 17.0%), safely above its regulatory minimum, reflecting growth in risk weighted assets

 

Strategic highlights

 

·      the Board remains focused on disciplined execution and remains well placed to capture attractive opportunities while continuing to manage the business prudently and efficiently

·      the Conister Overdraft remains in user acceptance testing ahead of an anticipated launch later in 2026

·      the Group submitted an Irish consumer credit licence application. A decision from the Central Bank of Ireland is anticipated by late summer 2026

 

The 2025 Audited Annual Report and Accounts will be posted to Shareholders and will be available from the Company's website www.mfg.im shortly. Details concerning the 2026 Annual General Meeting will be announced in due course.

Douglas Grant, Group Chief Executive Officer, and James Smeed, Group Finance Director, will host a live presentation for retail investors relating to the FY25 Results via Investor Meet Company on Wednesday 20 May 2026 at 10.00 a.m. UK time.

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9.00 a.m. on Tuesday 19 May 2026 or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and register to meet Manx Financial Group PLC via: https://www.investormeetcompany.com/manx-financial-group-plc/register-investor

Investors who already follow Manx Financial Group PLC on the Investor Meet Company platform will automatically be invited.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU No. 596/2014) AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

For further information, please contact:

Manx Financial Group PLC	Beaumont Cornish Limited	Shore Capital	Tavistock Communications Limited
Denham Eke	Roland Cornish/ James Biddle	Tony Gibbs/ Oliver Jackson	Simon Hudson/ Adam Baynes
Tel: +44 (0) 1624 694694	Tel: +44 (0) 20 7628 3396	Tel: +44 (0) 20 7408 4090	Tel: +44 (0) 20 7920 3150 [email protected]

 

About Manx Financial

Manx Financial Group (AIM: MFX) is a diversified UK banking and financial services group with a proud Manx heritage. The Group holds Isle of Man and UK banking licences, allowing it to provide flexible funding solutions across both territories focused on SME lending. Knowledge of the SME sector has enabled MFX to build a portfolio of valuable subsidiaries, from start-ups to selective and accretive acquisitions, which are creating significant value for shareholders. These entrepreneurial subsidiaries are grouped under our entrepreneurial subsidiary Manx Ventures Limited.

Nominated Adviser

Beaumont Cornish Limited ("Beaumont Cornish") is the Company's Nominated Adviser and is authorised and regulated by the FCA. Beaumont Cornish's responsibilities as the Company's Nominated Adviser, including a responsibility to advise and guide the Company on its responsibilities under the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed solely to the London Stock Exchange. Beaumont Cornish is not acting for and will not be responsible to any other persons for providing protections afforded to customers of Beaumont Cornish nor for advising them in relation to the proposed arrangements described in this announcement or any matter referred to in it.

 

Chair's Statement

Introduction

2025 was yet another year of steady strategic and operational progress for the Group, notwithstanding a still challenging external environment. Whilst our reported results in the current and prior year reflect the effect of certain non-recuring and accounting items, the Board remains encouraged by the Group's underlying performance and prospects. Our principal subsidiaries continued to perform well, our robust balance sheet strengthened still further, and we maintained positive momentum in the development of the business.

 

The Isle of Man and UK economies have remained more resilient than many anticipated, despite continued inflationary pressures and wider geopolitical and macroeconomic uncertainty. Against this backdrop, demand for short-term funding solutions from both consumers and SMEs, our core markets, has remained robust. We also continue to see evidence that these segments are underserved following the retreat of a number of UK banks from short-term lending, creating a meaningful opportunity for the Group which we are well placed to address.

 

Results

Reported profit before tax for 2025 decreased to £7.3 million (2024: £9.9 million). This primarily reflected a weaker contribution from The Business Lending Exchange Limited ("BLX"), together with two non-recurring items: a £1.3 million provision in connection with the Financial Conduct Authority's Discretionary Commission Arrangement review concerning the sale of legacy UK car loans (bringing the total provision to £1.5 million), and a £1.8 million provision release in 2024 relating to Payment Assist Limited following an enhancement to expected credit loss modelling and arrears management actions, which benefited the prior year comparator. Excluding these two latter items, but including the weaker BLX performance, normalised profit before tax increased to £8.6 million (2024: £8.3 million), representing like-for-like growth of approximately 3.6% and demonstrating the Group's underlying resilience.

 

Total assets at the year-end increased by 12.8% to £561.3 million (2024: £497.8 million), while the Group's well-diversified, largely secured net loan book grew by 9.5% to £407.9 million (2024: £372.4 million). Net assets increased by 16.7% to £43.6 million (2024: £37.3 million). These increases reflect the continuing strength of the Group's financial position. Further detail on financial performance is set out in the CEO's Review below.

 

Dividend

The Group's dividend policy is to pay an annual dividend equivalent to 10% of profit attributable to the shareholders of the Company and, in respect of 2025 (payable in 2026), the Board has maintained that policy. Accordingly, the Board is proposing a basic dividend for 2025 of £639,000 (2024: £810,000), representing 0.5197 pence per share. This reflects the Board's confidence in the Group's cash generation, capital position and long-term earnings outlook. Shareholders will again have the option to receive their entitlement in cash or in scrip. In addition, following consultation with shareholders, we are proposing an additional bonus distribution of 5% on the same qualifying basis, payable in shares only. Taken together, this represents a total dividend of 15% of profit attributable to shareholders at 0.7796 pence per share. The dividend will be payable on 20 August 2026 to shareholders on the register at the close of business on 10 July  2026.

 

Strategic objectives

The Group's strategic objectives remain unchanged. In an environment shaped by continuing inflationary pressures, a more prolonged higher interest-rate backdrop and broader economic uncertainty, the Board remains focused on disciplined execution. We will continue to:

 

·      provide the highest quality of service throughout our operations to all customers, ensuring that their treatment is both fair and appropriate;

·      adopt a pro-active strategy to managing risk, including credit and climate risk, within a structured and compliant manner;

·      concentrate on developing our core business by considered acquisitions, increasing prudential lending, and augmenting the range of financial services we offer;

·      prudently progress the implementation of our IT infrastructure to better service the operational requirements of a growing Group without the requirement for a disproportionate increase in headcount and other associated operational costs;

·      continue to develop our treasury management to improve the return on the liability side of our balance sheet; and

·      manage our balance sheet to exceed the regulatory requirements for capital adequacy.

 

The Board believes that delivery against these objectives will support further growth in shareholder value, strengthen cash generation for reinvestment in new products and services and underpin returns to shareholders. Further details are set out in the Corporate Governance Report, together with our approach to the Quoted Companies Alliance ("QCA) Corporate Governance Code.

 

Environmental, Social and Governance

The Board believes that ESG considerations are integral to the delivery of sustainable long-term value, effective risk management and the resilience of the Group. Our approach is proportionate to our scale as an AIM-listed financial services business and is focused on clear governance, responsible business practices and positive outcomes for customers, colleagues and the communities in which we operate.

 

The Board retains ultimate responsibility for ESG and climate-related matters, supported by the Group Audit, Risk and Compliance Committee within the Group's established risk management framework. This approach is aligned with the Quoted Companies Alliance ("QCA") Corporate Governance Code and applies across the Group's lending, wealth management and leasing operations. Further details are provided in the Environmental, Social and Governance Report.

 

Board changes

In March this year, I was pleased to welcome Jennifer Quirke to the Group Board as a non-executive director. Jennifer is currently Chair of the Audit Committee of Vernon Building Society, a role from which she will retire later this year and also serves as Chair and non-executive director of the Mersey Gateway Crossings Board. She is a Fellow of the Chartered Institute of Management Accountants ("CIMA") and will chair the Group Audit, Risk and Compliance Committee. Jennifer succeeds Alan Clarke, who retired last year after 18 years of service. I am also pleased to welcome Tanya Beckett and Bill Shimmins to the board of Conister Bank Limited.

 

Outlook

The economic backdrop in the Isle of Man and the UK remains uncertain, with inflationary pressures and the prospect of interest rates remaining higher for longer continuing to affect household and business budgets. At the same time, these conditions are creating opportunities for the Group to support customers through both our existing and new short-term financing products. The wider business environment will also continue to be influenced by government policy and the pace at which announced measures are implemented.

 

Against this backdrop, the Group remains well placed to capture attractive opportunities while continuing to manage the business prudently and efficiently. My executive colleagues and I look forward to continued engagement with existing and prospective shareholders as we further raise the profile of the Group.

 

In closing, I would like to thank my colleagues on the Board and all our staff in the Isle of Man and the UK for their continued hard work and commitment. Their contribution has been central to the Group's progress during the year.

 

 

 

Jim Mellon

Executive Chair

15 May 2026

 

Chief Executive Officer's review

As noted in the Chair's statement, cost of living pressures remained evident throughout 2025 and continued to influence demand across both retail and corporate markets. At the same time, the availability of short-term finance from traditional banking providers remained constrained. More recently, geopolitical developments in the Middle East have contributed to renewed inflationary pressure and increased the prospect of interest rates remaining elevated for longer. Despite this, our operating income continued to grow.

 

Against this backdrop, the Group continued to operate in a relatively challenging environment while benefiting from sustained demand for short-term credit solutions from individuals and small and medium-sized enterprises ("SMEs").

 

The Group operates a diversified portfolio of subsidiaries across banking, asset finance, point-of-sale lending, wealth management, foreign exchange and leasing. This breadth of activity reduces concentration risk and provides multiple drivers of income and medium-term growth.

 

The following sections review the Group's performance in 2025, and the contribution made by its principal businesses in supporting SMEs and individual customers through the provision of finance for everyday purchases, insurance premiums and broader cash flow requirements.

 

Financial review

 

Key metrics

 

Metric	2025 Actual £'m	2024 Actual £'m
Net interest income	£37.5	£32.8
Profit before tax payable	£7.3	£9.9
Total comprehensive income attributable to owners	£6.6	£7.8
Basic earnings per share	5.33 pence	6.87 pence
Tangible net assets per share	22.2 pence	17.9 pence
Return on equity	15.8%	22.4%
Normalised return on tangible equity	30.9%	32.4%
Net loan book	£407.9	£372.4
Total capital ratio	15.8%	17.0%
Liquidity ratio	27.0%	24.0%
Dividend per share	0.7796 pence	0.6768 pence

 

In addition to reported results, management also reviews performance on a normalised trading basis. For 2025, this includes adjusting for the £1.3 million exceptional provision relating to certain UK vehicle commissions paid between 2007 and 2024, which is discussed further later in this report. In 2024, the Group benefited from a £1.8 million release of Payment Assist Limited provisions following an enhancement to expected credit loss modelling and arrears management actions.

 

On a reported basis, the Group delivered the largest balance sheet in its history, record net interest income, an improved funding cost profile and a strong liquidity position. As noted in the Chair's statement, the Board has proposed an increased dividend. The reduction in reported profit before tax principally reflected two non-recurring items. Excluding these items, underlying performance remained in line with the Group's strategic priorities.

 

In addition to reported results, management reviews performance on a normalised trading basis. For 2025, this includes adjusting for the £1.3 million (2024: £0.2 million) exceptional provision relating to certain UK vehicle commissions paid between 2007 and 2024, which is discussed further later in this report. In 2024, the Group benefited from a £1.8 million release of Payment Assist Limited provisions following an enhancement to expected credit loss modelling and arrears management actions. At present, we do not expect further UK Discretionary Commission Arrangement motor related provisioning.

 

Operating income increased by £2.9 million to £37.3 million (2024: £34.4 million). Profit before tax, excluding the impact of non-recurring provisions in 2024 and 2025, was £8.6 million (2024: £8.3 million). On the same basis, earnings per share increased by 10% to 6.28 pence and return on equity remained at 18.6%. The return on tangible equity on this basis was 30.9%. The Group's total capital ratio and liquidity ratio remained within management's risk appetite at 15.8% and 27.0% respectively.

 

Total assets increased by 12.8% to £561.3 million (2024: £497.8 million), reflecting disciplined growth across the Group's core lending categories. The net loan book increased by 9.5% to £407.9 million (2024: £372.4 million), driven principally by growth in unsecured personal lending and block discounting, while remaining well diversified and predominantly secured. Customer deposits increased by 11.7% to £452.5 million (2024: £405.2 million), reflecting the continued strength of the Group's retail funding franchise in both the Isle of Man and the UK.

 

Net interest income increased by 14.3% to £37.5 million (2024: £32.8 million), reflecting both balance sheet growth and an improved funding mix. Despite an increase of £47.3 million in customer deposits, total interest expense decreased by £1.7 million, from £23.1 million to £21.4 million, as the average cost of retail deposits reduced from 5.0% in 2024 to 4.1% in 2025. Asset yields were maintained and net interest margin increased to 9.6% (2024: 8.9%).

 

The cumulative UK Discretionary Commission Arrangements provision at the year-end was £1.5 million. Based on management's assessment, and having regard to the FCA's announced redress scheme, the provision is considered appropriate. The incremental charge recognised in 2025 was £1.3 million (2024: £0.2 million) and management currently expects 2025 to represent the peak year of provisioning.

 

Conister Bank Limited

Gross loans, net of deferred income and before the provisions referred to above, increased by 11.7% to £420.3 million (2024: £376.4 million). Customer deposits increased by 11.7% to £452.5 million (2024: £405.2 million). These movements further strengthened liquidity and the loan-to-deposit ratio remained broadly stable at 90.1%.

 

As announced in February 2026, following the FCA's overdraft reforms introduced in 2020, an estimated 16.5 million individuals have lost access to unarranged overdrafts, with a further 6 to 8 million losing arranged facilities since 2022. These reforms, which introduced a single interest rate and prohibited fixed fees, have reduced overdraft availability across a number of banks for both consumers and SMEs. The Group continues to respond to this market need through a range of products, including the Conister Overdraft being developed in partnership with Fiinu plc.

 

The Conister Overdraft is intended to allow customers to access the facility without switching banks. Following regulatory approval in December 2025, the product remains in user acceptance testing ahead of an anticipated launch later in 2026. The initial launch is expected to target Payment Assist Limited's customer base of more than 1.3 million customers.

 

At 31 December 2025, the Bank's total capital ratio was 15.8% (2024: 17.0%), very safely above its regulatory minimum. The reduction reflected growth in risk-weighted assets arising from planned loan book expansion. The Tier 1 capital ratio was 11.7% against a minimum requirement of 8.5%. The Bank's liquidity ratio decreased to 21.1% (2024: 22.5%) and remained comfortably above the regulatory minimum of 10%. Total liquidity reserves were £95.5 million (2024: £91.1 million).

 

Payment Assist Limited

Payment Assist Limited ("PAL"), the Group's buy-now-pay-later subsidiary, delivered growth in 2025, with annual advances increasing by £49.2 million to £219.7 million (2024: £170.5 million). As previously announced in February 2026, PAL invested in new collections software, which became fully operational in April 2026. The Group continues to support PAL in arranging additional liquidity facilities and implementing further automation to improve efficiency, support profitability and enable future scale.

 

PAL notes the planned introduction of FCA regulation for the buy-now-pay-later ("BNPL") sector, which is expected to commence in July 2026. The business has continued its readiness programme in anticipation of the enhanced regulatory framework.

 

The Group has submitted an Irish consumer credit licence application, initially focused on the automotive sector. A decision from the Central Bank of Ireland ("CBI") is anticipated by late summer 2026. Subject to the outcome of the application and any further regulatory approvals that may be required, this may provide the Group with a route into additional EU markets without significant upfront balance sheet deployment.

 

Edgewater Associates Limited

The Group's Isle of Man-based wealth management business performed resiliently during the year, with assets under advisement increasing by 3% to £334 million (2024: £325 million). The business remains an important component of the Group's diversification strategy, complementing its deposit, lending, foreign exchange and general insurance activities on the Island.

 

The business remains sustainably profitable and continues to generate introductions across the wider Group.

 

Manx Ventures Limited

The Group's other lending subsidiaries continued to deliver organic growth within their respective niche markets, with the exception of The Business Lending Exchange Limited, which reported a loss of £0.3 million compared with a profit of £0.6 million in 2024. This business operates in the non-standard SME credit market and, in response to performance, the Group has tightened credit criteria and strengthened collections processes.

 

The Group's foreign exchange businesses delivered results in line with expectations in 2025. Management notes that volatility in the current economic environment has supported performance in the first quarter of 2026. CAM Wealth became a wholly owned subsidiary in January 2025, strengthening the Group's wealth management proposition and enhancing cross-referral opportunities. During the year, CAM Wealth also extended its FCA permissions to offer general insurance products in the UK and has commenced offering these products to customers across the wider Group.

 

In addition to PAL, the Group holds a 30% shareholding in another Buy Now Pay Later business, PayitMonthly Limited. PayitMonthly provides a flexible finance platform to businesses ranging from independent operators to national brands, enabling them to offer customers the option to pay by instalments. The business has signed approximately 10,000 UK businesses to its platform.

 

The Board continues to evaluate strategic options in respect of the subsidiaries and investments held within Manx Ventures Limited, with the objective of realising value over time and enhancing shareholder returns. These options may include partial or full disposals, joint ventures and, for more mature businesses, potential initial public offerings, subject to market conditions. The Group will provide further updates as appropriate.

 

Investor relations

During the year, the Group continued to develop its investor relations activity and engaged with shareholders through a number of investor events. In April 2026, the Group attended a ShareSoc event in Leeds and also made its annual appearance at the Master Investor Show.

 

The Group is hosting an Investor Meet Company presentation in connection with the publication of these results. It intends to continue broadening engagement with existing and prospective shareholders, together with relevant wealth management and small-cap institutional investor audiences.

 

Outlook

The macroeconomic environment remains a little fragile, with inflationary pressures and interest rates expected to remain elevated for longer than previously anticipated as geopolitical developments continue to affect financial markets. Nonetheless, the Manx and UK economies seem pretty robust in the face of adverse international backdrops. Against this backdrop, the Group remains focused on providing flexible, short-term funding solutions in underserved markets across the UK and Isle of Man and on delivering those products efficiently in order to support margin progression.

 

The Group intends to broaden its portfolio of financing products through organic development and selective acquisitions. Management believes that current market conditions may present opportunities for value-accretive transactions. The Group also looks forward to entering the Irish consumer credit market subject to the outcome of its licence application.

 

MFG remains well positioned to deliver continued organic growth and to pursue further opportunities as they arise. I look forward to updating shareholders further on the Group's progress during 2026.

 

 

Douglas Grant

Group CEO

15 May 2026

Consolidated Statement of Profit or Loss and Other Comprehensive Income

		2025	2024
For the year ended 31 December	Notes	£000	£000
Interest revenue calculated using the effective interest method		58,906	55,930
Interest expense		(21,411)	(23,139)
Net interest income	9	37,495	32,791
Fee and commission income	10	4,002	3,923
Fee and commission expense	10	(6,795)	(7,181)
Net trading income		34,702	29,533
Other operating income		41	585
Gain on financial instruments	19	35	18
Realised gain on debt securities	18	2,561	4,266
Operating income		37,339	34,402
Personnel expenses	11	(13,373)	(12,495)
Other expenses	12	(11,856)	(9,053)
Provision for impairment on loans and advances to customers	13	(3,335)	(1,752)
Depreciation	22	(879)	(949)
Amortisation and impairment of intangibles	23	(647)	(340)
Share of profit of equity accounted investees, net of tax	30	87	119
Profit before tax payable	14	7,336	9,932
Income tax expense	15	(944)	(1,384)
Profit for the year		6,392	8,548

 

		2025	2024
For the year ended 31 December	Notes	£000	£000
Profit for the year		6,392	8,548
Other comprehensive income:
Items that will be reclassified to profit or loss
Unrealised gain/(loss) on debt securities	18	171	(395)
Related tax		(17)	40
Items that will never be reclassified to profit or loss
Actuarial gain on defined benefit pension scheme	28	57	67
Related tax		(6)	(7)
Other comprehensive income/(loss), net of tax		205	(295)
Total comprehensive income for the period attributable to owners		6,597	8,253
Profit attributable to:
Owners of the Company		6,390	8,102
Non-controlling interests	32	2	446
		6,392	8,548
Total comprehensive income attributable to:
Owners of the Company		6,594	7,807
Non-controlling interests	32	3	446
		6,597	8,253
Earnings per share - Profit for the year
Basic earnings per share (pence)	16	5.33	6.87
Diluted earnings per share (pence)	16	4.25	5.39
Earnings per share - Total comprehensive income for the year
Basic earnings per share (pence)	16	5.50	6.62
Diluted earnings per share (pence)	16	4.39	5.20

The Directors believe that all results derive from continuing activities.

Company Statement of Profit or Loss and Other Comprehensive Income

		2025	2024
For the year ended 31 December	Notes	£000	£000
Interest income calculated using the effective interest method		1,067	998
Interest expense		(147)	(89)
Dividend income		125	450
Other income		794	700
Operating income		1,839	2,059
Personnel expenses	11	(130)	(40)
Administration expenses		(198)	(74)
Depreciation expense	22	(119)	(128)
Amortisation expense	23	(264)	(2)
Profit before tax payable		1,128	1,815
Tax payable		-	-
Profit for the year		1,128	1,815
Total comprehensive income for the year		1,128	1,815

The Directors believe that all results derive from continuing activities.

Consolidated Statement of Financial Position

		2025	2024
As at 31 December	Notes	£000	£000
Assets
Cash and cash equivalents	17	24,310	16,199
Debt securities	18	84,912	79,140
Equity held at Fair Value Through Profit or Loss	33	188	154
Loans and advances to customers	20	407,872	372,358
Trade and other receivables	21	21,526	7,312
Property, plant and equipment	22	5,816	6,433
Intangible assets	23	5,049	5,301
Investment in associates	30	404	317
Pension asset	28	99	-
Goodwill	34	11,144	10,576
Total assets		561,320	497,790
Liabilities
Deposits from customers	24	452,461	405,166
Creditors and accrued charges	25	11,511	9,679
Contingent consideration	26	590	-
Loan notes	27	52,895	45,292
Pension liability	28	-	46
Deferred tax liability	15	308	294
Total liabilities		517,765	460,477
Equity
Called up share capital	29	19,932	19,626
Profit and loss account		23,594	17,632
Revaluation reserve	22	-	-
Non-controlling interest	32	29	55
Total equity		43,555	37,313
Total liabilities and equity		561,320	497,790

Company Statement of Financial Position

		2025	2024
As at 31 December	Notes	£000	£000
Assets
Cash and cash equivalents	17	7,774	718
Trade and other receivables	21	71	130
Amounts due from Group undertakings	35	15,088	14,421
Property, plant and equipment	22	665	87
Intangible assets	23	1,745	1,983
Investment in subsidiaries	31	31,097	31,097
Subordinated loans	35	14,228	14,228
Total assets		70,668	62,664
Liabilities
Creditors and accrued charges	25	1,007	1,603
Loan notes	27	52,895	45,292
Total liabilities		53,902	46,895
Equity
Called up share capital	29	19,932	19,626
Profit and loss account		(3,166)	(3,857)
Total equity		16,766	15,769
Total liabilities and equity		70,668	62,664

Consolidated and Company Statements of Changes in Equity

	Attributable to owners of the Company
		Profit			Non-
	Share	and loss	Revaluation		controlling	Total
	capital	account	reserve	Total	interests	equity
Group	£000	£000	£000	£000	£000	£000
Balance as at 1 January 2024	19,384	15,544	15	34,943	1,041	35,984
Profit for the year	-	8,102	-	8,102	446	8,548
Other comprehensive income	-	(295)	-	(295)	-	(295)
Transactions with owners
Dividends declared (see note 29)	-	(337)	-	(337)	(1,817)	(2,154)
Scrip dividend shares (see note 29)	193	(193)	-	-	-	-
Share options exercised (see note 29)	49	-	-	49	-	49
Share-based payment expense (see notes 16 and 29)	-	196	-	196	-	196
Revaluation loss	-	-	(15)	(15)	-	(15)
Acquisition of NCI net without change of control	-	(5,385)	-	(5,385)	385	(5,000)
Balance as at 31 December 2024	19,626	17,632	-	37,258	55	37,313
Profit for the year	-	6,390	-	6,390	2	6,392
Other comprehensive income	-	205	-	205	-	205
Transactions with owners
Dividend declared (see note 29)	-	(504)	-	(504)	-	(504)
Scrip dividend shares (see note 29)	306	(306)	-	-	-	-
Share-based payment expense	-	373	-	373	-	373
Acquisition of NCI net without change of control	-	(196)	-	(196)	(28)	(224)
Balance as at 31 December 2025	19,932	23,594	-	43,526	29	43,555

 

					Profit
				Share	and loss	Total
				capital	account	equity
Company				£000	£000	£000
Balance as at 1 January 2024				19,384	(5,338)	14,046
Profit for the year				-	1,815	1,815
Transactions with owners
Dividends declared (see note 29)				-	(337)	(337)
Scrip dividend shares (see note 29)				193	(193)	-
Share options exercised (see note 29)				49	-	49
Share-based payment expense (see notes 16 and 29)				-	196	196
Balance as at 31 December 2024				19,626	(3,857)	15,769
Profit for the year				-	1,128	1,128
Transaction with owners
Dividend declared (see note 29)				-	(504)	(504)
Scrip dividend shares (see note 29)				306	(306)	-
Share options exercised (see note 29)				-	-	-
Share-based payment expense (see notes 16 and 29)				-	373	373
Balance as at 31 December 2025				19,932	(3,166)	16,766

Consolidated Statement of Cash Flows

		2025	2024
For the year ended 31 December	Notes	£000	£000
Reconciliation of profit before taxation to operating cash flows
Profit before tax		7,336	9,932
Adjustments for:
Depreciation	22	879	949
Amortisation of intangibles	23	647	340
Impairment of loans and advances to customers	13	3,335	1,752
Net interest income		(37,495)	(35,614)
Realised gains on debt securities		(2,561)	(4,266)
RSU expense taken to reserves		373	196
Share of profit of Equity Accounted Investees		(87)	(119)
Lease interest		191	132
Pension charge included in personnel expenses	28	1	8
Gain on financial instruments	19	(35)	(18)
		(27,416)	(26,708)
Changes in:
Trade and other receivables	21	(14,217)	915
Creditors and accrued charges	25	1,680	(5,628)
Net cash flow from trading activities		(39,953)	(31,421)
Changes in:
Loans and advances to customers	20	(42,856)	(13,691)
Deposits from customers	24	45,855	16,818
Pension contribution	28	(85)	(57)
Cash used in operating activities		(37,039)	(28,351)

 

		2025	2024
For the year ended 31 December	Notes	£000	£000
CASH FLOW STATEMENT
Cash from operating activities
Cash used in operating activities		(37,039)	(28,351)
Interest received		62,915	58,164
Interest paid		(19,971)	(22,389)
Income taxes paid		(582)	(1,095)
Net cash from operating activities		5,323	6,329
Cash flows from investing activities
Acquisition of property, plant and equipment	22	(844)	(228)
Sale proceeds from disposal of property, plant and equipment	22	582	-
Acquisition of intangible assets	23	(421)	(1,373)
Sale proceeds from disposal of intangible assets	23	26	-
Acquisition of a subsidiary net of cash acquired	26	(129)	-
Purchase of debt securities		(3,040)	(860)
Settlement of contingent consideration on acquisition of subsidiary	6(ii),26	-	(20)
Net cash used in investing activities		(3,826)	(2,481)
Cash flows from financing activities
Receipt of loan notes	27	7,603	5,975
Acquisition of non-controlling interest	32	(206)	(5,000)
Payment of lease liabilities	37	(279)	(443)
Dividend paid	29	(504)	(337)
Proceeds from issue of share	29	-	49
Net cash from financing activities		6,614	244
Net increase / (decrease) in cash and cash equivalents		8,111	4,092
Cash and cash equivalents at 1 January		16,199	12,107
Cash and cash equivalents at 31 December		24,310	16,199

Company Statement of Cash Flows

		2025	2024
For the year ended 31 December	Notes	£000	£000
Reconciliation of profit before taxation to operating cash flows
Profit before tax		1,128	1,815
Adjustments for:
Depreciation	22	119	128
Amortisation	23	264	2
Interest income		(1,069)	(998)
RSU expense taken to reserves		373	196
Dividend income		(125)	(450)
		690	693
Changes in:
Amounts due from group undertakings	35	(667)	(3,727)
Trade and other receivables	21	59	(7)
Creditors and accrued charges	25	(444)	1,206
Amounts due to Group undertakings		-	(608)
Cash used in operating activities		(362)	(2,443)
CASH FLOW STATEMENT
Cash from operating activities
Cash used in operating activities		(362)	(2,443)
Interest received		1,069	998
Dividends received		125	450
Net cash from / (used in) operating activities		832	(995)
Cash flows from investing activities
Acquisition of property, plant and equipment	22	(697)	(76)
Acquisition of intangible assets	23	(26)	(1,123)
Investment in group undertakings		-	(3,000)
Net cash used in investing activities		(723)	(4,199)
Cash flows from financing activities
Proceeds from issue of loan notes	27	7,603	5,975
Payment of finance lease liabilities	37	(152)	(148)
Proceeds from issue of shares	29	-	49
Dividend paid	29	(504)	(337)
Net cash from financing activities		6,947	5,539
Net increase in cash and cash equivalents		7,056	345
Cash and cash equivalents at 1 January		718	373
Cash and cash equivalents at 31 December		7,774	718

Notes to the Consolidated and Company Financial Statements

For the year ended 31 December 2025

1. Reporting entity

Manx Financial Group PLC ("Company") is a company incorporated in the Isle of Man. The Company's registered office is at Clarendon House, Victoria Street, Douglas, Isle of Man, IM1 2LN. The consolidated financial statements of the Company for the year ended 31 December 2025 comprise the Company and its subsidiaries ("Group") including Conister Bank Limited (the "Bank"). The Group is primarily involved in the provision of financial services.

The Company's financial statements are the separate financial statements of the Company.

2. Basis of accounting

The consolidated and the separate financial statements of the Company have been prepared in accordance with international accounting standards in accordance with UK-adopted international accounting standards ("UK-adopted IFRS" or "IFRSs"), on a going concern basis as disclosed in the Directors' Report.

3. Functional and presentation currency

These financial statements are presented in pounds sterling, which is the Company's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated. All subsidiaries of the Group have pounds sterling as their functional currency.

4. Use of judgements and estimates

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties at year-end that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following notes:

§  Note 45(G)(vi) and Note 7(A) - key assumptions of Expected Credit Loss ("ECL") allowance for loans and advances to customers and assessment of impairment allowances where loans are in default or arrears.

5. Financial instruments - Classification

For description of how the Group classifies financial assets and liabilities, see note 45(G)(ii).

The following table provides reconciliation between line items in the statement of financial position and categories of financial instruments.

		FVOCI -		Total
	Measured	debt	Amortised	carrying
Group	at FVTPL	instruments	cost	amount
31 December 2025	£000	£000	£000	£000
Cash and cash equivalents	-	-	24,310	24,310
Debt securities	-	84,912	-	84,912
Equity held at Fair Value Through Profit or Loss	188	-	-	188
Loans and advances to customers	-	-	407,872	407,872
Trade and other receivables	-	-	21,526	21,526
Total financial assets	188	84,912	453,708	538,808
Deposits from customers	-	-	452,461	452,461
Creditor and accrued charges	-	-	11,511	11,511
Contingent consideration	590	-	-	590
Loan notes	-	-	52,895	52,895
Total financial liabilities	590	-	516,867	517,457

 

		FVOCI -		Total
	Designated	debt	Amortised	carrying
Group	as at FVTPL	instruments	cost	amount
31 December 2024	£000	£000	£000	£000
Cash and cash equivalents	-	-	16,199	16,199
Debt securities	-	79,140	-	79,140
Equity held at Fair Value Through Profit or Loss	154	-	-	154
Loans and advances to customers	-	-	372,358	372,358
Trade and other receivables	-	-	7,312	7,312
Total financial assets	154	79,140	395,869	475,163
Deposits from customers	-	-	405,166	405,166
Creditor and accrued charges	-	-	9,679	9,679
Loan notes	-	-	45,292	45,292
Total financial liabilities	-	-	460,137	460,137

At 31 December 2025 and 31 December 2024, all financial instruments, being cash and cash equivalents, trade and other receivables, amounts due from Group undertakings, investment in subsidiaries and subordinated loans were carried at amortised cost in the separate financial statements.

6. Financial instruments - Fair values

For description of the Group's fair value measurement accounting policy, see note 44(G)(v).

The following table shows the carrying amounts and fair values of Group financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

	Carrying amount		Fair value
	Total	Level 1	Level 2	Level 3	Total
31 December 2025	£000	£000	£000	£000	£000
Financial assets measured at fair value
Debt securities	84,912	-	84,912	-	84,912
Equity held at Fair Value Through Profit or Loss	188	-	-	188	188
	85,100	-	84,912	188	85,100
Financial liabilities measured at fair value
Contingent consideration	590	-	-	590	590
	590	-	-	590	590

 

	Carrying amount		Fair value
	Total	Level 1	Level 2	Level 3	Total
31 December 2024	£000	£000	£000	£000	£000
Financial assets measured at fair value
Debt securities	79,140	-	79,140	-	79,140
Equity held at Fair Value Through Profit or Loss	154	-	-	154	154
	79,294	-	79,140	154	79,294
Financial liabilities measured at fair value
Contingent consideration	-	-	-	-	-
	-	-	-	-	-

All Company financial assets and liabilities carrying amounts are a reasonable approximation of their fair value.

Measurement of fair values

i. Valuation techniques and significant unobservable inputs

Type	Valuation technique	Significant unobservable inputs	Inter-relationship between significant unobservable inputs and fair value measurement
Debt securities	Market comparison / discounted cash flow: The fair value is estimated considering a net present value calculated using discount rates derived from quoted yields of securities with similar maturity and credit rating that are traded in active markets.	Not applicable.	Not applicable.
Equities at Fair Value Through Profit or Loss	Net asset value	Expected net cash flows derived from the entity	The estimated fair value would increase (decrease) if the expected cash flows were higher (lower).
Contingent consideration	Discounted cash flows	Expected cash net flows derived from the entity, discount rates	The estimated fair value would increase (decrease) if forecast earnings or revenue were higher (lower).

ii. Level 3 recurring fair values

Reconciliation of Level 3 fair values

The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.

	2025	2024
	£000	£000
Balance at 1 January	154	158
Acquisition of a subsidiary	568	-
Finance costs	22	-
Net change in fair value (unrealised)	34	16
	624	174
Payment (note 26)	-	(20)
Balance at 31 December	778	154

Sensitivity analysis

For the fair value of contingent consideration, reasonably possible changes at the reporting date to one of the significant unobservable inputs, holding other inputs constant would have the following effects.

	Profit or loss
	Increase	Decrease
31 December 2025	£000	£000
Expected cash flows (10.0% movement)	59	59
Risk-adjusted discount rate (1.0% movement)	7	7

 

	Profit or loss
	Increase	Decrease
31 December 2024	£000	£000
Expected cash flows (10.0% movement)	-	-
Risk-adjusted discount rate (1.0% movement)	-	-

7. Financial risk review

Risk management

This note presents information about the Group's exposure to financial risks and the Group's management of capital. For information on the Group and Company's financial risk management framework, see note 43.

A. Group Credit risk

For definition of credit risk and information on how credit risk is mitigated by the Group, see note 43.

i. Credit quality analysis

Loans and advances to customers

Explanation of the terms 'Stage 1', 'Stage 2' and 'Stage 3' is included in note 44(G)(vi).

An analysis of the credit risk on loans and advances to customers is as follows:

		2025				2024
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
Group	£000	£000	£000	£000	£000	£000	£000	£000
Grade A	366,957	-	-	366,957	327,561	3,968	-	331,529
Grade B	-	9,094	-	9,094	-	19,836	5,932	25,768
Grade C	-	-	54,713	54,713	-	5	35,268	35,273
Gross value	366,957	9,094	54,713	430,764	327,561	23,809	41,200	392,570
Allowance for impairment	(2,216)	(213)	(20,463)	(22,892)	(688)	(36)	(19,488)	(20,212)
Carrying value	364,741	8,881	34,250	407,872	326,873	23,773	21,712	372,358

Loans are graded A to C depending on the level of risk. Grade A relates to agreements with the lowest risk, Grade B with medium risk and Grade C relates to agreements with the highest of risk.

The following table sets out information about the overdue status of loans and advances to customers in Stage 1, 2 and 3:

		2025				2024
Group	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
31 December	£000	£000	£000	£000	£000	£000	£000	£000
Current	348,383	-	-	348,383	314,542	-	-	314,542
Overdue < 30 days	18,574	-	-	18,574	13,019	-	-	13,019
Overdue > 30 days	-	9,094	54,713	63,807	-	23,809	41,200	65,009
Gross value	366,957	9,094	54,713	430,764	327,561	23,809	41,200	392,570

For Stage 3 loans and advances that are overdue for more than 90 days, the Group holds collateral value of £9,470,000 (2024: £11,982,000) representing security cover of 60% (2024: 66%).

The contractual amount outstanding on financial assets that were written off during the reporting period and are still subject to enforcement activity are £nil (2024: £nil).

Debt securities, cash and cash equivalents

The following table sets out the credit quality of liquid assets:

Group	2025	2024
	£000	£000
Government bonds and treasury bills
Rated A to A+	84,912	79,140
Cash and cash equivalents
Rated A to A+	24,310	16,199
Trade and other receivables
Unrated	21,526	7,312
	130,748	102,651

The analysis has been based on Standard & Poor's ratings. The above debt securities, cash and cash equivalents and trade and other receivables are considered to be Stage 1 as there is no evidence of significant deterioration in credit quality and hence no material expected credit loss allowance is observed.

ii. Collateral and other credit enhancements

The Group holds collateral in the form of the underlying assets (typically private and commercial vehicles, plant and machinery) to loan arrangements as security for HP, finances leases, vehicle stocking plans, block discounting, wholesale funding arrangements, integrated wholesale funding arrangements and secured commercial loan balances, which are sub-categories of loans and advances to customers. In addition, the Group will take debentures, mortgages, personal and corporate guarantees, fixed and floating charges on specific assets such as cash and shares.

The terms of enforcing such security can only occur on default, and when realised can only be used to settle the amount of debt and related collection fees. On occasion the Bank may realise a surplus if the defaulting party loses title to the underlying security as part of enforcement. In addition, the commission share schemes have an element of capital indemnified.

As at 31 December 2025, 32.5% of loans and advances had an element of capital indemnification (2024: 28.7%). At the time of granting credit within the sub-categories listed above, the loan balances due are secured over the underlying assets held as collateral.

At the time of granting credit within the sub-categories listed above, the loan balances due are secured over the underlying assets held as collateral (see note 20 for further details). Collateral is valued at the time of borrowing, and is not individually valued at each reporting date but fair value groups of similar collateral are considered as part of the impairment testing model.

For portfolios where the Group has never had a default in its history or has robust credit enhancements such as credit insurance or default indemnities for the entire portfolio, then no IFRS 9 provision is made. At 2025 year-end, 32.8% had such credit enhancements (2024: 31.0%).

The following table sets out the principal types of collateral held against different types of financial assets.

Group	2025	2024
	%	%	Principal type of collateral held
HP balances	100	100	Property and equipment
Finance lease balances	100	100	Property and equipment
Unsecured personal loans	-	-	None
Vehicle stocking plans	100	100	Motor vehicles
Wholesale funding arrangements	100	100	Floating charges over corporate assets
Block discounting	100	100	Floating charges over corporate assets
Secured commercial loans	100	100	Floating charges over corporate assets
Secured personal loans	100	100	Property
Government backed loans	70 - 100	70 - 100	Government guarantee
Property secured	100	100	Property

There have been no significant changes in the quality of collateral as a result of a deterioration or changes to the Group's collateral policies during the reporting period.

iii. Amounts arising from ECL

Inputs, assumptions and techniques used for estimating impairment

See accounting policy in note 45(G)(vi).

Significant increase in credit risk

When determining whether the risk of default on a financial instrument has increased significantly since initial recognition, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and expert credit assessment and including forward looking information.

▪       A Significant Increase in Credit Risk ("SICR") is always deemed to occur when the borrower is 30 days past due on its contractual payments. If the Group becomes aware ahead of this time of non-compliance or financial difficulties of the borrower, such as loss of employment, avoiding contact with the Group then a SICR has also deemed to occur.

▪       A receivable is always deemed to be in default and credit-impaired when the borrower is 90 days past due on its contractual payments or earlier if the Group becomes aware of severe financial difficulties such as bankruptcy, individual voluntary arrangements, abscond or disappearance, fraudulent activity or other similar events.

Credit risk grades

The Group allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of default and applying experienced credit judgement. Credit risk grades are defined using qualitative and quantitative factors that are indicative of risk of default. These factors vary depending on the nature of the exposure and the type of borrower.

Credit risk grades are defined and calibrated such that the risk of default occurring increases exponentially as the credit risk grade deteriorates. Loans are graded A to C depending on the level of risk. Grade A relates to agreements with the lowest risk, Grade B with medium risk and Grade C relates to agreements with the highest risk.

Each exposure is allocated to a credit risk grade on initial recognition based on available information about the borrower. Exposures are subject to ongoing monitoring, which may result in an exposure being moved to a different credit risk grade. The monitoring typically involves the use of the following data:

Corporate exposures	Retail exposures	All exposures
Information obtained during periodic review of customer files - e.g. audited financial statements, management accounts, budgets and projections. Examples of areas of particular focus are: gross profit margins, financial leverage ratios, debt service coverage, compliance with covenants	Internally collected data on customer behaviour - e.g. repayment behaviour	Payment record - this includes overdue status as well as a range of variables about payment ratios
Data from credit reference agencies	Affordability matrix	Requests for and granting of forbearance
	External data from credit reference agencies, including industry-standard credit scores	Existing forecast changes in business, financial and economic conditions

Definition of default

The Group considers a financial asset to be in default when:

▪       the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held);

▪       the borrower is more than 90 days past due on any material credit obligation to the Group; or

▪       it is becoming probable that the borrower will restructure the asset as a result of bankruptcy due to the borrower's inability to pay its credit obligations.

In assessing whether a borrower is in default, the Group considers indicators that are:

▪       qualitative: e.g. breaches of covenant;

▪       quantitative: e.g. overdue status and non-payment by another obligation of the same Borrower to the Group; and

▪       based on data developed internally and obtained from external sources.

Inputs into the assessment of whether a financial instrument is in default and their significance may vary over time to reflect changes in circumstances. The definition of default largely aligns with that applied by the Group for regulatory capital purposes.

Incorporation of forward-looking information

The Group incorporates forward looking information into the measurement of ECL.

The Group has identified and documented key drivers of credit risk and credit losses within its financial instruments and using an analysis of historical data, has estimated the relationship between macroeconomic variables and credit risk and credit losses. The key drivers for credit risk for corporate, retail and wholesale portfolios include gross domestic product (GDP) growth, unemployment rates and interest rates. The Group estimates each key driver for credit risk over the active forecast period of three years. The table below lists the UK macroeconomic assumption used in the base scenarios over the three-year forecast period:

31 December 2025	2026	2027	2028
GDP growth rate	1.4	1.3	1.1
Interest rates	3.7	3.5	3.5
Unemployment rate	5.4	5.3	5.1

 

31 December 2024	2025	2026	2027
GDP growth rate	2.0	1.0	1.3
CPI inflation	4.2	2.4	1.8
Unemployment rate	4.8	4.9	4.9

Predicted relationships between the key indicators and default and loss rates on various portfolios of financial assets have been developed based on analysing historical data over the past 3 years.

Changes to ECL assumptions from the prior year

As of 31 December 2025, the Group has updated its economic projections utilised in the expected credit loss calculation, shifting from the 2024 figures. A key indicator - interest rates, has been added and was ultimately selected as a macroeconomic forward-looking adjustment instead of GDP which was used in prior year. This adjustment is prompted by a higher correlation between default rates and interest rates. These changes did not result in a material impact to the expected credit losses.

iv. Concentration of credit risk

Geographical

Lending is restricted to individuals and entities with Isle of Man and UK addresses.

Segmental

The Bank is exposed to credit risk with regard to customer loan accounts, comprising HP and finance lease balances, unsecured personal loans, secured commercial loans, block discounting, vehicle stocking plan loans and wholesale funding agreements. In addition, the Bank lends via significant introducers into the UK. There was one introducer that accounted for more than 5% of the Bank's total lending portfolio at the end of 31 December 2025 (2024: one). Advances to a single distribution partner under IWFA, WFA and block discounting is restricted to 25% of the Bank's Large Exposure Capital Buffer (LECB) in line with FSA direction.

B. Group Liquidity risk

For the definition of liquidity risk and information on how liquidity risk is managed by the Group, see note 43.

i. Exposure to liquidity risk

The key measure used by the Bank for managing liquidity risk is the ratio of net liquid assets to deposits from customers and short-term funding. The Group aims to maintain the ratio at no less than 13.7% compared to FSA requirement of not less than 10%. For this purpose, net liquid assets includes cash and cash equivalents and investment-grade debt securities for which there is an active and liquid market.

Details of the reported Group ratio of net liquid assets to deposits from customers at the reporting date and during the reporting year were as follows:

	2025	2024
At 31 December	27.0%	24.0%
Average for the year	22.0%	23.0%
Maximum for the year	27.0%	27.0%
Minimum for the year	19.0%	20.0%

ii. Maturity analysis for financial liabilities and financial assets

The table below shows the Group's financial liabilities classified by their earliest possible contractual maturity, on an undiscounted basis including interest due at the end of the deposit term. Based on historical data, the Group's expected actual cash flow from these items varies from this analysis due to the expected re-investment of maturing customer deposits.

Residual contractual maturities of financial liabilities as at the reporting date (undiscounted):

	Sight-	>8 days	>1 month	>3 months	>6 months	>1 year	>3 years
31 December 2025	8 days	- 1 month	- 3 months	- 6 months	- 1 year	- 3 years	- 5 years	>5 years	Total
	£000	£000	£000	£000	£000	£000	£000	£000	£000
Deposits	19,438	10,251	40,163	113,147	219,970	62,810	-	-	465,779
Other liabilities	5,127	715	2,920	8,443	24,736	21,079	7,455	308	70,783
Total liabilities	24,565	10,966	43,083	121,590	244,706	83,889	7,455	308	536,562

 

	Sight-	>8 days	>1 month	>3 months	>6 months	>1 year	>3 years
31 December 2024	8 days	- 1 month	- 3 months	- 6 months	- 1 year	- 3 years	- 5 years	>5 years	Total
	£000	£000	£000	£000	£000	£000	£000	£000	£000
Deposits	9,016	13,010	44,111	97,353	166,118	79,123	16,561	-	425,292
Other liabilities	71	204	8,073	4,246	13,657	24,402	9,719	340	60,712
Total liabilities	9,087	13,214	52,184	101,599	179,775	103,525	26,280	340	486,004

The table below shows the carrying amount of the Group's assets and liabilities by their expected maturities.

Expected maturity of assets and liabilities at the reporting date (discounted):

	Sight-	>8 days	>1 month	>3 months	>6 months	>1 year	>3 years
31 December 2025	8 days	- 1 month	- 3 months	- 6 months	- 1 year	- 3 years	- 5 years	>5 years	Total
	£000	£000	£000	£000	£000	£000	£000	£000	£000
Assets
Cash	24,310	-	-	-	-	-	-	-	24,310
Debt securities	2,000	7,984	24,835	41,384	-	1,532	6,165	1,012	84,912
Loans and advances	28,783	29,017	42,519	56,655	78,664	135,357	34,939	1,938	407,872
Other assets	188	-	-	-	23,612	-	3,730	16,696	44,226
Total assets	55,281	37,001	67,354	98,039	102,276	136,889	44,834	19,646	561,320
Liabilities
Deposits	19,040	9,173	37,366	109,664	216,426	60,792	-	-	452,461
Other liabilities	5,090	490	2,350	7,700	23,608	18,668	7,090	308	65,304
Total liabilities	24,130	9,663	39,716	117,364	240,034	79,460	7,090	308	517,765

 

	Sight-	>8 days	>1 month	>3 months	>6 months	>1 year	>3 years
31 December 2024	8 days	- 1 month	- 3 months	- 6 months	- 1 year	- 3 years	- 5 years	>5 years	Total
	£000	£000	£000	£000	£000	£000	£000	£000	£000
Assets
Cash	16,199	-	-	-	-	-	-	-	16,199
Debt securities	4,997	16,461	47,624	-	4,993	-	5,065	-	79,140
Loans and advances	21,559	35,642	45,541	48,415	57,042	125,667	37,316	1,176	372,358
Other assets	154	-	-	-	9,063	-	4,682	16,194	30,093
Total assets	42,909	52,103	93,165	48,415	71,098	125,667	47,063	17,370	497,790
Liabilities
Deposits	8,639	11,993	41,477	93,949	161,428	72,352	15,328	-	405,166
Other liabilities	-	-	7,600	3,597	12,427	22,002	9,345	340	55,311
Total liabilities	8,639	11,993	49,077	97,546	173,855	94,354	24,673	340	460,477

Company

All the Company's assets (excluding Investment in subsidiaries, Property, plant and equipment, Intangible assets, Investment in subsidiaries and Subordinated loans) are due within one year. The Subordinated loans are due in more than five years.

All the Company's creditors (excluding Loan notes) are due within one year. The maturity profile indicates that £29 million of loan notes are due within one year, £17 million within 3 years, £2 million within 4 years and £5 million within five years.

iii. Liquidity reserves

The following table sets out the components of the Group's liquidity reserves:

	2025	2025	2024	2024
	Carrying	Fair	Carrying	Fair
	amount	value	amount	value
	£000	£000	£000	£000
Balances with other banks	24,310	24,310	16,199	16,199
Unencumbered debt securities	84,912	84,912	79,140	79,140
Total liquidity reserves	109,222	109,222	95,339	95,339

C. Group Market risk

For the definition of market risk and information on how the Group manages the market risks of trading and non‑trading portfolios, see note 43.

The following table sets out the allocation of assets and liabilities subject to market risk between trading and non- trading portfolios:

		Market risk measure
	Carrying	Trading	Non-trading
31 December 2025	amount	portfolios	portfolios
	£000	£000	£000
Assets subject to market risk
Debt securities	84,912	-	84,912
Equity held at Fair Value Through Profit or Loss	188	-	188
Total	85,100	-	85,100

 

		Market risk measure
	Carrying	Trading	Non-trading
31 December 2024	amount	portfolios	portfolios
	£000	£000	£000
Assets subject to market risk
Debt securities	79,140	-	79,140
Equity held at Fair Value Through Profit or Loss	154	-	154
Total	79,294	-	79,294

i. Exposure to interest rate risk

The following tables present the interest rate mismatch position between assets and liabilities over the respective maturity dates. The maturity dates are presented on a worst-case basis, with assets being recorded at their latest maturity and deposits from customers at their earliest.

			>3 months	>6 months	>1 year	>3 years	>5 years £000	Non- Interest Bearing £000	Total £000
	Sight-	>1 month
	1 month	- 3 months	- 6 months	- 1 year	- 3 years	- 5 years
31 December 2025	£000	£000	£000	£000	£000	£000
Assets
Cash & cash equivalents	24,310	-	-	-	-	-	-	-	24,310
Debt securities	9,984	24,835	41,384	-	1,532	6,165	1,012	-	84,912
Loans and advances to customers	57,800	42,519	56,655	78,664	135,357	34,939	1,938	-	407,872
Other assets	-	-	-	-	-	-	-	44,226	44,226
Total assets	92,094	67,354	98,039	78,664	136,889	41,104	2,950	44,226	561,320
Liabilities
Deposits from customers	28,213	37,366	109,664	216,426	60,792	-	-	-	452,461
Other liabilities	5,580	2,350	7,700	14,300	18,668	7,090	308	9,308	65,304
Total liabilities	33,793	39,716	117,364	230,726	79,460	7,090	308	9,308	517,765
Interest rate sensitivity gap	58,301	27,638	(19,325)	(152,062)	57,429	34,014	2,642	34,918	43,555
Cumulative	58,301	85,939	66,614	(85,448)	(28,019)	5,995	8,637	43,555	43,555

 

								Non-
	Sight-	>1 month	>3 months	>6 months	>1 year	>3 years		Interest
31 December 2024	1 month	- 3 months	- 6 months	- 1 year	- 3 years	- 5 years	>5 years	Bearing	Total
	£000	£000	£000	£000	£000	£000	£000	£000	£000
Assets
Cash & cash equivalents	16,199	-	-	-	-	-	-	-	16,199
Debt securities	21,458	47,624	-	4,993	-	5,065	-	-	79,140
Loans and advances to customers	57,201	45,541	48,415	57,042	125,667	37,316	1,176	-	372,358
Other assets	-	-	-	-	-	-	-	30,093	30,093
Total assets	94,858	93,165	48,415	62,035	125,667	42,381	1,176	30,093	497,790
Liabilities
Deposits from customers	20,632	41,477	93,949	161,428	72,352	15,328	-	-	405,166
Other liabilities	-	7,600	3,597	4,540	22,002	9,345	46	8,181	55,311
Total liabilities	20,632	49,077	97,546	165,968	94,354	24,673	46	8,181	460,477
Interest rate sensitivity gap	74,226	44,088	(49,131)	(103,933)	31,313	17,708	1,130	21,912	37,313
Cumulative	74,226	118,314	69,183	(34,750)	(3,437)	14,271	15,401	37,313	37,313

The Bank monitors the impact of changes in interest rates on interest rate mismatch positions using a method consistent with the FSA required reporting standard. The methodology applies weightings to the net interest rate sensitivity gap in order to quantify the impact of an adverse change in interest rates of 2% per annum (2024: 2.0%). The following tables set out the estimated total impact of such a change based on the mismatch at the reporting date:

								Non-
	Sight-	>1 month	>3 months	>6 months	>1 year	>3 years		Interest
	1 month	- 3 months	- 6 months	- 1 year	- 3 years	- 5 years	>5 years	Bearing	Total
31 December 2025	£000	£000	£000	£000	£000	£000	£000	£000	£000
Interest rate sensitivity gap	58,301	27,638	(19,325)	(152,062)	57,429	34,014	2,642	34,918	43,555
Weighting	-	0.003	0.007	0.014	0.027	0.054	0.115	-	-
	-	83	(135)	(2,129)	1,551	1,837	304	-	1,511

 

								Non-
	Sight-	>1 month	>3 months	>6 months	>1 year	>3 years		Interest
31 December 2024	1 month	- 3 months	- 6 months	- 1 year	- 3 years	- 5 years	>5 years	Bearing	Total
	£000	£000	£000	£000	£000	£000	£000	£000	£000
Interest rate sensitivity gap	74,226	44,088	(49,131)	(103,933)	31,313	17,708	1,130	21,912	37,313
Weighting	-	0.003	0.007	0.014	0.027	0.054	0.115	-	-
	-	132	(344)	(1,455)	845	956	130	-	264

The interest rate profile of the Group's interest-bearing financial instruments as reported to the management of the Group is as follows;

	2025	2024
	£000	£000
Fixed-rate instruments
Financial assets	517,094	467,697
Financial liabilities	508,457	452,296
	8,637	15,401

The Group does not account for any fixed-rate financial assets or liabilities at FVTPL. A change of 1% in interest rates would have increased or decreased equity by £441,000 (2024: £306,000). This analysis assumes that all other variables remain constant.

D. Group Capital Management

i. Regulatory capital

MFG and its subsidiaries maintain sufficient capital stock to cover risks inherent in their principal operating activities. The lead regulator of the Group's wholly owned subsidiary, the Bank, is the FSA. The FSA sets and monitors capital requirements for the Bank. The Bank maintains a capital base to meet the capital adequacy requirements of the FSA. There have been no changes to its approach to capital management from the prior year.

The Bank's regulatory capital consists of the following elements.

▪       Common Equity Tier 1 ("CET1") capital, which includes ordinary share capital, retained earnings and reserves after adjustment for deductions for goodwill, intangible assets and intercompany receivable.

▪       Tier 2 capital, which includes collective impairment allowances up to the level set by the FSA, subordinated loan liabilities and gains on financial instruments carried at fair value.

The Bank's Tier 1 and Total Capital regulatory ratios stood at 11.7% (2024: 12.50%) and 15.80% (2024: 17.00%) respectively as at 31 December 2025. The Bank complied with all capital requirements externally imposed on it in the year with minimum Tier 1 and Overall Capital ratio of 8.52% (2024: 8.73%) and 15.10% (2024: 15.29%) respectively.

The FSA's approach to the measurement of capital adequacy is primarily based on monitoring the relationship of the capital resources requirement to available capital resources. The FSA sets individual capital guidance ("ICG") for the Bank in excess of the minimum capital resources requirement. A key input to the ICG setting process is the Bank's internal capital adequacy assessment process ("ICAAP").

The Bank is also regulated by the FCA in the UK for credit and brokerage related activities.

Further details of the Bank's management of capital are described in the Risk Management Report on page 15.

ii. Capital allocation

Management uses regulatory capital ratios to monitor its capital base. The allocation of capital between specific operations and activities is, to a large extent, driven by optimisation of the return achieved on the capital allocated. The amount of capital allocated to each operation or activity is based primarily on regulatory capital requirements.

E. Company Financial Risk Review

i. Credit risk

The Company is exposed to credit risk primarily from deposits with banks and from its financing activities of Group entities. These balances include Trade and other receivables, Amounts due from Group undertakings, Investment in subsidiaries and Subordinated loans. Cash balances are held with institutions with a credit rating of A to A+. The Group's primary credit exposure is to the Bank and Payment Assist Ltd. The Investment in subsidiary and subordinated loan balance counterparties are disclosed in Notes 31 and 35 respectively. Amounts due from Group undertakings relate to balances advanced to the Group's subsidiary (MVL) for the acquisition of other subsidiaries including PAL, BBSL, BLX and NRF. The Group manages its credit risk by ensuring that sufficient resources are allocated to credit management and capital allocation and using reputable financial institutions to hold its cash balances.

ii. Liquidity risk

The value and term of short-term assets are monitored against those of the Company's liabilities. The Company maintains sufficient liquid assets to meet liabilities as they fall due either by retaining Interest income from the Subordinated loan, Dividend income from subsidiary companies or raising funds through the issue of Loan notes. Amounts due to / from Group undertakings are unsecured, interest-free and repayable on demand. £13.6m capital on subordinated loan notes is repayable to the Company in more than 5 years. £29.3m (2024: £16.0m) of loan notes are repayable within one year.

iii. Market risk

The Company does not have exposure to foreign exchange risk as transactions are made in, and balances held in Sterling. The Company has both interest-bearing assets and liabilities. In order to manage interest rate risk, the Companies loans and advances to customers, subordinated loans, and loan notes are charged exclusively at fixed rates.

8. Operating segments

Segmental information is presented in respect of the Group's business segments. The Directors consider that the Group currently operates in one geographic segment comprising of the Isle of Man and UK. The primary format, business segments, is based on the Group's management and internal reporting structure. The Directors consider that the Group operates in three (2024: three) product orientated segments in addition to its investing activities: Asset and Personal Finance (including provision of HP contracts, finance leases, personal loans, commercial loans, block discounting, vehicle stocking plans and wholesale funding agreements); Edgewater Associates Limited (provision of financial advice); and MFX Limited (provision of foreign currency transaction services).

	Asset and
	Personal	Edgewater	MFX	Investing
For the year ended 31 December 2025	Finance	Associates	Limited	Activities	Total
	£000	£000	£000	£000	£000
Interest revenue calculated using the effective interest method	58,906	-	-	-	58,906
Interest expense	(21,264)	-	-	(147)	(21,411)
Net interest income	37,642	-	-	(147)	37,495
Components of Net Trading Income	(5,721)	2,049	879	-	(2,793)
Net trading income	31,921	2,049	879	(147)	34,702
Components of Operating Income	3,183	9	6	(561)	2,637
Operating Income	35,104	2,058	885	(708)	37,339
Depreciation	(667)	(16)	(1)	(195)	(879)
Amortisation and impairment of intangibles	(306)	(75)	(2)	(264)	(647)
Share of profit of equity accounted investees, net of tax	87	-	-	-	87
Provision for impairment on loans and advances	(3,318)	(17)	-	-	(3,335)
All other expenses	(22,577)	(1,640)	(249)	(763)	(25,229)
Profit / (loss) before tax payable	8,323	310	633	(1,930)	7,336
Capital expenditure	657	-	1	596	1,254
Total assets	469,773	1,539	166	89,842	561,320
Total liabilities	447,135	123	33	70,474	517,765

 

	Asset and
	Personal	Edgewater	MFX	Investing
For the year ended 31 December 2024	Finance	Associates	Limited	Activities	Total
	£000	£000	£000	£000	£000
Interest revenue calculated using the effective interest method	55,930	-	-	-	55,930
Interest expense	(23,044)	-	-	(95)	(23,139)
Net interest income	32,886	-	-	(95)	32,791
Components of Net Trading Income	(6,341)	2,048	1,035	-	(3,258)
Net trading income	26,545	2,048	1,035	(95)	29,533
Components of Operating Income	4,818	11	5	35	4,869
Operating Income	31,363	2,059	1,040	(60)	34,402
Depreciation	(715)	(23)	(1)	(210)	(949)
Amortisation and impairment of intangibles	(256)	(78)	(4)	(2)	(340)
Share of profit of equity accounted investees, net of tax	119	-	-	-	119
All other expenses	(20,586)	(1,570)	(1,020)	(124)	(23,300)
Profit / (loss) before tax payable	9,925	388	15	(396)	9,932
Capital expenditure	401	1	-	1,199	1,601
Total assets	446,771	1,614	310	49,095	497,790
Total liabilities	428,540	377	9	31,551	460,477

All revenues are earned from the entity's one geographic segment. All non-current assets are located in the entity's one geographic segment.

9. Net interest income

	2025	2024
	£000	£000
Interest income
Loans and advances to customers	58,906	55,930
Total interest income calculated using the effective interest method	58,906	55,930
Total interest income	58,906	55,930
Interest expense
Deposits from customers	(18,732)	(20,184)
Loan note interest	(2,466)	(2,823)
Contingent consideration	(22)	-
Lease liability	(191)	(132)
Total interest expense	(21,411)	(23,139)
Net interest income	37,495	32,791

10. Net fee and commission income

In the following table, fee and commission income from contracts with customers in the scope of IFRS 15 - Revenue from Contracts with Customers is disaggregated by major type of services. The table includes a reconciliation of the disaggregated fee and commission income with the Group's reportable segments. See note 45D regarding revenue recognition.

	2025	2024
	£000	£000
Major service lines
Independent financial advice income	2,049	2,048
Foreign exchange trading income	879	1,035
Asset and personal finance: Brokerage services income	356	267
Debt collection	718	573
Fee and commission income	4,002	3,923
Fee and commission expense	(6,795)	(7,181)
Net fee and commission income	(2,793)	(3,258)

Fee and commission expense relates to commission paid to Brokerages which introduce new business to the Bank.

11. Personnel expenses

	Group		Company
	2025	2024	2025	2024
	£000	£000	£000	£000
Staff gross salaries	(9,990)	(9,309)	-	-
Executive Directors' remuneration	(647)	(615)	-	-
Non-executive Directors' fees	(235)	(244)	(130)	(40)
Executive Directors' performance related pay	(195)	(131)	-	-
Executive Directors' pensions	(53)	(49)	-	-
Staff pension costs	(571)	(545)	-	-
National insurance and payroll taxes	(1,084)	(1,050)	-	-
Staff training and recruitment costs	(326)	(300)	-	-
Equity Settled Restricted Stock Units - key management personnel	(272)	(206)	-	-
Equity Settled Restricted Stock Units - employees	-	(46)	-	-
	(13,373)	(12,495)	(130)	(40)

The Company's personnel expenses consist exclusively of Directors' remuneration and fees for services rendered to the Company.

12. Other expenses

	2025	2024
	£000	£000
Professional and legal fees	(3,008)	(2,478)
Marketing costs	(712)	(429)
IT costs	(2,358)	(1,987)
Establishment costs	(911)	(655)
Communication costs	(275)	(326)
Travel costs	(277)	(283)
Bank charges	(1,633)	(1,394)
Insurance	(275)	(321)
Irrecoverable VAT	(566)	(492)
Discretionary commission redress costs	(1,300)	(202)
Other costs	(541)	(486)
	(11,856)	(9,053)

13. Impairment on loans and advances to customers

The charge in respect of allowances for impairment comprises, excluding loss allowances on financial assets managed on a collective basis.

	2025	2024
	£000	£000
Impairment allowances made	(8,735)	(4,076)
Release of allowances previously made	6,193	3,771
	(2,542)	(305)

The charge in respect of allowances for impairment on financial assets managed on a collective basis comprises:

	2025	2024
	£000	£000
Collective impairment allowances made	(2,030)	(1,475)
Release of allowances previously made	1,237	28
Total charge for allowances for impairment on financial assets managed on a collective basis	(793)	(1,447)
Total charge for allowances for impairment	(3,335)	(1,752)

14. Profit before tax payable

The profit before tax payable for the year is stated after charging:

	Group		Company
	2025	2024	2025	2024
	£000	£000	£000	£000
Fees payable to the Company's auditor for the: Audit of the Group's financial statements	(86)	(92)	(86)	(59)
Audit of the Company's subsidiary undertakings	(486)	(280)	-	-
	(572)	(372)	(86)	(59)
Other assurance service fees	(11)	(7)	-	-
Other services - tax compliance	(18)	(4)	-	-
Pension cost defined benefit scheme	(1)	(8)	-	-
Expenses relating to short-term leases and low value assets	(121)	(92)	-	-

15. Income tax expense

Group	2025	2024
	£000	£000
Current tax expense
Current year	(930)	(1,482)
	(930)	(1,482)
Deferred tax expense
Origination and reversal of temporary differences	(14)	98
Tax expense	(944)	(1,384)

 

Group		2025		2024
	%	£000	%	£000
Reconciliation of effective tax rate
Profit before tax		7,336		9,932
Tax using the Bank's domestic tax rate	(10.0)	(734)	(10.0)	(993)
Effect of tax rates in foreign jurisdictions	(4.7)	(342)	(7.1)	(702)
Origination and reversal of temporary differences in deferred tax	0.2	(14)	1.0	98
Tax exempt income	2.1	152	2.2	213
Non-deductible expenses	(0.1)	(6)	-	-
Tax expense	(12.9)	(944)	(13.9)	(1,384)

The main rate of corporation tax in the Isle of Man is 0.0% (2024: 0.0%). However, the profits of the Group's Isle of Man banking activities are taxed at 10.0% (2024: 10.0%). The profits of the Group's subsidiaries that are subject to UK corporation tax are taxed at a rate of 25% (2024: 25.0%). The Company is subject to 0.0% corporation tax.

The value of tax losses carried forward reduced to nil and there is now a temporary difference related to accelerated capital allowances resulting in a £308,000 liability (2024: £294,000 liability). This resulted in a reversal of an expense of £14,000 (2024: £98,000 expense) to the Consolidated Income Statement.

16. Earnings per share

	2025	2024
Profit for the year attributable to owners of the Company	£6,390,000	£8,101,700
Weighted average number of Ordinary Shares in issue (basic)	119,891,760	117,923,558
Basic earnings per share (pence)	5.33	6.87
Diluted earnings per share (pence)	4.25	5.39
Total comprehensive income for the year attributable to owners of the Company	£6,594,000	£7,807,000
Weighted average number of Ordinary Shares in issue (basic)	119,891,760	117,923,558
Basic earnings per share (pence)	5.50	6.62
Diluted earnings per share (pence)	4.39	5.20

The basic earnings per share calculation is based upon the profit for the year after taxation and the weighted average of the number of shares in issue throughout the year.

As at:	2025	2024
Reconciliation of weighted average number of Ordinary Shares in issue between basic and diluted
Weighted average number of Ordinary Shares (basic)	119,891,760	117,923,558
Number of shares issued if all convertible loan notes were exchanged for equity	35,138,889	35,138,889
Dilutive element of share options if exercised	400,000	399,352
Weighted average number of Ordinary Shares (diluted)	155,430,649	153,461,799
Reconciliation of profit for the year between basic and diluted
Profit for the year (basic)	£6,390,000	£8,101,700
Interest expense saved if all convertible loan notes were exchanged for equity	£221,250	£171,415
Profit for the year (diluted)	£6,611,250	£8,273,115

The diluted earnings per share calculation assumes that all convertible loan notes and share options have been converted / exercised at the beginning of the year where they are dilutive.

As at:	2025	2024
Reconciliation of total comprehensive income for the year between basic and diluted
Total comprehensive income for the year (basic)	£6,594,000	£7,807,000
Interest expense saved if all convertible loan notes were exchanged for equity	£221,250	£171,415
Total comprehensive income for the year (diluted)	£6,815,250	£7,978,415

The weighted average number of ordinary shares and earnings per share have been adjusted retrospectively.

17. Cash and cash equivalents

	Group		Company
	2025	2024	2025	2024
	£000	£000	£000	£000
Cash at bank and in hand	24,310	16,199	7,774	718
	24,310	16,199	7,774	718

Cash at bank includes an amount of £nil (2024: £nil) representing receipts which are in the course of transmission.

18. Debt securities

	Group		Company
	2025	2024	2025	2024
	£000	£000	£000	£000
Financial assets at fair value through other
comprehensive income:
UK Government treasury bills	84,912	79,140	-	-
	84,912	79,140	-	-

UK Government Treasury Bills are stated at fair value and unrealised changes in the fair value are reflected in other comprehensive income. There were realised gains of £2,561,000 (2024: £4,266,000) and unrealised loss of £171,000 (2024: £395,000 unrealised gain) during the year.

19. Financial assets

	Group		Company
	2025	2024	2025	2024
	£000	£000	£000	£000
Financial assets at FVTPL:
Gain on equity instrument	35	18	-	-
	35	18	-	-

20. Loans and advances to customers

	2025				2024
	Gross	Impairment	Carrying	Gross	Impairment	Carrying
	Amount	Allowance	Value	Amount	Allowance	Value
Group	£000	£000	£000	£000	£000	£000
HP balances	97,299	(3,812)	93,487	115,403	(4,503)	110,900
Finance lease balances	16,220	(2,750)	13,470	23,163	(3,033)	20,130
Unsecured personal loans	158,343	(13,911)	144,432	119,209	(10,936)	108,273
Vehicle stocking plans	1,472	-	1,472	1,714	-	1,714
Wholesale funding arrangements	19,297	-	19,297	23,851	-	23,851
Block discounting	49,408	-	49,408	40,845	-	40,845
Secured commercial loans	31,509	(642)	30,867	30,940	(575)	30,365
Secured personal loans	39,677	-	39,677	901	-	901
Government backed loans	16,079	(1,777)	14,302	25,760	(1,165)	24,595
Property secured	1,460	-	1,460	10,784	-	10,784
	430,764	(22,892)	407,872	392,570	(20,212)	372,358

Collateral is held in the form of underlying assets for HP, finance leases, vehicles stocking plans, block discounting, secured commercial and personal loans and wholesale funding arrangements.

Allowance for impairment	2025	2024
	£000	£000
Balance at 1 January	18,576	19,426
Allowance for impairment made	8,735	4,076
Release of allowances previously made	(6,193)	(3,771)
Write-offs	(655)	(1,155)
Balance at 31 December	20,463	18,576

 

Collective allowance for impairment	2025	2024
	£000	£000
Balance at 1 January	1,636	189
Collective allowance for impairment made	2,030	1,475
Release of allowances previously made	(1,237)	(28)
Balance at 31 December	2,429	1,636
Total allowances for impairment	22,892	20,212

The following table provides an explanation of how significant changes in the gross carrying amount of financial instruments during the period contributed to changes in loss allowance:

	2025	2024
	£000	£000
Loans and advances to customers
Unsecured personal loans originated during the period	120,800	5,138

The contractual amount outstanding on financial assets that were written off during the reporting period and are still subject to enforcement activity are £nil (2024: £nil). Advances on preferential terms are available to all Directors, management and staff. As at 31 December 2025 £1,822,000 (2024: £2,211,000) had been lent on this basis. In the Group's ordinary course of business, advances may be made to Shareholders, but all such advances are made on normal commercial terms (see note 36).

Undrawn loan commitments are £60,182,000 (2024: £47,816,000), of which £50,551,000 (2024: £44,395,000) are unconditionally cancellable without prior notice, and there is no ECL provision made on such commitments in both financial years.

At the end of the current financial year 14 loan exposures (2024: 12) exceeded 10.0% of the capital base of the Bank:

	Outstanding	Outstanding	Facility	Facility
	Balance	Balance	Limit	Limit
Exposure	2025	2024	2025	2024
	£000	£000	£000	£000
Block discounting facility	49,408	40,845	100,850	83,700
Wholesale funding agreement	19,297	23,851	22,003	26,330

HP and finance lease receivables

Loans and advances to customers include the following HP and finance lease receivables:

	2025	2024
	£000	£000
Less than one year	47,294	63,483
Between one and two years	33,653	45,171
Between two and three years	19,839	26,629
Between three and four years	9,701	13,022
Between four and five years	2,694	3,616
Greater than five years	338	454
Gross investment in HP and finance lease receivables	113,519	152,375

The investment in HP and finance lease receivables net of unearned income comprises:

	2025	2024
	£000	£000
Less than one year	44,561	57,730
Between one and two years	31,707	41,078
Between two and three years	18,692	24,216
Between three and four years	9,141	11,842
Between four and five years	2,538	3,288
Greater than five years	318	412
Net investment in HP and finance lease receivables	106,957	138,566

21. Trade and other receivables

	Group		Company
	2025	2024	2025	2024
	£000	£000	£000	£000
Other debtors	16,390	6,649	27	1
Prepayments	5,136	663	44	129
	21,526	7,312	71	130

22. Property, plant and equipment and right-of-use assets

	Buildings and
	Leasehold	IT	Furniture and	Motor	Right-of-use
Group	Improvements	Equipment	Equipment	Vehicles	assets	Total
	£000	£000	£000	£000	£000	£000
Cost
As at 1 January 2025	415	449	4,526	198	2,660	8,248
Additions	4	27	65	52	696	844
Disposals	(172)	(9)	(788)	(38)	-	(1,007)
As at 31 December 2025	247	467	3,803	212	3,356	8,085
Accumulated depreciation
As at 1 January 2025	128	340	391	47	909	1,815
Charge for year	50	61	371	36	361	879
Disposals	(45)	(28)	(350)	(2)	-	(425)
As at 31 December 2025	133	373	412	81	1,270	2,269
Carrying value at 31 December 2025	114	94	3,391	131	2,086	5,816
Carrying value at 31 December 2024	287	109	4,135	151	1,751	6,433

 

	Leasehold	IT	Furniture and	Right-of-use
Company	Improvements	Equipment	Equipment	assets	Total
	£000	£000	£000	£000	£000
Cost
As at 1 January 2025	234	21	18	500	773
Additions	-	2	-	695	697
As at 31 December 2025	234	23	18	1,195	1,470
Accumulated depreciation
As at 1 January 2025	234	7	14	431	686
Charge for year	-	1	2	116	119
As at 31 December 2025	234	8	16	547	805
Carrying value at 31 December 2025	-	15	2	648	665
Carrying value at 31 December 2024	-	14	4	69	87

23. Intangible assets

		Intellectual	IT Software
	Customer	Property	and Website
Group	Contracts	Rights	Development	Total
	£000	£000	£000	£000
Cost
As at 1 January 2025	2,937	2,074	5,334	10,345
Additions	-	124	297	421
Disposals	-	-	(42)	(42)
As at 31 December 2025	2,937	2,198	5,589	10,724
Accumulated amortisation
As at 1 January 2025	1,470	873	2,701	5,044
Charge for year	72	148	427	647
Disposals	-	-	(16)	(16)
As at 31 December 2025	1,542	1,021	3,112	5,675
Carrying value at 31 December 2025	1,395	1,177	2,477	5,049
Carrying value at 31 December 2024	1,467	1,201	2,633	5,301

 

	IT Software
	and Website
Company	Development
	£000
Cost
As at 1 January 2025	2,048
Additions	26
As at 31 December 2025	2,074
Accumulated amortisation
As at 1 January 2025	65
Charge for year	264
As at 31 December 2025	329
Carrying value at 31 December 2025	1,745
Carrying value at 31 December 2024	1,983

24. Deposits from customers

	2025	2024
	£000	£000
Retail customers: term deposits	432,595	386,526
Corporate customers: term deposits	19,866	18,640
	452,461	405,166

25. Creditors and accrued charges

	Group		Company
	2025	2024	2025	2024
	£000	£000	£000	£000
Other creditors and accruals	8,019	7,032	341	1,541
Commission creditors	479	333	-	-
Lease liability	2,203	1,792	666	62
Taxation creditors	810	522	-	-
	11,511	9,679	1,007	1,603

26. Contingent consideration

Deferred consideration relates to contingent payments due to the sellers on the acquisition of CAM Wealth.

On 21 January 2025, CAM Wealth was acquired for total cash consideration of £135,000. In the third year, the Group has agreed to pay 5 times the relevant profits for the UK IFA business for the year ended 21 January 2028 should certain performance conditions be met.

Based on the forecasts when the Company was acquired, the Group estimates an additional contingent consideration of £640,000 payable in the final year. The Group has included £590,000 as contingent consideration related to the additional consideration, which represents its fair value as at 31 December 2025 determined through a discounted cash flow valuation technique.

As at	2025	2024
	£000	£000
CAM Wealth	590	-
	590	-

27. Loan notes

		Group		Company
		2025	2024	2025	2024
	Notes	£000	£000	£000	£000
Related parties
J Mellon	JM	2,750	1,750	2,750	1,750
Burnbrae Limited	BL	5,200	3,200	5,200	3,200
Culminant Reinsurance Ltd	CR	1,000	1,000	1,000	1,000
John Spellman	JS	400	400	400	400
Ian Morley	IM	250	250	250	250
Alan Clarke	AC	150	100	150	100
		9,750	6,700	9,750	6,700
Unrelated parties	UP	43,145	38,592	43,145	38,592
		52,895	45,292	52,895	45,292

JM - Three loans, one loan of £1,250,000 maturing on 26 February 2030 with interest payable of 7.5% per annum, convertible to ordinary shares of the Company at a rate of 9.0 pence, one of £500,000 maturing on 31 July 2027, paying interest of 7.5% per annum and convertible to ordinary shares of the Company at a rate of 8.0 pence and one of £1,000,000 maturing on 31 December 2028, paying interest of 8% per annum.

BL - Five loans, one of £1,000,000 maturing on 25 February 2030, paying interest of 7.5% one of £1,200,000 maturing on 31 July 2027, paying interest of 7.5% per annum, convertible to ordinary shares of the Company at a rate of 8.0 pence, one of £1,000,000 maturing 1 July 2026, paying interest of 7.5% per annum, one of £1,000,000 maturing 28 September 2030 paying interest of 8.0% per annum and one of £1,000,000 maturing on 20 November 2028, paying interest of 8.0% per annum. Jim Mellon is the beneficial owner of BL and Denham Eke is also a director.

CR - One loan consisting of £1,000,000 maturing on 12 October 2030, paying interest of 8.0% per annum. Greg Bailey, a director, is the beneficial owner of CR.

JS - One loan consisting of £400,000 maturing on 3 May 2029, paying interest of 8.5% per annum.

IM - One loan consisting of £250,000 maturing on 3 June 2026, paying interest of 8.0% per annum.

AC - Two loans consisting of £150,000 maturing on 6 May 2026, paying interest of 7.8% per annum. One loan note of £50,000 matured on 6 May 2026 and the other £100,000 renewed at 5.75% for one year.

UP - Sixty-six loans (2024: Fifty-four), the earliest maturity date was 19 January 2026, and the latest maturity is 30 April 2030. The average interest payable is 6.99% (2024: 6.71%)

With respect to the convertible loans, the interest rate applied was deemed by the Directors to be equivalent to the market rate at the time with no conversion option.

28. Pension liability

The Conister Trust Pension and Life Assurance Scheme ("Scheme") operated by the Bank is a funded defined benefit arrangement which provides retirement benefits based on final pensionable salary. The Scheme is closed to new entrants and the last active member of the Scheme left pensionable service in 2011.

The Scheme is approved in the Isle of Man by the Assessor of Income Tax under the Income Tax (Retirement Benefit Schemes) Act 1978 and must comply with the relevant legislation. In addition, it is registered as an authorised scheme with the FSA in the Isle of Man under the Retirement Benefits Scheme Act 2000. The Scheme is subject to regulation by the FSA but there is no minimum funding regime in the Isle of Man.

The Scheme is governed by two corporate trustees, Conister Bank Limited and Boal & Co (Pensions) Limited. The trustees are responsible for the Scheme's investment policy and for the exercise of discretionary powers in respect of the Scheme's benefits.

Exposure to risk

The Company is exposed to the risk that additional contributions will be required in order to fund the Scheme as a result of poor experience. Some of the key factors that could lead to shortfalls are:

▪       investment performance - the return achieved on the Scheme's assets may be lower than expected; and

▪       mortality - members could live longer than foreseen. This would mean that benefits are paid for longer than expected, increasing the value of the related liabilities.

In order to assess the sensitivity of the Scheme's pension liability to these risks, sensitivity analysis have been carried out. Each sensitivity analysis is based on changing one of the assumptions used in the calculations, with no change in the other assumptions. The same method has been applied as was used to calculate the original pension liability and the results are presented in comparison to that liability. It should be noted that in practice it is unlikely that one assumption will change without a movement in the other assumptions; there may also be some correlation between some of these assumptions. It should also be noted that the value placed on the liabilities does not change on a straight-line basis when one of the assumptions is changed. For example, a 2.0% change in an assumption will not necessarily produce twice the effect on the liabilities of a 1.0% change.

Exposure to risk

No changes have been made to the method or to the assumptions stress-tested for these sensitivity analyses compared to the previous period. The investment strategy of the Scheme has been set with regard to the liability profile of the Scheme. However, there are no explicit asset-liability matching strategies in place.

Restriction of assets

No adjustments have been made to the statement of financial position items as a result of the requirements of IFRIC 14 - IAS 19: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction, issued by IASB's International Financial Reporting Interpretations Committee.

Scheme amendments

There have not been any past service costs or settlements in the financial year ending 31 December 2025 (2024: none).

Funding policy

The funding method employed to calculate the value of previously accrued benefits is the Projected Unit Method. Following the cessation of accrual of benefits when the last active member left service in 2011, regular future service contributions to the Scheme are no longer required. However, additional contributions will still be required to cover any shortfalls that might arise following each funding valuation.

The most recent triennial full actuarial valuation was carried out at 31 March 2025, which showed that the market value of the Scheme's assets was £1,404,000 representing 74% of the benefits that had accrued to members, after allowing for expected future increases in earnings. As required by IAS 19: Employee Benefits, this valuation has been updated by the actuary as at 31 December 2025.

The amounts recognised in the Consolidated Statement of Financial Position are as follows:

Total underfunding in funded plans recognised as a liability	2025	2024
	£000	£000
Fair value of plan assets	1,497	1,361
Present value of funded obligations	(1,398)	(1,407)
	99	(46)

 

Movement in the liability for defined benefit obligations	2025	2024
	£000	£000
Opening defined benefit obligations at 1 January	1,407	1,521
Benefits paid by the plan	(78)	(80)
Interest on obligations	76	71
Actuarial loss / (gain)	21	(105)
Prior year overprovision	(28)	-
Liability for defined benefit obligations at 31 December	1,398	1,407

 

Movement in plan assets	2025	2024
	£000	£000
Opening fair value of plan assets at 1 January	1,361	1,359
Interest on plan assets	79	63
Contribution by employer	57	57
Return on plan assets	78	(38)
Benefits paid	(78)	(80)
Closing fair value of plan assets at 31 December	1,497	1,361

 

Expense recognised in income statement	2025	2024
	£000	£000
Net interest cost recognised in the statement of profit and loss	1	8

 

Actuarial gain / (loss) recognised in other comprehensive income	2025	2024
	£000	£000
Return on plan assets	78	(38)
Actuarial (loss) / gain on defined benefit obligations	(21)	105
	57	67

 

Plan assets consist of the following	2025	2024
	%	%
Equity securities	45	44
Corporate bonds	19	18
Government bonds	29	27
Cash	2	6
Other	5	5
	100	100

The actuarial assumptions used to calculate Scheme liabilities under IAS19 are as follows:

	2025	2024
	%	%
Rate of increase in pension in payment:
Service from 6 April 1997 to 13 September 2005	2.8	3.1
Service from 14 September 2005	2.0	2.1
Rate of increase in deferred pensions	5.0	5.0
Discount rate applied to scheme liabilities	5.6	5.7
Inflation	5.7	5.0
Life expectancy	2025	2024
Current pensioner aged 65 (male)	21.4	21.2
Current pensioner aged 65 (female)	23.7	23.8
Future pensioner aged 65 in 10 years (male)	21.9	21.7
Future pensioner aged 65 in 10 years (female)	24.4	24.5

The assumptions used by the actuary are best estimates chosen from a range of possible assumptions, which due to the timescale covered, may not necessarily be borne out in practice.

Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

	2025		2024
Effect in £'000	Increase	Decrease	Increase	Decrease
Discount rate (0.5% movement)	(60)	66	(70)	77
Inflation rate (0.5% movement)	17	(17)	18	(17)
Life expectancy (1 year movement)	50	(50)	53	(53)

29. Called up share capital

Ordinary shares of no par value available for issue	Number
At 31 December 2025	200,200,000
At 31 December 2024	200,200,000

 

Issued and fully paid: Ordinary shares of no par value	Number	£000
At 31 December 2025	122,950,726	19,932
At 31 December 2024	119,715,757	19,626

A. Analysis of changes in financing during the year

	Group		Company
	2025	2024	2025	2024
	£000	£000	£000	£000
Balance at 1 January	65,843	60,059	64,861	58,792
Issue of loan notes	7,603	5,975	7,603	5,975
Issue of shares via scrip dividend	306	193	306	193
Issue of shares	-	49	-	49
Payment of lease liabilities	(470)	(433)	(152)	(148)
Balance at 31 December	73,282	65,843	72,618	64,861

The 2025 Group closing balance is represented by £19,932,000 share capital (2024: £19,626,000), £52,895,000 loan notes (2024: £42,292,000) and £2,203,000 lease liability (2024: £1,085,000).

The 2025 Company closing balance is represented by £19,932,000 share capital (2024: £19,626,000), £52,895,000 of loan notes (2024: £42,292,000) and £666,000 lease liability (2024: £91,000).

B. Dividends

On 16 September 2025, MFG declared a dividend of £810,000 (2024: £530,000) which could either be taken up in cash or new ordinary shares. 1,162,469 new shares (2024: 1,013,821 new shares) were admitted to the Alternative Investment Market ("AIM") at 26.349 pence per share (2024: 19.0 pence per share), at a total cost of £306,000 (2024: £193,000).

C. Convertible loans

There are three convertible loans totalling £2,950,000 (2024: £2,950,000) (refer to note 27).

D. Share options and Restricted Stock Units

On 5 July 2022, 27 October 2022, 29 November 2023, 16 December 2024 and 25 June 2025 MFG granted Restricted Stock Units ("RSUs") under its 2022 RSU Plan. The Group has issued, in total, RSUs over 5,087,500 ordinary shares representing 4.14% of the issued share capital of the Group, including 2,400,000 to certain directors and 2,687,500 to certain employees. The RSUs issued before 2024 have a 2-year term while those issued post 2024 have a 3-year term and are subject to certain vesting conditions based upon an overall growth in profitability. Any RSUs granted will fall away should the recipient leave employment before the 2‑year or 3-year term expires. Should the individual vesting conditions be satisfied at the end of the term, the stock can be exercised at nil cost.

The Group directors who received RSUs are as follows:

§  Douglas Grant, Group Chief Executive Officer, was issued 1,925,000 RSUs. On 23 December 2025, he exercised his options and was issued with 850,000 New Ordinary Shares of no par value at nil cost. Following this, the total number of Ordinary Shares held by Mr Grant is 3,258,212, representing 2.65% of the issued ordinary share capital of the Company;

§  James Smeed, Group Finance Director, was issued 475,000 RSUs. On 23 December 2025, James Smeed exercised his options and was issued with 175,000 New Ordinary Shares of no par value respectively at nil cost. Following this, the total number of Ordinary Shares held by Mr Smeed is 500,000, representing 0.41% of the issued ordinary share capital of the Company;

	2025	2024	Contractual
Grant date/employees entitled	Number of Units	Number of Units	life of options
RSUs granted to key employees at 5 July 2022	1,020,000	1,020,000	2 years
RSUs granted to directors at 5 July 2022	1,100,000	1,100,000	2 years
RSUs granted to key employees at 27 October 2022	165,000	165,000	2 years
RSUs granted to directors at 27 October 2022	150,000	150,000	2 years
RSUs granted to directors at 29 November 2023	1,150,000	1,150,000	2 years
RSUs granted to key employees at 29 November 2023	1,102,500	1,102,500	2 years
RSUs granted to key employees at 16 December 2024	200,000	200,000	3 years
RSUs granted to key employees at 25 June 2025	200,000	-	3 years
Total RSUs	5,087,500	4,887,500
Lapsed RSUs	(455,000)	(425,000)
Exercised	(4,232,500)	(2,160,000)
Remaining RSUs	400,000	2,302,500

The fair value of employee services received in return for restricted stock units granted is based on the fair value of them measured using the Black-Scholes formula. Service related and non-market performance conditions were not taken into account in measuring fair value. The inputs used in measuring the fair values at the grant of the equity-settled restricted stock unit payment plans were as follows.

	Grant at	Grant at	Grant at	Grant at	Grant at
Fair value of restricted stock units and assumptions	5 July	27 October	29 November	16 December	25 June
	2022	2022	2023	2024	2025
Share price at grant date	8.5 pence	14.0 pence	17.5 pence	14.5 pence	25.5 pence
Exercise price	nil	nil	nil	nil	nil
Expected volatility * ^	55.14%	107.71%	638.12%	560.10%	611.26%
Expected life (weighted average)	2 years	2 years	2 years	3 years	3 years
Risk-free interest rate (based on government bonds) * ^	1.65%	3.15%	4.43%	4.49%	4.46%
Forfeiture rate	0.00%	0.00%	0.00%	0.00%	0.00%
Fair value at grant date	8.5 pence	14.0 pence	17.5 pence	14.5 pence	25.6 pence

^ Based on past 3 years

* Annual rates

The expected volatility is based on both historical average share price volatility and implied volatility derived from traded options over the group's ordinary shares of maturity similar to those of the employee options.

The charge for the year for RSUs granted was £373,000 (2024: £196,000).

The fair value of services received in return for share options granted is based on the fair value of share options granted, measured using a binomial probability model with the following inputs for each award:

Date of grant	23 June 2014
Fair value at date of grant	£0.08
Share price at date of grant	£0.14
Exercise price	£0.14
Expected volatility	55.0%
Option life	3
Risk-free interest rate (based on government bonds)	0.5%
Forfeiture rate	33.3%

30. List of associates

Set out below is a list of associates of the Group:

	Group	Group
	2025	2024
	£000	£000
Payitmonthly Ltd ("PIML")	331	260
Lesley Stephen & Co Limited ("LSC")	73	57
	404	317

In August 2018, 30% of the share capital of PIML was acquired for £90,000 consideration. The Group's resulting share of the associate's total comprehensive income during the year was £87,000 (2024: £119,000).

As part of the Bank providing loan finance to LSC, on 29 June 2023 the Group acquired 10% of its issued share capital for nil consideration. The receipt of the issued share capital is considered to be linked to the loan facilities financed and therefore its term and interest rate implicit in the finance agreement have been used as the basis to discount the fair value of the gratis shares issued.

The Group possesses the capacity to engage in policy-making processes within LSC through its right to designate an individual to attend all board meetings as an observer. Via its representative, the Group also holds the ability to introduce topics for discussion on the agenda, although it does not have voting rights in this regard. Moreover, the Group has introduced constraints on LSC's board, effectively preventing specified significant actions from being taken without the Group's consent. The fair value of the financial instrument received has been determined as £42,000 at initial recognition based on the proportionate share of the net asset value of LSC. As part of the transaction, the Group has been granted two warrants to acquire further shares. The first warrant is for 10% of the share capital and the second warrant is for a further 10% of the share capital. The two warrants are exercisable dependent upon the profit before tax achieved by LSC relative to target profit before tax for the relevant financial period. The fair value of the two warrants has been determined to be nil due to the significant uncertainty that exists at acquisition date of achieving such targets. For these reasons, the financial instrument is accounted for as an Associate in accordance with IAS 28. The Group's resulting share of the associate's total comprehensive income during the year was £nil (2024: £nil).

31. List of subsidiaries

Set out below is a list of direct subsidiaries of the Group:

		31 December
		2025	Date of	2025	2024
Carrying value of investments	Nature of Business	% Holding	Incorporation	£000	£000
Conister Bank Limited	Asset and Personal Finance	100	05/12/1935	29,092	29,092
Edgewater Associates Limited	Wealth Management	100	24/12/1996	2,005	2,005
TransSend Holdings Limited	Holding Company	100	05/11/2007	-	-
Manx Ventures Limited	Holding Company	100	15/05/2009	-	-
				31,097	31,097

All subsidiaries are incorporated in the Isle of Man.

Set out below is a list of indirect significant subsidiaries of the Group:

					Cost of	Cost of
					investment	investment
	Nature of	Principal place	Country of		2025	2024
Carrying value of investments	business	of business	incorporation	% Holding	£000	£000
Conister Finance & Leasing Ltd	Asset and Personal Finance	UK	IOM	100.0%	1	1
CAM Wealth Group Limited	Private Wealth Management	UK	UK	100.0%	814	-
Finova Limited	Treasury solutions	IOM	IOM	100.0%	1	-
MFX Limited	Foreign exchange advisory	IOM	IOM	100.0%	1	1
Payment Assist Ltd	Point of Sale Lender	UK	UK	100.0%	9,244	9,244
Blue Star Leasing Limited	SME Asset Finance	UK	UK	100.0%	2,275	2,275
Ninkasi Rentals & Finance Limited	SME Asset Finance	UK	UK	95.0%	1,480	1,275
Manx Collection Limited	Debt Collection	UK	IOM	100.0%	1	1
Manx Financial Limited	Asset and Personal Finance	IOM	IOM	100.0%	1,001	1,001
Conister Insurance Services Limited	General insurance	IOM	IOM	100.0%	1	-
The Business Lending Exchange Limited	SME Asset Lender	UK	UK	100.0%	2,186	2,186

32. Non-controlling interests in subsidiaries

The following table summarises the information about the Group's subsidiary that has material NCI, before any intra-group eliminations.

31 December 2025 £'000	NRF	Total
NCI percentage	5%
Cash and cash equivalents	321
Loans and advances to customers	-
Trade and other receivables	2,392
Property, plant and equipment	3,064
Stocks	39
Intangible assets	8
Creditors and accrued charges	(4,978)
Deferred tax	(266)
Net assets	580
Carrying amount of NCI	29	29
Revenue	1,448
Profit	49
OCI	-
Total comprehensive income	49
Profit allocated to NCI	2	2
Operating activities cashflows	718
Investing activities cashflows	(706)
Financing activities cashflows	-
Net increase in cashflows	12

On 28 March 2025, the Group acquired an additional 5% interest in Ninkasi Rentals & Finance Limited ("NRFL"), increasing its ownership to 95%. The carrying amount of NRFL's net assets in the Group's consolidated financial statements on the date of acquisition was £580,049. The following table summarises the effect of changes in the Group's ownership interest in NRFL.

	2025
	£000
Carrying amount of NCI acquired (£580,409*5%)	29
Consideration paid to NCI in cash	(206)
Decrease in equity attributable to owners of the Company	(177)

 

	2025	2024
	£000	£000
NCI brought forward (49.9%)	55	-
Pre-acquisition profits in the year	1	-
Dividends paid	-	-
	56	-
Carrying amount of NCI acquired	29	-
Consideration paid to NCI	(206)	-
Decrease in equity attributable to owners of the Company	(177)	-

 

31 December 2024 £'000	NRF	Total
NCI percentage	10%
Cash and cash equivalents	309
Loans and advances to customers	-
Trade and other receivables	1,863
Property, plant and equipment	3,725
Intangible assets	12
Loans and borrowings	(547)
Creditors and accrued charges	(4,569)
Deferred tax	(244)
Net assets	549
Carrying amount of NCI	55	55
Revenue	1,539
Profit	20
OCI	-
Total comprehensive income	20
Profit allocated to NCI	2	2
OCI allocated to NCI	-	-
Operating activities cashflows	40
Investing activities cashflows	(151)
Financing activities cashflows
Net (decrease) in cashflows	(111)

In September 2024, the Group acquired the remaining 49.9% interest in PAL, increasing its ownership to 100%. The movement in NCI in relation to the acquisition is explained below.

	2025	2024
	£000	£000
NCI brought forward (49.9%)	-	987
Pre-acquisition profits in the year	-	445
Dividends paid	-	(1,817)
	-	(385)
Carrying amount of NCI acquired	-	(385)
Consideration paid to NCI	-	(5,000)
Decrease in equity attributable to owners of the Company	-	(5,385)

33. Financial Instruments

Rivers Finance Group PLC ("RFG")

On 9 June 2021, the Group acquired 10% of the issued share capital of RFG for nil consideration. The receipt of the issued share capital is considered to be a commitment fee receivable by the Group in order to originate loan facilities in aggregate not exceeding £6,250,000 to RFG. The commitment fee is an integral part of the effective interest rate of the associated loan facilities issued to RFG.

The Group is not considered to have a significant influence over RFG as it holds less than a 20% shareholding and is not considered to participate in the policy making decisions of the entity. The 10% shareholding has thus been classified as a financial instrument.

The Group continues to obtain information necessary to measure the fair value of the shares obtained. The fair value of the financial instrument received has been determined as £188,000 (2024: £154,000) based on the proportionate share of the net asset value of RFG.

As part of the transaction, the Group has been granted two warrants to acquire further shares. The first warrant is for 5% of the share capital and the second warrant is for a further 5% of the share capital.

The two warrants are exercisable dependent upon the Group's banking subsidiary, the Bank, contracting with RFG, for a larger facility. The fair value of the two warrants has been determined to be nil due to the significant uncertainty that exists at acquisition date and the period end in issuing a further debt facility.

34. Goodwill

	Group	Group	Company	Company
Cash generating unit	2025	2024	2025	2024
	£000	£000	£000	£000
PAL	4,456	4,456	4,456	4,456
EAL	1,649	1,649	1,649	1,649
BLX	1,908	1,908	1,908	1,908
BBSL	1,390	1,390	1,390	1,390
NRFL	678	678	678	678
CAM Wealth	568	-	568	-
Manx Collections Limited ("MCL")	454	454	454	454
Three Spires Insurance Services Limited("Three Spires")	41	41	41	41
	11,144	10,576	11,144	10,576

Management has determined that a reasonably possible change in the key assumptions would not result in the carrying amount to exceed the recoverable amount of the following CGU's and accordingly no impairment of goodwill.

Acquisition of a subsidiary- CAM Wealth

On 22 January 2025, the Group announced the acquisition of the UK FCA licenced Wealth Management business, CAM Wealth Group Holdings and its subsidiary CAM Wealth Group Limited, (together "CAM Wealth" trading as CAM Wealth). This acquisition links to the Group's growth strategy of accretive acquisition to continue developing a robust and diversified financial services group to support the ongoing objective of continuously enhancing shareholder value.

In the eleven months to 31 December 2025, CAM Wealth contributed revenue of £80,000 and a loss of £164,000 to the Group's results. If the acquisition had happened on 01 January 2025, management estimates that the impact on the consolidated income would have been £87,000 and the impact on the consolidated profit for the period would have been a loss of £179,000.

A. Consideration transferred

The following table summarises the acquisition date fair value of each major class of consideration transferred:

	2025
	£000
Cash	135
Contingent consideration (Note 26)	568
	703

B. Identifiable assets acquired, and liabilities assumed

The following table summarises the recognised amounts of assets acquired, and liabilities assumed at the date of acquisition:

	2025
	£000
Intangible asset acquired	100
Cash and cash equivalents	6
Trade and other receivables	35
Creditors and accrued charges	(6)
Total identifiable net assets acquired	135

The trade and other receivables comprise gross contractual amounts due of £35,000, of which £nil was expected to be uncollectable at the date of acquisition.

C. Goodwill

The goodwill arising from the acquisition has been recognised as follows:

	2025
	£000
Total consideration transferred	703
Fair value of identifiable net assets	(135)
Goodwill	568

General

The key assumptions used in the estimation of the recoverable amount are set out in this note. The recoverable amount of the CGUs discussed in this note were each based on value in use. The values assigned to key assumptions represents management's assessment of future trends in the relevant industries and have been based on historical data from both external and internal sources.

The estimated recoverable amount in relation to the goodwill generated on the purchase of PAL is based on 10-year forecast cash flow projections and then discounted using a 15.3% (2024: 15.3%) discount factor. The sensitivity of the analysis was tested using additional discount factors of up to 20.0% on single interest income growth rates.

The estimated recoverable amount in relation to the EAL CGU (including also goodwill generated on acquisition of EAL) is based on 10-year forecast cash flow projections using a 2.0% annual increment and then discounted using a 13% (2024: 13.0%) discount factor. The sensitivity of the analysis was tested using additional discount factors of 15.0% and 20.0% on stable profit levels. An impairment loss on EAL goodwill of £200,000 was recognised in 2022.

The estimated recoverable amount in relation to the goodwill generated on the purchase of BLX is based on 10-year forecast cash flow projections using a 0% annual increment and then discounted using a 15.3% (2024: 15.3%) discount factor. The sensitivity of the analysis was tested using additional discount factors of up to 20.0% on single interest income growth rates.

The estimated recoverable amount in relation to the goodwill generated on the purchase of BBSL is based on 10-year forecast cash flow projections using a 2% annual increment, with a terminal value calculated using a 2.0% growth rate of net income and then discounted using a 15.3% (2024: 15.3%) discount factor. The sensitivity of the analysis was tested using additional discount factors of up to 20.0% on single interest income growth rates.

The estimated recoverable amount in relation to the goodwill generated on the purchase of NRFL is based on 10-year forecast cash flow projections using a 0% annual increment and then discounted using a 15.3% (2024: 15.3%) discount factor. The sensitivity of the analysis was tested using additional discount factors of up to 20.0%. On the basis of the above reviews no impairment to goodwill has been made in the current year.

The estimated recoverable amount in relation to the goodwill generated on the purchase of MCL is based on 10-year forecast cash flow projection using a 2.0% annual increment and then discounted using a 15.3% (2024: 15.3%) discount factor. The sensitivity of the analysis was tested using additional discount factors up to 20.0%.

The goodwill generated on the purchase of Three Spires has been reviewed at the current year end and is considered adequate given its income streams referred to EAL. Based on the above no impairment to goodwill has been made in the current year.

35. Loans and amounts due from Group undertakings

Amounts due from and to Group undertakings

Amounts due from and to Group undertakings relate to intra-group transactions and are unsecured, interest-free and repayable on demand. The amounts will be settled either through cash or net settlement.

Subordinated loans

MFG has issued several subordinated loans as part of its equity funding into the Bank and EAL.

		Interest rate	2025	2024
Creation	Maturity	% p.a.	£000	£000
Conister Bank Limited
11 February 2014	11 February 2034	7.0	500	500
27 May 2014	27 May 2034	7.0	500	500
9 July 2014	9 July 2034	7.0	500	500
17 September 2014	17 September 2026	7.0	400	400
22 July 2013	22 July 2033	7.0	1,000	1,000
25 October 2013	22 October 2033	7.0	1,000	1,000
23 September 2016	23 September 2036	7.0	1,100	1,100
14 June 2017	14 June 2037	7.0	450	450
12 June 2018	12 June 2038	7.0	2,000	2,000
23 March 2023	23 March 2043	7.0	6,500	6,500
Edgewater Associates Limited
21 February 2017	21 February 2027	7.0	150	150
14 May 2017	14 May 2027	7.0	128	128
			14,228	14,228

36. Related party transactions

Cash deposits

During the year, the Bank held cash on deposit on behalf of Jim Mellon (Executive Chair of MFG) and Douglas Grant (Group CEO). Total deposits amounted to £302,885 and £23,659 (2024: £36,280 and £24,898) respectively, at normal commercial interest rates in accordance with the standard rates offered by the Bank.

Key management remuneration including Executive Directors

	2025	2024
	£000	£000
Remuneration - executive Directors	647	615
Remuneration - non-executive Directors	235	243
Performance Related Pay	195	131
Pension	53	49
Equity Settled Restricted Stock Units (see note 11)	272	113
	1,402	1,151

Employment benefits include gross salaries, performance related pay, employer defined contributions and restricted stock units (See note 29D).

Directors' loans

At 31 December 2025, Douglas Grant had three amortising loans outstanding to Conister Bank Limited with capital outstanding of £302,061 (2024: £285,072). The maximum original term of the three loans is 61 months and the average interest is 7.91% (2024: 2.57%). James Smeed had one amortising loan outstanding to Conister Bank with capital outstanding of £41,418 (2024: £nil). The original term of the loan is 49 months, and the average interest is 7.75%. No impairment is held in respect of these amounts.

Intercompany recharges

Various intercompany recharges are made during the course of the year as a result of the Bank settling debts in other Group companies.

Loan advance to PIML

At 31 December 2025, £nil (2024: £5,000,000) had been advanced to PIML and interest is charged at commercial rates. No impairment is held in respect of these amounts. This loan facility is repayable in cash.

Loan advance to Rivers Finance Group PLC ("RFG")

A total of £9,930,000 loan facility is available to RFG, a financial instrument of Manx Ventures Limited ("MVL"), to provide the finance required to expand its operations. Interest is charged at commercial rates. At 31 December 2025, £9,642,000 (2024: £8,512,000) had been advanced to RFG. This loan facility is repayable in cash.

Loan advance to Lesley Stephen & Co Limited ("LSC")

A total £11,500,000 loan facility is available to LSC to provide the finance required to expand its operations. Interest is charged at commercial rates. At 31 December 2025, £11,279,837 (2024: £10,783,914) had been advanced to LSC. As part of a finance arrangement between the Bank and LSC, Manx Ventures Limited ("MVL") (a related entity) acquired a 10% shareholding in LSC. This loan facility is repayable in cash.

Subordinated loans

The Company has advanced £13,950,000 (2024: £13,950,000) of subordinated loans to the Bank and £278,000 (2024: £278,000) to EAL as at 31 December 2025. See note 35 for more details.

37. Leases

A. Leases as lessee

The Group leases the head office building in the Isle of Man. The lease's term is 10 years with an option to renew the lease after that date. Lease payments are renegotiated every 10 years to reflect market rentals.

The Group leases an office unit in the United Kingdom and IT equipment with contract terms of 2 to 3 years. These leases are short-term and / or low-value items. The Group has elected not to recognise right-of-use assets and lease liabilities for these leases.

Information about leases for which the Group is a lessee is presented below.

i. Right-of-use assets

Right-of-use assets related to leased properties that do not meet the definition of investment property are presented as property, plant and equipment.

	Land and
Group	Buildings	Total
	£000	£000
Cost
As at 1 January 2025	2,660	2,660
Additions	695	695
As at 31 December 2025	3,355	3,355
Accumulated depreciation
As at 1 January 2025	909	909
Charge for the year	360	360
As at 31 December 2025	1,269	1,269
Carrying value at 31 December 2025	2,086	2,086
Carrying value at 31 December 2024	1,751	1,751

ii. Amounts recognised in profit or loss

	Group		Company
	2025	2024	2025	2024
	£000	£000	£000	£000
Interest on lease liabilities	191	132	38	17
Depreciation expense	361	351	116	126
Expenses relating to short-term leases and low-value assets	-	81	-	-

iii. Amounts recognised in statement of cash flows

	Group		Company
	2025	2024	2025	2024
	£000	£000	£000	£000
Interest paid	191	132	38	17
Capital paid	279	311	152	131
Total cash outflow for leases	470	443	190	148

38. Regulators

Certain Group subsidiaries are regulated by the FSA and the FCA as detailed below.

The Bank and EAL are regulated by the FSA under a Class 1(1) - Deposit Taking licence and Class 2 - Investment Business licence respectively. The Bank is also regulated by the UK's Prudential Regulatory Authority ("PRA") and the UK's Financial Conduct Authority ("FCA"). CAM Wealth is licensed by FCA to offer wealth management services.

39. Contingent liabilities

The Bank is required to be a member of the Isle of Man Government Depositors' Compensation Scheme which was introduced by the Isle of Man Government under the Banking Business (Compensation of Depositors) Regulations 1991 and creates a liability on the Bank to participate in the compensation of depositors should it be activated. In addition, the Bank is a member of UK's FSCS.

The possibility of an outflow of resources embodying economic benefits for all other contingent liabilities of the Group are considered remote and thus do not require separate disclosure.

40. Provision for Discretionary Commission Arrangements

Following publication of the FCA's consultation paper on a proposed Motor Finance redress scheme, the Group has reassessed its provision relating to historical motor‑finance commission arrangements. The provision, initially £202,920 in the 2024 Annual Report, has been increased to £1,502,920 as at 31 December 2025. The additional £1,300,000 charge reflects the increased likelihood that a higher number of cases fall within the scope of the FCA's proposed scheme, and that redress amounts may be higher than previously anticipated. The Group believes that its historical practices were compliant with the law and regulations in place at the time and is willing to cooperate with FCA through its revised customer-engagement approach. The provision includes commission models and calculations in line with the FCA's published redress scheme. No redress settlements were made as at 31 December 2025.

41. Non-IFRS measures

Non-IFRS measures included in the financial statements include the following:

Measure	Description
Net trading income	Net trading income represents net interest income and contributions from non-interest income activities.
Operating income	Operating income represents net trading income, other operating income and gains or losses on financial instruments.

42. Subsequent events

There were no subsequent events occurring after 31 December 2025.

43. Financial risk management

A. Introduction and overview

The Group has exposure to the following risks from financial instruments:

§  credit risk;

§  liquidity risk;

§  market risk; and

§  operational risk.

Risk management framework

The Board has overall responsibility for the establishment and oversight of the Group's risk management framework. The Board has established the GARCC, which is responsible for approving and monitoring Group risk management policies. The GARCC is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the GARCC.

The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

B. Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group's loans and advances to customers and investment debt securities. Credit risk includes counterparty, concentration, underwriting and credit mitigation risks.

Management of credit risk

The Bank's Board of Directors created the Credit Committee which is responsible for managing credit risk, including the following:

§  Formulating credit policies in consultation with business units, covering collateral requirements, credit assessments, risk grading and reporting, documentary and legal procedures, and compliance with regulatory and statutory requirements;

§  Establishing the authorisation structure for the approval and renewal of credit facilities. Authorisation limits are allocated in line with credit policy;

§  Reviewing and assessing credit risk: The Credit Committee or High Value Loan Committee assesses all credit exposures in excess of designated limits before facilities are committed to customers. Renewals and reviews of facilities are subject to a clearly documented process.

§  Limiting concentrations of exposures to counterparties, geographies and industries, by issuer, credit rating band, market liquidity and country (for debt securities);

§  Developing and maintaining risk gradings to categorise exposures according to the degree of risk of default. The current risk grading consists of 3 grades reflecting varying degrees of risk of default;

§  Developing and maintaining the Group's process for measuring ECL: This includes processes for:

o  initial approval, regular validation and back-testing of the models used;

o  determining and monitoring significant increase in credit risk; and

o  the incorporation of forward-looking information; and

§  Reviewing compliance with agreed exposure limits. Regular reports on the credit quality of portfolios are provided to the Credit Committee which may require corrective action to be taken.

C. Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk arises from mismatches in the timing and amounts of cash flows, which is inherent to the Group's operations and investments.

Management of liquidity risk

The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have enough liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. The key elements of the Group's liquidity strategy are as follows:

§  Funding base: offering six-months to five-year fixed term deposit structure with no early redemption option. This means the Bank is not subject to optionality risk where customers redeem fixed rate products where there may be a better rate available within the market;

§  Funding profile: the Bank has a matched funding profile and does not engage in maturity transformation which means that on a cumulative mismatch position the Bank is forecast to be able to meet all liabilities as they fall due;

§  Monitoring maturity mismatches, behavioural characteristics of the Group's financial assets and financial liabilities, and the extent to which the Group's assets are encumbered and so not available as potential collateral for obtaining funding;

§  Liquidity buffer: the Bank maintains a liquidity buffer of 10.0% of its deposit liabilities, with strict short-term mismatch limits of 0.0% for sight to three months and -5.0% for sight to six months. This ensures that the Bank is able to withstand any short-term liquidity shock; and

§  Interbank market: the Bank has no exposure to the interbank lending market. The Bank has no reliance on liquidity via the wholesale markets. In turn, if market conditions meant access to the wholesale funding was constrained as per the 2008 credit crisis, this would have no foreseeable effect on the Bank.

The Bank's liquidity position is monitored daily against internal and external limits agreed with the FSA and according to the Bank's Liquidity Policy. The Bank also has a Liquidity Contingency Policy and Liquidity Contingency Committee in the event of a liquidity crisis or potential liquidity disruption event occurring.

The Treasury department receives information from other business units regarding the liquidity profile of their financial assets and financial liabilities and details of other projected cash flows arising from projected future business. Treasury then maintains a portfolio of short-term liquid assets, largely made up of short-term liquid investment securities, loans and advances to banks and other inter-bank facilities, to ensure that sufficient liquidity is maintained within the Group as a whole.

Regular liquidity stress testing is conducted under a variety of scenarios covering both normal and more severe market conditions. The scenarios are developed considering both Group-specific events and market-related events (e.g. prolonged market illiquidity).

D. Market risk

Market risk is the risk that of changes in market prices; e.g. interest rates, equity prices, foreign exchange rates and credit spreads (not relating to changes in the obligor's / issuer's credit standing), will affect the Group's income or value of its holdings of financial instruments. The objective of the Group's market risk management is to manage and control market risk exposures within acceptable parameters to ensure the Group's solvency while optimising the return on risk.

Management of market risks

Overall authority for market risk is vested in the Assets and Liabilities Committee ("ALCO") which sets up limits for each type of risk. Group finance is responsible for the development of risk management policies (subject to review and approval by the ALCO) and for the day-to-day review of their implementation.

Foreign exchange risk

The Bank is not subject to foreign exchange risks and its business is conducted in pounds sterling.

Equity risk

The Group has investment in associates which are carried at cost adjusted for the Group's share of net asset value. The Bank has access to these accounts. The Bank's exposure to market risk is not considered significant given the low carrying amount of the investment.

The Group does not hold any investments in listed equities.

Interest rate risk

The principal potential interest rate risk that the Bank is exposed to is the risk that the fixed interest rate and term profile of its deposit base differs materially from the fixed interest rate and term profile of its asset base, or basis and term structure risk.

Additional interest rate risk may arise for banks where (a) customers are able to react to market sensitivity and redeem fixed rate products and (b) where a bank has taken out interest rate derivate hedges especially against longer-term interest rate risk, where the hedge moves against the bank. However, neither of these risks apply to the Bank.

Any interest rate risk assumed by the Bank will arise from a reduction in interest rates, in a rising environment due to the nature of the Bank's products and its matched funded profile. The Bank should be able to increase its lending rate to match any corresponding rise in its cost of funds, notwithstanding its inability to vary rates on its existing loan book. The Bank attempts to efficiently match its deposit taking to its funding requirements.

E. Operational risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group's processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks - e.g. those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the Group's operations.

Management of operational risk

The Group's objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Group's reputation with overall cost effectiveness and innovation. In all cases, Group policy requires compliance with all applicable legal and regulatory requirements.

The Group has developed standards for the management of operational risk in the following areas:

§  Business continuity planning;

§  Requirements for appropriate segregation of duties, including the independent authorisation of transactions;

§  Requirements for the reconciliation and monitoring of transactions;

§  Compliance with regulatory and other legal requirements;

§  Documentation of controls and procedures;

§  Periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified;

§  Requirements for the reporting of operational losses and proposed remedial action;

§  Development of contingency plans;

§  Training and professional development;

§  Ethical and business standards;

§  Information technology and cyber risks; and

§  Risk mitigation, including insurance where this is cost-effective.

Compliance with Group standards is supported by a programme of periodic reviews undertaken by Internal Audit. The results of Internal Audit reviews are reported to the GARCC.

44. Basis of measurement

The financial statements are prepared on a historical cost basis, except for the following material items:

Items	Measurement basis
FVTPL - Trading asset	Fair value
FVOCI - Debt securities	Fair value
Land and buildings	Fair value
Deferred consideration	Fair value
Net defined benefit liability	Fair value of plan assets less the present value of the defined benefit obligation

45. Material accounting policies

A. New currently effective requirements

The Group has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1 January 2025:

§  Amendments to IAS 21 - Lack of Exchangeability

No significant changes followed the implementation of these standards and amendments.

B. Forthcoming requirements

The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. New standards and amendments to standards, not yet effective:

§  Classification and Measurement of Financial Instruments - Amendments to IFRS 9 and IFS 7

§  Annual improvements to IFRS Accounting Standards - Volume 11

§  Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 & IFRS 7)

§  IFRS 18 Presentation and Disclosure in Financial Statements

The Group has assessed and is still assessing the impact of these amendments on the Group Financial Statements.

The Group has consistently applied the following accounting policies to all periods presented in these financial statements.

Set out below is an index of the material accounting policies, the details of which are available on the pages that follow:

Ref.	Note description	No.
A.	Basis of consolidation of subsidiaries and separate financial statements of the Company	100
B.	Interest in equity accounted investees	101
C.	Interest	101
D.	Fee and commission income	101
E.	Leases	102
F.	Income tax	103
G.	Financial assets and financial liabilities	104
H.	Cash and cash equivalents	108
I.	Loans and advances	108
J.	Property, plant and equipment	108
K.	Intangibles assets and goodwill	109
L.	Impairment of non-financial assets	109
M.	Employee benefits	110
N.	Share capital and reserves	111
O.	Earnings per share ("EPS")	111
P.	Segmental reporting	111

A. Basis of consolidation of subsidiaries and separate financial statements of the Company

i. Business combinations

The Group accounts for business combinations using the acquisition method when control is transferred to the Group.

Any contingent consideration is measured at fair value at the date of acquisition. Contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

ii. Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity if it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its control over the entity. The Group reassesses whether it has control if there are changes to one or more of the elements of control. This includes circumstances in which protective rights held (e.g. those resulting from a lending relationship) become substantive and lead to the Group having power over an investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

iii. Non-controlling interests ("NCI")

NCI are measured initially at their proportionate share of the acquiree's identifiable net assets at the date of acquisition.

Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

iv. Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.

v. Separate financial statements of the Company

In the separate financial statements of the Company, interests in subsidiaries, associates and joint ventures are accounted for at cost less impairment.

B. Interests in equity accounted investees

The Group's interests in equity accounted investees may comprise interests in associates and joint ventures.

Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.

Interests in associates and joint ventures are accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group's share of the profit or loss and OCI of equity accounted investees, until the date on which significant influence or joint control ceases.

C. Interest

Interest income and expense are recognised in profit or loss using the effective interest method.

i. Effective interest rate

The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts of the financial instrument to the gross carrying amount of the financial asset or amortised cost of the financial liability. When calculating the effective interest rate for financial assets, the Group estimates future cash flows considering all contractual terms of the financial instruments, including origination fees, loan incentives, broker fees payable, estimated early repayment charges, balloon payments and all other premiums and discounts. It also includes direct incremental transaction costs related to the acquisition or issue of the financial instrument. The calculation does not consider future credit losses.

ii. Amortised cost and gross carrying amount

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured on initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any expected credit loss allowance.

The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any expected credit loss allowance.

iii. Calculation of interest income and expense

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability.

However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the net carrying amount of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

D. Fee and commission income

The Group generates fee and commission income through provision of independent financial advice, insurance brokerage agency, introducer of foreign exchange services and commissions from brokering business finance for small and medium sized enterprises.

Independent financial advice and insurance brokerage agency

Income represents commission arising on services and premiums relating to policies and other investment products committed during the year, as well as renewal commissions having arisen on services and premiums relating to policies and other investment products committed during the year and previous years and effective at the reporting date. Income is recognised on the date that policies are submitted to product providers with an appropriate discount being applied for policies not completed. As a way to estimate what is due at the year-end, a "not proceeded with" rate of 10.0% for pipeline life insurance products and 0.0% for non-life insurance pipeline is assumed. Renewal commissions are estimated by taking the historical amount written pro-rata to 3 months.

Other income other than that directly related to the loans is recognised over the period for which service has been provided or on completion of an act to which the fee relates.

E. Leases

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

i. As a lessee

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, for the leases of property the Group has elected not to separate non-lease components and as a result, accounts for the lease and non-lease components as a single lease component.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and the type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

§  Fixed payments, including in-substance fixed payments;

§  Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

§  Amounts expected to be payable under a residual value guarantee; and

§  The exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in‑substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group presents right-of-use assets that do not meet the definition of investment property in 'property, plant and equipment' and lease liabilities in 'loans and borrowings' in the statement of financial position.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

ii. As a lessor

At inception or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

When the Group acts as a lessor, it determines at lease inception whether each lease is a finance or an operating lease.

To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

Finance leases and HP contracts

When assets are subject to a finance lease or HP contract, the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. HP and lease income is recognised over the term of the contract or lease reflecting a constant periodic rate of return on the net investment in the contract or lease. Initial direct costs, which may include commissions and legal fees directly attributable to negotiating and arranging the contract or lease, are included in the measurement of the net investment of the contract or lease at inception.

Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss and other comprehensive income on a straight-line basis over the period of the lease.

F. Income tax

Current and deferred taxation

Current taxation relates to the estimated corporation tax payable in the current financial year. Deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill and temporary differences related to investments in subsidiaries and associates to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.

Deferred taxation is determined using tax rates, and laws that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred tax is realised. Deferred taxation assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

G. Financial assets and financial liabilities

i. Recognition and initial measurement

The Group initially recognises loans and advances, deposits, debt securities issued and subordinated liabilities on the date on which they are originated. All other financial instruments, including regular-way purchases and sales of financial assets are recognised on the trade date, which is the date on which the Group becomes party to the contractual provisions of the instrument.

A financial asset or financial liability is measured initially at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue.

ii. Classification

Financial assets

On initial recognition, a financial asset is classified as measured at amortised cost, FVOCI or FVTPL.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

§  The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

§  The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest ("SPPI").

A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated as FVTPL:

§  The asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

§  The contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.

All other financial assets are classified as measured at FVTPL.

In addition, on initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Business model assessment

The Group makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed and information provided to management.

Assessment of whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin.

In assessing whether the contractual cash flows are SPPI, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

Financial liabilities

The Group classifies its financial liabilities, other than financial guarantees and loan commitments, as measured at amortised cost.

iii. Derecognition

Financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in OCI is recognised in profit or loss.

Financial liabilities

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.

iv. Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted under IFRS, or for gains and losses arising from a group of similar transactions such as in the Group's trading activity.

v. Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at the date. The fair value of a liability reflects its non‑performance risk.

The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred.

The Group measures fair values using the following fair value hierarchy, which reflects the significance of the inputs used in making the measurements:

§  Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments;

§  Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data; and

§  Level 3: inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

The fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments, the Group determines fair values using other valuation techniques.

For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

vi. Impairment

A financial instrument that is not credit-impaired on initial recognition is classified in 'Stage 1' and has its credit risk continuously monitored by the Group.

If a SICR since initial recognition is identified, the financial instrument is moved to 'Stage 2' but is not yet deemed to be credit impaired.

§  An SICR is always deemed to occur when the borrower is 30 days past due on its contractual payments. If the Group becomes aware ahead of this time of non-compliance or financial difficulties of the borrower, such as loss of employment, avoiding contact with the Group then an SICR has also deemed to occur; and

§  A receivable is always deemed to be in default and credit-impaired when the borrower is 90 days past due on its contractual payments or earlier if the Group becomes aware of severe financial difficulties such as bankruptcy, individual voluntary arrangement, abscond or disappearance, fraudulent activity and other similar events.

If the financial instrument is credit-impaired, the financial instrument is then moved to 'Stage 3'. Financial instruments in Stage 3 have their ECL measured based on expected credit losses on a lifetime basis.

Loss allowances for lease receivables are always measured at an amount equal to lifetime ECL.

12-month ECL are the portion of ECL that result from default events on a financial instrument that are possible within the 12 months after the reporting date. Financial instruments for which a 12-month ECL is recognised are referred to as 'Stage 1 financial instruments'.

Lifetime ECL are the ECL that result from all possible default events over the expected life of a financial instrument. Financial instruments for which a lifetime ECL is recognised but which are not credit-impaired are referred to as 'Stage 2 financial instruments'.

Measurement of ECL

After a detailed review, the Group devised and implemented an impairment methodology in light of the IFRS 9 requirements outlined above noting the following:

§  The Group has identified and documented key drivers of credit risk and credit losses its financial instruments and using an analysis of historical data has estimated the relationship between macroeconomic variables and credit risk and credit losses;

§  The ECL is derived by reviewing the Group's loss rate and loss given default over the past 8 years by product and geographical segment; and

§  If the Group holds objective evidence through specifically assessing a credit-impaired receivable and believes it will go on to completely recover the debt due to the collateral held and cooperation with the borrower, then no IFRS 9 provision is made.

ECL are probability-weighted estimates of credit losses. They are measured as follows:

§  Financial assets that are not credit-impaired at the reporting date: as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive);

§  Financial assets that are credit-impaired at the reporting date: as the difference between the gross carrying amount and the present value of estimated future cash flows; and

§  Undrawn loan commitments: as the present value of the difference between the contractual cash flows that are due to the Group if the commitment is drawn down and the cash flows that the Group expects to receive.

Credit-impaired financial assets

At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt financial assets carried at FVOCI, and finance lease receivables are credit-impaired (referred to as 'Stage 3 financial assets'). A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable date:

§  Significant financial difficulty of the borrower or issuer;

§  A breach of contract such as a default or past due event;

§  The restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;

§  It is becoming probable that the borrower will enter bankruptcy or another type of financial reorganisation; or

§  The disappearance of an active market for a security because of financial difficulties.

A loan that has been renegotiated due to a deterioration in the borrower's condition is usually considered to be credit-impaired unless there is evidence that the risk of not receiving contractual cash flows has reduced significantly and there are no other indicators of impairment. In addition, a retail loan that is overdue for 90 days or more is considered credit-impaired even when the regulatory definition of default is different.

In assessing of whether an investment in sovereign debt is credit impaired, the Group considers the following factors:

§  The market's assessment of creditworthiness as reflected in the bond yields;

§  The rating agencies' assessments of creditworthiness;

§  The country's ability to access the capital markets for new debt issuance;

§  The probability of debt being restructured, resulting in holders suffering losses through voluntary or mandatory debt forgiveness; and

§  The international support mechanisms in place to provide the necessary support as 'lender of last resort' to that country, as well as the intention, reflected in public statements, of governments and agencies to use those mechanisms. This includes an assessment of the depth of those mechanisms and, irrespective of the political intent, whether there is the capacity to fulfil the required criteria.

Presentation of allowance for ECL in the statement of financial position

Loss allowances for ECL are presented in the statement of financial position as follows:

§  Financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets;

§  Loan commitments: generally, as a provision; and

§  Debt instruments measured at FVOCI: no loss allowance is recognised in the statement of financial position because the carrying amount of these assets is their fair value. However, the loss allowance is disclosed and is recognised in the fair value reserve.

Write-off

Loans and debt securities are written off (either partially or in full) when there is no reasonable expectation of recovering a financial asset in its entirety or a portion thereof. This is generally the case when the Group determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. This assessment is carried out at the individual asset level.

Recoveries of amounts previously written off are included in 'impairment losses on financial instruments' in the statement of profit or loss and OCI.

Financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due.

H. Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents comprise cash and deposit balances with an original maturity date of three months or less.

I. Loans and advances

Loans and advances' captions in the statement of financial position include:

§  Loans and advances measured at amortised cost (see note 44 (G)). They are initially measured at fair value plus incremental direct transaction costs, and subsequently at their amortised cost using the effective interest method; and

§  Finance lease receivables (see note 44 (E)).

J. Property, plant and equipment

Items of property, plant and equipment are stated at historical cost less accumulated depreciation (see below). Historical cost includes expenditure that is directly attributable to the acquisition of the items. Buildings are carried at a revalued amount, being fair value at the date of revaluation, less subsequent depreciation and impairment.

If an asset's carrying amount is increased as a result of a revaluation, the increase shall be recognised in other comprehensive income and accumulated in equity under the heading of revaluation surplus. However, the increase shall be recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss.

If an asset's carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in profit or loss. However, the decrease shall be recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount accumulated in equity under the heading of revaluation surplus.

The assets' residual values and useful economic lives are reviewed, and adjusted if appropriate, at each reporting date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

When parts of an item of property, plant and equipment have different useful lives, those components are accounted for as separate items of property, plant and equipment.

Depreciation

Assets are depreciated on a straight-line basis, so as to write off the book value over their estimated useful lives. The estimated useful lives of property, plant and equipment are as follows:

Property, plant and equipment

Leasehold improvements	to expiration of the lease
IT equipment	4 - 5 years
Motor vehicles	2 - 5 years
Furniture and equipment	4 - 10 years
Plant and machinery	5 - 20 years

K. Intangible assets and goodwill

i. Goodwill

Goodwill that arises on the acquisition of subsidiaries is measured at cost less accumulated impairment losses.

ii. Software

Software acquired by the Group is measured at cost less accumulated amortisation and any accumulated impairment losses.

Expenditure on internally developed software is recognised as an asset when the Group is able to demonstrate: that the product is technically feasible, its intention and ability to complete the development and use the software in a manner that will generate future economic benefits, and that it can reliably measure the costs to complete the development. The capitalised costs of internally developed software include all costs directly attributable to developing the software and capitalised borrowing costs, and are amortised over its useful life. Internally developed software is stated at capitalised cost, less accumulated amortisation and any accumulated impairment losses.

Software is amortised on a straight-line basis in profit or loss over its estimated useful life, from the date on which it is available for use. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

iii. Other

Intangible assets that are acquired by an entity and having finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.

Intangible assets with indefinite useful lives that are acquired or built are carried at cost less accumulated impairment losses. Intangible assets with indefinite useful lives are not amortised but instead are subject to impairment testing at least annually.

The useful lives of intangibles are as follows:

Intangible assets

Customer contracts and lists	to expiration of the agreement
Intellectual property rights	4 years - indefinite
Website development costs	indefinite
IT Software and website development costs	5 years

Included in intellectual property rights is capitalised costs for acquiring a UK Banking licence. The banking licence is assumed to have an indefinite life as there is no foreseeable limit to the period over which the asset is expected to generate benefits for the business. Costs related to obtaining this asset are held at cost and are not being amortised.

L. Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. Goodwill and indefinite useful life intangible assets are tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that is largely independent of the cash inflows of other assets or Cash Generating Units ("CGUs"). Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less cost to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.

The Group's corporate assets do not generate separate cash inflows and are used by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGUs to which the corporate assets are located.

Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

M. Employee benefits

i. Long-term employee benefits

Pension obligations

The Group has pension obligations arising from both defined benefit and defined contribution pension plans.

A defined contribution pension plan is one under which the Group pays fixed contributions into a separate fund and has no legal or constructive obligations to pay further contributions. Defined benefit pension plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and remuneration.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in OCI. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

The statement of financial position records as an asset or liability as appropriate, the difference between the market value of the plan assets and the present value of the accrued plan liabilities. The defined benefit pension plan obligation is calculated by independent actuaries using the projected unit credit method and a discount rate based on the yield on high quality rated corporate bonds.

The Group's defined contribution pension obligations arise from contributions paid to a Group personal pension plan, an ex gratia pension plan, employee personal pension plans and employee co-operative insurance plans. For these pension plans, the amounts charged to the income statement represent the contributions payable during the year.

ii. Share-based compensation

The Group maintains a share option programme which allows certain Group employees to acquire shares of the Group. The change in the fair value of options granted is recognised as an employee expense with a corresponding change in equity. The fair value of the options is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options.

At each reporting date, the Group revises its estimate of the number of options that are expected to vest and recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

The fair value is estimated using a proprietary binomial probability model. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.

N. Share capital and reserves

Share issue costs

Incremental costs that are directly attributable to the issue of an equity instrument are deducted from the initial measurement of the equity instruments.

O. Earnings per share ("EPS")

The Group presents basic and diluted EPS data for its Ordinary Shares. Basic EPS is calculated by dividing the profit or loss that is attributable to ordinary Shareholders of MFG by the weighted-average number of Ordinary Shares outstanding during the period. Diluted EPS is determined by adjusting profit or loss that is attributable to Ordinary Shareholders and the weighted-average number of Ordinary Shares outstanding for the effects of all dilutive potential Ordinary Shares, which comprise share options granted to employees.

P. Segmental reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Group's primary format for segmental reporting is based on business segments.

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses relating to transactions with any of the Group's other components, whose operating results are regularly reviewed by the CEO who is the chief operating decision maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results reported to the CEO include items that are directly attributable to a segment as well as those that can be allocated on a reasonable basis.