Outcomes Statement

Publication Date: 22nd May 2023 How are Default and Delinquency rates defined? Delinquency rates are those loans that are overdue at least one repayment, expressed as a percentage of the amount lent in the year. Default rates are the percentage of the amount lent in the year which is considered unrecoverable following our Collections efforts. For the ‘Actual’ results published, all loans have passed their final payment date at the date of publication and our Collection activities continue to collect further repayments on loans, for example customers on payment plans, and as a result our Default and Delinquency Rates improve over time, and so does the Lender IRR. What is the expected cash flow return profile of The Money Platform’s loans? Our target is for a monthly loan cohort as a whole to have broken even by 6 months after the start date (e.g. loans issued in May 2023 are targeted to reach IRR break even (0% return) by November 2023), and to reach Forecast IRR 6 months after that (i.e. 12 months after the loan start date). The First published Actual annualised return above includes months that are several months passed their maturity date (e.g. February 2022) and months that have only recently matured (e.g. January 2023) Returns by annual cohort 2022-23 Actual Returns (May 2023) Returns in 2022-23 were slightly ahead of expectations with a Gross Return (after losses and fees) now at 17.9% (forecast: 13.4%). This is significantly ahead of 2021-22 at the same point and we should, as collections activity takes place, see returns continue to increase. Key reasons for this outperformance versus forecast are we tightened lending criteria to offset risk from the cost-of-living crisis, however, the macro-economy has performed better than was predicted in May 2022 on some metrics – for example unemployment has remained slightly lower than we forecast last year and the impact of the cost-of-living crisis has been muted due to government intervention. 2021-2022 Updated Returns (May 2023) Returns in 2021-22 are now ahead of the original forecast lifetime net annualised return of 5.9-6.7% p.a.. Returns for 2021-22 did underperform initially, with the cohort only just reaching lender breakeven in May 2022 (Net IRR of 0.2%- 0.3%). The year was one of two halves with performance markedly weaker in the first half as the U.K. exited Covid-19 restrictions in the Spring and Summer of 2021, with the well-documented effects of the ‘pingdemic’ and end of furlough, amalgamating to product weak credit performance. By contrast the performance over the Autumn and Winter of 2021 was stronger as the economy returned to more ‘normal’ conditions. We said in our initial assessment in May 2022 that we expected strong collections from the 2021-22 year and this has now been borne out, with Latest Actual Net Annualised Return of 7.4%-8.4%. This corresponds to a Gross Return (after losses and fees, before estimated tax and cash drag) now at 17.6%, and follows the Default Rate falling from 7.8% to 6.7% and the Delinquency Rate dropped from 11.7% to 10.4%. 2020-2021 Updated Returns (January 2023) Returns in 2020-21 have continued to outperform expectations, with both the Default and Delinquency rate now below the forecast level. Collections are now slowing on this cohort and so further improvements in performance are likely to be muted. It should be noted that the figures above refer to the past and that past performance is not a reliable indicator of future results 2023-2024 Forecast Returns For our financial year 2023-24 (loans issued between 1st February 2023 – 31st January 2024) we are publishing Forecast Lifetime Annualised Return (after losses and fees, before estimated tax and cash drag) of 15.5%. Background The key assumptions for the 2023-2024 Forecast Returns (when compared to actual returns for 2022-23) are: A higher default rate of 7.8%. A higher delinquency rate of 9.7%. These Forecast Returns reflect a slight expected deterioration on the actual returns realised in 2022-23 (as at May 2023). Over the course of the last year we have operated a tighter than desired lending policy in response to the cost of living crisis, the war in Ukraine, the rising interest rate environment, and the expectation of a deterioration of our customer’s finances. Macro-economic uncertainty has led to us taking a highly cautious approach but we do not expect to see the same extent of macro-economic uncertainty over the next 12 months, reflected in a more flexible credit policy. Nevertheless, the macroeconomic situation faced by our borrowers will continue to be challenging over 2023-24 as high inflation continues to erode consumer purchasing power and interest rate rises are felt by more homeowners and businesses leading to subsequent knock-on impacts resulting in a flatlining economy. As with last year, we expect low levels of unemployment, albeit a slightly looser labour market than seen over the last year – the OBR’s March 2023 report forecast unemployment of 4.1% in 2023. Like in 2021-22 we expect to continue to see economic stagnation in the face of the cost-of-living crisis and war in Europe. The OBR forecast a contraction of 0.2% in 2023, with continued high levels of inflation and wages not keeping up, the OBR expect Real Household Disposable Income to fall by 2.6% in 2023, very similar to the 2.5% seen in 2022. Uncertainty around the strength of UK consumers, persistency of high inflation and level of economic growth (or possible recession) is a cause for our caution and expectation that returns in in 2023-24 will be weaker than seen in previous years. Any deviation from our macro-economic assumptions, including for example entering a deep recession, higher than expected interest rate rises, higher than expected inflation, further changes to the regulatory environment or political instability, could undermine the situation and result in higher levels of default and delinquency. Methodology for 2023-24 The Forecast lifetime annualised return is the total return calculated on an Internal Rate of Return (IRR) basis that an investor can expect to receive on loans issued in the year from February 2023 to January 2024 (our company’s financial year) over the life of the loans. We will continue to update the actual returns (including recoveries) for our cohorts. The IRR calculated on the basis of historic performance of our loan book adjusted for forward-looking expectations. We are constantly improving our credit decisioning as we accumulate data but given the macroeconomic uncertainties, we have included a buffer on our historic loss rate. The Forecast lifetime annualised Return assumes an investor invests in a diversified portfolio of our loans each month throughout the Forecast Return period, and in proportion to the volume of loans issued each month by the Company. For the purposes of this Outcomes Statement the Forecast lifetime annualised return is based on expected cashflows from three different loan outcome-cohorts: Performing Loans, being those that are fully repaid within the reporting period. Defaulted loans, being those with no received payments. Delinquent loans, being those that at the end of the reporting period have only made partial payments or have entered into an alternative payment plan. Reasons why the actual return may differ from the Forecast Return: The default and/or delinquency rate being different to expected. The UK macroeconomic situation in 2023-4 being different to expected. The Company’s loan volumes each month being different from forecast. Changes to the regulatory environment in which the Company operates. An investor’s portfolio mix being different to the Company’s volume mix. The number of lenders on the platform impacting the uninvested weighting (cash drag). Delays in payments being distributed to lenders due to technical or personnel issues. Our net return assumes a 25-35% cash drag and a 40% (higher band) tax rate – this may not match the experience of all lenders. For 2020-21 the tax rate was assumed at forecast to be 20%, this was updated at the time of publication of the actual results in May 2021. Changes to The Money Platform’s economic model, for example a change to the income allocations between lenders and the platform (which would be communicated in advance to loan participation). Reduction in interest payable due to changes in customer behaviour resulting in more early repayments. What is an “Internal Rate of Return”? The internal rate of return on an investment is the annualised effective compounded return rate or rate of return that sets the net present value of all cash flows (both positive and negative) from the investment equal to zero. IRR is designed to account for the time value of money. A given return on investment received at a given time is worth more than the same return received at a later time, so the latter would yield a lower IRR than the former, if all other factors are equal.