Regulatory Filings • Aug 26, 2021
Regulatory Filings
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Prospectus dated 26 August 2021
(incorporated with limited liability in England and Wales with registered number 06018973)
(incorporated with limited liability in England and Wales with registered number 01525242)
(incorporated with limited liability in England and Wales with registered number 00961088)
(incorporated with limited liability in England and Wales with registered number 00753518)
(incorporated with limited liability in England and Wales with registered number 06032184)
Euro Medium Term Note Programme
Arranger for the Programme HSBC
Dealers
HSBC, PEEL HUNT AND SANTANDER CORPORATE & INVESTMENT BANKING
This document (the "Prospectus") has been approved as a base prospectus by the United Kingdom (the "UK" or the "United Kingdom") Financial Conduct Authority (the "FCA"), as competent authority under Regulation (EU) 2017/1129 (the "EU Prospectus Regulation") as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 (the "EUWA") (the "UK Prospectus Regulation").The FCA only approves this Prospectus as meeting the standards of completeness, comprehensibility and consistency imposed by the UK Prospectus Regulation. Such approval should not be considered as an endorsement of the Issuer or the Guarantors or of the quality of the Notes (as defined below) that are the subject of this Prospectus.
Investors should be aware that the UK Prospectus Regulation only applies where Notes are admitted to trading on a regulated market for the purposes of Article 2(1)(13A) of Regulation (EU) No 600/2014 as it forms part of UK domestic law by virtue of the EUWA ("UK MiFIR" and a "UK Regulated Market") situated or operating within the United Kingdom and/or an offer of Notes is made to the public (within the meaning provided for the purposes of the Prospectus Regulation Rules that form part of the FCA Handbook) in the United Kingdom.
This Prospectus has also been approved as a base prospectus by the Central Bank of Ireland (the "CBI"), as a competent authority under the EU Prospectus Regulation. The CBI only approves this Prospectus as meeting the standards of completeness, comprehensibility and consistency imposed by the EU Prospectus Regulation. Such approval should not be considered as an endorsement of the Issuer or the Guarantors or of the quality of the Notes that are the subject of this Prospectus.
The CBI's approval relates only to the Notes which are to be admitted to trading on a regulated market for the purposes of Directive 2014/65/EU ("MiFID II" and an "EU Regulated Market") and/or which are to be offered to the public in any Member State of the European Economic Area (the "EEA"). No offer of Notes to the public in the EEA will be made.
Accordingly, Investors should be aware that they will only have the rights afforded by the EU Prospectus Regulation if the EU Prospectus Regulation applies and they will only have the rights afforded by the UK Prospectus Regulation if the UK Prospectus Regulation applies.
Under the Euro Medium Term Note Programme described in this Prospectus (the "Programme"), International Personal Finance plc (the "Issuer" or "IPF") may from time to time issue notes denominated in any currency (the "Notes") which will be unconditionally and irrevocably guaranteed on a joint and several basis by each of IPF Holdings Limited, International Personal Finance Investments Limited, IPF International Limited and IPF Digital Group Limited (each a "Guarantor", together the "Guarantors" and their respective guarantee in respect of the Notes, the "Guarantee"); "unconditionally" means that, if the Issuer hasn't paid the relevant amount due, there is no further condition to be fulfilled before the Guarantee can be called on, and "irrevocably" means that the Guarantors can't revoke their Guarantee at a later date. The reference to "on a joint and several basis" means that any person owed money under the Guarantee may pursue the obligation against all the Guarantors together, or any one Guarantor as if that Guarantor were liable for the whole guaranteed amount. The Issuer and its subsidiaries (including the Guarantors) taken as a whole are referred to in this Prospectus as the "Group". The aggregate nominal amount of Notes outstanding will not at any time exceed EUR 1,000,000,000. The specific terms of each series or tranche of Notes to be issued under the Programme will be specified in the final terms issued by the Issuer (the "Final Terms"). Each set of Final Terms sets out the specific terms of the relevant issue of Notes under the Programme. Each set of Final Terms is intended to be read alongside the Terms and Conditions of the Notes, and the two together provide the specific terms of the Notes relevant to a specific issuance.
An Investor should read and understand fully the contents of this Prospectus and any applicable Final Terms before making any investment decisions relating to any Notes issued under this Prospectus. The UK Prospectus Regulation requires the Issuer to give more disclosure in respect of Notes denominated in an amount of less than EUR 100,000 (unless traded only on a UK Regulated Market, or a specific segment thereof, to which only qualified investors, as defined in the UK Prospectus Regulation, have access) ("Retail Notes") than it does in respect of Notes denominated in an amount of EUR 100,000 or more ("Wholesale Notes"), on the basis that lower denomination Notes are more likely to be bought by less sophisticated investors who might benefit from additional information. There are therefore two different forms of Final Terms included in this document, one with slightly more disclosure items than the other, and which one will be used will depend on the denomination of the Notes as made clear in the legend appearing in the very first paragraph of each form of Final Terms.
This Prospectus relates to (i) the admission to "listing to listing and" trading of Wholesale Notes (the "EU Notes") on the regulated market of The Irish Stock Exchange plc (trading as Euronext Dublin) (the "Euronext Dublin Regulated Market" and "Euronext Dublin", respectively) or any other EU Regulated Market operated in the EEA (the "EEA Admission"); (ii) the admission to listing and trading of Retail Notes (the "UK Retail Notes") and Wholesale Notes (the "UK Wholesale Notes") and, together with the UK Retail Notes, the "UK Notes") on the official list of the FCA and the main market of London Stock Exchange plc (the "LSE Main Market" and the "LSE", respectively) or any other UK Regulated Market (the "UK Admission"); and (iii) an offer of the UK Retail Notes in the United Kingdom in circumstances where the Final Terms in relation to the UK Retail Notes specify that an offer of those UK Retail Notes may be made other than pursuant to Article 1(4) of the UK Prospectus Regulation (a "UK Public Offer").
The Euronext Dublin Regulated Market is an EU Regulated Market for the purposes of MiFID II. The LSE Main Market is a UK Regulated Market for the purposes of UK MiFIR.
Each set of Final Terms in respect of UK Notes will be submitted to the FCA and the LSE and/or the operator of any other UK Regulated Market and published by the Issuer in accordance with the UK Prospectus Regulation and in compliance with the other requirements of UK law, if applicable.
Each set of Final Terms in respect of EU Notes will be submitted to the CBI and Euronext Dublin and/or the operator of any other EU Regulated Market, following, where relevant, receipt of a certificate of approval in respect of the passporting of this Prospectus being provided to the relevant host EEA Member State, and published by the Issuer in accordance with the EU Prospectus Regulation and in compliance with the other requirements of the local law of the relevant EEA Member State, if applicable.
For the avoidance of doubt, the information contained in this Prospectus in relation to UK Notes, the UK Admission and any UK Public Offer does not relate or apply to EU Notes or the EEA Admission. The information contained in this Prospectus in relation to EU Notes and the EEA Admission does not relate or apply to UK Notes, the UK Admission or a UK Public Offer. Only UK Notes may be listed on the LSE Main Market or any other UK Regulated Market and only EU Notes may be listed on the Euronext Dublin Regulated Market or any other EU Regulated Market.
The "Relevant Competent Authority" is: (i) in respect of the UK Admission or a UK Public Offer, the FCA; and (ii) in respect of the EEA Admission, the CBI. A "Relevant Market" is: (i) in respect of the UK Admission, the LSE Main Market or any other UK Regulated Market; and (ii) in respect of the EEA Admission, the Euronext Dublin Regulated Market or any other EU Regulated Market. This Prospectus is valid for 12 months from its date and may be supplemented or replaced from time to time to reflect any significant new factor, material mistake or material inaccuracy relating to the information included in it. The obligation to prepare a supplement to this Prospectus in the event of any significant new factor, material mistake or material inaccuracy does not apply when this Prospectus is no longer valid.
This Prospectus contains important information about IPF, the Group (as defined below) and the terms of the Programme. This Prospectus also describes the risks relevant to IPF and its business and risks relating to an investment in the Notes generally. Investors in the Notes ("Investors") should make their own assessment as to the suitability of investing in the Notes.
If the Final Terms in respect of any Notes includes a legend entitled "Prohibition of Sales to EEA Retail Investors", the Notes are not intended to be offered, sold or otherwise made available to, and should not be offered, sold or otherwise made available to, any retail investor in the EEA. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of Directive (EU) 2016/97 (the "Insurance Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the EU Prospectus Regulation. Consequently no key information document required by Regulation (EU) 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
Information on the relevant terms and conditions of an offer is to be provided at the time of that offer by an Authorised Offeror (as defined in the section entitled Important Legal Information), and cannot therefore be included in this Prospectus.
If the Final Terms in respect of any Notes includes a legend entitled "Prohibition of Sales to UK Retail Investors", the Notes are not intended to be offered, sold or otherwise made available to, and should not be offered, sold or otherwise made available to, any retail investor in the UK. For these purposes, a "retail investor" means a person who is one (or more) of: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of UK domestic law by virtue of the EUWA; or (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the "FSMA") and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of UK MiFIR. Consequently, no key information document required by Regulation (EU) No 1286/2014 as it forms part of UK domestic law by virtue of the EUWA (the "UK PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.
The Issuer and the Guarantors accept responsibility for the information contained in this Prospectus and, in relation to each Tranche of Notes, for the information contained in the applicable Final Terms for such Tranche of Notes. To the best of the knowledge of the Issuer and the Guarantors, the information contained in this Prospectus is in accordance with the facts and makes no omission likely to affect the import of such information.
Where information has been sourced from a third party, this information has been accurately reproduced and, as far as the Issuer is aware and is able to ascertain from the information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. The source of third party information is identified where used.
Certain terms, words or phrases in this Prospectus are defined in double quotation marks, and references elsewhere to that term are designated with initial capital letters. See also the section "Index of Defined Terms" in this Prospectus.
In this Prospectus, unless otherwise specified or the context otherwise requires, references to "sterling", "£" and "GBP" are to the currency of the United Kingdom (and references to "£m" are to millions of pounds sterling), references to "dollars", "\$" and "USD" are to the currency of the United States of America (and references to "\$m" are to millions of U.S. dollars) and references to "€", "EUR" and "euro" are to the single currency of those Member States participating in the third stage of European economic and monetary union from time to time (and references to "€m" are to millions of euro).
Any references in this Prospectus to any statute, directive, regulation or other legislation is a reference to such statute, directive, regulation or other legislation as it may be amended, reenacted, supplemented or replaced from time to time.
The Issuer has been given:
The Programme has been rated BB- by Fitch and (P)Ba3 by Moody's. In general, EEA regulated investors are restricted from using a rating for EEA regulatory purposes if such rating is not issued by a credit rating agency established in the EEA and registered under Regulation (EC) No. 1060/2009 (the "EU CRA Regulation") (and such registration has not been withdrawn or suspended, subject to transitional provisions that apply in certain circumstances). Similarly, in general, UK regulated investors are restricted from using a rating for UK regulatory purposes if such rating is not issued by a credit rating agency established in the UK and registered under Regulation (EC) No. 1060/2009 as it forms part of UK domestic law by virtue of the EUWA (the "UK CRA Regulation"). Each of Fitch and Moody's is established in the UK and registered as a credit rating agency under the UK CRA Regulation. As such, the ratings issued by Fitch and Moody's may be used for regulatory purposes in the UK in accordance with the UK CRA Regulation. Whilst Fitch and Moody's are not established in the EEA, the ratings issued by Fitch have been endorsed by Fitch Ratings Ireland Limited and the ratings issued by Moody's have been endorsed by Moody's Deutschland GmbH (each of which is established in the EEA and registered as a credit rating agency under the EU CRA Regulation) in accordance with the EU CRA Regulation. As such, the ratings issued by Fitch and Moody's may be used for regulatory purposes in the EEA in accordance with the EU CRA Regulation.
Tranches of Notes to be issued under the Programme will be rated or unrated. Where a Tranche of Notes is to be rated, such rating will not necessarily be the same as the rating assigned to the Programme and the applicable rating will be specified in the relevant Final Terms. Whether a rating in relation to any Tranche of Notes will be treated as having been issued by a credit rating agency established in the EEA and registered under the EU CRA Regulation or by a credit rating agency established in the UK and registered under the UK CRA Regulation will be disclosed in the relevant Final Terms. A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency.
"BB-" ratings from Fitch indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists which supports the servicing of financial commitments. Obligations rated "Ba" by Moody's are judged to have speculative elements and are subject to substantial credit risk. The modifier "3" is appended to a rating by Moody's to denote relative status within the major rating category.
This Prospectus is to be read in conjunction with all documents which are incorporated herein by reference (see "Documents Incorporated by Reference" section).
The Notes to be issued under the Programme are not protected by the Financial Services Compensation Scheme (the "FSCS"). As a result, neither the FSCS nor anyone else will pay compensation to an Investor upon the failure of the Issuer, the Guarantors or the Group as a whole.
This Prospectus does not constitute an offer of, or an invitation by or on behalf of the Issuer, the Guarantors or the Dealers to subscribe for, or purchase, any Notes.
See the section starting on page 7 entitled "How do I use this Prospectus?". If an Investor has any questions regarding the content of this Prospectus, any Final Terms and/or any Notes or the actions they should take, they should seek advice from their independent financial adviser, tax adviser or other professional adviser before making any investment decision.
Amounts payable under the Notes may be calculated by reference to EURIBOR, SONIA, PIBOR, WIBOR, PRIBOR, ROBOR, BUBOR, STIBOR or TIIE which are respectively provided by the European Money Markets Institute ("EMMI"), the Bank of England ("BoE"), the European Banking Federation ("EBF"), GPW Benchmark SA ("GPW"), the Czech Financial Benchmark Facility ("CFBF"), the National Bank of Romania ("NBR"), Magyar Nemzeti Bank ("MNB"), the Swedish Bankers' Association and Banco de México ("BDM"). As at the date of this Prospectus, the EMMI and the CFBF appear on the register of administrators and benchmarks (the "EU Benchmarks Register") established and maintained by the European Securities and Markets Authority ("ESMA") pursuant to Article 36 of Regulation (EU) 2016/1011 (the "EU Benchmarks Regulation"), but not the register of administrators and benchmarks (the "UK Benchmarks Register") established and maintained by the FCA pursuant to Article 36 of Regulation (EU) 2016/1011 as it forms part of UK domestic law by virtue of the EUWA (the "UK Benchmarks Regulation"). As at the date of this Prospectus, GPW does not appear on the UK Benchmarks Register, but does appear on the EU Benchmarks Register. The BoE, the EBF, the NBR, MNB, the Swedish Bankers' Association and BDM do not appear on the EU Benchmarks Register or the UK Benchmarks Register, as benchmarks set by central banks and certain public authorities are subject to certain exemptions pursuant to Article 2 of the EU Benchmarks Regulation and Article 2 of the UK Benchmarks Regulation. As far as the Issuer is aware, the transitional provisions in Article 51 of the UK Benchmarks Regulation apply such that none of the EMMI, the CFBF or GPW are currently required to obtain authorisation/ registration (or, if located outside the UK, recognition, endorsement or equivalence) under the UK Benchmarks Regulation. The registration status of any administrator under one or both of the EU Benchmarks Regulation and the UK Benchmarks Regulation is a matter of public record and, save where required by applicable law, the Issuer does not intend to update the applicable Final Terms to reflect any change in the registration status of an administrator.
The Final Terms in respect of any Notes may include a legend entitled "MiFID II Product Governance" which will outline the target market assessment in respect of the Notes and which channels for distribution of the Notes are appropriate. Any person subsequently offering, selling or recommending the Notes (a "distributor") should take into consideration the target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution channels.
A determination will be made in relation to each issue about whether, for the purpose of the MiFID Product Governance rules under EU Delegated Directive 2017/593 (the "MiFID Product Governance Rules"), any Dealer subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the MiFID Product Governance Rules.
The Final Terms in respect of any Notes may include a legend entitled "UK MiFIR product governance" which will outline the target market assessment in respect of the Notes and which channels for distribution of the Notes are appropriate. Any person subsequently offering, selling or recommending the Notes (a "distributor") should take into consideration the target market assessment; however, a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the "UK MiFIR Product Governance Rules") is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution channels. A determination will be made in relation to each issue about whether, for the purpose of the UK MiFIR Product Governance Rules, any Dealer subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the UK MiFIR Product Governance Rules.
The Notes have not been and will not be registered under the United States Securities Act of 1933 (the "Securities Act") and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act.
Notification under Section 309B of the Securities and Futures Act, Chapter 289 of Singapore – Unless otherwise stated in the Final Terms in respect of any Notes, all Notes issued or to be issued under the Programme shall be prescribed capital markets products (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).
An Investor should read and understand fully the contents of this Prospectus and the relevant Final Terms before making any investment decisions relating to any Notes. This Prospectus contains important information about the Issuer, the Guarantors, the Group, the terms of the Notes and the terms of the Guarantee; as well as describing certain risks relevant to the Issuer, the Guarantors, the Group and their businesses and also other risks relating to an investment in the Notes generally. An overview of the various sections comprising this Prospectus is set out below:
The "RISK FACTORS" section describes the principal risks and uncertainties which may affect the Issuer's and/or Guarantors' respective abilities to fulfil their obligations under the Notes and/or the Guarantee, as the case may be. Risk factors are presented in categories and in each category the most material risks are mentioned first.
The "INFORMATION ABOUT THE PROGRAMME" section provides an overview of the Programme in order to assist the reader. This is a good place to start for the most basic information about how the Programme works and how Notes are issued.
The "BUSINESS DESCRIPTION OF INTERNATIONAL PERSONAL FINANCE PLC AND THE GROUP" section describes certain information relating to the Issuer and its group structure, as well as the business that the Group conducts.
The "BUSINESS DESCRIPTION OF THE GUARANTORS" section briefly sets out information relating to the Guarantors under the Programme.
The "REGULATORY INFORMATION" section contains information on the regulatory framework within which the Group currently operates, together with details of any regulatory investigations and proceedings and/or litigation in connection with the Group's business.
The "DOCUMENTS INCORPORATED BY REFERENCE" section contains a description of the information that is deemed to be incorporated by reference into this Prospectus (rather than being set out in the body of this Prospectus).
The "SUBSCRIPTION AND SALE" section contains a description of the material provisions of the Dealer Agreement, which includes the selling restrictions applicable to any Notes that may be issued under the Programme.
The "TAXATION" section provides a brief outline of certain United Kingdom taxation implications regarding any Notes that may be issued under the Programme.
The "IMPORTANT LEGAL INFORMATION" section contains some important legal information regarding the basis on which this Prospectus may be used, forward-looking statements and other important matters.
The "TERMS AND CONDITIONS OF THE NOTES" section sets out the terms and conditions which apply to any Notes that may be issued under the Programme. The relevant Final Terms relating to any offer of Notes will complete the terms and conditions of the Notes.
The "SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM" section briefly sets out certain information relating to the clearing systems and settlement of securities in CREST and is a summary of certain parts of those provisions of the Global Notes which apply to the Notes while they are held in global form by the clearing systems, some of which include minor and/or technical modifications to the terms and conditions of the Notes as set out in this Prospectus.
The "FORM OF FINAL TERMS" section sets out the respective forms of Final Terms that the Issuer will publish if it offers any Notes under the Programme. Any such completed Final Terms will detail the relevant information applicable to each respective offer, adjusted to be relevant only to the specific Notes being offered.
The "GENERAL INFORMATION" section sets out further information on the Issuer, the Guarantors and the Programme which the Issuer is required to include under applicable rules. These include the availability of certain relevant documents for inspection, confirmations from the Issuer and details relating to applications for listing to the FCA and to Euronext Dublin, and the applications for admission to trading on the LSE Main Market and the Euronext Dublin Regulated Market.
The "INDEX OF DEFINED TERMS" section provides an explanation of technical terms used in this Prospectus.
A "TABLE OF CONTENTS" section, with corresponding page references, is set out on the following page.
| IMPORTANT NOTICES | 2 |
|---|---|
| HOW DO I USE THIS PROSPECTUS? | 7 |
| RISK FACTORS | 10 |
| INFORMATION ABOUT THE PROGRAMME | 31 |
| BUSINESS DESCRIPTION OF INTERNATIONAL PERSONAL FINANCE PLC | 41 |
| SELECTED FINANCIAL INFORMATION OF INTERNATIONAL PERSONAL FINANCE PLC | 63 |
| BUSINESS DESCRIPTION OF THE GUARANTORS | 66 |
| REGULATORY INFORMATION | 68 |
| DOCUMENTS INCORPORATED BY REFERENCE | 73 |
| SUPPLEMENTARY PROSPECTUS | 76 |
| SUBSCRIPTION AND SALE | 77 |
TAXATION |
87 |
| IMPORTANT LEGAL INFORMATION | 89 |
| TERMS AND CONDITIONS OF THE NOTES | 97 |
| SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM | 131 |
| FORM OF FINAL TERMS FOR UK RETAIL NOTES | 139 |
| FORM OF FINAL TERMS FOR UK WHOLESALE NOTES AND EU NOTES | 150 |
| GENERAL INFORMATION | 161 |
| INDEX OF DEFINED TERMS | 165 |
The Issuer and the Guarantors believe that the following factors may affect their ability to fulfil their obligations under the Notes issued under the Programme.
Factors which the Issuer and the Guarantors believe may be material for the purpose of assessing the market risks associated with Notes issued under the Programme are also described below.
The Issuer and the Guarantors believe that the factors described below represent the material risks inherent in investing in Notes issued under the Programme, but the Issuer and the Guarantors may be unable to pay interest, principal or other amounts on or in connection with any Notes for other reasons and the Issuer does not represent that the statements below regarding the risks of holding any Notes are exhaustive. Prospective Investors should also read the detailed information set out elsewhere in this Prospectus (including any documents incorporated by reference herein) and reach their own views prior to making any investment decision.
The Group is headquartered in the UK and has operations in Poland, the Czech Republic, Hungary, Romania, Lithuania, Spain, Finland (although the Group is withdrawing from this market), Latvia, Estonia (all of which are members of the European Union (the "EU")), Mexico and Australia. The majority of the aforementioned countries are developing markets undergoing rapid, and/or relatively unpredictable, economic, political and social development.
The Group's operations are, and will continue to be, exposed to risks common to regions undergoing such political, economic and social change, including economic recession, currency fluctuations, exchange control restrictions, an evolving regulatory environment (in particular, in relation to the provision of consumer credit), inflation, tax regime changes, local market disruption and labour unrest. The prevailing political, economic and social conditions in a territory (including, in the case of territories within the EU, conditions across the EU as a whole) may significantly affect the general demand for loans and other credit services in that territory, the creditworthiness of the Group's customers and the regulatory and taxation regime in which the Group operates. Contagion from a neighbouring country (for example in relation to the Group's eastern European businesses, Ukraine, or destabilising actions from Russia) could also have an impact. The performance of the Mexican business is influenced by the political stability and economic conditions of Mexico. External political factors, such as policies adopted and pursued by the U.S. administration and internal political factors may negatively impact the Group's future trading performance in Mexico. Restrictions on the ability of the Group to freely move capital and dividends from subsidiaries to the holding company in the United Kingdom may prevent the Group from meeting its financial obligations. The Group has significant exposure to economic conditions in a number of EU countries. The exit of one or more countries from the Eurozone or the EU may impact consumer spending patterns. This may have an adverse effect on the revenue, profits, business, financial condition or results of the Group, which may adversely affect the Issuer's ability to make payments under the Notes.
The COVID-19 pandemic, the measures imposed by governments in response (including temporary annual percentage rate of charge ("APR") caps and debt repayment moratoria) and their consequent economic effects have impacted all of the Group's markets and the businesses operating in those markets. See the section "The COVID-19 pandemic has materially affected, and may continue to materially affect, the Group's businesses". There is a risk of an extended period of economic contraction that continues through 2021 as further lockdowns are imposed, restricting economic activity across the markets in which the Group operates, depending on the efficacy, take-up and rollout of the vaccines for COVID-19. These risks could amplify the existing downward pressure on the economy; for example: a large surge in business failures with knock-on effects for the labour market resulting in high rates of unemployment that create debt management issues for customers, which could also contribute to negative multiplier effects through delayed investment and spending; and a stronger push towards protectionism as governments look to protect home industries. This could also lead to a longer-term turn in the credit cycle with a broader contraction of credit as lenders attempt to protect themselves from increased losses. This may have an adverse effect on the revenue, profits, business, financial condition or results of the Group, which may adversely affect the Issuer's ability to make payments under the Notes.
The Group is exposed to funding and liquidity risk, credit rating risk, credit quality risk, counterparty risk, exchange rate fluctuation risk and interest rate fluctuation risk.
Funding and liquidity risk: Liquidity risk is the risk that the Group does not have sufficient financial liquid resources to meet its obligations when they fall due, or can only do so at excessive cost. The ability of the Group to access debt funding sources on acceptable economic terms over the longer term is dependent on a variety of factors, such as general market conditions and confidence in the global banking system, which are outside the Group's control. This may impact the ability of the Group to access new debt funding or secure funding on terms favourable to the Group.
The Group relies, in part, upon the effective management of its banking and other borrowing relationships and upon securing loan commitments from a number of lenders, often within the jurisdictions where it has operations. As at 30 June 2021, the Group had total debt facilities of £596 million, and borrowing under these facilities of £479 million (excluding deferred debt issuance costs of £7 million) with headroom on undrawn facilities and non-operational cash balances of £173 million. These facilities have a range of maturities from 2021 through to 2025. There is, however, a risk that all or some of these facilities may not be refinanced in the future.
The capital and bank loan markets in many of the countries in which the Group currently operates are less developed and subject to greater volatility than developed markets. There is also a risk that the credit market in a jurisdiction where the Group operates may become illiquid or less liquid in cash, thereby limiting the Group's access to cash in that market. This could hinder the Group's ability to raise, renew and service its borrowings and affect its ability to extend credit to customers in that market.
Even with sufficient debt facilities at a Group level, local currency debt funding may not be available in each country, or may only be available at a prohibitively high cost, and it may not be possible to swap funding available to the Group in other currencies into local currency.
Failure to secure liquid funding at an appropriate cost and in the necessary currencies could adversely impact the Group's business, results of operations and financial condition, which may adversely affect the Issuer's ability to make payments under the Notes.
Credit rating risk: Credit ratings are opinions on the Issuer's creditworthiness. The Issuer's credit ratings affect the cost and availability of its funding from capital markets and other funding sources. If the Issuer fails to maintain its current credit ratings, this could adversely affect its cost of funds and its access to capital and other credit markets, which may ultimately adversely affect the Issuer's ability to make payments under the Notes. In addition, any downgrade of the Issuer's credit ratings (or other adverse ratings action) may adversely affect the market price (if any) of the Notes.
Credit quality risk: The Group is exposed to risks associated with the uncontrolled deterioration in the credit quality of its customers, which may be driven by, for example, socio-economic or customer-specific factors linked to economic performance. For instance in 2020, the Group experienced a significant rise in impairment levels due to the impact of the COVID-19 pandemic. The impact of higher impairment levels on the profitability of the Group is likely to be exacerbated by a consequent reduction in the number of current customers with the potential to take a new loan. This would cause a rapid fall in the Group's revenue at a time of increased impairments.
Declining credit quality and increased impairment levels would impact profitability, the number of existing customers capable of taking on new loans, and employee and agent engagement, and could ultimately have a material adverse effect on the Group's business, results of operations and financial condition, which may adversely affect the Issuer's ability to make payments under the Notes.
Counterparty risk: The Group has cash balances in the accounts of banks in all of its countries of operation and the United Kingdom, in order to ensure sufficient cash availability to fund the shortterm operation of the business. Although the Group has policies in place to mitigate counterparty risk, including policies with respect to the minimum acceptable credit rating of institutions with whom the Group places cash, there is nevertheless a risk that a bank holding Group cash becomes insolvent, and the Group loses all or substantially all of the cash deposited with that bank as a result. If such an event were to happen, this may adversely affect the Issuer's ability to make payments under the Notes.
Exchange rate fluctuation risk: The Group is subject to risks associated with exchange rate fluctuations. Although the Group is based in the United Kingdom, files its consolidated financial reports and accounts in sterling and pays dividends to shareholders in sterling, all of its existing operations are based overseas and most of its profits and losses are denominated in foreign currency. The sterling value of foreign currency denominated profits and losses cannot be effectively hedged in the long term and so exchange rate fluctuations may adversely affect the Group's income statement account, its reserves or future cash flows.
Additionally, the operations of the Group have net assets which are denominated in foreign currencies. The Group's policy is to use local currency borrowings to the maximum possible extent to fund local currency assets to provide a natural hedge (either through direct borrowings or via currency transactions for funding raised in non-operational currencies). A hedge is a method of removal or mitigation of a particular risk. In this case, borrowing in a local currency to fund assets in the same currency mitigates against the risk of adverse movements in exchange rates between currencies to the Group's sterling net asset value. Any residual exposure remains unhedged. This residual unhedged exposure could adversely affect the sterling value of the Group's net assets if the value of sterling strengthens against the currency in which the residual unhedged exposure is denominated.
A significant proportion of the Group's borrowing is in euro and sterling and the Group swaps these proceeds into the Group's operational currencies. Exchange rate fluctuations may have the effect of reducing or removing the overall headroom on the Group's debt facilities. The majority of the Group's current bank facilities are denominated in foreign currencies, such that local currency funding is in place to partly fund local currency assets. In addition, the Group has from time to time issued bonds denominated in local currencies under the Programme, to access local currency funding. There can, however, be no assurance that the Group will be successful in negating the potential impact of risks associated with volatility in foreign currency exchange rates. Such rates or changes could have a material adverse effect on the ability of the Group to fund its growth strategy, on the value of the Group's future cash flows and/or on the results of its operations and financial condition, all of which may adversely affect the Issuer's ability to make payments under the Notes.
Interest rate fluctuation risk: To the extent that interest costs are not fixed or hedged on borrowings required to fund fixed rate loans to customers for the duration of the repayment period for such loans, there is a risk that increases in interest rates will reduce the profit margin on those loans to customers.
In order to limit its net exposure to interest rate risk, the Group enters into hedging transactions. A hedging transaction is a transaction where a party buys protection in respect of a particular risk by entering into a derivative with a counterparty in respect of that risk. So for example if a company has exposure to a floating rate of interest for its own funding costs, but lends at a fixed rate of interest to its customers, that company's profitability is at risk if the floating rate of interest rises, because there is no equivalent rise in the fixed rate at which it has lent funds to customers. To mitigate this risk, the company may enter into a hedging transaction with a counterparty where the company agrees to swap the cashflows on its floating interest rate debt with a counterparty for the cashflows on a fixed interest rate in respect of a similar amount to that of its borrowings. The utility of the protection the relevant company buys by doing this will depend on the counterparty's ability to make payments under the hedging contract when the floating rate of interest goes up. If the Group engages in hedging transactions, it will be exposed to the risk of default by its hedging counterparties.
There can be no assurance that the Group will be able to successfully manage the potential negative impact of risks associated with rapid interest rate changes. Such changes could have a material adverse effect on the Group's business, results of operations and financial position if, as a result of the Group's borrowings not being fixed or hedged, the costs of such borrowings rise whilst the fixed rates of interest on loans to customers which have been funded by such borrowings remains the same. This may have an adverse effect on the Issuer's ability to make payments under the Notes whether or not any particular Tranche of Notes pays interest on a fixed or floating rate basis.
The performance of the Group is influenced by the economic conditions of the countries in which it operates around the world. Further, some of the countries in which the Group currently operates are emerging economies and so are likely to be subject to greater volatility in economic, political and financial market conditions. The precise nature of all the risks and uncertainties the Group faces, and will face, as a result of any future global financial crisis or deterioration in the global economic outlook cannot be predicted and many of these risks are outside the Group's control.
A deterioration in economic conditions globally and in the markets in which the Group operates, including, but not limited to, business and consumer confidence, unemployment, household disposable income, the state of the housing market, foreign exchange markets, counterparty risk, inflation, the availability and cost of credit, and the liquidity of global financial markets or market interest rates, may reduce the level of demand for the products and services of the Group, adversely affect the earnings the Group can achieve on its products and lead to reduced volumes of credit issued, reduced revenue and increased levels of impairment charge. This may affect the Group's ability to obtain sufficient liquid, local currency funds to meet the requirements of the business (following maturity of the Group's existing sources of financing), to issue sufficient volumes of credit at appropriate levels of impairment and to maintain adequate cover on its financial covenants. A global recession may also result in the Group being unable to execute its growth strategy. The aforementioned factors may materially and adversely impact the Group's operating results, financial condition and prospects, which may adversely affect the Issuer's ability to make payments under the Notes.
The Group's operations are subject to legislation, regulations, rules, guidance, codes of conduct and government policies in the jurisdictions in which it conducts business and in relation to the products it markets and sells. For further information in relation to the regulation to which the Group is subject, please see the "Regulatory Information" section of this Prospectus. Regulatory authorities have broad jurisdiction over many aspects of the Group's business, marketing and selling practices, advertising and terms of business.
Financial services laws, regulations, rules, guidance, government decrees and ordinances, codes of conduct, government policies and/or the respective interpretations or enforcement thereof may change on a temporary or permanent basis and, although the Group monitors developments, it cannot predict future initiatives or changes. Such changes, or proposals to make such changes, whether temporary or permanent may sometimes take place without consultation or prior warning at any time both within, and outside of, formal legislative processes (including as a result of a response to emergency situations such as the COVID-19 pandemic). In many countries in which the Group operates, the interpretation and approach to enforcement of legal and regulatory systems is in a process of development, which may result in existing laws and regulations being applied, interpreted and enforced inconsistently. For details of possible changes to the certain consumer credit regulation to which the Group is subject, please see the "Regulatory Information" section of this Prospectus.
Any such changes may materially and adversely affect, amongst other things, the Group's product range and activities, creditworthiness assessments, the sales and pricing of its products, the Group's profitability, solvency and capital requirements and costs of compliance. The total charges for the Group's loans are higher than for loans provided by mainstream banks, reflecting the higher lending risk and (in respect of the home credit business) the high level of personal service provided by the Group's agents. This can attract criticism and bring calls for statutory caps on charges on certain products the Group offers and/or limitations on the amount the Group may lend to any individual customer.
The Group is at risk of further, or changes to existing, caps on interest rates, the total cost of credit, APR or other types of cost caps as well as other types of lending restrictions (including, but not limited to, creditworthiness assessments), changes to usury or "good morals" laws, withdrawal of a key licence or removal of an entry from a relevant register (including those licences or registrations necessary for the Group's offering of insurance products as on an intermediary, distributor and/or agency basis for a range of insurance providers), and to changes to laws or regulations on, or prohibition of, doorstep lending. The Group is also at risk of more restrictive product regulation, more stringent consumer credit legislation, more restrictive customer protection regulation (covering, for example, advertising or personal insolvency), responsible lending legislation (for example, debt to income limits), fines for breach of current regulators' standards, employment and health and safety legislation (for example, relating to the status of agents), implementation of new or more stringent licensing or registration procedures (for example, the introduction of registration or certification requirements for home credit agents, the introduction of financial intermediary licensing or the introduction or tightening of licensing requirements for non-banking financial institutions), broader grounds for challenges to the Group's commercial practices or product terms and conditions by customers or interest groups and any other legal or regulatory changes designed to restrict or with the effect of restricting the growth of credit in any given country in which the Group operates.
The Group is at risk of challenges by customers or interest groups to the Group's commercial practices (for example, in relation to the mis-selling of its core lending products or its ancillary offering of home, medical, and life insurance and other products on an intermediary, distributor and/or agency basis) or product terms and conditions. This risk may become more significant with any introduction of broader grounds and/or new or emerging procedures for such challenges (including the introduction, or expanded use of, ombudsman schemes and class action litigation, claims management companies or collective redress procedures). The Group's operations in Europe and Mexico are exposed to a risk that courts could invoke civil law provisions in order to render void contracts that contain provisions that are entered into in bad faith or that are contrary to rules of social coexistence. Most countries also contain criminal law provisions that enable penalties to be imposed on those persons responsible for transactions that are deemed usurious.
The Group may have to respond to any material changes in legislation or regulation which could potentially affect its business by adapting its business model or products in the relevant market. There can be no assurance, however, that the Group will be able to effectively respond to any such changes and this may affect the Group's operations and the conduct and success of its business in the relevant market, all of which may adversely affect the Issuer's ability to make payments under the Notes.
For further information in relation to the regulation to which the Group is subject and the legislative proposals that may come into force in the countries in which the Group operates, see the "Regulatory Information" section of this Prospectus.
The Group is subject to risks of regulatory investigations, audits, controls, proceedings and/or litigation in connection with its business (including in relation to compliance with consumer credit legislation and regulation). Such regulatory investigations, audits, controls, proceedings and/or litigation could be initiated, amongst other reasons, in response to an actual or suspected breach by the Group or a Group company of laws, regulations or rules (including as a result of a regulator or court disagreeing with the Group's interpretation of any law, regulation or rule). Any such actions could result in the loss of a licence, the removal from a register, the imposition of a fine, the retraction of any other authorisation to provide credit in a particular country or the imposition of onerous operational obligations.
Regulatory and legal actions may be difficult to assess or quantify and may seek recovery of large or indeterminate amounts, which may remain unknown for substantial periods of time. In addition, such actions could result in adverse publicity for the Group or could affect its relations with customers, as well as divert management's attentions from the day-to-day management of the Group's business. In countries where judicial and dispute resolution systems are less developed, it may in some circumstances not be possible to obtain timely legal remedies. If the Group becomes party to legal proceedings in a market with an insufficiently developed judicial system, it may be difficult for the Group to make a reasonable qualification or quantification of the risks and outcomes associated with any proceedings, or to make, or defend against, claims.
The Group may also be vulnerable to regulatory action by competition or consumer protection authorities if it is found that the markets in which it operates are not functioning competitively or effectively. Information on the regulatory framework within which the Group currently operates, together with a description of any regulatory investigations and proceedings and/or litigation in connection with the Group's business, can be found in the "Regulatory Information" section of this Prospectus.
Although the Group does not have substantial operations in the United Kingdom, the Group is headed by a holding company incorporated and tax resident in the United Kingdom. This exposes the Group to the United Kingdom's international tax regime, including its controlled foreign companies regime, and makes the United Kingdom tax position more difficult to manage. The treatment of such international groups under United Kingdom tax law has been, and may again be, subject to significant change.
Tax legislation and interpretation in the jurisdictions in which the Group operates have been subject to significant change. In general, the Group sees less clarity in tax legislation in its overseas markets than in the United Kingdom, and some uncertainty generally arising from the fact that court decisions are often not binding as precedents. Coupled with this, a home credit business has a number of unusual features which may make it unclear as to how overseas tax authorities will tax certain aspects of the operations. For example, the rules which determine the extent to which tax relief for impairment is obtained are often very complex and in certain jurisdictions in which the Group operates have been, or are potentially, subject to significant change. A restriction in the availability of tax deductions for impairment could significantly increase the Group's tax liabilities and reduce post-tax returns, which may limit the resources available to the Issuer to make payments under the Notes.
Adverse changes in, or conflicting interpretations of, tax legislation and practice in the different jurisdictions in which the Group operates may lead to an increase in the Group's taxation liabilities and effective tax rate. As with other international groups, the Group is subject to the risk of future changes to the taxation treatment of cross-border transactions arising as a result of the implementation of the Organisation for Economic Co-operation and Development's Action Plan on Base Erosion and Profit Shifting. As with other financial services institutions, the Group is subject to the risk of additional taxation arising from new taxes levied on the financial sector, either at a national level or at an EU level, including a tax on financial transactions, if implemented. Following Brexit, certain intra-group payments of dividends and interest are now subject to withholding taxes, which the Group estimates will be approximately £1-2 million per year.
In late 2017, the European Commission opened a State Aid investigation into the "group financing exemption" contained in the UK controlled foreign company rules, which were introduced in 2013. In April 2019, the EU announced its finding that the group financing exemption is partially incompatible with EU State Aid rules. In common with other UK-based international companies whose intra-group finance arrangements are in line with the UK's controlled foreign company rules, the Group is affected by this decision. On 12 February 2021, Her Majesty's Revenue and Customs ("HMRC") issued a charging notice, following the introduction of new legislation in December 2020 empowering HMRC to issue such notices, in order to collect allegedly unlawful State Aid. The charging notice required a payment of £14.2 million with respect to accounting periods ended 2013 to 2018, which was paid in February 2021, with a further amount of interest estimated at approximately £1.3 million payable in due course. The payment of this amount is a procedural matter, and the new law does not allow for postponement. IPF has appealed the charging notice on the grounds of the quantum assessed. Whether the UK's group financing exemption regime constitutes State Aid is ultimately to be decided and the Group awaits a decision of the General Court of the European Union on this matter. The UK government has filed an annulment application before the General Court of the European Union. In common with a number of other affected taxpayers, IPF has also filed its own annulment application. Based on legal advice received regarding the strength of the technical position set out in the annulment applications, it is expected to be more likely than not that the payment that the Group has made under the charging notice will ultimately be repaid.
HMRC has initiated a review of the compliance of the Group's finance company, IPF Management Unlimited Company ("IPF Management"), with certain conditions under the UK domestic tax rules to confirm whether IPF Management is eligible for the benefits of the group financing exemption which it has claimed in its historical tax returns. IPF believes that all conditions have been complied with and has sought legal advice with regard to the interpretation of the relevant legislative conditions. As part of the review, HMRC raised a discovery assessment with a view to protecting its position before certain time limits expired and which IPF Management has appealed. The legal advice confirmed IPF's view that it is more likely than not that IPF Management will succeed in defending its position. The amount at stake for years up to and including 2018 is approximately £7.3 million. This domestic tax issue and the State Aid issue are mutually exclusive, and the UK legislation implemented in December 2020 and referred to above includes provisions to ensure no double charge to tax arises.
The Group is currently subject to a tax audit in Mexico with respect to 2017. The Mexican tax authority has issued a decision assessing tax and interest of approximately £1 million in total; the decision has been appealed and a court hearing is awaited. The total exposure for all years that are open to audit by the Mexican tax authority is estimated to be approximately £2.8 million.
Changes to taxation law, which includes rules governing indirect taxes, personal taxes and capital taxes, may also affect the attractiveness of certain products offered by the Group. This could result in a significant reduction in sales of those products which, in turn, could have a material adverse effect on the Group's business, results of operations and financial condition. As with other financial services institutions operating within the UK and the EU, changes to the VAT treatment of financial services may materially and adversely affect, among other things, the Group's sales and pricing of its products and the Group's profitability. Changes in the scope of VAT exempt financial services may have a material adverse impact on the Group's VAT position in terms of the VAT status of supplies to customers and of services received from suppliers including agents. The withdrawal of the UK from the EU has not adversely affected the Group's VAT position, as at the date of this Prospectus, but any divergence of UK and EU rules in the future may alter the impact of indirect taxes such as VAT on the Group.
Furthermore, the European Commission initiated a public consultation, which closed in May 2021, to obtain the views of stakeholders and public authorities of the EU Member States on the current VAT rules for financial and insurance services and their functioning, as provided under the EU VAT Directive (Council Directive 2006/112/EC), as well as on possible changes to these rules. Any legislative changes with regard to the VAT treatment of financial services may have a material impact on the Group's VAT position, although any changes to the VAT Directive would require unanimity from the EU Member States. The European Commission currently intends to put forward a proposal for a Directive in the fourth quarter of 2021.
There are a number of significant intra-Group cross-border transactions that take place between various of the Group's UK and non-UK subsidiaries, including derivative transactions, sales of debt and debt participations, provision of finance and guarantees and provision of services and know how. Intra-group transactions are priced, for transfer pricing purposes, on what is considered to be an arm's length basis. Where provision is made from the United Kingdom, the pricing has been discussed in advance with HMRC, and the pricing methodology in respect of intra-Group loans and the provision of guarantees of third party debt has been agreed with HMRC under advanced pricing agreements for the accounting periods through to April 2021.
Were the tax treatment of any of these intra-Group cross-border transactions to change in the future to the Group's detriment (for example as a result of a negative assessment by a tax authority), the Group may face additional taxation costs, which may in turn impact its results of operations and underlying financial condition. This may limit the resources of the Issuer available to the Issuer to make payments under the Notes.
In Poland, the Czech Republic and Mexico, each home credit agent is treated as being selfemployed rather than being an employee or agent of the relevant member of the Group. In Hungary and Romania, however, business entities must perform their usual business activities through employees. There is a risk that the interpretation of employee or agent could be challenged or that changes to law or regulation could require the Group to employ the home credit agents who presently operate as self-employed. A challenge in any jurisdiction, if successful, could result in increased costs of operation for the Group, or may require the Group to reassess its home credit business model and/or discontinue its operations in the affected locality. It may also render the relevant entity within the Group liable to, amongst other things, fines, additional taxation (on an ongoing and backward looking basis) or non-financial penalties or require changes to be made to its employee and/or agent remuneration and structure. Any such taxation, penalties or changes may materially and adversely impact the Group's operating results, financial condition and prospects, on either a one-off or ongoing basis, which may adversely affect the Issuer's ability to make payments under the Notes.
Losses may arise or liabilities may be incurred from defective transactions or contracts, either where contractual obligations are not enforceable or are judged unlawful or do not allocate rights and obligations as intended. This may arise in a number of ways.
The Group may incur losses if it cannot recover all or part of the debt from its customers because its contracts with those customers are held to be partly or wholly unenforceable. For example, local or national courts may find a customer contract to be in breach of anti-usury or ''good morals'' laws and regulation and therefore unlawful, thereby also increasing the risk that the number of claims by customers seeking to avoid their loan repayments and/or any accrued interest or fees will increase. Failure by the Group to sustain effective debt recovery methods or a loss in confidence of the Group to recover debt under its contracts with customers, by recourse to the courts or otherwise, could severely impede the Group's business in the affected jurisdiction. In addition, collective redress mechanisms or class action litigation as a means of addressing mass consumer claims in several of the Group's territories may pose a risk of the relevant subsidiary being party to a collective dispute in the event that it commences litigation, or if litigation is commenced against it.
Any such factors may materially and adversely impact the Group's operating results, financial condition and prospects, on either a one-off or ongoing basis, which may adversely affect the Issuer's ability to make payments under the Notes.
Changes in the small sum credit markets in any of the Group's markets and, in particular, an increase in competition in any of the Group's markets.
There is the risk of the level of competition continuing and intensifying from existing or new competitors in the small sum credit markets in which the Group operates (the home credit sector, the small sum credit card sector and other credit product sectors). The Group's business model, which has high direct and overhead costs, may become unsustainable in the face of competition from other lenders who operate business models with lower costs or, through disruptive business models or otherwise, offer customers more contemporary and relevant channels and products.
Competition from (principally digital) remote lenders for those customers at the higher socioeconomic end of the home credit sector could intensify as the prime market matures and mainstream financial institutions seek to attract customers who are deemed to be of lower creditworthiness. Aspiring competitors may be prepared to offer loan products in the small sum credit sector at lower prices than the Group is able to offer.
An increase in competition may reduce market share leading to increased costs of customer acquisition and retention, reduced credit issued, greater difficulty for the Group in recruiting and retaining high calibre staff, lower revenue and lower profitability, all of which may, in turn, affect the Issuer's ability to make payments under the Notes.
The Group may seek to introduce new product groups, pricing and credit assessment analysis methods and uses of data in order to retain existing customers whose needs have evolved, and to attract new customers for whom the existing product offering or methods of acquisition are unattractive or ineffective and/or for whom more competitive pricing and more sophisticated underwriting processes are required. The new businesses and products may not be able to attain the forecast returns and the Group may make errors of judgement in the conception, planning and/or implementation of these strategies and methods which may materially and adversely affect its results of operations and financial condition, which may, in turn, affect the Issuer's ability to make payments under the Notes.
The COVID-19 pandemic, the measures imposed by governments in response, and their consequent economic effects have impacted all of the Group's markets and the businesses operating in those markets. For further information in relation to the impact of the COVID-19 pandemic on the Group, see the sections of the 2021 Half Year Report entitled "Market Overview and Covid-19 response strategy" on page 4, "Group performance" on pages 4 to 6, "Strategy" on page 6 and "Business division performance update" on pages 7 to 11.
Additional waves of the COVID-19 pandemic, or the reimposition or tightening of existing regulatory restrictions or the imposition of additional regulatory restrictions, in any of the Group's markets may adversely affect the Group's businesses, results of operations and financial condition; all of which may have an adverse impact on the Issuer's ability to make payments under the Notes.
The Group's current business model is concentrated through a home credit business model (the provision of small sum unsecured loans with optional home collection service) and a digital credit model. The Group's strategy includes the development of its product offerings and expansion through existing and new markets. In the shorter term this concentration toward the home credit business model increases exposure to adverse regulatory or competitive threats.
Furthermore, the Group's concentrated business model means that, were the consumer credit regulatory landscape to change to its detriment, its costs of compliance, amongst other things, may materially increase. This may in turn have a material impact on the ability of the Group to maintain its current product offering, impacting negatively on its underlying profitability and, in turn, adversely affecting the Issuer's ability to make payments under the Notes. See "The Group may be affected by changes in financial services regulation, or other laws or regulations applicable to the Group, or the interpretations or enforcement thereof" for further information on the regulatory risks the Group faces.
The Group's strategy may be impacted by not having sufficient depth and quality of people or being unable to retain key people and treat them in accordance with its values and ethical standards. Therefore the Group is dependent upon its ability to attract, engage, develop, retain and appropriately reward the right agents, management and key executives who are able to collaborate to deliver the pillars of the Group's strategy. There can be no assurances that such people will remain with or, as the case may be, join the Group.
The Group needs to continue to engage agents in the home credit businesses in order to both service existing customers and seek new business in an increasingly competitive environment. The success of the Group's strategy to expand the business will depend upon the Group's ability to attract, engage, develop, retain and appropriately incentivise a sufficient number of agents on a sustained basis.
The Group's strategy to grow its digital business also relies upon the creation of a dynamic and modern culture which is attractive to people who want to build a career in the digital market place. Failure to attract, engage, develop, retain and appropriately reward the right people in the digital sector will negatively impact the growth of the digital business.
The Group aims to have sufficient breadth of capabilities and depth of personnel to ensure that it can meet its strategic objectives. However, the loss of key personnel or of a substantial number of talented employees, or an inability to attract, retain and motivate the calibre of agents, operational managers and employees required for the continuation, and the expansion, of the Group's activities could cause disruption to the Group's business and have a material adverse effect on its business, growth prospects, results of operations and financial condition; all of which may have an adverse impact on the Issuer's ability to make payments under the Notes.
The personal safety of agents and employees continues to be a priority of the Group, and, to that end, the Group has implemented formal health and safety policies and procedures that are managed by designated safety managers in every market and overseen by a competent person at the Group's head office. The Group has also sought and obtained independent safety standard accreditations. Notwithstanding the aforementioned precautions taken by the Group, a small number of the Group's agents and employees have nevertheless sustained fatal or other personal injuries during the course of, or for reasons related to, their work for the Group over a number of years.
The risks of personal injury or illness (including as a result of the COVID-19 pandemic) to the Group's agents or employees could affect the ability of the Group to retain and engage agents or employees to perform home collection services, or the ability or willingness of its managers to visit customers, could give rise to an increase in personal injury claims against the Group and may damage the reputation, brands and profitability of the Group, all of which may impact the Issuer's ability to make payments under the Notes.
There could be a change in legislation, regulations, rules, guidance, codes of conduct and government policies relating to the health and safety of agents and employees performing the home collection service (including as a result of the COVID-19 pandemic), which may require the Group to review its agent delivery and collection model and which may be adverse to the business, results of operations and financial condition of the Group and may impact the Issuer's ability to make payments under the Notes.
In order to successfully implement its strategy, the Group has established certain procedures in order to manage changes that may be required to the Group's existing business and operations. These include system pilots, change risk management frameworks, monitoring programmes, prioritisation methodologies, audits, contingency and business continuity planning and regular progress reporting. Despite these controls, however, a new project, system, product or guide may fail to deliver the business benefits required to implement the Group's business model and/or growth strategy. A failure in the Group's management of any change could be for reasons such as noncompliance with best practice, technology failure, unexpected changes in external conditions and resource constraints. Failure to deliver on the Group's change programme could have a material adverse effect on its business, results of operations and financial condition.
The Group may, from time to time, seek to expand its operations by entering into new geographic markets or making acquisitions of businesses operating in new or established markets. The Group may not be able to achieve success upon entry into a new geographic market, despite the research it undertakes before launching into a new market or, in the case of an acquisition of an existing business in a new geographic market, despite the due diligence it undertakes. The Group may not be able to successfully support its growth strategy in a newly entered geographic market and/or realise the expected accretive value of an acquired business if it cannot recruit and retain wellqualified staff for those businesses. The Group may not be able to take advantage of market opportunities due to under-performance elsewhere in the Group's business. The Group may not be able to meet customer demand or requirements or it may not be able to respond to local economic and regulatory conditions or to competitive pressure, so that its operations in new geographic markets or its newly acquired businesses do not perform as expected. This, in turn, may lead to losses which may impact the cash resources available to the Issuer to make payments under the Notes.
If the Group consequently disposes of an acquired business, disposes of a business entity (as with Bulgaria in 2017) or withdraws from a market (as it did in Slovakia and as it is presently doing in Finland) or from a part of a market (as it did in the case of the home credit business in Lithuania), the Group will incur costs of disposal or withdrawal and may have lost out on the opportunity of having instead entered another more appropriate market or acquired a more appropriate business. In addition, the Group may retain certain historical liabilities associated with the disposed or historical business. The losses will be of greater magnitude if the Group makes such an error in relation to a number of markets or acquisitions and this could materially and adversely affect the Group's business, results of operations and financial condition, which may impact the cash resources available to the Issuer to make payments under the Notes.
Moreover, if future profits do not materialise on entry into a new geographic market or the Group withdraws from the new geographic market, effective tax relief for start-up losses may not be available and may lead to an adverse impact on the Group's overall tax charge, which may impact the cash resources available to the Issuer to make payments under the Notes.
The Group's success and, in particular, sales and collections, are dependent, in part, upon the strength of the Group's brands and the reputation of its business. The Group operates in the non-bank sector which attracts media interest and regulatory oversight and, as a result, providing credit in a responsible, transparent and ethical way that meets the Group's customers' expectations is important for a sustainable performance.
The Group could suffer damage to its reputation and brands as a result of negative publicity in connection with, for example, the perception of unreasonably high charges (when compared with banks and online lenders) for home credit products and digital loans and/or the behaviour or product offering of competitors operating in the same market. Negative publicity could also result from the activities of politicians, legislators, consumer protection agencies and the media. Such adverse publicity could directly affect customer consideration for the Group's products and their contractual repayments and result in increased regulation around pricing, debt to income levels and taxation with an adverse impact on the Group's financial performance. In addition, a poor reputation could make it more difficult for the Group to recruit and retain high-calibre employees to deliver its home credit and digital business strategy (in respect of which, see "Failure to attract, engage, motivate and retain sufficient depth of capability and quality of people at all levels of the Group's business").
Any deterioration in the Group's brands and reputation may impact the business, results of operations and financial condition of the Group, which may, in turn, adversely affect the Issuer's ability to make payments under the Notes.
The Group's business depends on its ability to process a large number of transactions efficiently and accurately. The Group's ability to develop business intelligence systems, to monitor and manage collections, to maintain financial and operating controls, to monitor and manage its risk exposures across the Group, to keep accurate records, to provide high-quality customer service and to develop and sell profitable products and services in the future depends on the success of its business continuity and contingency planning, the uninterrupted and efficient operation of its information and communications systems, including its information technology and the successful development and implementation of new systems.
There is a risk that the Group encounters losses if there is a systematic breakdown of operating procedures, processes, systems or controls that underpin the business model. Losses can result from inadequate or failed internal control processes and protection systems, human error, fraud or external events that interrupt normal business operations. This may result in a loss of data and a failure to provide quality service to customers. The Group's (as well as the Group's third party service providers') information technology, databases and other systems may be subject to damage or interruption from natural disasters (as in Mexico, following an earthquake in September 2017), floods, fires, power loss, telecommunication failures and similar events as well as to damage from the introduction to its systems of incorrect programming language by its employees and contractors. These systems may also be subject to computer viruses, physical or electronic break-ins, sabotage, vandalism, malicious cyber-attack, ransomware and similar misconduct.
Although the Group has in place certain business continuity and contingency plans to guard against service disruptions, the Group's business continuity plans may prove to be unsuccessful against such disruptions.
If any of the above risks materialise, the interruption or failure of the Group's information technology and other systems (or the failure of those provided by third party service providers and software providers) could impair the Group's ability to provide its services effectively, causing direct financial loss, and may compromise the Group's strategic initiatives. In addition, it could damage the Group's reputation if customers believe its systems are unreliable which, in turn, could have an adverse effect on the Group's ability to collect loan repayments from customers and to attract new and retain existing customers. Technology failure or underperformance could also result in a higher number of customer and agent disputes and may increase the Group's litigation and regulatory exposure or require it to incur higher administrative costs (including remediation costs). Further, a loss of any customer database may require an expensive and time-consuming effort to endeavour to retrieve or recreate the lost data which may have a material adverse effect on the Group's operations and financial situation and damage its reputation and brands. All of the foregoing may impact the cash resources available to the Issuer to make payments under the Notes.
The Group relies on the collection and use of information from customers to conduct its business. It discloses its information collection and usage practices in a published privacy policy on the websites of its operating entities, which may be modified from time to time to meet operational needs or changes in the law or industry best practice. Companies within the Group may be subject to investigative or enforcement actions by data protection authorities, legal claims and reputational damage if they act, or are perceived to be acting, inconsistently with the terms of any privacy policy, customer expectations or applicable law. In addition, concern among customers about the Group's privacy practices could deter them from using its services and require the alteration of its business practices with attendant costs and possible loss of revenue.
Concerns may be expressed about whether the Group's use of data compromises the privacy of customers. Concerns about the Group's collection, use or sharing of personal information or other privacy-related matters, even if unfounded, could damage its reputation and operating results.
Data protection legislation and regulation in the jurisdictions in which the Group operates (or the interpretation or application thereof) may change in the future and impose new burdensome requirements, compliance with which may increase the Group's costs or require it to change the way it conducts business with attendant costs and possible loss of revenue, which may, in turn, impact the cash resources available to the Issuer to make payments under the Notes.
The Group engages third parties to provide certain ancillary services which are material to the Group's business (for example, the provision of equipment, software and associated services in connection with operational management software). Disputes arising with, or failure of adequate provision of services by, third parties who provide ancillary services which are material to the Group's business may cause disruption to the Group's operations, result in losses, lead to incurred legal and court costs and also detract management's time from the Group's business, thereby adversely affecting it, its results of operations and its financial condition.
The Group may incur losses if a counterparty, such as a key supplier or operational partner, ceases to operate. There is a risk of business failure of a counterparty such as an IT services outsourcer, which may cause significant disruption to the business or impact upon the Group's ability to operate. In such circumstances, there may be an impact on the cash resources available to the Issuer to make payments under the Notes.
The Group's business relies on the ability of agents to arrange loans in the home service markets, on customers having sufficient household income to repay those loans and on agents visiting customers to collect payment or customers being able to make payments through alternative collection channels. Catastrophes, pandemics and weather-related events including, but not limited to, natural disasters, severe storms, flooding and prolonged periods of snow or freezing weather can all affect both the ability of agents/employees to arrange and collect loans, as well as the ability of customers to repay loans if their household income is significantly reduced as a result or if access to repayment channels is restricted. The incidence and severity of catastrophes, pandemics and weather-related events are inherently unpredictable. Catastrophes, pandemics and weather-related events, therefore, may have a material adverse effect on the Group's consolidated financial condition, results of operations and cash flows, which, in turn, may impact the cash resources available to the Issuer to make payments under the Notes.
The Group relies on intellectual property laws to protect its rights to certain aspects of its systems, brands, products, processes, and databases. If there is any unauthorised use or infringement of the Group's intellectual property rights and the Group fails to enforce such rights, or the Group fails to maintain its database rights and the database's integrity, the value of the Group's products and services could be diminished, its competitive position could be adversely affected and its business may suffer. Third party rights in respect of the ''Provident" or any of the Group's other brand names may exist in some countries in which the Group does business or intends to do business in the future. If such third party right owners brought infringement proceedings, the Group's right to use such brand names in such countries may be restricted or impaired, which may impact the performance of the Group's businesses, which, in turn, may impact the cash resources available to the Issuer to make payments under the Notes.
There are also risks inherent in using the same name as another entity, as the Group may suffer adverse consequences as a result of any damage to the ''Provident" brand (which is used by Provident Financial group in the UK, which has recently announced its withdrawal from the home credit sector), which may impact on the performance of the Group's businesses, which, in turn, may impact the cash resources available to the Issuer to make payments under the Notes.
An optional redemption feature is likely to limit the market value of Notes. During any period when the Issuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period.
The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an Investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed, and may only be able to do so at a significantly lower rate. Potential Investors should consider reinvestment risk in light of other investments available at that time.
The market values of securities issued at a substantial discount or premium to their nominal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities.
Higher volatility can in turn depress the market value of such securities, as price volatility is an unattractive feature of an investment for an Investor seeking stable returns.
LIBOR, EURIBOR and other interest rate, equity, commodity, foreign exchange rate and other types of rates and indices which are deemed to be 'benchmarks' have been the subject of regulatory scrutiny and recent national and international regulatory guidance and reform. These reforms may cause benchmarks to perform differently than in the past or disappear entirely, or there could be other consequences which cannot be predicted. Any such consequence could have a material adverse effect on any Notes that are linked to such a benchmark.
The EU Benchmarks Regulation was published in the European official journal on 29 June 2016 and the majority of its provisions became fully applicable in the EU on 1 January 2018 (subject to certain transitional provisions). The EU Benchmarks Regulation applies to 'contributors', 'administrators' and 'users' of benchmarks in the EU. It (a) requires EU benchmark administrators to be authorised or registered and to comply with requirements relating to the administration of benchmarks, (b) prohibits the use in the EU of benchmarks provided by EU administrators which are not authorised or registered in accordance with the EU Benchmarks Regulation, and (c) prohibits the use in the EU of benchmarks provided by non-EU administrators which are either not authorised or registered and subject to supervision in a jurisdiction in respect of which an 'equivalence' decision has been adopted in accordance with the EU Benchmarks Regulation or, where such equivalence decision is pending, 'recognised' by the competent authorities of applicable EU Member State(s). An exception to this is that a benchmark provided by a non-EU administrator can itself be endorsed for use in the EU by an EU authorised or registered administrator or an EU-based supervised entity, following authorisation of the endorsement by the relevant competent authority. The UK Benchmarks Regulation became fully applicable in the UK at the end of the transitional period following the UK's exit from the EU and, among other things, applies to the provision of benchmarks and the use of a benchmark in the UK. Similarly to the EU Benchmarks Regulation, it prohibits the use in the UK by UK supervised entities of benchmarks of administrators that are not authorised by the FCA or registered on the FCA register (or, if non-UK based, not deemed equivalent or recognised or endorsed). Both the EU Benchmarks Regulation and the UK Benchmarks Regulation could have a material impact on Floating Rate Notes linked to a benchmark rate as, for example, it may have the effect of discouraging market participants from continuing to administer or participate in certain benchmarks, trigger changes in the rules or methodologies used in certain benchmarks or lead to the disappearance of certain benchmarks.
It is anticipated that the majority of LIBOR rates will cease to be published on 31 December 2021 (although certain rates are expected to be published for a further period, and some rates may be continued on a "non-representative" synthetic basis) and it is possible that other benchmarks may cease to be published (in their current form or at all) in the future. The potential elimination of a benchmark, or changes in the manner of administration of any benchmark, may require an adjustment to the terms and conditions, or result in other consequences, in respect of any Notes linked to such benchmark (including but not limited to Floating Rate Notes) depending on the specific provisions of the relevant terms and conditions applicable to the Notes.
More broadly, prospective Investors should in particular be aware that any of the international or national reforms, or the general increased regulatory scrutiny of interest rates and indices which are deemed to be "benchmarks" (including the application of the EU Benchmarks Regulation or the UK Benchmarks Regulation), could increase the costs and risks of administering or otherwise participating in the setting of a benchmark and complying with any such regulations or requirements. Such factors may have the effect of discouraging market participants from continuing to administer or contribute to the benchmark, trigger changes in the rules or methodologies used in the benchmark, or lead to the disappearance of the benchmark. Any of the above changes or any other consequential changes as a result of the application of the EU Benchmarks Regulation or the UK Benchmarks Regulation or other international or national reforms, initiatives or investigations, could have an adverse effect on the value or liquidity of, and return on, any Notes whose rate of interest or principal return is linked to a benchmark (including, but not limited to, Floating Rate Notes) and result in the effective application pursuant to the Terms and Conditions of either (i) an alternative floating rate selected in accordance with specified fallback procedures, or (ii) fixed rate based on the rate or rates which applied or were offered in the previous Interest Period when such benchmark was available.
Where Screen Rate Determination – Applicable (Term Rate) (as defined in the Terms and Conditions of the Notes) specified as the manner in which the Rate of Interest in respect of Floating Rate Notes is to be determined, the Terms and Conditions provide that the Rate of Interest (as defined in the Terms and Conditions of the Notes) shall be determined by reference to the Relevant Screen Page (or its successor or replacement) (as defined in the Terms and Conditions of the Notes). In circumstances where such Original Reference Rate (as defined in the Terms and Conditions of the Notes) is discontinued, neither the Relevant Screen Page, nor any successor or replacement, may be available.
Where the Relevant Screen Page is not available, and no successor or replacement for the Relevant Screen Page is available, the Terms and Conditions provide for the Rate of Interest to be determined by the Calculation Agent by reference to quotations from banks communicated to the Calculation Agent.
Where such quotations are not available (as may be the case if the relevant banks are not submitting rates for the determination of such Original Reference Rate), the Rate of Interest may ultimately revert to the Rate of Interest applicable as at the last preceding Interest Determination Date (as defined in the Terms and Conditions of the Notes) before the Original Reference Rate was discontinued. Uncertainty as to the continuation of the Original Reference Rate, the availability of quotes from reference banks, and the rate that would be applicable if the Original Reference Rate is discontinued may adversely affect the value of, and return on, the Floating Rate Notes.
Benchmark Events (as defined in the Terms and Conditions of the Notes) include (amongst other events) permanent discontinuation of an Original Reference Rate. If a Benchmark Event occurs, the Issuer shall use its reasonable endeavours to appoint an Independent Adviser (as defined in the Terms and Conditions of the Notes). The Independent Adviser shall endeavour to determine a Successor Rate or Alternative Rate (each as defined in the Terms and Conditions of the Notes) to be used in place of the Original Reference Rate. The use of any such Successor Rate or Alternative Rate to determine the Rate of Interest is likely to result in Notes initially linked to or referencing the Original Reference Rate performing differently (which may include payment of a lower Rate of Interest) than they would do if the Original Reference Rate were to continue to apply in its current form.
Furthermore, if a Successor Rate or Alternative Rate for the Original Reference Rate is determined by the Independent Adviser, the Terms and Conditions provide that the Issuer may vary the Terms and Conditions, as necessary to ensure the proper operation of such Successor Rate or Alternative Rate, without any requirement for consent or approval of the Noteholders.
If a Successor Rate or Alternative Rate is determined by the Independent Adviser, the Terms and Conditions also provide that an Adjustment Spread will be determined by the Independent Adviser and applied to such Successor Rate or Alternative Rate.
The Adjustment Spread (as defined in the Terms and Conditions of the Notes) is (i) the spread, formula or methodology which is formally recommended in relation to the replacement of the Original Reference Rate with the Successor Rate by any Relevant Nominating Body (which may include a relevant central bank, supervisory authority or group of central banks/supervisory authorities), (ii) if no such recommendation has been made, or in the case of an Alternative Rate, the spread, formula or methodology which the Independent Adviser determines is customarily applied to the relevant Successor Rate or the Alternative Rate (as the case may be) in international debt capital markets transactions to produce an industry-accepted replacement rate for the Original Reference Rate, or (iii) if the Independent Adviser determines that no such spread is customarily applied, the spread, formula or methodology which the Independent Adviser determines and which is recognised or acknowledged as being the industry standard for over-the-counter derivative transactions which reference the Original Reference Rate, where such rate has been replaced by the Successor Rate or the Alternative Rate, as the case may be.
Accordingly, the application of an Adjustment Spread may result in the Notes performing differently (which may include payment of a lower Rate of Interest) than they would do if the Original Reference Rate were to continue to apply in its current form.
The Issuer may be unable to appoint an Independent Adviser or the Independent Adviser may not be able to determine a Successor Rate or Alternative Rate in accordance with the terms and conditions of the Notes.
Where the Issuer is unable to appoint an Independent Adviser in a timely manner, or the Independent Adviser is unable, to determine a Successor Rate or Alternative Rate before the next Interest Determination Date, the Rate of Interest for the next succeeding Interest Period will be the Rate of Interest applicable as at the last preceding Interest Determination Date before the occurrence of the Benchmark Event, or, where the Benchmark Event occurs before the first Interest Determination Date, the Rate of Interest will be the initial Rate of Interest.
Where the Issuer has been unable to appoint an Independent Adviser, or the Independent Adviser has failed, to determine a Successor Rate or Alternative Rate in respect of any given Interest Period, it will continue to attempt to appoint an Independent Adviser in a timely manner before the next succeeding Interest Determination Date and/or to determine a Successor Rate or Alternative Rate to apply the next succeeding and any subsequent Interest Periods, as necessary.
Applying the initial Rate of Interest, or the Rate of Interest applicable as at the last preceding Interest Determination Date before the occurrence of the Benchmark Event, is likely to result in Notes linked to or referencing the relevant benchmark performing differently (which may include payment of a lower Rate of Interest) than they would do if the relevant benchmark were to continue to apply, or if a Successor Rate or Alternative Rate could be determined.
If the Issuer is unable to appoint an Independent Adviser or, the Independent Adviser fails to determine a Successor Rate or Alternative Rate for the life of the relevant Notes, the initial Rate of Interest, or the Rate of Interest applicable as at the last preceding Interest Determination Date before the occurrence of the Benchmark Event, will continue to apply to maturity. This will result in the Floating Rate Notes, in effect, becoming Fixed Rate Notes.
Where ISDA Determination is specified as the manner in which the Rate of Interest in respect of Floating Rate Notes is to be determined, the Terms and Conditions provide that the Rate of Interest in respect of the Notes shall be determined by reference to the relevant Floating Rate Option in the 2006 ISDA Definitions. Where the Floating Rate Option specified is an "IBOR" Floating Rate Option, the Rate of Interest may be determined by reference to the relevant screen rate or the rate determined on the basis of quotations from certain banks. If the relevant IBOR is permanently discontinued and the relevant screen rate or quotations from banks (as applicable) are not available, the operation of these provisions may lead to uncertainty as to the Rate of Interest that would be applicable, and may, adversely affect the value of, and return on, the Floating Rate Notes.
The debt capital markets have recently adopted "risk free rates" as reference rates for newly-issued floating rate debt securities in place of screen rates (such as LIBOR). In the case of sterling, the market has moved to the use of SONIA as a replacement for sterling LIBOR. SONIA (like other risk free rates) differs from LIBOR (and other screen rates) in a number of material respects. In addition, Investors should be aware that the market continues to develop in relation to SONIA as a reference rate in the capital markets. In particular, market participants and relevant working groups are exploring alternative reference rates based on SONIA, including term reference rates (which seek to measure the market's forward expectation of an average rate over a designated term).
The market or a significant part thereof may adopt an application of SONIA that differs significantly from that set out in the terms and conditions of the Notes and used in relation to Floating Rate Notes that reference a SONIA rate issued under the Programme. The Issuer may in the future also issue Floating Rate Notes referencing SONIA that differ materially in terms of interest determination when compared with any previous Floating Rate Notes referencing SONIA issued under the Programme.
As SONIA is published and calculated by the Bank of England based on data received from other sources, the Group has no control over SONIA's ongoing calculation or publication. There can be no guarantee that SONIA will not be discontinued or fundamentally altered in a manner that is materially adverse to the interests of Investors in Floating Rate Notes linked to or which reference a SONIA rate (or that any applicable benchmark fallback provisions provided for in the Terms and Conditions will provide a rate which is economically equivalent for Investors). The Bank of England does not have an obligation to consider the interests of Investors in calculating, adjusting, converting, revising or discontinuing SONIA. If the manner in which SONIA is calculated is changed, that change may result in a reduction in the amount of interest payable on such Floating Rate Notes, which may result in a fall in the trading prices of such Floating Rate Notes in the secondary market. Furthermore, the interest payable on Floating Rate Notes which reference a SONIA rate is only capable of being determined at the end of the relevant observation period and shortly prior to the relevant Interest Payment Date (as defined in the Terms and Conditions of the Notes). It may therefore be difficult for Investors in Floating Rate Notes which reference a SONIA rate to estimate reliably the amount of interest which will be payable on such Floating Rate Notes.
Further, in contrast to LIBOR-based debt instruments, if Floating Rate Notes referencing SONIA become due and payable as a result of an Event of Default (as defined in the Terms and Conditions of the Notes) under Condition 10 (Events of Default), or are otherwise redeemed early on a date which is not an Interest Payment Date, the final interest payable in respect of such Floating Rate Notes will only be determined on or immediately prior to the date on which the Floating Rate Notes become due and payable and will not be reset thereafter.
Investors should also be aware that the manner of adoption or application of SONIA as a reference rate in the international debt capital markets may differ materially compared with the application and adoption of SONIA in other markets, such as the derivatives and loan markets. Investors should carefully consider how any mismatch between the adoption of SONIA as reference rates across these markets may impact any hedging or other arrangements which Investors may put in place in connection with any acquisition, holding or disposal of Notes linked to or which reference a SONIA rate.
Since SONIA is a relatively new rate in the debt capital markets, Floating Rate Notes linked to or which reference a SONIA rate may have no, or a limited, established secondary market when issued and an established secondary market may never develop or may not be very liquid.
If an Investor chooses to sell its Notes issued under the Programme in the open market at any time prior to the maturity of the Notes, the price the Investor will receive from a purchaser may be less than its original investment, and may be less than the amount due to be repaid at the maturity of the Notes if an Investor were to hold onto the Notes until that time. Factors that will influence the price received by Investors who choose to sell their Notes in the open market may include, but are not limited to, market appetite, inflation, the period of time remaining to maturity of the Notes, prevailing interest rates and the financial position of the Issuer. In addition, inflation may reduce the real value of the Notes over time which may affect what Investors can buy with their investments in the future (including on the maturity of the Notes).
The Terms and Conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders, including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.
The Terms and Conditions of the Notes also provide that the Trustee may, without the consent of Noteholders, agree to (i) any modification of, or the waiver or authorisation of any breach or proposed breach of, any of the provisions of the Notes, (ii) determine without the consent of the Noteholders that any Event of Default or potential Event of Default shall not be treated as such, (iii) the substitution of another company in place of the Issuer as principal debtor under the Notes in the circumstances described in Condition 11 of the Terms and Conditions of the Notes or (iv) the release of a Guarantor or the accession of a new Guarantor in certain circumstances.
The Terms and Conditions of the Notes are based on English law in effect as at the date of issue of the relevant Notes. No assurance can be given as to the impact of any possible judicial decision or change to English law or administrative practice after the date of issue of the relevant Notes. Any such change could adversely impact the value of the Notes by, for example, calling into doubt in some way any of the rights and remedies under English law available to Noteholders as at the date of issue of their Notes, and which were therefore an intrinsic element of the value ascribed to such Notes at the date of issue.
In the event that the Issuer or any Guarantor (i) has or will become obliged to increase the amounts payable in respect of any Notes or Coupons due to any withholding or deduction for any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the United Kingdom or any political subdivision or authority thereof or therein having power to tax, as a result of any change in, or amendment to, the laws or regulations of the United Kingdom or any political subdivision or authority thereof or therein having the power to tax, or any change in the application or interpretation of such laws or regulations, which change or amendment becomes effective on or after the date on which agreement is reached to issue the first tranche of the relevant series of Notes, and (ii) such obligation cannot be avoided by the Issuer (or the relevant Guarantor(s), as the case may be) taking reasonable measures available to it, the Issuer may redeem all of the outstanding Notes of the relevant series in accordance with their Terms and Conditions.
Unlike a bank deposit, the Notes are not protected by the Financial Services Compensation Scheme (the "FSCS") or any equivalent schemes in other jurisdictions. As a result, neither the FSCS, nor anyone else, will pay compensation to an Investor in the Notes upon the failure of the Issuer, the Guarantors or the Group as a whole.
In relation to any issue of Notes in bearer form which have denominations consisting of a minimum Specified Denomination (as defined in the Terms and Conditions of the Notes) plus one or more higher integral multiples of another smaller amount, it is possible that the Notes may be traded in amounts that are not integral multiples of such minimum Specified Denomination. In such a case, a Noteholder who, as a result of trading such amounts, holds a principal amount of less than the minimum Specified Denomination in its account with the relevant clearing system at the relevant time, will not receive a definitive Note in respect of such holding (should definitive Notes be printed) and would need to purchase a principal amount of Notes such that it holds an amount equal to one or more Specified Denominations.
The Issuer is a holding company and operates its business entirely through its subsidiaries, including the Guarantors. Each of the Guarantors also operate their business through their respective operating subsidiaries. Payments on the Notes are structurally subordinated to all existing and future liabilities and obligations of each operating subsidiary within the Group (the "Group Operating Subsidiaries"). Claims of creditors of the Group Operating Subsidiaries will generally have priority as to the assets of such subsidiaries over the Issuer, the Guarantors and their respective creditors, including holders of the Notes. The Issuer's and the Guarantors' respective obligations to make payments under the Notes are solely obligations of the Issuer and the Guarantors, and will not be guaranteed by any other Group company (including the Group Operating Subsidiaries).
In addition, as holding companies, the Issuer's and the Guarantors' ability to make payments depends upon the receipt of dividends, distributions or advances from the Group Operating Subsidiaries. The ability of the Group Operating Subsidiaries to pay dividends or such other amounts will be dependent on their profitability and will be subject to applicable laws and regulations and to restrictions on making payments contained in contractual arrangements.
Investors should be aware that, whilst financial information relating to the Guarantors is consolidated within the 2020 Annual Report and the 2019 Annual Report, each of which are incorporated by reference into this Prospectus, no separate consolidated financial statements are available with respect to any of the Guarantors and their respective subsidiaries. Accordingly, this Prospectus does not contain separate accounts for the Guarantors. The Issuer has accordingly made an omission request to, and received approval thereof from, the CBI (in respect of EU Notes only) and the FCA (in respect of UK Notes only) in relation to the requirement contained in the EU Prospectus Regulation and the UK Prospectus Regulation (as applicable) to present in a prospectus historical financial information with respect to each guarantor of the relevant securities.
Investors should refer to the consolidated financial statements of the Group (including the auditor's report thereto and the notes thereon) as set out in Pages 101 to 157 of the 2020 Annual Report, and on Pages 108 to 160 of the 2019 Annual Report for information on the financial position and prospects of the Group, including the Guarantors, in respect of the past two financial years.
One or more independent credit rating agencies may assign credit ratings to an issue of Notes. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the relevant rating agency at any time.
In general, EEA regulated investors are restricted from using a rating for EEA regulatory purposes if such rating is not issued by a credit rating agency established in the EEA and registered under the CRA Regulation (and such registration has not been withdrawn or suspended, subject to transitional provisions that apply in certain circumstances). The list of registered and certified rating agencies published by ESMA on its website in accordance with the CRA Regulation is not conclusive evidence of the status of the relevant rating agency included in such list, as there may be delays between certain supervisory measures being taken in respect of a relevant rating agency and the publication of the updated ESMA list. Similarly, UK regulated investors are restricted from using a rating for UK regulatory purposes if such rating is not issued by a credit rating agency established in the UK and registered under the UK CRA Regulation. The list of registered and certified rating agencies published by the FCA on its website in accordance with the UK CRA Regulation is not conclusive evidence of the status of the relevant rating agency included in such list, as there may be delays between certain supervisory measures being taken in respect of a relevant rating agency and the publication of the updated FCA list.
Certain information with respect to the credit rating agencies and ratings is set out in the "Important Notices" section of this Prospectus. Where a Tranche of Notes is rated, such rating will be specified in the applicable Final Terms and will not necessarily be the same as the rating of the Programme.
Fixed Rate Notes bear interest at a fixed rate. Investors should note that (i) if interest rates start to rise then the income to be paid by the Notes might become less attractive and the price the Investors get if they sell such Notes could fall, and (ii) inflation will reduce the real value of the Notes over time and may make the fixed interest rate on the Notes less attractive in the future. However, the market price of the Notes has no effect on the interest amounts due on the Notes or what Investors will be due to be repaid if the Notes are held by the Investors until they mature.
The Issuer will pay principal and interest on the Notes, and the Guarantors will make payments, in the Specified Currency (as defined in the Terms and Conditions of the Notes). This presents certain risks relating to currency conversions if an Investor's financial activities are denominated principally in a currency or currency unit (the "Investor's Currency") other than the Specified Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Investor's Currency may impose or modify exchange controls. An appreciation in the value of the Investor's Currency relative to the Specified Currency would decrease (i) the Investor's Currency equivalent yield on the Notes, (ii) the Investor's Currency equivalent value of the principal payable on the Notes, and (iii) the Investor's Currency equivalent market value of the Notes.
Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate or the ability of the Issuer or the Guarantors to make payments in respect of the Notes. As a result, Investors may receive less interest or principal than expected, or no interest or principal.
In the case of any UK Notes issued under the Programme which are tradable on the London Stock Exchange's electronic order book for retail bonds (the "ORB"), a market-maker will be appointed in respect of the relevant Notes from the date of admission of those Notes to trading. Market-making means that a person will quote prices for buying and selling securities during trading hours. However, the market-maker may not continue to act as a market-maker for the life of the relevant Notes. If a replacement market-maker is not appointed in such circumstances, this could have an adverse impact on an Investor's ability to sell the relevant Notes.
Notes may have no established trading market when issued, and one may never develop. If a market does develop, it may not be liquid. Therefore, Investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market, or, in the case of Fixed Rate Notes, with the yield indicated in the relevant Final Terms. This is particularly the case for Notes that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies, or have been structured to meet the investment requirements of limited categories of Investors. These types of Notes generally would have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a severely adverse effect on the market value of Notes. Moreover, other than in the case of Notes issued under the Programme to be traded on the ORB, it is not anticipated that a market-maker will be appointed in respect of Notes issued under the Programme, and the absence of a market-maker for the Notes may severely and adversely impact the price that an Investor would receive if it wishes to sell its Notes, especially where trading activity levels are low.
The Notes in each Series will be represented by a temporary or permanent Global Note. Such Global Note may be deposited with a common depositary or common safekeeper for Euroclear and Clearstream, Luxembourg. Except in the circumstances described in the Global Note, an Investor will not be entitled to receive Definitive Notes. Euroclear and Clearstream, Luxembourg will maintain records of the interests in the relevant Global Note. While any Notes issued under the Programme are represented by a Global Note, an Investor will be able to trade their interests only through Euroclear or Clearstream, Luxembourg.
While Notes are represented by a Global Note, the Issuer will discharge its payment obligations under such Notes by making payments to the common depositary or common safekeeper for Euroclear and Clearstream, Luxembourg for distribution to their account holders. A holder of an interest in the Global Note must rely on the procedures of Euroclear and Clearstream, Luxembourg to receive payments under the Notes. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, interests in any Global Note.
Holders of interests in a Global Note will not have a direct right to vote in respect of the Notes represented by such Global Note. Instead, such holders will be permitted to act only to the extent that they are enabled by Euroclear or Clearstream, Luxembourg.
Investors may hold interests in the Notes through Euroclear UK & Ireland Limited (formerly known as CREST Co Limited) ("CREST") through the issuance of dematerialised depository interests ("CDIs") issued, held, settled and transferred through CREST, representing interests in the Notes underlying the CDIs (the "Underlying Notes"). Holders of CDIs (the "CDI Holders") will hold, or have an interest in, a separate legal instrument and will not be the legal owners of the Underlying Notes. The rights of CDI Holders to the Underlying Notes are represented by the relevant entitlements against CREST Depository Limited (the "CREST Depository") which (through CREST International Nominees Limited (the "CREST Nominee")) holds interests in the Underlying Notes. Accordingly, rights under the Underlying Notes cannot be enforced by CDI Holders except indirectly through the intermediary depositaries and custodians. The enforcement of rights under the Underlying Notes will be subject to the local law of the relevant intermediaries. This could result in an elimination or reduction in the payments that otherwise would have been made in respect of the Underlying Notes in the event of any insolvency or liquidation of any of the relevant intermediaries, in particular where the Underlying Notes held in clearing systems are not held in special purpose accounts and are fungible with other securities held in the same accounts on behalf of other customers of the relevant intermediaries.
CDIs are constituted under English law and transferred through CREST and will be issued by the CREST Depository pursuant to the global deed poll dated 25 June 2001 (as subsequently modified, supplemented and/or restated) (the "CREST Deed Poll"). The rights of the CDI Holders will be governed by the arrangements between CREST, Euroclear, Clearstream, Luxembourg and the Issuer, including the CREST Deed Poll. Potential Investors should note that the provisions of the CREST Deed Poll, the CREST Manual issued by CREST (including the CREST International Manual dated 14 April 2008) as amended, modified, varied or supplemented from time to time (the "CREST Manual") and the CREST Rules contained in the CREST Manual applicable to the CREST International Settlement Links Service (the "CREST Rules") contain indemnities, warranties, representations and undertakings to be given by CDI Holders, and limitations on the liability of the CREST Depository. CDI Holders are bound by such provisions and may incur liabilities resulting from a breach of any such indemnities, warranties, representations and undertakings in excess of the amounts originally invested by them. As a result, the rights of, and returns received by, CDI Holders may differ from those of holders of Notes which are not represented by CDIs.
In addition, CDI Holders may be required to pay fees, charges, costs and expenses to the CREST Depository in connection with the use of the CREST International Settlement Links Service (the "CREST International Settlement Links Service"). These will include the fees and expenses charged by the CREST Depository in respect of the provision of services by it under the CREST Deed Poll and any taxes, duties, charges, costs or expenses which may be or become payable in connection with the holding of the Notes through the CREST International Settlement Links Service. Potential Investors should note that none of the Issuer, the Guarantors, the Arranger, the Dealers, the Trustee or the Paying Agent will have any responsibility for the performance by any intermediaries or their respective direct or indirect participants or accountholders of their respective obligations under the rules and procedures governing their operations. The CDIs are not the subject of this Prospectus.
| Refer to | ||
|---|---|---|
| What is the Programme? |
The Programme is a debt issuance programme under which International Personal Finance plc ("IPF" or the "Issuer") as the issuer may, from time to time, issue debt instruments which are referred to in this Prospectus as the Notes. Notes are also commonly referred to as bonds. The payment of all amounts owing in respect of Notes issued by IPF will be unconditionally and irrevocably guaranteed on a joint and several basis by each of IPF Holdings Limited, International Personal Finance Investments Limited, IPF International Limited and IPF Digital Group Limited under their respective guarantees in respect of such Notes (the "Guarantee") (in such capacity, each of IPF Holdings Limited, International Personal Finance Investments Limited, IPF International Limited and IPF Digital Group Limited is referred to as a "Guarantor", and together they are referred to as the "Guarantors"); "unconditionally" means that, if the Issuer hasn't paid the relevant amount due, there is no further condition to be fulfilled before the guarantee can be called on, and "irrevocably" means that the Guarantors can't revoke their guarantee at a later date. The reference to "on a joint and several basis" means that any person owed money under the Guarantee may pursue the obligation against all the Guarantors together, or any one Guarantor as if that Guarantor were liable for the whole guaranteed amount. The Programme is constituted by a set of master documents containing standard terms and conditions and other contractual provisions that can be used by IPF to undertake any number of issues of Notes from time to time in the future, subject to a maximum limit, at any time, of EUR 1,000,000,000. The Terms and Conditions of the Notes are set out later in this Prospectus. The Programme was established on 19 April 2010. |
Terms and Conditions of the Notes beginning on page 97 |
| How are Notes issued under the Programme? |
Whenever the Issuer decides to issue Notes, it undertakes what is commonly referred to as a "drawdown". On a drawdown, documents which are supplementary to the Programme master documents are produced, indicating which provisions in the master documents are relevant to that particular drawdown and setting out the terms of the Notes to be issued under the drawdown. The key additional documents which Investors will need to be aware of when deciding whether to invest in Notes issued as part of a drawdown over the 12 month period from the date of this Prospectus are: (a) any supplement to this Prospectus and (b) the applicable Final Terms for such Notes. |
Terms and Conditions of the Notes beginning on page 97, Supplementary Prospectus on page 76 and the Form of Final Terms beginning on pages 139 and 150 |
| of Final Terms is intended to be read alongside the Terms and Conditions of the Notes, and the two together provide the specific terms of the Notes relevant to a specific drawdown. Each set of Final Terms in respect of EU Notes will be submitted to the CBI and Euronext Dublin and/or the operator of any other EU Regulated Market and published by the Issuer in accordance with the EU Prospectus Regulation and in compliance with the other requirements of the local law of the relevant EEA Member State, if applicable. Each set of Final Terms in respect of UK Notes will be submitted to the FCA and the LSE and/or the operator |
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|---|---|---|
| of any other UK Regulated Market and published by the Issuer in accordance with the UK Prospectus Regulation and in compliance with the other requirements of UK law, if applicable. |
||
| What types of Notes may be issued under the Programme? |
The following types of Notes, or a combination of them, may be issued under the Programme: Fixed Rate Notes, Floating Rate Notes and Zero Coupon Notes. Fixed Rate Notes Fixed Rate Notes are Notes where the interest rate payable by the Issuer on the Notes is fixed, for the life of the Notes, as a set percentage at the time of issue. Floating Rate Notes |
Terms and Conditions of the Notes beginning on page 97 and the Form of Final Terms beginning on pages 139 and 150 |
| Floating Rate Notes are Notes where the interest rate is calculated by reference to a fluctuating benchmark rate. Under the Programme, that benchmark rate will be one of the Euro Interbank Offered Rate (EURIBOR), the Paris Interbank Offered Rate (PIBOR), the Warsaw Interbank Offered Rate (WIBOR), the Prague Interbank Offered Rate (PRIBOR), the Romanian Interbank Offered Rate (ROBOR), the Budapest Interbank Offered Rate |
| denominated in Polish Zloty, the benchmark rate chosen by the Issuer might be WIBOR (though the Issuer would be free to choose one of the other rates listed above if for any reason it felt it was more appropriate to a particular issuance of Notes). |
|
|---|---|
| Term Rate Floating Rate Notes | |
| The floating interest rate for Floating Rate Notes that reference a Term Rate is calculated on or about the start of each new interest period and applies for the length of that interest period. Therefore, such Floating Rate Notes in effect have a succession of fixed interest rates which are recalculated on or about the start of each new interest period. |
|
| SONIA Floating Rate Notes | |
| SONIA is an overnight interest rate, whilst the interest periods for Floating Rate Notes (including those that reference SONIA) will typically be longer (by way of example only, three or six months). Therefore, for Floating Rate Notes that reference SONIA, the daily SONIA rate must be aggregated to determine the interest payable in respect of each interest period. This is achieved by compounding the daily SONIA rates over a period of time equivalent to the length of the relevant interest period. The relevant daily SONIA rates used in this calculation are the daily SONIA rates for a period that lags behind the relevant interest period by a set number of days that will be specified in the Final Terms. This mechanism means that Investors and IPF will not know the relevant floating rate at the start of each interest period, but only after the end of the relevant observation period. Although the floating interest rates applicable to the |
|
| Floating Rate Notes will be based on benchmark rates, Floating Rate Notes will typically also include a fixed percentage margin which is added to (or subtracted from) the benchmark rate. |
|
| Zero Coupon Notes | |
| Zero Coupon Notes are Notes which do not carry any interest but are generally issued at a deep discount to their nominal amount. Zero Coupon Notes are repaid at their full amount. Therefore, if Investors purchase Zero Coupon Notes on their issue date and hold them to maturity, their return will be the difference between the issue price and the nominal amount of the Zero Coupon Notes paid on maturity. Alternatively, they might realise a return on Zero Coupon Notes through a sale prior to their maturity. |
|
| The specific details of each issue of Notes will be specified in the applicable Final Terms. |
| Why are there two forms of Final Terms and which one should I be looking at? |
The UK Prospectus Regulation requires the Issuer to give more disclosure in respect of UK Retail Notes than it does in respect of UK Wholesale Notes, on the basis that lower denomination Notes are more likely to be bought by less sophisticated Investors who might benefit from additional information. There are therefore two different forms of Final Terms included in this document, one with slightly more disclosure items than the other, and which one will be used will depend on the denomination of the Notes as made clear in the legend appearing in the very first paragraph of each form of Final Terms. |
Form of Final Terms beginning on pages 139 and 150 |
|---|---|---|
| What is the relationship between the Issuer and the Group? |
All references to the Group are to IPF, its subsidiaries (which include the Guarantors) and its subsidiary undertakings taken as a whole. IPF is the ultimate holding company of the Group. IPF's financial condition depends upon the receipt of funds provided by other members of the Group. |
N/A |
| Why has the Programme been established? What will the proceeds be used for? |
The Group established the Programme in order to diversify their sources of funding and the debt maturity profile of the Group. The net proceeds from each issue of Notes will be applied by the Group for its general corporate purposes. If, in respect of any particular issue of Notes under the Programme there is a particular identified use of proceeds, this will be stated in the applicable Final Terms. |
N/A V.3.2 CATC |
| Have any Notes been issued under the Programme to date? |
As of the date of this Prospectus, IPF has made seventeen issuances under the Programme. |
N/A |
| How will the price of the Notes be determined? |
Notes may be issued at their nominal amount or at a discount or premium to their nominal amount. The price and amount of Notes to be issued from time to time under the Programme will be determined by the Issuer and the relevant Dealer or Dealers at the time of "pricing" of the Notes in accordance with prevailing market conditions. The issue price for each tranche will be specified in the applicable Final Terms. |
Form of IV7.1 IV7.2 Final Terms V.5.3.1(ii) beginning CAT B on pages 139 and 150 |
| What is the yield on Fixed Rate Notes and Zero Coupon Notes? |
The yield in respect of each issue of Fixed Rate Notes and Zero Coupon Notes will be calculated on the basis of the Issue Price and specified in the applicable Final Terms. Yield is not an indication of future price. Investors can find a sample calculation of yield set out on page 164. |
General V.4.9(i) CAT B, C Information – 15 beginning on page 161 |
| The Final Terms in respect of any Floating Rate Notes will not include any indication of yield. |
| How are the Notes redeemed? What is a call option and a put option |
Upon maturity, the Notes will pay a fixed redemption amount. In addition, the Notes may provide for early redemption at the option of the Issuer (a call option) or at the option of the Investor (a put option). |
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|---|---|---|
| and what will you get paid upon the exercise of these options? |
Call Options | |
| A call option gives the Issuer the right to redeem the Notes before the final maturity date at a predetermined price (or a price determined in part by reference to another bond referred to as a "make-whole") on one or more specified dates, which will be set out in the Final Terms. If the Notes are redeemed early, the Investor will be paid a pre-specified redemption value plus any accrued and unpaid interest or the "make-whole" amount calculated in accordance with the Terms and Conditions. |
||
| Put Option | ||
| A put option gives the Investor the right to require the Issuer to redeem such Investor's Notes before the final maturity date at a predetermined price on one or more specified dates, which will be set out in the Final Terms. If the Notes are redeemed early, the Investor will be paid a pre-specified redemption value plus any accrued and unpaid interest. |
||
| Bullet Redemption | ||
| Unless Notes are terminated early, are purchased and cancelled, or are adjusted in accordance with their Terms and Conditions, the Investor will receive, on the maturity date for each Note that such Investor holds, an amount equal to (x) the nominal amount, multiplied by (y) the amount per calculation amount specified in the relevant Final Terms. Both the calculation amount and the amount per calculation amount are set out in the Final Terms, and are used to determine what proportion of the nominal amount will be payable by the Issuer on the maturity date. |
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| Will the Notes issued under the Programme be secured? |
The Issuer's obligations to pay interest and principal on the Notes issued under the Programme will not be secured either by any of the Issuer's or any other member of the Group's assets, revenues or otherwise. |
Terms and Conditions of the Notes beginning on |
| The terms and conditions of the Notes do, however, contain a "negative pledge", which gives the Noteholders some protection from the Issuer or Guarantors creating security in favour of other creditors holding securities similar to the Notes. |
page 97 | |
| Will the Notes issued under the Programme be guaranteed? |
The payment of all amounts owing in respect of Notes issued by IPF will, for so long as IPF has any outstanding financial indebtedness, be unconditionally and irrevocably guaranteed by the Guarantors. |
N/A |
| Will the Notes issued under the Programme have a credit rating? |
A Series of Notes issued under the Programme may be rated by a credit rating agency or unrated. Such ratings will not necessarily be the same as the rating assigned to the Issuer or to any other Series of Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. The Programme is currently rated, and further information can be found at the start of this Prospectus. |
Important Notices – Credit Rating Agency Regulation Notice beginning on page 4 |
|---|---|---|
| Will the Notes issued under the Programme have voting rights? |
Holders of Notes issued under the Programme have certain rights to vote at meetings of Noteholders of the relevant Series, but are not entitled to vote at any meeting of shareholders of the Issuer or of any other member of the Group. |
Terms and Conditions of the Notes – 11 Meetings of Noteholders, Modification, Waiver and Substitution beginning on page 127 |
| Will I be able to | Applications have been made: | General |
| trade the Notes | (i) in respect of the EEA Admission: |
Information – 1 on page 161 |
| issued under the Programme? |
(a) to the CBI, in its capacity as a competent authority under the EU Prospectus Regulation, for EU Notes issued under the Programme during the period of 12 months from the date of this Prospectus to be admitted to the official list of Euronext Dublin; and |
|
| (b) to Euronext Dublin for such EU Notes to be admitted to trading on the Euronext Dublin Regulated Market, although particular Series of EU Notes may be admitted to trading on other EU Regulated Markets; and |
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| (ii) in respect of the UK Admission: |
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| (a) to the FCA, in its capacity as competent authority under the UK Prospectus Regulation, for UK Notes issued under the Programme during the period of 12 months from the date of this Prospectus to be admitted to the official list of the FCA; and |
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| (b) to the LSE for such UK Notes to be admitted to trading on the LSE Main Market, although particular Series of UK Notes may be admitted to trading on other UK Regulated Markets. |
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| Once listed, Notes may be purchased or sold through a broker. The market price of Notes may be higher or lower than their issue price depending on, among other things, the level of supply and demand for such Notes, movements in interest rates and the financial performance of the Issuer and the Group. (See "Risk Factors – Risks related to the market generally – The secondary market generally"). |
| What will Noteholders receive in a winding up of the Issuer and the Group? |
of the applicable. |
Issuer's, or Guarantor's, |
If the Issuer or a Guarantor becomes insolvent and is unable to pay its debts, an administrator or liquidator would be expected to make distributions to its creditors in accordance with a statutory order of priority. An Investor's claim as a Noteholder would be expected to rank after the claims of any holders of the Issuer or Guarantor's secured debt or other creditors that are given preferential treatment by applicable laws of mandatory application relating to creditors, but ahead shareholders, A simplified diagram illustrating the expected ranking |
as | N/A | |
|---|---|---|---|---|---|---|
| of the Notes compared to other creditors of the Issuer and the Guarantors, as the case may be, is set out below. Type of Examples of |
||||||
| obligation | obligations | |||||
| Highest ranking |
Proceeds of fixed charge assets |
Currently none | ||||
| Expenses of liquidation/ administration |
Currently none | |||||
| Preferential creditors |
Including certain remuneration due to employees |
|||||
| Proceeds of floating charge assets |
Currently none | |||||
| Unsecured obligations, including guarantees in respect of them |
Including any Notes of the Issuer to be issued under the Programme and the Guarantee of the Guarantors. Also includes unsecured obligations (including guarantee obligations) in respect of various Group banking facilities and other financings |
|||||
| Lowest ranking |
Shareholders | Ordinary shareholders |
||||
| to the assets "Business Finance Plc |
other categories indirectly through Description of for details of the Issuer's principal subsidiaries). |
However, as well as being aware of the ranking of the Notes issued under the Programme compared of creditor and shareholders of the Issuer, Investors should note that the Issuer holds a substantial majority of its its subsidiaries International Personal – Organisational structure" on page 42 |
the (see |
| Investors should also be aware of the Finance Act 2020 which received Royal Assent on 22 July 2020, which has given priority, as a preferential creditor, to HMRC in respect of certain taxes due from companies incorporated in the United Kingdom upon a winding-up. This may affect the amounts available for distribution to the Issuer's or the Guarantors' unsecured creditors (such as Investors in the Notes) were the Issuer, any Guarantor or any other Group subsidiary to be wound-up in the United Kingdom. |
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|---|---|---|
| Who will represent the interests of the Noteholders? |
The Law Debenture Trust Corporation p.l.c. (the "Trustee") is appointed to act on behalf of the Noteholders as an intermediary between Noteholders and the Issuer and the Guarantors (if applicable) throughout the life of any Notes issued under the Programme. The main obligations of the Issuer and the Guarantors (if applicable) (such as the obligation to pay amounts due under, and observe the various covenants in, the Terms and Conditions of the Notes) are owed to the Trustee. These obligations are, in the normal course, enforceable by the Trustee only, not the Noteholders themselves. Although the entity selected to act as Trustee is chosen and appointed by the Issuer, the Trustee's role is to protect the interests of the Noteholders as a class. |
N/A |
| Can the Terms and Conditions of the Notes be amended? |
The Terms and Conditions of the Notes provide that the Trustee may, without the consent of Noteholders or Couponholders, agree to: (a) waive, modify or authorise any breach or proposed breach of any provisions of the Trust Deed dated on or around 26 August 2021 and made between the Issuer, the Guarantors and the Trustee (the "Trust Deed") if, in the opinion of the Trustee, such modification is not materially prejudicial to the interests of the Noteholders; (b) any modification of any of the provisions of the Trust Deed that is, in the opinion of the Trustee, of a formal, minor or technical nature or is made to correct a manifest error; (c) the substitution of another company as principal debtor under the Notes in place of the Issuer, in certain circumstances, and subject to the satisfaction of certain conditions; and (d) the release of a Guarantor in certain circumstances. Noteholders may also sanction a modification of the Terms and Conditions of the Notes by passing an Extraordinary Resolution (as defined in the Trust Deed). |
Terms and Conditions of the Notes – 11 Meetings of Noteholders, Modification, Waiver and Substitution beginning on page 127 |
| How do I check whether the person offering me the Notes has been given the Issuer's consent to do so? |
If an Investor is unclear on whether or not the person offering him the Notes has the Issuer's consent to do so (and therefore whether the Investor can rely on this Prospectus), the Investor should as a starting point check the Final Terms for the relevant Notes and see whether the Issuer has given either "Specific Consent" or "General Consent". If "Specific Consent" has been given, then the people who are authorised are the ones named in the Final Terms and/or on the Issuer's website as being authorised. No-one else is authorised to offer the Notes. If "General Consent" has been given, then the Investor should look on the website of the person offering them the Notes for what is called an "Acceptance Statement" confirming that that person has complied with the conditions attached to the consent. If no such Acceptance Statement appears, then the person is not authorised to offer the Investor the Notes. This is a good first step to checking that the person offering an Investor the Notes has been authorised to do so and the Investor can rely on the Prospectus, but unfortunately it is not conclusive – the person doing the offering still has to comply with various conditions (for example, they can only offer in specified jurisdictions, and within specified time limits). Details of these conditions are provided in the section "Important Legal Information". Therefore, if an Investor is in any doubt as to whether or not a person who offers him the Notes is authorised to do so, the Investor should seek independent legal advice. |
Form of Final Terms beginning on pages 139 and 150 Important Legal Information on page 89 |
|---|---|---|
| What if I have further queries? |
If Investors are unclear in relation to any matter, or uncertain if the Notes issued under the Programme are a suitable investment, they should seek professional advice from their broker, solicitor, accountant or other independent financial adviser before deciding whether to invest. |
N/A |
International Personal Finance plc ("IPF") is the holding company for an international provider of home credit and digital loans to consumers with average to below average incomes. IPF and its subsidiaries (as defined in the Companies Act 2006) (the "Group") focus on the provision of small sum, primarily home collected, short-term unsecured loans in emerging markets. IPF also offers products through IPF Digital, the digital lending business of IPF which includes both IPF Digital Group Limited and IPF Digital AS as participating Group companies ("IPF Digital"). The Group operates in Poland, the Czech Republic, Hungary, Romania, Mexico, Lithuania, Spain, Finland (although the Group is withdrawing from this market), Estonia, Latvia and Australia and has approximately 22,000 employees and agents. The Group's head office is in Leeds in the United Kingdom. The issued share capital of IPF, as at 30 June 2021, comprises 234,000,000 ordinary shares of ten pence each, each of which is fully paid up.
The memorandum and articles of association of the Issuer are incorporated by reference into this Prospectus and the objects of the Issuer are unrestricted.
IPF is a public limited company incorporated and registered in England and Wales on 5 December 2006 as a company limited by shares, with registered number 6018973. The operations of IPF are subject to English company law, in particular the Companies Act 2006. IPF's registered office is at Number Three, Leeds City Office Park, Meadow Lane, Leeds LS11 5BD. The telephone number of IPF's registered office is +44 (0)113 539 5466.
IPF is headquartered in the United Kingdom and operates eleven overseas markets in Europe, Mexico and Australia. IPF is the ultimate holding company of the Group, and the Group's business is conducted through its subsidiaries. As such, IPF is dependent on those members of its Group. IPF also has certain United Kingdom subsidiaries which provide business services, financial support or credit hedging facilities to fellow subsidiary undertakings.
The following chart shows, in simplified form, the organisational structure of the Group.
The Group operates in a sub-sector of the consumer credit market, offering small-sum, primarily home-collected, short-term unsecured cash loans in the developing credit markets of Europe and Mexico as well as Australia. The Group also offers digital instalment loans and revolving credit line facilities through the IPF Digital division trading as hapi loans, Credit 24 and Creditea.
The Group's home credit business provides loans with a typical value of approximately £730 in the Group's European home credit businesses and £240 in the Group's Mexican home credit business and maturities ranging from 12 weeks to around 3 years. The average term of loans is 75 weeks in the European home credit business and 44 weeks in the Mexican home credit business. The loans are unsecured and the customer is not required (or requested) to provide a third party guarantee in respect of their obligations under the loan. The loans are provided in local currency and typically, loans are delivered to, and repayments are collected from, the customer's home by the Group's agents.
By way of an example, for a typical loan offered by the Group's Polish home credit business for a 60 week term the repayment profile is such that the Group would expect to receive the full amount of principal lent to its customers within 50 weeks.
Typically, customers that opt for the agent home service incur no extra charges for missed or late payments during the contractual term of the loan.
The credit vetting of customers and, where the agent home service is provided, the provision of the loan and the collection of weekly or monthly instalments are performed at the customer's home by a home credit agent (supported by central credit scoring systems) who is responsible for servicing the customer's needs over the course of their relationship with the Group.
The Group's digital business serves customers who prefer to take out credit online and repay remotely. The credit, provided under the brands Credit 24, Creditea and hapi loans, includes revolving credit line facilities, being the key product for IPF Digital, and instalment loans with an average actual term of 18 to 24 months. Repayments are collected monthly and the average outstanding customer balance as at 30 June 2021 for (i) credit lines was approximately £1,150 in the Group's established markets and £900 in the Group's new markets and (ii) instalment loans was £850-900 in both the Group's established markets and new markets. The credit is unsecured, provided in local currency and the customer is not typically required to provide a guarantee.
The Group has a central credit scoring and management system, which operates alongside dedicated credit professionals in each business. The Group operates a different application process and behavioural credit scorecard in each of its markets, including, where appropriate, using data from external credit bureaus. Each credit scorecard has been built using the Group's database of the performance of over 45 million loans. The Group's lending decisions, driven by the unsecured nature of the Group's lending operations, are made on the basis of a customer's disposable income rather than the value of the customer's assets.
For both its home credit and digital customers, the Group has a repeat lending offering (resulting in a retention rate of 70% for the Group's home credit businesses and approximately 60% for IPF Digital) which is in line with the Group's "low and grow" strategy. Under the "low and grow" strategy customers are initially offered smaller loans, or credit lines, with further assessments conducted before larger loans or credit lines are offered.
The Group has a centralised arrears management system, which involves the sale of nonperforming loans to external debt recovery agencies.
The credit risk profile of the Group's home credit customers is naturally higher than for the Group's digital business. The home credit agent is critical to the credit management of the Group's home credit customers in order to mitigate the additional credit risk and the agent (supported by the central credit scoring systems) conducts the assessment of the customer's character, characteristics and capacity to repay.
The Group's home credit agents are remunerated primarily on the basis of collections.
The credit risk profile of the Group's digital business is lower than for the Group's home credit business. In some instances, in order to mitigate the risk of human error, upon approval of a loan, 1 cent (or the local currency equivalent) is transferred into the customer's bank account before the full value of the loan is transferred.
The Group's customers require simple, small-sum loans, either in their home via an agent or via their bank account through the Group's money transfer or digital offerings, with transparent costs and affordable repayments to help them manage their weekly budget, or to buy one-off items at the time they need them.
Home credit customers have low, fluctuating incomes and a limited or no credit history. This means some would not qualify for credit from a mainstream lender or an online loan provider and, as such, are suited to home credit. The personal service provided by agents as well as the convenience and speed of the offering is attractive to customers.
The increasing use of mobile services means a growing number of consumers in the Group's target segment are choosing to borrow online. The Group's target customers earn low to middle incomes and have high smartphone adoption levels. They already have a credit history that may allow them to qualify for an online loan. The Group is able to meet its customers' needs through its digital offering, which has operated for more than 15 years, and offers a significant strategic opportunity to grow the number of customers it serves with instalment loans and credit line facilities.
The Group plays an important role in society by providing affordable finance responsibly to underbanked and underserved consumers. The Group's strategy centres on delivering a positive customer experience and expanded product range in European home credit to enable these businesses to return to delivering good levels of profitability and returns. These returns will be used to maintain investment in improving the customer journey and operational efficiency while reinvigorating growth in Mexico home credit and IPF Digital. Whilst the Group's underlying strategy has not changed, in light of the COVID-19 pandemic the Group redefined its strategic goals in April 2020 to safeguard the business and develop firm foundations to return quickly to profitability and long-term growth.
Protect the Group's people, prioritise loyal customers and protect the business
Rightsize the Group's business to accelerate recovery and refinance the balance sheet
Rebuild the Group's business
Deliver long-term, sustainable growth
The Group successfully executed phases 1 and 2 of its plan, and this supported the delivery of the improved operating and financial performance in the second half of 2020. In managing the impact of the pandemic, the Group ensured that its people were well-protected and that the Group retained its loyal customers and preserved liquidity. Through the rightsizing programme, the Group significantly reduced its cost base to reflect the smaller scale of its operations and to accelerate a return to full-year profitability. Role reductions were weighted towards back-office positions in order to protect the key field and agent roles that are crucial to retaining loyal customers and delivering future growth. In addition, following a review of the level of expected returns and the capital requirements of each business unit, the Group closed four weaker-performing branches in Mexico, merged its two digital businesses in Poland to create operational synergies and decided to collect out the IPF Digital Finland portfolio due to the further tightening of the APR cap in that market. Despite the challenges of the pandemic, the Group also made progress on a number of strategic developments. The Group rolled out the new mobile wallet in Latvia and launched a Creditea digital offering in the Czech Republic. The Group continued the digital transformation of its home credit operations, completing the roll-out of the sales and collections functionality of its MyProvi mobile app for agents in Europe and commenced the introduction of the first apps in Mexico. The Group's new MyNews mobile communications app, which proved critical to delivering health and safety information directly to agents and field staff during the pandemic, has been rolled out to all agents and most employees in Europe and 8,000 agents and employees in Mexico, to date.
In 2021, the Group is focused on rebuilding the receivables portfolio and expects to progressively increase credit issued in each of its businesses. The Group continues to believe that there will be lower levels of supply of credit in the course of the next few years, and expects to be in a good position to meet the needs of underserved consumers in its segment of the consumer credit market.
Beyond the return to profitability, the Group plans to use its digital expertise combined with its market-leading positions and unrivalled knowledge of its core customer segment to enhance its product proposition for customers and deliver longer-term growth across the Group.
The Group specialises in providing small sum, short-term, unsecured loans and credit lines to consumers who are underbanked or underserved by mainstream financial operators or who may have no or a limited credit history. The Group does this through two lending channels – home credit and digital.
The Group offers both home credit and digital loans, and has a differentiated proposition from that of other credit providers. The Group's home credit business is different because the Group's agents connect the Group to its customers by providing a personal service in its customers' homes every week. The Group's digital business model meets the needs of a growing number of customers in the Group's consumer segment who want affordable credit that they can manage on their mobile phone, tablet or PC.
The Group believes that the best way to create value for its shareholders and deliver sustainable returns is to build close, long-term relationships with its customers. The Group also makes a valuable contribution to the communities it serves through spending on goods and services, employment and career development for its people, and through taxes.
Profit is generated from lending responsibly while managing the business efficiently. The home credit businesses generate a high proportion of Group revenue primarily through the agent serviced model, while IPF Digital delivers a smaller but growing contribution, driven by increased demand for online lending.
The Group operates a defensive liquidity model, based on the Group's business of short-term lending and long term debt funding and strong cash generation. This gives the Group flexibility to slow down credit growth in economic downturns to focus on cash generation.
The business model has generated sustainable returns for shareholders. Since the demerger of IPF from the Provident Financial group in 2007:
In response to the COVID-19 pandemic, the Group made a short-term amendment to the covenanted interest cover ratio, such that, despite the impact of the COVID-19 pandemic, the Group has at all times been in compliance with the actual covenanted level.
| Pre-exceptional profit/(loss) before tax for continuing operations (£m) |
|
|---|---|
| 2008 | 70.3 |
| 2009 | 61.7 |
| 2010 | 92.1 |
| 2011 | 100.5 |
| 2012 | 95.1 |
| 2013 | 118.1 |
| 2014 | 123.5 |
| 2015 | 116.1 |
| 2016 | 96.0 |
| 2017 | 105.6 |
| 2018 | 109.3 |
| 2019 | 114.0 |
| 2020 | (28.8) |
| Credit issued £m (at CER*) |
European HC £m (at CER) |
Mexico HC £m (at CER) |
IPF Digital £m (at CER) |
|
|---|---|---|---|---|
| Q1 2020 | 261 | 143 | 51 | 67 |
| Q2 2020 | 105 | 62 | 16 | 27 |
| Q3 2020 | 163 | 107 | 30 | 26 |
| Q4 2020 | 216 | 143 | 40 | 32 |
| Q1 2021 | 214 | 136 | 40 | 38 |
| Q2 2021 | 246 | 153 | 48 | 46 |
* CER = constant exchange rates
| Collections | European HC | Mexico HC | IPF Digital | |
|---|---|---|---|---|
| £m (at CER*) | £m (at CER) | £m (at CER) | £m (at CER) | |
| Q1 2020 | 426 | 238 | 93 | 95 |
| Q2 2020 | 332 | 190 | 65 | 78 |
| Q3 2020 | 341 | 204 | 65 | 72 |
| Q4 2020 | 347 | 215 | 67 | 65 |
| Q1 2021 | 346 | 209 | 68 | 69 |
| Q2 2021 | 353 | 214 | 73 | 67 |
* CER = constant exchange rates
At the core of the Group's activities is a commitment to responsible lending and social inclusion through making finance accessible to consumers who are less likely to be served by mainstream lenders. This is seen in the Group's core responsible lending principles:
The Group has businesses in 11 markets, ranging from the Baltics through Central Eastern Europe to Mexico and Australia. The business lines are broadly distinguished by home credit (branded predominantly as Provident) businesses and IPF Digital online lending businesses, branded as Credit24, Hapi and Creditea.
The Group's home credit businesses specialise in the provision of small sum cash instalment loans typically delivered directly to a customer's home, and operate in Poland, the Czech Republic, Hungary, Romania and Mexico.
To take advantage of the ongoing growth of digital borrowing the Group is increasingly investing in its digital business. Providing online instalment loans and revolving credit line facilities, IPF Digital operates in Lithuania, Finland (although the Group is withdrawing from this market), Latvia, Estonia, Poland, Spain, Mexico and Australia.
The market for consumer credit continues to evolve in all of the Group's markets. Consumers are increasingly choosing online credit and this has driven increased competition from digital lending operators and major retail banks, as well as more regulatory oversight from national banks and consumer protection authorities.
Notwithstanding these changes, the Group believes that home credit will co-exist with digital credit offerings, providing access to regulated credit for people who might otherwise be financially excluded. The involvement of an agent at the customer's home allows the Group to gain a more in-depth understanding of their financial circumstances and propensity to repay. This means the Group is able to lend with more confidence to creditworthy customers in circumstances where a remote lending business cannot.
The Group continued to effectively execute its strategy to rebuild the business and return to full-year profitability and long-term growth. Building on the momentum achieved in the second half of 2020, the Group delivered a robust trading performance in H1 2021 despite the challenging operational landscape caused by the ongoing COVID-19 pandemic. The Group's focus on rebuilding the business delivered a significant improvement in the Group's financial performance, with first half profit before taxation of £43.3 million, driven by a combination of lower impairment charges resulting from strong collections, good new business credit quality and cost reductions, all of which more than offset lower revenue resulting from the smaller receivables portfolio. The result comprised profit before tax of £24 million in Q1 and £19.3 million in Q2. The slight reduction in reported Q2 profit was a result of increased investment to deliver growth, the tailing off of COVID-19 impairment provision releases, and higher levels of IFRS9 up-front impairment as the Group increased the amount of credit issued.
| H1 2020 | H1 2021 | Change | Change | Change at CER* |
||
|---|---|---|---|---|---|---|
| £m | £m | £m | % | % | ||
| Customer numbers (000s) . | 1,818 | 1,679 | (139) | (7.6) | (7.6) | |
| Credit issued | 378.2 | 459.5 | 81.3 | 21.5 | 25.1 | |
| Average net receivables | 862.9 | 656.9 | (206.0) | (23.9) | (22.0) | |
| Revenue | 362.2 | 262.9 | (99.3) | (27.4) | (25.4) | |
| Impairment | (182.2) | (11.7) | 170.5 | 93.6 | 93.5 | |
| Net revenue | 180.0 | 251.2 | 71.2 | 39.6 | 45.1 | |
| Finance costs | (27.3) | (25.8) | 1.5 | 5.5 | 3.4 | |
| Agents' commission | (36.3) | (32.3) | 4.0 | 11.0 | 7.7 | |
| Other costs | (163.2) | (149.8) | 13.4 | 8.2 | 6.3 | |
| Pre-exceptional (loss)/ | ||||||
| profit before taxation | (46.8) | 43.3 | 90.1 | 192.5 | ||
| Exceptional items | (6.5) | – | 6.5 | 100.0 | ||
| (Loss)/profit before | ||||||
| taxation | (53.3) | 43.3 | 96.6 | 181.2 |
*CER = constant exchange rates
The improved year-on-year profit performance was reflected across all of the Group's business divisions, each of which was profitable in the first half of 2021.
| HY June 2020 profit £m |
Change £m |
HY June 2021 £m |
|
|---|---|---|---|
| European home credit | (22.7) | 57.6 | 34.9 |
| Mexico home credit | (8.4) | 17.8 | 9.4 |
| IPF Digital. | (8.8) | 14.9 | 6.1 |
| Central costs | (6.9) | (0.2) | (7.1) |
| Pre-exceptional (loss)/profit before taxation | (46.8) | 90.1 | 43.3 |
The Group's European home credit businesses delivered a robust performance in H1 2021, with profit before tax increasing to £34.9 million against a challenging trading backdrop as the third wave of the pandemic impacted the region. This result was driven by a significant reduction in impairment alongside cost savings, partially offset by the smaller business scale, and comprised profit before tax of £17.4 million in Q1 2021 and £17.5m million in Q2 2021.
The Group's improved collections effectiveness during the second half of 2020 enabled the continued implementation of its strategy to carefully ease credit settings and rebuild the receivables portfolio. This resulted in a significant improvement in sales momentum through the period and, notwithstanding weaker comparators year-on-year, credit issued increased by 48% in H1 2021, with Q2 2021 credit issued 13% higher than in Q1 2021. Customer numbers reduced year-onyear by 5% to 808,000, but as lockdown restrictions eased and demand increased, the Group was able to serve more customers and, as a result, customer numbers were broadly flat in Q2 2021. Year-on-year, average net receivables reduced by 17% in H1 2021 and 6% in Q2 2021. However, as the Group's rebuild strategy gained momentum, it delivered an 8% (at CER) increase in period end receivables since December 2020 to £406 million. This receivables growth was largely delivered in Q2 2021.
The Group's collections performance remained strong throughout H1 2021 despite planning for some reductions in effectiveness. This, together with the unwinding of COVID-19 impairment provisions booked in 2020 and higher quality lending, resulted in annualised impairment as a percentage of revenue improving by 26.4 percentage points from 31 December 2020 to 9.2%. Other costs were broadly flat in the first half of the year, with a cost reduction in Q1 2021 being offset by a 28% year-on-year increase in Q2 2021. This latter increase was driven by the much lower Q2 2020 comparatives that arose from the COVID-19 cost reduction programme together with a modest increase in costs to fund higher credit issuance.
| H1 2020 £m |
H1 2021 £m |
Change £m |
Change % |
Change at CER % |
|
|---|---|---|---|---|---|
| Customer numbers (000s) | 850 | 808 | (42) | (4.9) | (4.9) |
| Credit issued | 201.4 | 288.0 | 86.6 | 43.0 | 47.5 |
| Average net receivables | 483.2 | 388.6 | (94.6) | (19.6) | (17.2) |
| Revenue | 184.9 | 140.1 | (44.8) | (24.2) | (21.8) |
| Impairment | (87.9) | 9.0 | 96.9 | 110.2 | 110.5 |
| Net revenue | 97.0 | 149.1 | 52.1 | 53.7 | 59.1 |
| Finance costs | (16.3) | (15.8) | 0.5 | 3.1 | 0.6 |
| Agents' commission | (25.3) | (21.6) | 3.7 | 14.6 | 11.5 |
| Other costs | (78.1) | (76.8) | 1.3 | 1.7 | (0.7) |
| Pre-exceptional (loss/profit | |||||
| before taxation | (22.7) | 34.9 | 57.6 | 253.7 |
Mexico home credit reported a £17.8 million increase in profit before taxation year on year to £9.4million. This significantly-improved performance comprised profit before tax of £4.9 million in Q1 2021 and £4.5 million in Q2 2021, and was driven primarily by a reduction in impairment and a lower cost base, partially offset by a reduction in the scale of the business.
The Group's focus on collections and the impact of tighter credit settings resulting from significant continued COVID-19 challenges led to a 7% contraction in customer numbers yearon-year to 624,000, however increased demand for credit from April 2021 onwards resulted in customer growth of 21,000 in Q2 2021. Credit issued increased by 30% year on year, with Q2 2021 20% higher than in Q1 2021. Year-on-year, average net receivables reduced by 16% in H1 2021 due to lower credit issued in 2020 and incremental impairment provisions, and grew by 2% in Q2 2021. This contraction resulted in a 26% reduction in revenue, the rate of which reduced to 16% in Q2 2021. The Group's focus on rebuilding the business delivered a 13% (at CER) increase in period end receivables since December 2020 to £100 million at the end of Q2 2021. Closing receivables growth in Q2 was 9% (at CER).
The benefits of actions taken to improve collections and credit quality in Mexico during the past two years continued to flow through the business and, together with the unwinding of COVID-19 impairment provisions booked in 2020, resulted in annualised impairment as a percentage of revenue improving by 21.1 percentage points since 31 December 2020 to 12.6% in H1 2021. This ratio is now well below the Group's target range of 25% to 30% and the Group expects it to increase during the remainder of 2021 as trading conditions normalise. The Group continued to manage costs tightly, maintaining the benefits of cost savings achieved in 2020 and delivering a 12% reduction in other costs year-on-year, and 5% in Q2 2021.
The Group's strategy is focused on maintaining the improvements made in operational execution and returning the business to sustainable growth, and will continue to ease credit settings and rebuild the receivables portfolio, which will result in an increase in the very low impairment charge reported H1 2021, while maintaining tight control of the cost base. The digital transformation of the business will also continue. The roll-out of the collections functionality of the MyProvi agent app is now complete with additional functionality to be introduced in 2021 and 2022, all of which will further improve cost efficiency.
| H1 2020 £m |
H1 2021 £m |
Change £m |
Change % |
Change at CER % |
|
|---|---|---|---|---|---|
| Customer numbers (000s) | 670 | 624 | (46) | (6.9) | (6.9) |
| Credit issued | 72.3 | 87.5 | 15.2 | 21.0 | 29.6 |
| Average net receivables | 119.0 | 95.1 | (23.9) | (20.1) | (16.4) |
| Revenue | 91.0 | 64.9 | (26.1) | (28.7) | (25.8) |
| Impairment | (45.1) | (8.5) | 36.6 | 81.2 | 81.4 |
| Net revenue | 45.9 | 56.4 | 10.5 | 22.9 | 34.6 |
| Finance costs | (4.3) | (3.1) | 1.2 | 27.9 | 24.4 |
| Agents' commission | (11.0) | (10.7) | 0.3 | 2.7 | (0.9) |
| Other costs | (39.0) | (33.2) | 5.8 | 14.9 | 11.9 |
| Pre-exceptional (loss)/profit | |||||
| before taxation | (8.4) | 9.4 | 17.8 | 211.9 |
IPF Digital reported a £14.9 million improvement in profit before tax to £6.1 million driven by significantly improved impairment and a reduction in costs, offset partially by lower revenue. This improved performance comprised profit before tax of £4.9 million in Q1 2021 and £1.2 million in Q2 2021.
| H1 2020 £m |
H1 2021 £m |
Change £m |
Change % |
Change at CER % |
|
|---|---|---|---|---|---|
| Customer numbers (000s) | 298 | 247 | (51) | (17.1) | (17.1) |
| Credit issued | 104.5 | 84.0 | (20.5) | (19.6) | (19.6) |
| Average net receivables | 260.7 | 173.2 | (87.5) | (33.6) | (33.0) |
| Revenue | 86.3 | 57.9 | (28.4) | (32.9) | (32.6) |
| Impairment | (49.2) | (12.2) | 37.0 | 75.2 | 74.8 |
| Net revenue | 37.1 | 45.7 | 8.6 | 23.2 | 21.9 |
| Finance costs | (6.7) | (6.9) | (0.2) | (3.0) | (3.0) |
| Other costs | (39.2) | (32.7) | 6.5 | 16.6 | 16.2 |
| Pre-exceptional (loss)/profit | |||||
| before taxation | (8.8) | 6.1 | 14.9 | 169.3 |
Consumer appetite for credit, suppressed in Q1 2021 by pandemic-related restrictions, began to increase in Q2 2021, as these restrictions were relaxed. The relatively soft consumer demand earlier in the year, the Group's continued cautious credit settings in Spain and the cessation of lending in Finland resulted in a 17% reduction in customers to 247,000. Excluding the reduction in customers in Finland, customer numbers increased by around 4,000 during Q2 2021. These factors also impacted credit issued which, year-on-year, contracted by 20% in H1 2021, with Q2 2021 credit issued 19% higher than in Q1 2021. Excluding Finland, where the portfolio collect-out is progressing well, credit issued increased year-on-year by 1%. Average net receivables reduced by 33% in H1 2021 and 29% in Q2 2021, with revenue contracting at a similar rate in the first half and by 25% in Q2 2021.
The Group's collections performance continued to be strong, driven by higher-quality lending and robust collections processes, which resulted in a 19.3 percentage point improvement in annualised impairment as a percentage of revenue from 45.4% as at 31 December 2020 to 26.1%. Costs continue to be tightly managed and reduced 16% year-on-year, driven mainly by the benefits of the Group's rightsizing exercise in 2020, lower marketing expenditure and other volume-related costs. Costs increased by 6% in Q2 2021 compared with Q1 2021, driven by a combination of higher spend to support growth and the fact that the 2020 comparatives include the benefit of the significant cost reduction programme delivered in 2020.
The pre-exceptional profitability of IPF Digital is segmented as follows:
| H1 2020 £m |
H1 2021 £m |
Change £m |
Change % |
|
|---|---|---|---|---|
| Established markets | 7.0 | 11.2 | 4.2 | 60.0 |
| New markets | (9.2) | 0.6 | 9.8 | 106.5 |
| Head office costs | (6.6) | (5.7) | 0.9 | 13.6 |
| IPF Digital | (8.8) | 6.1 | 14.9 | 169.3 |
The established markets delivered a £4.2 million increase in profit before tax to £11.2 million, driven by lower impairment and a reduction in costs, partially offset by lower net revenue arising from a contraction in the receivables portfolio. This improved performance comprised profit before tax of £7.3 million in Q1 2021 and £3.9 million in Q2 2021.
| H1 2020 £m |
H1 2021 £m |
Change £m |
Change % |
Change at CER % |
|
|---|---|---|---|---|---|
| Customer numbers (000s) | 136 | 102 | (34) | (25.0) | (25.0) |
| Credit issued | 54.8 | 30.4 | (24.4) | (44.5) | (44.8) |
| Average net receivables | 128.9 | 87.3 | (41.6) | (32.3) | (31.9) |
| Revenue | 37.4 | 25.5 | (11.9) | (31.8) | (31.5) |
| Impairment | (15.0) | (1.3) | 13.7 | 91.3 | 91.2 |
| Net revenue | 22.4 | 24.2 | 1.8 | 8.0 | 7.6 |
| Finance costs | (3.5) | (3.5) | – | – | – |
| Other costs | (11.9) | (9.5) | 2.4 | 20.2 | 19.5 |
| Pre-exceptional profit | |||||
| before taxation | 7.0 | 11.2 | 4.2 | 60.0 |
Customers and credit issued contracted year on year by 25% and 45% respectively, as a result of tighter credit settings introduced in response to the COVID-19 pandemic together with the Group's decision to cease lending in Finland and collect out the portfolio. Recognising weaker comparatives, credit issued in Q2 2021 contracted by just 7% as the Group responded to growing demand when lockdown restrictions began to ease. Average net receivables contracted year on year by 32% (Q2 2021: contraction of 30%) due to the lower credit issued and this resulted in a similar reduction in revenue for both the H1 2021 and Q2 2021 periods. Excluding Finland, the contraction in average net receivables and revenue in the first half was significantly lower at 18% and 19% respectively.
Good collections, the benefit of debt sales and lower levels of credit issued resulted in a lower impairment charge in the period and a 17.2 percentage point improvement in annualised impairment as a percentage of revenue to 11.4% since 31 December 2020. Continued tight management of costs and the benefit of the 2020 rightsizing programme resulted in a 20% reduction in costs year on year, predominantly in Q1 2021 as costs in Q2 2021 were broadly flat year on year.
The new markets delivered profit before tax of £0.6 million, an increase of £9.8 million in the period, with a reduction in the cost base and improved credit quality partially offset by the impact of smaller scale. This improved performance comprised profit before tax of £0.3 million in both Q1 2021 and Q2 2021.
| H1 2020 £m |
H1 2021 £m |
Change £m |
Change % |
Change at CER % |
|
|---|---|---|---|---|---|
| Customer numbers (000s) | 162 | 145 | (17.0) | (10.5) | (10.5) |
| Credit issued | 49.7 | 53.6 | 3.9 | 7.8 | 8.5 |
| Average net receivables | 131.8 | 85.9 | (45.9) | (34.8) | (34.2) |
| Revenue | 48.9 | 32.4 | (16.5) | (33.7) | (33.5) |
| Impairment | (34.2) | (10.9) | 23.3 | 68.1 | 67.7 |
| Net revenue | 14.7 | 21.5 | 6.8 | 46.3 | 43.3 |
| Finance costs | (3.2) | (3.4) | (0.2) | (6.3) | (6.3) |
| Other costs | (20.7) | (17.5) | 3.2 | 15.5 | 15.0 |
| Pre-exceptional (loss)/profit | |||||
| before taxation | (9.2) | 0.6 | 9.8 | 106.5 |
Customer numbers reduced year on year by 11% to 145,000, however, growth recommenced in Q2 with customer numbers increasing by 6,000. As lockdown restrictions eased and demand from consumers increased, the Group relaxed credit settings which resulted in credit issued growth of 9% in H1 2021, with Q2 2021 credit issued 11% higher than Q1 2021. Both average net receivables and revenue reduced by 34% in the first half. In Q2 2021, average net receivables contracted by 29% and the rate of revenue contraction reduced to 21%.
Credit quality continued to improve, driven by tighter credit settings and good collections which, together with the lower credit issued, resulted in a 20.5 percentage point improvement in impairment as a percentage of revenue since the 2020 year end to 39.6%. Other costs reduced by 15% year on year in H1 2021 and 14% in Q2 2021, driven by the benefits of the rightsizing exercise in 2020.
IPF Digital continues to offer excellent long-term growth opportunities. In H2 2021, the Group will continue to progressively rebuild the receivables portfolio and accelerate new customer growth, particularly in the Group's new markets. The Group also plans to expand its mobile wallet offering in Latvia, leverage the benefits of merging its two digital businesses in Poland and deliver a successful collect-out of its business in Finland.
The taxation charge on profit for the first half of 2021 (£20.4 million) is based on an expected effective tax rate for the full year of approximately 47%.
With regard to the European Commission's State Aid challenge to the UK's Group Financing Exemption regime, following the enactment of new legislation in December 2020, HMRC issued a charging notice seeking payment of £14.2 million in respect of the alleged State Aid for the affected years. The payment of this amount is a procedural matter, and the new law does not allow for postponement. Accordingly, this amount was paid in February 2021, with a further amount of interest estimated at £1.3 million which is expected to be payable during H2 2021. The Group has appealed the charging notice on the grounds of the quantum assessed. Whether the UK's Group Financing Exemption regime constitutes State Aid is ultimately to be decided and the Group continues to await a decision of the General Court of the European Union on this matter. The £14.2 million paid is held on the balance sheet as a non-current tax asset reflecting the directors' judgement that it is more likely than not that the amount will ultimately be repaid. This judgement is based on legal advice received on the strength of the technical position included in the Issuer's annulment application.
In the long term, the Group aims to deliver long-term profitable growth and deploy capital efficiently, in order to develop and run high-return businesses which provide returns to shareholders while maintaining a strong financial profile.
The Group's businesses are at different stages of development. Excluding 2020 which was heavily impacted by the COVID-19 pandemic, the European home credit business is cash and capital generative and provides attractive returns. The Group's IPF Digital and Mexico home credit businesses are growth focused and the Group continues to invest in them to further build returns over the medium term. The strong capital generation of the European home credit business provides significant capital for the Group's IPF Digital and Mexico home credit businesses, in addition to any capital generated by those growth businesses themselves.
To maintain the credit quality of the Group's lending, an impairment to revenue range of 25- 30% is targeted and the Group has always operated within or just below this range at a Group level (with the exception of 2020 as a result of the COVID-19 pandemic). The Group has a diversified debt portfolio of bond and bank facilities.
After a very long track record of consistent profitability and returns, the Group was significantly impacted by the COVID-19 pandemic and reported a loss in 2020. This was due to lower revenue arising from a reduction in the receivables portfolio and a material increase in impairment. The Group reported a pre-exceptional loss before taxation for the year of £28.8 million and a statutory loss of £40.7 million before taxation after an exceptional charge of £11.9 million. This comprised a loss of £46.8 million in the first half of the year before taxation, followed by a return to profitability in the second half due to lower impairment and costs, partially offset by lower revenue arising from the reduction in the receivables portfolio.
Building on the momentum achieved in the second half of 2020, the Group delivered a robust trading performance in the first half of 2021 despite the challenging operational landscape caused by the ongoing COVID-19 pandemic. The Group's focus on rebuilding the business delivered a significant improvement in the Group's financial performance, with first half profit before taxation of £43.3 million. This very positive result was driven by a combination of lower impairment charges resulting from strong collections, very good new business credit quality and cost reductions, all of which more than offset lower revenue resulting from the smaller receivables portfolio. The result comprised profit before tax of £24 million in Q1 2021 and £19.3 million in Q2 2021. The slight reduction in reported Q2 2021 profit was a result of increased investment to deliver growth, the tailing off of COVID-19 impairment provision releases, and higher levels of IFRS 9 up-front impairment as the Group increased the amount of credit issued.
Although the Group planned for a weakening in collections performance arising from subsequent waves of the pandemic in the first half of 2021, the Group continued to deliver a very strong operational performance, resulting in a significantly lower than anticipated impairment charge of £11.7 million in H1 2021, which includes the benefit of COVID-19 discounting and expected credit loss provisions releases totalling £20 million. The H1 2021 charge comprised £4.6 million in Q1 2021 and £7.1 million in Q2 2021, the increase being driven by reduced COVID-19 provision releases and higher levels of up-front IFRS 9 impairment resulting from our increased level of sales. The performance of the receivables originated since June 2020, which were largely granted under tighter than normal credit settings, has also been better than predicted by the Group's impairment models and this had a further positive impact on the Group's impairment charge. In addition, the annualised impairment charge in each reporting segment benefited from the COVID-19 impairment booked in H1 2020 dropping out from the annualised calculation. Taken together, these factors resulted in a faster-than-anticipated improvement in impairment as a percentage of revenue, with the annualised rate reducing by 23.7 percentage points since 31 December 2020 to 13.7%. The Group expects impairment as a percentage of revenue to remain below the Group's target range of 25% to 30% in 2021 before increasing in 2022 as the Group continues to rebuild the business.
Gearing was 1.4x as at 30 June 2021, in-line with 2020, well within the covenant level of 3.75x maximum in the Group's debt facilities.
The annualised cost-income ratio of the Group as at 30 June 2021 was 53.8%.
In the twelve month period from 1 July 2020 to 30 June 2021, the Group achieved revenue of £562m and pre-exceptional profit before tax of £61.3m, split as follows:
| Pre | ||
|---|---|---|
| exceptional | ||
| profit | ||
| Revenue | before tax | |
| £m | £m | |
| European home credit | 306.3 | 46.0 |
| Mexico home credit | 131.0 | 21.3 |
| IPF Digital | 124.7 | 6.9 |
| UK | – | (12.9) |
| Group … | 562.0 | 61.3 |
The closing receivables balance for the Group as at 30 June 2021 was as follows:
| £m | |
|---|---|
| European HC | 405.9 |
| Poland | 189.9 |
| Czech Republic | 46.4 |
| Hungary | 102.4 |
| Romania | 67.2 |
| Mexico HC | 99.8 |
| IPF Digital | 168.5 |
| Lithuania | 24.8 |
| Estonia | 25.6 |
| Finland | 9.2 |
| Latvia | 24.1 |
| Poland | 37.1 |
| Spain | 12.6 |
| Mexico | 10.1 |
| Australia | 25.0 |
| Group | 674.2 |
The revenue yield for the Group for the period 1 July 2020 to 30 June 2021 was as follows:
| European home credit |
77.4% |
|---|---|
| Mexico home credit |
144.8% |
| IPF Digital |
66.2% |
Group |
83.3% |
There are Board-approved policies to address the key treasury risks that the business faces – funding and liquidity risk, financial market risk (currency and interest rate risk), and counterparty risk. The policies are designed to provide robust risk management, even in more volatile financial markets and economic conditions within the Group's planning horizon.
The Group's funding policy requires it to maintain a resilient funding position for the existing business and for future growth in each market. The Group aims to maintain a prudent level of headroom on undrawn bank facilities. The Group's currency policy addresses economic currency exposures and requires it to fund its currency receivables with currency borrowings (directly or indirectly) to achieve a high level of balance sheet hedging. The Group chooses not to hedge the translational risk of foreign currency movements on accounting profits and losses. The Group's interest rate policy requires it to hedge interest rate risk in each currency to a relatively high level. The Group's counterparty policy requires financial counterparties (including hedging counterparties) to which the Group has exposures to have at least a BBB rating, except as approved, or delegated for approval, by the Board. In addition to these policies, the Group's operational procedures and controls ensure that funds are available in the right currency at the right time to serve its customers throughout the Group.
Debt funding is provided through a diversified debt portfolio at competitive cost with appropriate terms and conditions. The Group has Notes outstanding denominated in Euro, Sterling and Swedish Krona, wholesale and retail, with varying maturities, together with facilities from a group of banks with a good strategic and geographic fit with its business. The Group's debt is senior unsecured debt, with all lenders substantially in the same structural position. The Group maintains the Programme as the main platform for bond issuance across a range of currencies. This achieves further diversification and reinforces the Group's corporate position in that market. The Group's debt funding strategy has been successful over a number of years, and it has a consistent record of accessing debt markets throughout the economic cycle.
The Group's debt funding position is summarised in the table below. As at 30 June 2021, the Group had total debt facilities of £596 million (£410 million bonds and £186 million bank facilities) and borrowings of £479 million, with headroom on undrawn facilities and nonoperational cash balances of £173 million.
The Group's funding requirements reduced significantly during 2020 due to the contraction in the receivables portfolio, which resulted in cash generation from operating and investing activities of £268.5 million in 2020 compared with £33.0 million in 2019. The Group completed a significant refinancing exercise in 2020 that reflected the reduction in funding requirements, the need to address the maturity of the euro denominated Notes due in 2021 and the requirement to implement short-term amendments to debt funding covenants during its recovery from the COVID-19 pandemic. This included a new bond issuance of €341 million, amendments to debt funding covenants in existing bonds and bank facilities, and a reduction in the level of bank facilities commensurate with the Group's reduced funding requirements post-pandemic.
The Group has an equity to receivables ratio as at 30 June 2021 of 53.8%, compared with 55.4% as at 31 December 2020 and 44.8% as at 31 December 2019.
| Maturity | £m | |
|---|---|---|
| Bonds | ||
| Euro | November 2025 | 294 |
| Sterling | December 2023 | 78 |
| Swedish | June 2022 | 38 |
| Total Bonds | 410 | |
| Bank Facilities | 2021-2024 | 186 |
| Total Debt facilities | 596 | |
| Total Borrowings | 479 | |
| Non-operational cash balances | 56 | |
| Headroom on undrawn bank facilities and | ||
| non-operational cash balances* | 173 |
*Headroom does not include unamortised arrangement fees
The currency structure of the Group's debt facilities matches the asset and cash flow profile of its business. The Group has local currency bank facilities and bonds, and its main £294 million (€341 million) issuance of Euro-denominated Notes provides direct funding to its markets using the Euro currency, and to markets using other currencies via foreign exchange transactions. Therefore, the Group does not expect fluctuations in the value of sterling to have a major impact on the Group's funding position. It will continue to monitor the impact of the COVID-19 pandemic, including the impact on financial markets and macro-economic conditions, and react as appropriate.
By maintaining a strong financial profile, the Group operates with adequate headroom on the key financial covenants in its debt facilities, as set out in the tables below:
| 2019 | Actual | Headroom £m |
|---|---|---|
| Gearing* (Max 3.75x) | 1.5x | 268.5 |
| Interest Cover** (Min 2.0x) | 3.0x | 67.2 |
| Headroom | ||
| 2020 | Actual | £m |
| Gearing* (Max 3.75x) | 1.4x | 235.0 |
| Interest Cover** (Min 1.0x) | 2.1x | 58.2 |
| Headroom | ||
| H1 2021 | Actual | £m |
| Gearing* (Max 3.75x) | 1.4x | 227.3 |
| Interest Cover (Min 1.5x)* | 2.8x | 33.6 |
* Adjusted for derivative financial instruments, pension liabilities and items of income or expense of an unusual or a non-recurring nature according to covenant definitions and calculated in accordance with IFRS.
** Actual data includes adjustments for material items of an unusual or non-recurring nature arising from the pandemic made in accordance with terms of debt facilities.
*** Data presented is for the period 1 January 2021 to 30 June 2021.
The majority of the Group's net assets are denominated in its operating currencies and, therefore, the sterling value fluctuates with changes in currency exchange rates. In accordance with accounting standards, the Group has restated the opening foreign currency net assets at the 30 June 2021 exchange rate and this resulted in a £27.5 million foreign exchange movement, which has been debited to the foreign exchange reserve.
The Group's Financial Statements are presented in accordance with international accounting standards within the meaning of Regulation 1606/2002 on the Application of International Accounting Standards ("IFRS"), and in addition the Group uses certain ratios and measures included herein that would be considered non-IFRS financial measures ("Alternative Performance Measures" or "APM"). An APM measures historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measures. The APMs included herein are not in accordance with or an alternative to measures prepared in accordance with IFRS (for which Group management has responsibility).
On 3 July 2016, the ESMA Guidelines on APMs came into force. The Guidelines on APMs are focused on the provision of financial information on a company's performance, its financial state of affairs and future expectations when that information has not been drawn directly from the financial statements.
The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business. The APMs are consistent with how the business performance is planned and reported within the internal management reporting to the Board. Each of the APMs used by the Group (other than pre-exceptional profit before tax for continuing operations) are set out on pages 154 to 157 of the Annual Report and Financial Statements for the year ending 31 December 2020 including explanations of how they are calculated and how they can be reconciled to a statutory measure where relevant. A summary of preexceptional profit before tax, a key non-IFRS measure discussed in this Prospectus, but not otherwise described in this Prospectus, is below.
| APM | Closest equivalent statutory measure |
Reconciling items to statutory measure |
Definition and Purpose |
|---|---|---|---|
| Pre-exceptional profit/ (loss) before tax (£m) |
Profit/(loss) before tax |
Exceptional items |
Profit/(loss) before tax and exceptional items. This is considered to be an important measure where exceptional items distort the operating performance of the business. |
The Group reports percentage change figures for all performance measures, other than profit or loss before taxation and earnings per share, after restating prior year figures at a constant exchange rate. The constant exchange rate, which is an APM, retranslates the previous year measures at the average actual periodic exchange rates used in the current financial year. These measures are presented as a means of eliminating the effects of exchange rate fluctuations on the year-on-year reported results. The Group makes certain adjustments to the statutory measures in order to derive APMs where relevant. The Group's policy is to exclude items that are considered to be significant in both nature and/or quantum and where treatment as an adjusted item provides stakeholders with additional useful information to assess the year-on-year trading performance of the Group.
The following table sets out a list of directors of IPF and the principal activities performed by them outside IPF where these are significant to IPF as at the date of this Prospectus.
| Name | Position | Other principal activities |
|---|---|---|
| Stuart Sinclair | Chairman | Non-executive director and chair of remuneration committee for Lloyds Banking Group plc and non-executive director and chair of Willis Ltd |
| Gerard Ryan | Chief Executive Officer | None |
| John Mangelaars | Independent Non-executive Director |
Chief Executive Officer of: Skyscanner Ltd. |
| Deborah Davis | Independent Non-executive Director |
Non-executive chair of Diacetics PLC, non-executive director of The Institute of Directors in the UK, non executive director of IDEX Biometrics in Norway, and a trustee of Southern African Conservation Trust in South Africa. |
| Bronwyn Syiek | Independent Non-executive Director |
Member of the Finance Committee at Oxford University Press, the examinations board at ABRSM and advisor to Credit Sesame, Inc. |
| Richard Holmes | Senior Independent Non-executive Director |
Non-executive director of Itau BBA International PLC, advisor to Revolut UK Ltd and a trustee of the Barry and Peggy High Charitable Foundation |
The business address of each of the directors is c/o Number Three, Leeds City Office Park, Meadow Lane, Leeds LS11 5BD.
The Board may, subject to and in accordance with, the provisions of its articles of association, authorise any matter which would otherwise involve a director breaching his duty under the Companies Act 2006 to avoid conflicts of interest. Where the Board gives authority in relation to a conflict of interest the Board may (a) require the relevant director to be excluded from the receipt of information, the participation in discussion and/or the making of decisions related to the conflict of interest; (b) impose upon the relevant director such other terms for the purpose of dealing with the conflict of interest as it may determine; and (c) provide that the relevant director will not be obliged to disclose information that is confidential to a third party and obtained otherwise than through his position as a director of IPF, or to use or apply the information in relation to IPF's affairs, where to do so would amount to a breach of that confidence. The Board may revoke or vary such authority at any time.
The above paragraph details how future potential conflicts of interests not known as at the date of this Prospectus are to be addressed by IPF and the directors, should any such potential conflicts arise.
As to any potential conflicts of interest as at the date of this Prospectus, save for the fact that any of the directors of IPF may purchase and hold Notes issued under the Programme from time to time (which would make them creditors of IPF in their personal capacity for so long as they hold the Notes), there are no potential conflicts of interest between the duties of the directors listed above to IPF and their private interests and/or other duties. As at the date of this Prospectus, no directors do in fact hold any Notes issued under the Programme except as disclosed below.
Appointments and qualifications: Stuart is a non-executive director and the chair of the remuneration committee for Lloyds Banking Group plc and a non-executive director and chair of Willis Limited. He previously held non-executive roles as chairman of the Platinum Bank in Kiev, senior independent director and chair of the risk committee at QBE Insurance (Europe) Limited, interim chair and senior independent director at Provident Financial Group plc, senior independent director and chair of the risk committee at Swinton Group Ltd, non-executive director of PruHealth/Vitality Ltd and Universal Insurance Inc. and also as council member of the Royal Institute of International Affairs. He was president and COO at Aspen Insurance, president and CEO at GE Capital, China, Chief Executive of Tesco Personal Finance and Director of UK Retail Banking at The Royal Bank of Scotland Group plc. Stuart holds a master's degree in Economics and a Master in Business Administration from the University of California (UCLA). He is the author of three books and several UN reports in economics.
Key strengths and contributions: Stuart is a highly experienced non-executive director, committee chair and senior independent director with a background in consumer financial services.
Length of service: 9 years and 6 months
Appointments and qualifications: Gerard was previously CEO for Citigroup's consumer finance businesses in the Western Europe, Middle East and Africa region. He was a director of Citi International plc, Egg plc and Morgan Stanley Smith Barney UK. Earlier in his career, Gerard was CFO of Garanti Bank, Turkey and CEO of GE Money Bank, Prague. He is a Fellow of the Institute of Chartered Accountants in Ireland.
Key strengths and contributions: Gerard has over 25 years' multi-country experience in consumer financial services and provides the Company with strong leadership.
Senior independent non-executive director, age 67
Length of service: 1 year and 4 months
Appointments and qualifications: Richard is a non-executive director and member of the audit, risk & sustainability committees for Ulster Bank Ireland DAC Ltd and a trustee of the Barry and Peggy High Charitable Foundation. He previously held roles as non-executive director for British Growth Fund, chairman of the Financial Services Council at CBI, non-executive director of the British Bankers Association, CEO for Europe at Standard Chartered plc, chairman & chief executive of American Express Bank at American Express Company and executive vice president of private bank at Bank of America Corporation. Richard holds a degree and master's degree in Economics and is a fellow of the Institute of Chartered Accountants.
Key strengths and contributions: Richard is an experienced former senior executive with over 40 years of broad international financial services experience, including 20 years as CEO and board member in private banking, wholesale banking, capital markets, trading operations, strategy and finance.
Independent non-executive director, age 55
Length of service: 6 years
Appointments and qualifications: John worked for Microsoft for over 20 years specialising, in more recent years, in the sales and marketing of online products, MSN Messenger, Hotmail and Bing. He graduated from the Higher School of Economics in The Hague, Netherlands, with a Bachelor in Information and Communication Technology (B ICT) and is currently the CEO of online travel agency Travix International.
Key strengths and contributions: John has considerable experience in sales and e-commerce, which will support the expansion of the Group's digital lending business and the Group's objective to increase its technology capabilities.
Independent non-executive director, age 56
Length of service: 2 years and 9 months
Appointments and qualifications: Deborah is currently a non-executive director of The Institute of Directors and Which? Limited in the UK, IDEX Biometrics in Norway, and is a Trustee of Southern African Conservation Trust in South Africa. Deborah was previously Vice President of Global Partnerships, and Vice President of Global Risk Operations at PayPal based in London and Vice President of European Operations for eBay Marketplaces based in Germany. She is a member of The Digital Banking Club Advisory Panel and non-executive director of Intelligent Environments Ltd.
Key strengths and contributions: Deborah has wide ranging non-executive director experience in fintech, consumer and technology businesses undergoing digital transformation, growth and geographic expansion.
Independent non-executive director, age 55
Length of service: 2 years and 9 months
Appointments and qualifications: Bronwyn is currently a Trustee of The SETI Institute, a USbased non-profit scientific research institute and significant contractor to NASA. Bronwyn was previously the executive president and a board member of QuinStreet Inc., having been its Chief Operating Officer. A NASDAQ-listed company, QuinStreet is a leader in online performance marketing products and technologies, serving a number of sectors including financial services. Bronwyn also served on the management committee of De La Rue, a major European provider of online and offline security products and services, and before that was a consultant with McKinsey & Company, Inc.
Key strengths and contributions: Bronwyn has executive director experience in online consumer marketing and technology, and scientific research organisations, and board experience in education.
The Group's governance and oversight structure is summarised below:
The IPF Board leads and provides strategic direction to the Group. There is a formal schedule of matters reserved specifically for the Board's decision. These include the approval of the Group's strategy and risk appetite; principal risks; results; budgets; dividends; major transactions; treasury policies; amendment of a prospectus; issuance of bonds and notes; Board appointments and appointments to Board committees; health and safety and environmental policy; corporate governance; annual review of the effectiveness of the Group's systems of internal control; directors' conflicts of interest; and certain credit policies, particularly write-offs and material changes to product structure and pricing.
Other matters are delegated specifically to six principal Board committees. The Chairman of each Committee briefs the whole Board at each Board meeting on the principal items that were discussed, decisions and issues.
The day-to-day running of the business is delegated to the Executive Committee, which comprises the Chief Executive Officer and the Chief Financial Officer (and, on an interim basis, the Director of Strategy and Planning).
The Disclosure Committee meets as required to consider whether an announcement to the London Stock Exchange and/or Warsaw Stock Exchange is required. It comprises the Chief Executive Officer and the Company Secretary.
The Audit and Risk Committee comprises three Non-Executive Directors: Richard Holmes (Chairman of the Committee), Bronwyn Syiek and Deborah Davis. Richard Holmes is a Fellow of the Association of Chartered Certified Accountants, and has relevant and recent experience for the purposes of the UK Corporate Governance Code as published by the Financial Reporting Council (the "Governance Code"). The external auditor, Deloitte LLP, the Chief Executive Officer, the Chief Financial Officer, and the Head of Internal Audit are invited to attend all meetings. Periodically, senior management from across the Group are invited to present on specific aspects of the business.
The Committee also meets from time to time with the external auditor, without an executive director or member of the Group's senior management being present to discuss the external audit process. The Head of Internal Audit reports functionally to the Chairman of the Committee.
The objective of the Committee is to oversee the Group's financial reporting, internal controls and risk management procedures together with the work performed by the external auditor and internal audit function. The main responsibilities are as follows:
The Risk Advisory Group comprises members of the senior management team. It supports the Audit and Risk Committee by reviewing the level of risk exposure facing the Group against the Group's stated risk appetite, to ensure that the Group's risk-taking and response is appropriate. In particular, the Risk Advisory Group considers the risk assessments and risk registers produced in each country in which the Group operates and updates the Group schedule of key risks. The Risk Advisory Group reports to the Audit and Risk Committee.
The Issuer complied, throughout the year ended 31 December 2020, with all the provisions of the Governance Code as published by the Financial Reporting Council.
The financial summary set out below in relation to the years ended 31 December 2020 and 31 December 2019, and the half-year ended 30 June 2021, has been extracted without material adjustment from the audited consolidated financial statements of the Issuer for the years ended 31 December 2020 and 31 December 2019 and the unaudited results of the Issuer for the half-year ended 30 June 2021. Such selected financial information should be read together with such consolidated financial statements. The audited consolidated financial statements of the Issuer for the years ended 31 December 2020 and 31 December 2019 and the unaudited results of the Issuer for the half-year ended 30 June 2021 are incorporated by reference into this Prospectus. The financial summary in relation to the year 1 July 2020 to 30 June 2021 has been added to aid comparison.
| Revenue | Unaudited six months ended 30 June 2021 £m 262.9 |
Unaudited twelve months ended 30 June 2021 £m 562.0 |
Audited Year ended 31 December 2020 £m 661.3 |
Audited Year ended 31 December 2019 £m 889.1 |
|---|---|---|---|---|
| Impairment Revenue less impairment |
(11.7) 251.2 |
(77.1) 484.9 |
(247.6) 413.7 |
(243.5) 645.6 |
| Finance costs Other operating costs Administrative expenses |
(25.8) (52.9) (129.2) |
(53.5) (106.9) (263.2) |
(55.0) (108.7) (278.8) |
(63.5) (137.3) (330.8) |
| Total costs | (207.9) | (423.6) | (442.5) | (531.6) |
| Pre-exceptional profit/(loss) before taxation | 43.3 | 61.3 | (28.8) | 114.0 |
| Exceptional items: Impairment Finance costs Administrative costs Total exceptional items before taxation |
– – – – |
– – (5.4) (5.4) |
(2.5) 8.2 (17.6) (11.9) |
– – – – |
| Profit/(loss) before taxation | 43.3 | 55.9 | (40.7) | 114.0 |
| Pre-exceptional tax expense Exceptional tax income/(expense) Total tax expense |
(20.4) – (20.4) |
(36.9) (1.2) (35.7) |
(24.5) 1.0 (23.5) |
(42.2) – (42.2) |
| Profit/(loss) after taxation attributable to owners of the Issuer |
22.9 | 20.2 | (64.2) | 71.8 |
| Unaudited 30 June 2021 £m |
Audited 31 December 2020 £m |
Audited 31 December 2019 £m |
|
|---|---|---|---|
| Assets | |||
| Goodwill | 23.4 | 24.4 | 23.1 |
| Intangible assets | 26.2 | 30.2 | 43.2 |
| Property, plant and equipment | 13.2 | 15.4 | 20.0 |
| Right-of-use asset | 16.6 | 17.5 | 18.8 |
| Deferred tax assets | 125.5 | 135.7 | 151.7 |
| Non-current tax asset | 14.2 | – | 34.2 |
| Retirement benefit asset | 5.6 | 3.4 | 3.4 |
| Amounts receivable from customers | 162.0 | 136.5 | 245.3 |
| 386.7 | 363.1 | 539.7 | |
| Current assets | |||
| Amounts receivable from customers | 512.2 | 532.6 | 728.3 |
| Derivative financial instruments | 1.3 | 0.5 | 0.3 |
| Cash and cash equivalents | 100.4 | 116.3 | 37.4 |
| Other receivables | 15.9 | 9.9 | 16.9 |
| Current tax assets | 1.6 | 1.5 | 0.1 |
| 631.4 | 660.8 | 783.0 | |
| Total assets | 1,018.1 | 1,023.9 | 1,322.7 |
| Liabilities | |||
| Current liabilities | |||
| Borrowings | (43.3) | (0.2) | (112.7) |
| Derivative financial instruments | (3.7) | (6.7) | (16.2) |
| Trade and other payables Obligations under finances leases |
(113.4) | (89.1) (7.4) |
(123.9) (8.7) |
| Provisions for liabilities and charges | (7.3) (24.2) |
(19.2) | – |
| Current tax liabilities | (14.3) | (13.4) | (30.3) |
| (206.2) | (136.0) | (291.8) | |
| Non-current liabilities Deferred tax liabilities |
(9.4) | (13.8) | (20.0) |
| Borrowings | (428.5) | (491.8) | (563.7) |
| Obligations under finances leases | (11.0) | (11.8) | (10.8) |
| (448.9) | (517.4) | (594.5) | |
| Total liabilities | (655.1) | (653.4) | (886.3) |
| Net assets | 363.0 | 370.5 | 436.4 |
| Equity attributable to owners of the Issuer | |||
| Called-up share capital | 23.4 | 23.4 | 23.4 |
| Other reserve | (22.5) | (22.5) | (22.5) |
| Foreign exchange reserve | (22.5) | 5.0 | 9.1 |
| Hedging reserve | (0.6) | 0.9 | (0.1) |
| Own Shares | (44.4) | (45.2) | (46.1) |
| Capital redemption reserve | 2.3 | 2.3 | 2.3 |
| Retained earnings | 427.3 | 406.6 | 470.3 |
| Total equity | 363.0 | 370.5 | 436.4 |
| Unaudited six months ended 30 June 2021 £m |
Unaudited twelve months ended 30 June 2021 £m |
Audited 31 December 2020 £m |
Audited 31 December 2019 £m |
|
|---|---|---|---|---|
| Cash flows from operating activities | ||||
| Continuing operations | ||||
| Cash generated from operating activities | 58.7 | 212.5 | 329.8 | 169.2 |
| Finance costs paid | (11.3) | (26.3) | (54.7) | (64.0) |
| Finance income received Income tax paid |
– (33.7) |
9.9 (22.6) |
9.9 (1.4) |
– (41.0) |
| Net cash generated from operating activities | 13.7 | 173.5 | 283.6 | 64.2 |
| Cash flows used in investing activities | ||||
| Purchases of intangible assets | (3.4) | (8.7) | (11.7) | (21.2) |
| Purchases of property, plant and equipment | (1.3) | (3.2) | (3.8) | (10.2) |
| Proceeds from sale of property, | ||||
| plant and equipment | 0.1 | 0.3 | 0.4 | 0.2 |
| Net cash used in investing activities | (4.6) | (11.6) | (15.1) | (31.2) |
| Net cash generated from operating and | ||||
| investing activities | 9.1 | 161.9 | 268.5 | 33.0 |
| Cash flows from financing activities | ||||
| Proceeds from borrowings | 5.9 | 252.5 | 311.3 | 119.9 |
| Repayment of borrowings | (22.7) | (400.8) | (490.0) | (120.3) |
| Principal elements of lease payments | (4.9) | (10.5) | (10.9) | (9.9) |
| Shares acquired by employee trust | (1.3) | (1.3) | – | (2.1) |
| Dividends paid to Company shareholders | – | – | – | (27.7) |
| Net cash used in financing activities | (23.0) | (160.1) | (189.6) | (40.1) |
| Net (decrease)/increase in cash and | ||||
| cash equivalents | (13.9) | 1.8 | 78.9 | (7.1) |
| Cash and cash equivalents at beginning of period Exchange (losses)/gains on cash and cash |
116.3 | 100.6 | 37.4 | 46.6 |
| equivalents | (2.0) | (2.0) | – | (2.1) |
| Cash and cash equivalents at end of period | 100.4 | 100.4 | 116.3 | 37.4 |
IPF Holdings Limited is a private limited company incorporated and registered in England and Wales on 29 October 1980 as a company limited by shares with registered number 01525242. Its registered office is at Number Three, Leeds City Office Park, Meadow Lane, Leeds LS11 5BD and the telephone number of its registered office is +44 (0) 113 539 5466. The operations of IPF Holdings Limited are subject to English company law, in particular the Companies Act 2006.
IPF Holdings Limited is a wholly owned subsidiary of the Issuer and its principal business activity is to act as the intermediate holding company of International Personal Finance Investments Limited and IPF Financial Services Limited.
International Personal Finance Investments Limited is a private limited company incorporated and registered in England and Wales on 28 August 1969 as a company limited by shares with registered number 00961088. Its registered office is at Number Three, Leeds City Office Park, Meadow Lane, Leeds LS11 5BD and the telephone number of its registered office is +44 (0) 113 539 5466. The operations of International Personal Finance Investments Limited are subject to English company law, in particular the Companies Act 2006.
International Personal Finance Investments Limited is a wholly owned subsidiary of IPF Holdings Limited and its principal business activity is to act as the intermediate holding company of the Group's operating subsidiaries.
IPF International Limited is a private limited company incorporated and registered in England and Wales on 14 March 1963 as a company limited by shares with registered number 00753518. Its registered office is at Number Three, Leeds City Office Park, Meadow Lane, Leeds LS11 5BD and the telephone number of its registered office is +44 (0) 113 539 5466. The operations of IPF International Limited are subject to English company law, in particular the Companies Act 2006.
IPF International Limited is an indirectly wholly owned subsidiary of International Personal Finance Investments Limited and principal business activities are to provide services and business know-how to fellow subsidiary undertakings.
IPF Digital Group Limited is a private limited company incorporated and registered in England and Wales on 18 December 2006 as a company limited by shares with registered number 06032184. Its registered office is at Number Three, Leeds City Office Park, Meadow Lane, Leeds LS11 5BD and the telephone number of its registered office is +44 (0) 113 539 5466. The operations of IPF Digital Group Limited are subject to English company law, in particular the Companies Act 2006.
IPF Digital Group Limited is a wholly owned subsidiary of the Issuer and its principal business activity is to act as the intermediate holding company of IPF Digital AS.
The following table sets out a list of directors of each of the Guarantors and the principal activities performed by them outside of their duties as directors for the Guarantors, where these are significant to any of the Guarantors as at the date of this Prospectus.
| Name | Position | Other principal activities |
|---|---|---|
| Gerard Ryan | Director | None |
| Douglas Kleppen | Director | None |
| Rami Ryhanen (IPF Digital) | Director | None |
| James Ormrod | Director | None |
The business address of each of the directors listed above is c/o Number Three, Leeds City Office Park, Meadow Lane, Leeds LS11 5BD.
As at the date of this Prospectus, save for the fact that any of the directors of any of the Guarantors may purchase and hold Notes issued under the Programme from time to time (which would make them creditors of the Guarantors in their personal capacity for so long as they held the Notes), there are no potential conflicts of interest between the duties of the directors of each of the Guarantors listed above to any of the Guarantors and their private interests and/or other duties. As at the date of this Prospectus, no directors of the Guarantors do in fact hold any Notes issued under the Programme.
The provision of credit to consumers in the EU, including consumer loans, is at present governed by national legislation which implements the provisions of the consumer credit directive, Directive 2008/48/EC (the "CCD").
The CCD focuses on transparency and consumer rights in relation to consumer credit agreements and the efficiency of the consumer credit market. It requires a comprehensive set of information to be given to consumers in good time before the consumer credit agreement is concluded and also requires such information to be included as part of the consumer credit agreement itself.
Contrary to the position under the previous consumer credit directive, the CCD takes the approach of 'targeted full harmonisation'. This means that, whilst member states have discretion in certain areas, they are not permitted to adopt or retain more stringent provisions in their national law, the intention being that this leads to a largely consistent legislative position across the EU, thereby encouraging cross-border trade.
The CCD seeks to provide a standard mechanism for calculating the Annual Percentage Rate of Charge (the "APR") that must be included as part of the information to be provided to consumers entering into credit agreements. This means that the definition and formula for the calculation of the APR is harmonised at EU level. The CCD requires that:
Agreements for the provision of short term, low value credit with short repayment periods often attract attention as a result of their high APRs, although such attention is typically as a result of misconception as to the meaning of APR and its significance. Further, the total charges for the Group's loans are higher than for loans provided by mainstream banks, reflecting the higher lending risk, the absence generally of default fees for missed payments on home collected loans (within term) and the high level of personal service provided by the agent. Both of these factors can attract criticism and increase calls for statutory caps on charges and limitations on the amounts that the Group may lend to any individual customer.
The CCD also includes harmonised provisions relating to reductions in the total cost of credit to consumers who choose to utilise their right to early settlement of their credit obligations. Whilst similar provisions were included in the previous consumer credit directive, they were non-standardised and related only to full early settlement. The CCD extends this by providing an entitlement for consumers to a reduction on the total cost of credit on partial, as well as full, early settlement of their credit obligations.
Under the CCD, EU member states are under an obligation to ensure that, before the conclusion of a credit agreement with a consumer, the consumer credit provider assesses the consumer's creditworthiness on the basis of sufficient information obtained from the consumer, where appropriate, or on the basis of a consultation of the relevant national database. Furthermore, EU member states are under an obligation to ensure that, where parties to a consumer credit agreement agree to change the total amount of credit after the conclusion of the credit agreement, the consumer credit provider updates the financial information at its disposal concerning the consumer and re-assesses the consumer's creditworthiness before any significant increase in the total amount of credit made available. The European Commission published guidelines in May 2012 relating to the application of the CCD. Although the guidelines are non-binding, uncertainty still remains in relation to how national regulators and courts will interpret and apply them over time and, accordingly, there is a risk that the Group's business could be adversely affected. In particular, there is a risk that the Group may be compelled to make further changes to its product structure in some markets in order to comply with the provisions dealing with calculation of APR.
The European Commission recently launched a review of the CCD. The draft proposal of the Commission was published on 30 June 2021, as expected. The next stage is for the proposal to be debated by the European Council and the European Parliament, and the Group expects this process to take until the second half of 2022 to be completed. IPF will monitor the progress and scope of these discussions and any proposals to amend the CCD.
The detail of local regulatory restrictions can have a significant impact on the Group's business in each relevant jurisdiction. These restrictions can and do change quickly; this is something which the Group monitors closely. Key restrictions for the Group's business include (a) price caps; and (b) debt to income restrictions.
Regulatory developments relating to lending restrictions and a range of related issues have continued in a number of the Group's European markets and resulted in several changes to the regulatory environment in which the Group operates. As a result, financial services companies, including consumer lenders, face increased legislation and challenges from consumer protection authorities.
For information about the effect of the COVID-19 pandemic on the local regulatory restrictions relevant to the Group's businesses, please see "Temporary changes to regulatory frameworks as a result of COVID-19" below.
The Group operates within price cap environments in all its European markets with the exception of the Czech Republic, Romania and Spain, and the Group expects pricing regulations to be implemented in the future in these currently-uncapped markets.
In Poland, the current price cap is (i) a flat level of 25% of the loan value, and (ii) an additional variable cap of 30% per annum. Although there have been previous government proposals to amend these caps, such proposals were not implemented and there is currently no proposal to do so.
In Hungary, the maximum APR applicable to consumer loans is the national bank base rate plus 24% per annum.
In the Czech Republic, the possibility of a price capping measure was raised in 2018, and then deferred. However, at the beginning of 2019, the subject was brought up again and two separate proposals were submitted to the Czech parliament. Both proposals are currently frozen and, following the upcoming general elections, will fall away unless introduced into the new Chamber of Deputies.
The Group's home service is provided as a separate, optional service in Romania and Hungary. The fee for the optional home service has historically (based on consumer credit regulation) fallen outside the scope of interest rate, total cost of credit or APR caps. However, if these charges were required to be included within the scope of the caps, the Group's profitability may be adversely affected.
Legislative proposals have been tabled in the Romanian parliament which include: (i) a cap on the total amount repayable on loans below 15,000 Romanian Lei (approximately EUR 3,000), set at two times the principal borrowed; and (ii) an APR cap on all other consumer credit loans, set at 15% per annum plus the relevant base rate. These proposals were approved by the Romanian parliament, but were subsequently declared unconstitutional, and therefore did not enter into force. A new proposal could however be tabled in the future, although, if such a proposal were to be similar to that described above, this would be unlikely to have a material adverse impact on the Group's Romanian business.
In Finland, as a result of COVID-19, the existing APR cap was tightened to 10% for all new lending. This legislation followed a significant reduction in the APR cap in September 2019 and significantly limited the economic returns achievable in this market. As part of the Group's review of expected returns and capital requirements, the Group decided to close its digital business in Finland and collect out the portfolio. This is a recent example of how the jurisdictions in which the Group's businesses operate can be impacted by regulatory changes.
The Group operates within certain markets (such as Romania, Hungary and Lithuania) where the amount of a loan to a customer is restricted by mandatory debt to income limits. For example, the Romanian National Bank has adopted a maximum 40% debt to income ratio limit for loans in the national currency and 20% for those in other currencies. Lenders may exceed the maximum ratio for newly granted consumer credit, subject to a maximum of 15% of the volume of the consumer credit granted by such lender in the previous quarter. The regulation came into force on 1 January 2019. The Group expects similar proposals to emerge in other markets in the future.
UOKiK, the Polish competition and consumer protection authority, is conducting a comprehensive review of rebating practices by banks and other consumer credit providers on early loan settlement, including those of the Group's Polish businesses. In light of this and a recent Court of Justice of the European Union declaratory judgment on the matter, new market standard rebating practices are evolving in Poland. When the Group has full clarity on the new emerging standards, its Polish businesses will conform their rebating practices accordingly. As at the date of this Prospectus, the Group's current expectation is that the annual financial impact on profit before tax is likely to be in the range of £5-10 million and the Group is working on a number of mitigation strategies.
The Group's activities in Poland and Spain are subject to registration procedures / general licenses only, as opposed to any licensing or supervision by a financial authority. A licences regime was introduced in the Czech Republic during 2016 and the Group's Czech subsidiary received its licence in early 2018. In Romania and Lithuania, the Group's local business is included in registers of credit providers maintained by the respective National Banks and in Finland in a register maintained by the Regional State Administrative Agency of South Finland. The Group's operations in Hungary are subject to an operating licence issued by the National Bank, in Estonia the Group's operations are subject to a licence by the Financial Supervision Authority and in Latvia its operations are subject to a licence by the Consumer Rights Protection Centre.
In Poland, following the outbreak of the COVID-19 pandemic, a reduction in the cap on noninterest costs of credit for new lending was introduced on 1 April 2020. The flat level of the cap was reduced from 25% of the loan value to 15% and the additional variable cap from 30% to 6% per annum, with the aggregate total of the caps not to exceed 45% of the loan value. The reduced cap was originally scheduled to finish on 8 March 2021 before being extended to 30 June 2021. The cap has now reverted to previous levels.
As a result of the COVID-19 pandemic, governments and banks in many jurisdictions have introduced extraordinary measures to alleviate the financial and economic impact of the pandemic on consumers. Such emergency measures have included moratoria on loan payments (on an opt-out or opt-in basis) in certain of the Group's markets.
In the Czech Republic, Lithuania, Poland, Romania and Spain, governments and regulatory authorities implemented a variety of debt payment moratoria and payment holidays (each of which have now expired). None of these measures had a material impact on the business of the Group.
In Hungary, the government implemented a debt payment moratorium for consumers until 30 June 2021, and the Hungarian government has extended this to 30 September 2021. The moratorium only applies to loans entered into prior to 18 March 2020. Borrowers can opt out if they wish to continue to make payments on their loans and subsequently opt in at a later date. Currently, approximately 54 per cent. of borrowers have opted into the moratorium.
Each of the EU member states in which the Group operates has civil law provisions that apply principles of "good morals" and/or usury to contracts. The meaning, scope and application of these principles varies from country to country. As a general rule, however, each country's civil law contains provisions that enable courts to hold an agreement null and void if it is deemed to be unfair or if the agreement is considered to have been concluded in bad faith.
There has been a significant increase in the volume of usury-related claims from customers of the Group's Spanish business. In response to this, the Group has restructured its Spanish product offering. This is likely to have a negative impact on the volume of credit issued by the Group in Spain.
Similarly, each of the EU member states in which the Group operates has criminal law provisions that relate to the principles of "good morals" in contracts. While the meaning, scope and application again varies from country to country, the criminal codes in all relevant countries contain a general principle that a criminal offence would be committed by, for example, a consumer credit provider, if it were to exploit a consumer's position or state of distress. There are also, in certain of the relevant countries, specific criminal provisions that relate to usury.
All of the Group's European businesses are subject to local anti-money laundering and terrorist financing legislative requirements which were introduced pursuant to the requirements of the European Fifth Anti-Money Laundering Directive, Directive (EU) 2018/843, as amended.
The Group's Mexican subsidiary is not classified as a financial institution and therefore is not subject to the supervision of the National Banking Commission, or any other financial authority in Mexico, and does not require any permits or licences in respect of financial regulation to conduct its business. The Group's Mexican activities are subject to registration procedures only.
The Group's Mexican business is subject to local anti-money laundering and terrorist financing legislative requirements.
The Group's activities in Australia are subject to a credit licence from the Australian Securities and Investments Commission and are subject to maximum rate provisions.
The Group's Australian business is subject to local anti-money laundering and terrorist financing legislative requirements.
The Group's offering of certain home, medical, and life insurance and other products, in partnership with a range of insurance providers, to its customers is an ancillary activity to its core lending business. In all of its insurance activities the Group acts as an intermediary, distributor and/or agent and the Group does not underwrite any insurance policy. This is a regulated activity in a number of the jurisdictions within which the Group operates.
The Group has skilled and experienced legal and public affairs teams both at Group level and in each of the markets in which the Group operates. These teams monitor political, legislative and regulatory developments and engage with relevant stakeholders on these developments.
This Prospectus should be read and construed in conjunction with:
(c) Financial Review on pages 39 to 43;
(d) Independent Auditor's Report on pages 108 to 115;
(v) the memorandum and articles of association of IPF Holdings Limited (https://www.ipfin.co.uk/ content/dam/ipf/corporate/investors/debt-funding-information/ Documents%20relevant%20to %20the%20debt%20issuance%20programme.zip);
(vi) the memorandum and articles of association of International Personal Finance Investments Limited (https://www.ipfin.co.uk/content/dam/ipf/corporate/investors/debt-funding-information/ Documents%20relevant%20to%20the%20debt%20issuance%20programme.zip);
(vii) the memorandum and articles of association of IPF International Limited (https://www.ipfin.co.uk/content/dam/ipf/corporate/investors/debt-funding-information/ Documents%20relevant%20to%20the%20debt%20issuance%20programme.zip);
(viii) the memorandum and articles of association of IPF Digital Group Limited (https://www.ipfin.co.uk/content/dam/ipf/corporate/investors/debt-funding-information/ Documents%20relevant%20to%20the%20debt%20issuance%20programme.zip);
issuance of euro denominated Notes under the Programme (https://www.ipfin.co.uk/content/ dam/ipf/corporate/investors/debt-funding-information/20.11.10%20IPF%20-%20Drawdown %20Prospectus%20(BLACK).pdf),
each of which have been previously published or are published simultaneously with this Prospectus and which have been approved by the FCA or filed with it and filed with the CBI. Such documents shall be incorporated in and form part of this Prospectus, save that any statement contained in a document which is incorporated by reference herein shall be modified or superseded for the purpose of this Prospectus to the extent that a statement contained herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this Prospectus.
Any information contained in any of the documents incorporated by reference which is not incorporated in and does not form part of this Prospectus is either not relevant for Investors or is covered elsewhere in the Prospectus.
If documents which are incorporated by reference into this Prospectus themselves incorporate any information or other documents therein, either expressly or implicitly, such information or other documents will not form part of this Prospectus for the purposes of the EU Prospectus Regulation or the UK Prospectus Regulation except where such information or other documents are specifically incorporated by reference or attached to this Prospectus.
Copies of documents incorporated by reference in this Prospectus may be obtained (without charge) from the website of the Issuer at www.ipfin.co.uk. The other contents of the Issuer's website shall not form part of the Prospectus.
If at any time the Issuer shall be required to prepare a supplementary prospectus pursuant to Article 23 of the EU Prospectus Regulation or Article 23 of the UK Prospectus Regulation, the Issuer will prepare and make available an appropriate amendment or supplement to this Prospectus or a further Prospectus which; (i) in respect of any subsequent issue of EU Notes admitted to trading on the Euronext Dublin Regulated Market or any other EU Regulated Market, shall constitute a supplementary prospectus as required by the CBI and Article 23 of the EU Prospectus Regulation; and (ii) in respect of any subsequent issue of UK Notes admitted to trading on the LSE Main Market or any other UK Regulated Market, shall constitute a supplementary prospectus as required by the FCA and Article 23 of the UK Prospectus Regulation.
The obligation to prepare a supplement to this Prospectus in the event of any significant new factor, material mistake or material inaccuracy does not apply when the Prospectus is no longer valid.
In accordance with and pursuant to Article 23(2) of the UK Prospectus Regulation, where UK Notes are offered to the public, investors who have already agreed to purchase or subscribe for UK Notes before any supplement is published have the right, exercisable within two working days after the publication of such supplement, to withdraw their acceptance, provided that the significant new factor, material mistake or material inaccuracy referred to in Article 23(1) of the UK Prospectus Regulation arose or was noted before the closing of the offer period or the delivery of UK Notes, whichever occurs first. The period may be extended by the Issuer. The final date of the right of withdrawal will be stated in the supplement.
Subject to the terms and on the conditions contained in a dealer agreement dated on or around 26 August 2021 (the "Dealer Agreement") between the Issuer, the Guarantors, the Permanent Dealers (as defined in the Dealer Agreement) and the Arranger, the Notes will be offered on a continuous basis by the Issuer to the Permanent Dealers. However, the Issuer has reserved the right to sell Notes directly on its own behalf to Dealers that are not Permanent Dealers. The Notes may be resold at prevailing market prices, or at prices related thereto, at the time of such resale, as determined by the relevant Dealer. The Notes may also be sold by the Issuer through the Dealers, acting as agents of the Issuer. The Dealer Agreement also provides for Notes to be issued in syndicated Tranches that are jointly and severally underwritten by two or more Dealers.
The Issuer may agree with a Dealer to pay such Dealer a commission in respect of Notes subscribed by such Dealer. The Issuer has agreed to reimburse the Arranger for certain of its expenses incurred in connection with the establishment of the Programme and the Dealers for certain of their activities in connection with the Programme.
The Issuer and the Guarantors have agreed to indemnify the Dealers against certain liabilities in connection with the offer and sale of the Notes. The Dealer Agreement entitles the Dealers to terminate any agreement that they make to subscribe for Notes in certain circumstances prior to payment for such Notes being made to the Issuer.
The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.
The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. Treasury regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986 as amended and Treasury regulations thereunder. The relevant Final Terms will identify whether TEFRA C or TEFRA D apply, or whether TEFRA is not applicable.
Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that, except as permitted by the Dealer Agreement, it has not offered, sold or delivered and will not offer, sell or deliver the Notes (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering within the United States and the issuance date or to, or for the account or benefit of, U.S. persons, and it will have sent to each dealer to which it sells Notes during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons.
In addition, until 40 days after the commencement of the offering, an offer or sale of Notes within the United States by a dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act.
If the Final Terms in respect of any Notes includes a legend entitled "Prohibition of Sales to EEA Retail Investors", each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered, sold or otherwise made available, and will not offer, sell or otherwise make available, the Notes of that Series to any retail investor in the EEA. For the purposes of this provision:
(i) a retail client as defined in point (11) of Article 4(1) of EU MIFID II;
(ii) a customer within the meaning of the Insurance Distribution Directive, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of EU MIFID II; or
If the Final Terms in respect of any Notes includes a legend entitled "Prohibition of Sales to UK Retail Investors", each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered, sold or otherwise made available, and will not offer, sell or otherwise make available, the Notes of that Series to any retail investor in the United Kingdom. For the purposes of this provision:
If the Final Terms in respect of any Notes specifies the "Prohibition of Sales to EEA Retail Investors" as "Not Applicable", in relation to each Member State of the EEA (each, a "Relevant State"), each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not made, and will not make, an offer of Notes which are the subject of the offering contemplated by this Prospectus as completed by the Final Terms in relation thereto to the public in that Relevant State, except that it may make an offer of such Notes to the public in that Relevant State:
(iv) at any time in any other circumstances falling within Article 1(4) of the EU Prospectus Regulation,
provided that no such offer of Notes referred to above shall require the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the EU Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the EU Prospectus Regulation.
In this provision and in this Prospectus generally, the expression an "offer of Notes to the public" in relation to any Notes in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an Investor to decide to purchase or subscribe for the Notes.
If the Final Terms in respect of any Notes specifies "Prohibition of Sales to UK Retail Investors" as "Not Applicable", in relation to the UK, each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not made, and will not make, an offer of Notes which are the subject of the offering contemplated by this Prospectus as completed by the Final Terms in relation thereto to the public in the UK, except that it may make an offer of such Notes to the public in the UK:
provided that no such offer of Notes referred to in (ii) to (iv) above shall require the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the UK Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.
In this provision and in this Prospectus generally, the expression an "offer of Notes to the public" in the United Kingdom relation to any Notes means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an Investor to decide to purchase or subscribe for the Notes.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that:
(i) in relation to any Notes which have a maturity of less than one year, (a) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (b) it has not offered or sold and will not offer or sell any Notes other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Notes would otherwise constitute a contravention of Section 19 of the FSMA by the Issuer;
Each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that:
The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the "Financial Instruments and Exchange Act"). Accordingly, each of the Dealers has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Notes in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organised under the laws of Japan) or to others for reoffering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident in Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and other relevant laws and regulations of Japan.
Each Dealer has acknowledged, and each further Dealer appointed under the Programme will be required to acknowledge, that this Prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that it has not offered or sold any Notes or caused the Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell any Notes or cause the Notes to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this Prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA") pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered or sold, and will not offer or sell, any Notes in Poland through a public offering – subject to several exemptions set out in the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading, and Public Companies of 29 July 2005 (the "Polish Act on Offerings") – as part of their initial distribution or otherwise, to residents of Poland or within the territory of Poland. Pursuant to the Polish Act on Offerings, "public offering" means a communication in any form and by any means, which is addressed to at least 150 persons, or to an unspecified addressee, and which contains sufficient information on the securities to be offered and terms and conditions of their acquisition, so as to enable an investor to decide to acquire those securities.
Each Dealer has acknowledged, and each further Dealer appointed under the Programme will be required to acknowledge, that the acquisition and holding of the Notes by residents of Poland may be subject to restrictions imposed by Polish law (including foreign exchange regulations) and that re-offers and re-sales of the Notes to Polish residents or in Poland in secondary trading may also be subject to restrictions.
No action has been taken in the Czech Republic (including obtaining approval of the prospectus from the Czech National Bank (the "CNB") and the admission to trading on a regulated market (as defined in Section 55 (1) of Czech Act No. 256/2004 Coll., on Conducting Business in the Capital Market, as amended (the "Czech Capital Markets Act")) for the purposes of allowing any Notes to qualify as securities admitted to trading on the Czech regulated market (as defined in the Czech Capital Markets Act) or any other European regulated market within the meaning of the Czech Capital Markets Act.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered or sold, and will not offer or sell, any Notes in the Czech Republic through a public offering, and has not provided and will not provide any communication to a broader circle of persons containing information on the securities being offered and the terms under which they may acquire the securities and which are sufficient for the investor to make a decision or to subscribe for, or purchase, such securities, subject to the exemptions set out in the Czech Capital Markets Act, as part of their initial distribution or otherwise, to residents of the Czech Republic or within the Czech Republic.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has complied with and will comply with all the requirements of the Czech Capital Markets Act and has not taken, and will not take, any action which would result in the issue of the Notes being classed as "accepting deposits from the public" by the Issuer in the Czech Republic under Section 2 (1) of Czech Act No. 21/1992 Coll., on Banks (as amended) (the "Czech Act on Banks") or requiring a permit, registration, filing or notification to the CNB or other authorities in the Czech Republic in respect of the Notes in accordance with the Czech Capital Markets Act, the Czech Act on Banks or the practice of the CNB.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has complied with and will comply with all the laws of the Czech Republic applicable to the conduct of business in the Czech Republic (including the laws applicable to the provision of investment services (within the meaning of the Czech Capital Markets Act) in the Czech Republic) in respect of the Notes.
No permit for the issue of the Notes has been obtained (including obtaining approval of the terms and conditions of the Notes) from the National Bank of Slovakia (the "NBS") nor is any required under Slovak Act No. 530/1990 Zb. Coll., on Bonds (the "Slovak Bonds Act"). No action has been taken in Slovakia (including (i) obtaining approval of the Prospectus or base prospectus from the NBS pursuant to Slovak Act No. 566/2001 Coll., on Securities and Investment Services and on Amendments of Other Acts, as amended (the "Slovak Securities and Investment Act") and (ii) the admission to trading on a regulated market (as defined under the Slovak Act No. 429/2002 Coll., Stock Exchange Act, as amended (the "Slovak Stock Exchange Act")) for the purposes of any Notes to qualify as securities admitted to trading on the Slovak regulated market (as defined in the Slovak Stock Exchange Act) or any other European regulated market within the meaning of the Slovak Stock Exchange Act.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered or sold, and will not offer or sell, any Notes in Slovakia through a public offering, and has not provided and will not provide any communication to a broader circle of persons containing information on the securities being offered and the terms under which they may acquire the securities and which are sufficient for the investor to make a decision or to subscribe for, or purchase, such securities, subject to the exemptions set out in the Slovak Securities and Investment Act, as part of their initial distribution or otherwise, to residents of Slovakia or within Slovakia.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has complied with and will comply with all the requirements of the Slovak Securities and Investment Act and the Slovak Bonds Act and has not taken, and will not take, any action which would result in the Notes being deemed to have been issued in Slovakia, the issue of the Notes being classed as "accepting of deposits" by the Issuer in Slovakia under Section 2 (2) and Section 5 letter a) of Slovak Act No. 483/2001 Coll., on Banks (as amended) (the "Slovak Act on Banks") or requiring a permit, registration, filing or notification to the NBS or other authorities in Slovakia in respect of the Notes in accordance with the Slovak Securities and Investment Act, the Slovak Bonds Act, the Slovak Act on Banks or the practice of the NBS.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has complied with and will comply with all the laws of Slovakia applicable to the conduct of business in Slovakia (including the laws applicable to the provision of investment services (within the meaning of the Slovak Securities and Investment Act) in Slovakia) in respect of the Notes.
No permit for the issue of the Notes has been obtained (including obtaining approval of the terms and conditions of the Notes) from the National Bank of Hungary (the "NBH") nor is required under Hungarian Act CXX of 2001 on Capital Markets (the "Hungarian Capital Markets Act"). No action has been taken in Hungary (including obtaining approval of this Prospectus from the NBH and the admission to trading on a regulated market (as defined in Chapter II, Section 5.(1)114, of the Hungarian Capital Markets Act)) for the purposes of any Notes to qualify as securities admitted to trading on the Hungarian regulated market (as defined in Chapter IV of the Hungarian Capital Markets Act) or any other European regulated market within the meaning of the Hungarian Capital Markets Act.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered or sold, and will not offer or sell, any Notes in Hungary through a public offering, and has not provided and will not provide any communication to persons containing information on the securities being offered and the terms under which they may acquire the securities and which are sufficient for the investor to make a decision or to subscribe for, or purchase, such securities subject to exemptions set out in the Hungarian Capital Markets Act.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has complied with and will comply with all the requirements of the Hungarian Capital Markets Act and has not taken, and will not take, any action which would result in the Notes being deemed to have been issued in Hungary, the issue of the Notes being classed as "taking deposits and other repayable funds from the public" by the Issuer in Hungary under Section 3.(1)(a) of the Hungarian Act CCXXXVII of 2013 on Credit Institutions and Financial Enterprises (the "Hungarian Banking Act") or requiring a permit, registration, filing or notification to the NBH or other authorities in Hungary in respect of the Notes in accordance with the Hungarian Capital Markets Act or the practice of the NBH.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has complied with and will comply with all the laws of Hungary applicable to the conduct of business in Hungary (including the laws applicable to the provision of investment services – within the meaning of the Hungarian Act CXXXVIII of 2007 on Investment Firms and Commodity Dealers, and on the Regulations Governing their Activities – in Hungary) in respect of the Notes.
If the Notes are offered in a private placement in Hungary, the Issuer must report such private placement to the NBH within 15 days from the closing date of the private placement.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that, if the Notes are offered in a private placement in Hungary, (i) all written documentation prepared in connection with a private placement in Hungary will clearly indicate that it is a private placement; (ii) it will ensure that all investors receive the same information which is material or necessary to the evaluation of the Issuer's current market, economic, financial or legal situation and its expected development, including that which was discussed in any personal consultation with an investor, and (iii) the following standard wording will be included in such written communication:
"PURSUANT TO SECTION 18 OF ACT CXX OF 2001 ON THE CAPITAL MARKETS, THIS [NAME OF DOCUMENT] WAS PREPARED IN CONNECTION WITH A PRIVATE PLACEMENT IN HUNGARY."
No action has been taken in Romania (including obtaining approval of the Prospectus from the Romanian Financial Supervisory Authority (the "RFSA") and/or the admission to trading on an EU Regulated Market/alternative trading system in Romania nor has any notification under Article 25 of the EU Prospectus Regulation been made to the RFSA) for the purposes of any Notes to qualify as securities, as defined in Law no. 24/2017 on issuers of financial instruments and market operations (the "Romanian Capital Markets Laws") or to be admitted to trading on a market in Romania, within the meaning of the Romanian Capital Markets Laws and relevant secondary legislation (e.g. RFSA Regulation no. 5/2018 on issuers of financial instruments and market operations, as subsequently amended by the RFSA Regulation no. 1/2020).
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that:
(i) it has not offered or sold and will not offer or sell, directly or indirectly, any Notes in Romania through a public offering and has not provided and will not provide any communication to a broader circle of persons containing information on the securities being offered and the terms under which they may acquire the securities and which are sufficient for the Investor to make a decision or to subscribe for, or purchase, such securities;
The Notes have not been and will not be registered in the Mexican National Registry of Securities (Registro Nacional de Valores). Therefore, the Notes may not be offered or sold in the United Mexican States ("Mexico") by any means, or otherwise be the subject of brokerage activities (Intermediación) in Mexico, except in circumstances which constitute a private offering (oferta privada) pursuant to Article 8 of the Mexican Securities Market Law (Ley del Mercado de Valores). The Mexican Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) has not issued any certificate as to the investment quality of the Notes or solvency, liquidity or credit quality of the Issuer. All applicable provisions of the Mexican Securities Market Law must be complied with in respect of anything done in relation to the Notes in, from or otherwise involving Mexico.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that there has not been, and there will not be, any circulation in Jersey of any offer for subscription, sale or exchange of any Notes unless such offer is circulated in Jersey by a person or persons authorised to conduct investment business under the Financial Services (Jersey) Law 1998, as amended and (a) such offer does not for the purposes of Article 8 of the Control of Borrowing (Jersey) Order 1958, as amended, constitute an offer to the public; or (b) an identical offer is for the time being circulated in the United Kingdom without contravening the FSMA and is, mutatis mutandis, circulated in Jersey only to persons similar to those to whom, and in a manner similar to that in which, it is for the time being circulated in the United Kingdom.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that this Prospectus has not been, and will not be, registered or filed as a prospectus with any governmental or other authority in the Isle of Man, and this Prospectus and the issue of Notes have not been approved by the Isle of Man Financial Services Authority. Any offer for subscription, sale or exchange of the Notes within the Isle of Man shall be made by (i) an Isle of Man financial services licenceholder licensed under Section 7 of the Financial Services Act 2008 to do so or (ii) in accordance with any relevant exclusion contained within the Regulated Activities Order 2011 (as amended) or exemption contained in the Financial Services (Exemptions) Regulations 2011 (as amended).
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that:
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that no Notes will be offered to the public in Sweden nor admitted to trading on an EU Regulated Market in Sweden unless and until (A) a prospectus in relation to those Notes has been approved by the competent authority in Sweden or, where appropriate, approved in another Relevant State and such competent authority has certified to the competent authority in Sweden that the prospectus has been approved as a prospectus under the EU Prospectus Regulation; or (B) an exemption from the requirement to prepare a prospectus is available under the EU Prospectus Regulation.
Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that this Prospectus is not intended to constitute an offer or solicitation to purchase or invest in the Notes described herein. The Notes may not be publicly offered, sold or advertised, directly or indirectly through on-selling, in, into or from Switzerland and will not be listed on the SIX Swiss Exchange or on any other exchange or regulated trading facility in Switzerland. Neither this Prospectus nor any other offering or marketing material relating to the Notes constitutes a prospectus as such term is understood pursuant to article 1156 in connection with article 652a of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange or any other regulated trading facility in Switzerland, and neither this Prospectus nor any other offering or marketing material relating to the Notes may be publicly distributed or otherwise made publicly available in Switzerland.
Other than in respect of Notes for which "Prohibition of Sales to Belgian Consumers" is specified as "Not Applicable" in the applicable Final Terms, each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that an offering of Notes may not be advertised to any individual in Belgium qualifying as a consumer within the meaning of Article I.1 of the Belgian Code of Economic Law, as amended from time to time (a "Belgian Consumer") and that it has not offered, sold or resold, transferred or delivered, and will not offer, sell, resell, transfer or deliver, the Notes, and that it has not distributed, and will not distribute, any prospectus, memorandum, information circular, brochure or any similar documents in relation to the Instruments, directly or indirectly, to any Belgian Consumer.
These selling restrictions may be modified by the agreement of the Issuer and the Dealers following a change in a relevant law, regulation or directive. Any such modification will be set out in the Final Terms issued in respect of the issue of Notes to which it relates or in a supplement to this Prospectus.
No representation is made that any action has been taken in any jurisdiction that would permit a public offering of any of the Notes, or possession or distribution of this Prospectus or any other offering material or any Final Terms, in any country or jurisdiction where action for that purpose is required.
Each Dealer has agreed that it shall, to the best of its knowledge, comply with all relevant laws, regulations and directives in each jurisdiction in which it purchases, offers, sells or delivers Notes or has in its possession or distributes the Prospectus, any other offering material or any Final Terms in all cases at its own expense.
The tax law of a Noteholder's place of residence or nationality and United Kingdom tax law may have an impact on the income received from the Notes. The comments below are of a general nature based on United Kingdom tax law as applied in England and Wales and HMRC practice (which practice may not be binding on HMRC) at the date hereof. They are not intended to be exhaustive. They assume that there will be no substitution of the Issuer and do not address the consequences of any substitution (notwithstanding that such substitution may be permitted by the terms and conditions of the Notes). The comments relate only to the position of persons who are absolute beneficial owners of Notes. Prospective Noteholders should be aware that the particular terms of any Series of Notes, as specified in the relevant Final Terms, may affect the tax treatment of that and other Series of Notes. Any Noteholders who are in doubt as to their own tax position (in particular those who may be liable to taxation in jurisdictions other than the United Kingdom) should consult their professional advisers. The references below to "interest" mean interest for United Kingdom tax purposes (which may include any premium paid on a redemption of the Notes).
The Notes issued will constitute "quoted Eurobonds" under Section 987 of the Income Tax Act 2007 (the "Act") provided they carry a right to interest and are and continue to be listed on a recognised stock exchange, within the meaning of Section 1005 of the Act, or admitted to trading on a "multilateral trading facility" operated by an appropriately-regulated recognised stock exchange (within the meaning of Section 987 of the Act). Each of the London Stock Exchange and Euronext Dublin is a recognised stock exchange for these purposes. Securities will be treated as listed on the London Stock Exchange if they are included in the official list of the Financial Conduct Authority and are admitted to trading on the LSE Main Market. Securities will be treated as listed on Euronext Dublin if they are admitted to the official list of Euronext Dublin and to trading on the Euronext Dublin Regulated Market.
Whilst the Notes are and continue to be quoted Eurobonds, payments of interest by the Issuer on the Notes may be made without withholding or deduction for or on account of United Kingdom income tax.
Interest payable on the Notes may also be paid without withholding or deduction for or on account of United Kingdom income tax where the Notes have a maturity date less than one year from their date of issue, provided that the Notes are not issued with the intention that, or under arrangements the effect of which is that, such Notes form part of a borrowing with a total term of a year or more.
In all other cases, interest will generally be paid by the Issuer under deduction of United Kingdom income tax at the basic rate (currently 20%), subject to the availability of other reliefs or to any direction to the contrary from HMRC in respect of such relief as may be available pursuant to the provisions of any applicable double taxation treaty.
HMRC have powers to obtain information, including in relation to interest or payments treated as interest and payments derived from securities. This may include details of the beneficial owners of the Notes (or the persons for whom the Notes are held), details of the persons to whom payments derived from the Notes are or may be paid and information in connection with transactions relating to the Notes. Information obtained by HMRC may be provided to tax authorities in other countries.
If a Guarantor makes any payments under the Guarantee in respect of the Notes, such payments may be subject to United Kingdom withholding tax at the basic rate (currently 20%), subject to such relief as may be available under the provisions of any applicable double taxation treaty or other exemption which may apply. Such payments by a Guarantor may not be eligible for the exemption (in respect of quoted Eurobonds) from United Kingdom withholding tax described above.
As set out in Condition 8 of the Terms and Conditions of the Notes, if the Issuer or a Guarantor is at any time required by law to deduct or withhold an amount in respect of any withholding taxes in respect of payments under the Notes or the Guarantee (as applicable), the Issuer or that Guarantor (as applicable) must, subject to certain exclusions, pay such additional amounts as shall result in the receipt by the Noteholders and Couponholders of such amounts as would have been received by them had no such deductions or withholding been required.
Pursuant to certain provisions of the U.S. Internal Revenue Code of 1986, commonly known as FATCA, a "foreign financial institution" may be required to withhold on certain payments it makes ("foreign passthru payments") to persons that fail to meet certain certification, reporting or related requirements. The Issuer (or, as the case may be, any Guarantor or other non-US financial institution through which payments on the Notes are made) may be a foreign financial institution for these purposes. A number of jurisdictions (including the jurisdiction of the Issuer and the Guarantors) have entered into, or have agreed in substance to, intergovernmental agreements with the United States to implement FATCA ("IGAs"), which modify the way in which FATCA applies to their jurisdictions. Under the provisions of the IGAs as currently in effect, a foreign financial institution in an IGA jurisdiction would generally not be required to withhold under FATCA or an IGA from payments that it makes. Certain aspects of the application of the FATCA provisions and IGAs to instruments such as the Notes, including whether withholding would ever be required pursuant to FATCA or an IGA with respect to payments on instruments such as the Notes, are uncertain and subject to change. Even if withholding would be required pursuant to FATCA or an IGA with respect to payments on instruments such as the Notes, such withholding would not apply prior to the date that is two years after the date on which final regulations defining passthru payments are published in the U.S. Federal Register, and Notes characterised as debt (or which are not otherwise characterised as equity and have a fixed term) for U.S. federal tax purposes that are issued on or prior to the date that is six months after the date on which the final regulations defining "foreign passthru payments" are filed with the U.S. Federal Register generally would be "grandfathered" for the purposes of FATCA withholding unless materially modified after such date (including by reason of a substitution of the Issuer). However, if additional Notes (as described under the "Terms and Conditions – Further Issues") that are not distinguishable from previously issued Notes are issued after the expiration of the grandfathering period and are subject to withholding under FATCA, then withholding agents may treat all Notes, including the Notes offered prior to the expiration of the grandfathering period, as subject to withholding under FATCA. Noteholders should consult their own tax advisors regarding how these rules may apply to their investment in the Notes. In the event any withholding would be required pursuant to FATCA or an IGA with respect to payments on the Notes, no person will be required to pay additional amounts as a result of the withholding.
If, in the context of a UK Public Offer (as defined below), you are offered Notes by any entity, you should check that the entity is authorised to use this Prospectus for the purposes of making such offer before agreeing to purchase any Notes. To be authorised to use this Prospectus in connection with a UK Public Offer (referred to below as an "Authorised Offeror"), an entity must either be:
Valid offers of Notes may only be made by an Authorised Offeror in the context of a UK Public Offer if the offer is made in the United Kingdom and within the time period referred to in the Final Terms as the "Offer Period". Other than as set out above (and as described in greater detail below), none of the Issuer, the Guarantors and any Dealer has authorised the making of any UK Public Offer by any person in any circumstances and such person is not permitted to use this Prospectus in connection with any offer of Notes.
Please see below for certain important legal information relating to UK Public Offers.
Only financial intermediaries that have been authorised by the Issuer may offer Notes to Investors. The Issuer authorises financial intermediaries to offer Notes to Investors by consenting to their use of this Prospectus. This section sets out information relating to that consent, including conditions attached to it. In order to ensure that you can rely on this Prospectus, you should read this section carefully and consider checking that the financial intermediary has been authorised by the Issuer to offer Notes. See "How do I check whether the person offering me the Notes has been given the Issuer's consent to do so?" in the section entitled "Information about the Programme".
This Prospectus has been prepared on a basis that permits offers that are not made within an exemption from the requirement to publish a prospectus under Article 1(4) of the UK Prospectus Regulation (in this context meaning an offer of Notes with a denomination of less than €100,000 (or its equivalent in any other currency)) ("UK Public Offers") in the United Kingdom. Any person making or intending to make a UK Public Offer of the Notes on the basis of this Prospectus must do so only with the consent of the Issuer and the Guarantors – see "Consent given in accordance with Article 5(1) of the UK Prospectus Regulation" below.
In the context of any UK Public Offer of the Notes, the Issuer and each Guarantor accepts responsibility, in the United Kingdom, for the content of this Prospectus (as supplemented at the relevant time, if applicable) and the relevant Final Terms under Section 90 of the FSMA in relation to any person (an "Investor") who purchases any Notes in a UK Public Offer made by an Authorised Offeror (as defined below), where that offer is made in compliance with all the conditions attached to the giving of consent to the Authorised Offeror. Such consent is described below under "Consent".
Except in the circumstances described below, none of the Issuer, any Guarantor or any Dealer has authorised the making of any UK Public Offer by any offeror and neither the Issuer nor any Guarantor has consented to the use of this Prospectus or any Final Terms by any other person in connection with any offer of the Notes in any jurisdiction. Any offer made without the consent of the Issuer and the Guarantors is unauthorised and neither the Issuer, the Guarantors nor, for the avoidance of doubt, any of the Dealers accepts any responsibility or liability in relation to such offer or for the actions of the persons making any such unauthorised offer.
If, in the context of a UK Public Offer, an Investor is offered Notes by a person which is not an Authorised Offeror, the Investor should check with such person whether anyone is responsible for this Prospectus for the purposes of Section 90 of the FSMA in the context of the relevant UK Public Offer and, if so, who that person is. If an Investor is in any doubt about whether it can rely on this Prospectus and/or who is responsible for its contents, the Investor should take legal advice.
Where consent to use of the Prospectus is being given, the Final Terms for the relevant Notes will specify either "Specific Consent" or "General Consent". The different requirements for each type of consent are set out below. Whichever one is used, Investors should remember that the consent only applies to that particular Tranche of Notes to which it relates, is only valid during the Offer Period (which must occur within 12 months after the date of this Prospectus), and is subject to any additional conditions set out in Part B of the relevant Final Terms.
Subject to the conditions set out below:
(iii) complies with the restrictions set out under "Subscription and Sale" in this Prospectus which would apply as if it were a Dealer;
(iv) acknowledges the target market and distribution channels identified under the "UK MiFIR Product Governance Legend" set out in the applicable Final Terms;
(xiii) agrees that any communication in which it attaches or otherwise includes any announcement published by the Issuer or any Guarantor via Regulatory News Service at the end of the Offer Period will be consistent with the Prospectus as completed by the relevant Final Terms, and (in any case) must be fair, clear and not misleading and in compliance with the Rules and must state that such Authorised Offeror has provided it independently from the Issuer and the Guarantors and must expressly confirm that neither the Issuer nor the Guarantors have accepted any responsibility for the content of any such communication;
(xiv) does not use the legal or publicity names of any Dealer, the Issuer, any Guarantor or any other name, brand or logo registered by any entity within their respective groups or any material over which any such entity retains a proprietary interest or in any statements (oral or written), marketing material or documentation in relation to the Notes;
The financial intermediaries referred to in paragraphs (A)(ii), (A)(iii) and (B) above are together referred to herein as the "Authorised Offerors".
Any financial intermediary falling within paragraph (B) above who wishes to use this Prospectus in connection with a UK Public Offer as set out above is required, for the duration of the relevant Offer Period, to publish on its website that it is using this Prospectus for such UK Public Offer in accordance with the consent of the Issuer and the Guarantors and the conditions attached thereto in the following form (with the information in square brackets duly completed with the relevant information) (the "Acceptance Statement"):
"We, [specify legal name of financial intermediary], refer to the offer of [specify title of the relevant Notes] (the "Notes") described in the Prospectus dated [l] 2021 [,as supplemented,] and the Final Terms dated [specify date] (together, the "Prospectus") published by International Personal Finance plc (the "Issuer"). In consideration of the Issuer and the Guarantors offering to grant their consent to our use of the Prospectus in connection with the offer of the Notes (the "UK Public Offer") in the United Kingdom during the Offer Period in accordance with the Authorised Offeror Terms and subject to the other conditions to such consent (as specified in the Prospectus), we accept such offer by the Issuer. We confirm that we are authorised under UK MiFIR to make, and are using the Prospectus in connection with, the UK Public Offer accordingly. Terms used herein and otherwise not defined shall have the same meaning as is given to such terms in the Prospectus."
None of the Issuer, the Guarantors or any Dealer has any responsibility for any of the actions of any Authorised Offeror, including compliance by an Authorised Offeror with applicable conduct of business rules or other local regulatory requirements or other securities law requirements in relation to such offer or sale.
If an Investor intends to acquire or does acquire any Notes from an Authorised Offeror, an Investor will do so, and offers and sales of the Notes to that Investor by such an Authorised Offeror will be made, in accordance with any terms and other arrangements in place between such Authorised Offeror and Investor including as to price, allocations and settlement arrangements. Neither the Issuer nor any Guarantor will be a party to any such arrangements with an Investor in connection with the offer or sale of any Notes and, accordingly, this Prospectus does not contain such information. The information relating to the procedure for making applications will be provided by the relevant Authorised Offeror to an Investor at the relevant time. None of the Issuer, the Guarantors, the Dealers or other Authorised Offeror has any responsibility or liability for such information.
The Notes may not be a suitable investment for all Investors.
Each potential investor in any Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential Investor should consider, on its own or with the help of its financial or other professional advisers, whether it:
Some Notes are complex financial instruments and such instruments may be purchased by Investors as a way to reduce risk or enhance yield with an understood, measured and appropriate addition of risk to their overall portfolios. A potential Investor should not invest in Notes which are complex financial instruments unless it has the expertise (either alone or with the help of a financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of such Notes and the impact this investment will have on the potential Investor's overall investment portfolio.
No person has been authorised to give any information or to make any representation other than those contained in this Prospectus in connection with the issue or sale of the Notes and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer, the Guarantors, any of the Dealers or the Arranger.
Neither the delivery of this Prospectus nor any sale made in connection herewith shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer or the Guarantors since the date hereof or the date upon which this Prospectus has been most recently amended or supplemented or that there has been no change in the financial position of the Issuer or the Guarantors since the date hereof or the date upon which this Prospectus has been most recently amended or supplemented or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same.
Neither this Prospectus nor any other information supplied in connection with the offering of any Notes should be considered as a recommendation by the Issuer, any Guarantor, any Dealer or the Trustee that any recipient of this Prospectus or any other information supplied in connection with the offering of the Notes should purchase any Notes. Each potential purchaser of Notes should determine for itself the relevance of the information contained in this Prospectus and any purchase of Notes should be based upon such investigation as it deems necessary.
None of the Dealers, the Arranger or the Trustee accepts any responsibility for the contents of this Prospectus or for any other statement made or purported to be made by the Arranger, the Trustee or a Dealer or on its behalf in connection with the Issuer, the Guarantors or the issue and offering of the Notes. The Arranger, the Trustee and each Dealer accordingly disclaims all and any liability whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in respect of this Prospectus or any such statement. Neither this Prospectus nor any other financial statements are intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Issuer, the Guarantors, the Arranger, the Trustee or the Dealers that any recipient of this Prospectus or any other financial statements should purchase the Notes. Each potential purchaser of Notes should determine for itself the relevance of the information contained in this Prospectus and its purchase of Notes should be based upon such investigation as it deems necessary. None of the Dealers, the Trustee or the Arranger undertakes to review the financial condition or affairs of the Issuer or the Guarantors during the life of the arrangements contemplated by this Prospectus nor to advise any Investor or potential Investor in the Notes of any information coming to the attention of any of the Dealers, the Trustee or the Arranger.
The Dealers and their affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with, and may perform services for, the Issuer, the Guarantors and their affiliates in the ordinary course of business. Certain of the Dealers and their affiliates may have positions, deal or make markets in the Notes issued under the Programme, related derivatives and reference obligations, including (but not limited to) entering into hedging strategies on behalf of the Issuer and its affiliates, on behalf of investor clients or as principal in order to manage their exposure, their general market risk or other trading activities. In addition, in the ordinary course of their business activities, the Dealers and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of the Issuer or its affiliates. Certain of the Dealers or their affiliates routinely hedge their credit exposures to the Issuer consistent with their customary risk management policies. Typically, such Dealers and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in securities, including potentially the Notes issued under the Programme. Any such positions could adversely affect future trading prices of Notes issued under the Programme. The Dealers and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
The contents of the websites of the Group do not form part of this Prospectus, and an Investor should not rely on them.
In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as Stabilisation Manager(s) (or any persons acting on behalf of any Stabilisation Manager(s)) may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, stabilisation may not necessarily occur. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may cease at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant Stabilisation Manager(s) (or any person acting on behalf of any Stabilisation Manager(s)) in accordance with all applicable laws and rules.
This Prospectus includes statements that are, or may be deemed to be, 'forward-looking statements'. These forward-looking statements can be identified by the use of forward-looking expressions, including the terms 'believes', 'estimates', 'anticipates', 'expects', 'intends', 'may', 'will', or 'should' or, in each case, their negative or other variations or similar expressions, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Prospectus and include, but are not limited to, the following: statements regarding the intentions, beliefs or current expectations of the Issuer, the Guarantors and the Group concerning, amongst other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies and the industries in which the Group operates.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the actual results of the Group's operations, financial condition and liquidity, and the development of the countries and the industries in which the Group operates may differ materially from those described in, or suggested by, the forward-looking statements contained in this Prospectus. In addition, even if the results of operations, financial condition and liquidity of the Group, and the development of the countries and the industries in which the Group operates, are consistent with the forward-looking statements contained in this Prospectus, those results or developments may not be indicative of results or developments in subsequent periods. These and other factors are discussed in more detail under the section headed "Risk Factors". Many of these factors are beyond the control of the Issuer, the Guarantors and the Group. Should one or more of these risks or uncertainties materialise, or should underlying assumptions on which the forwardlooking statements are based prove incorrect, actual results may vary materially from those described in this Prospectus as anticipated, believed, estimated or expected. Except to the extent required by laws and regulations, the Issuer and the Guarantors do not intend, and do not assume any obligation, to update any forward-looking statements set out in this Prospectus.
This Prospectus is based on English law in effect as of the date of issue of this Prospectus. Except to the extent required by laws and regulations, the Issuer and the Guarantors do not intend, and do not assume any obligation, to update this Prospectus in light of the impact of any judicial decision or change to English law or administrative practice after the date of this Prospectus.
In certain circumstances, Investors may also hold interests in the Notes through CREST through the issue of CDIs representing interests in Underlying Notes. CDIs are independent securities constituted under English law and transferred through CREST and will be issued by CREST Depository Limited pursuant to the global deed poll dated 25 June 2001 (as subsequently modified, supplemented and/or restated). Neither the Notes nor any rights attached to the Notes will be issued, settled, held or transferred within the CREST system other than through the issue, settlement, holding or transfer of CDIs. CDI Holders will not be entitled to deal directly in the Notes and, accordingly, all dealings in relation to the Notes will be effected through CREST through the holding of CDIs. An Investor should note that the CDIs are the result of the CREST settlement mechanics and are not the subject of this Prospectus.
The following is the text of the terms and conditions that, subject to completion in accordance with the provisions of Part A of the relevant Final Terms, shall be applicable to the Notes in definitive form (if any) issued in exchange for the Global Note(s) representing each Series. Either (i) the full text of these terms and conditions together with the relevant provisions of Part A of the Final Terms or (ii) these terms and conditions as so completed (and subject to simplification by the deletion of nonapplicable provisions), shall be endorsed on such Bearer Notes or on the Certificates relating to such Registered Notes. All capitalised terms that are not defined in these Conditions will have the meanings given to them in Part A of the relevant Final Terms. Those definitions will be endorsed on the definitive Notes or Certificates, as the case may be. References in the Conditions to "Notes" are to the Notes of one Series only, not to all Notes that may be issued under the Programme.
Any Notes issued under the Programme on or after the date of this Prospectus are issued subject to the provisions herein. This does not affect any Notes issued prior to the date of this Prospectus.
These Conditions may be completed in relation to any Series of Notes by the terms of the relevant Final Terms in relation to such Series.
The Notes are constituted by a Trust Deed (as amended or supplemented as at the date of issue of the Notes (the "Issue Date"), the "Trust Deed") dated on or around 26 August 2021 between International Personal Finance plc (the "Issuer"), IPF Holdings Limited, International Personal Finance Investments Limited, IPF International Limited and IPF Digital Group Limited (as "Guarantors") and The Law Debenture Trust Corporation p.l.c. (the "Trustee", which expression shall include all persons for the time being the trustee or trustees under the Trust Deed) as trustee for the Noteholders (as defined below). These terms and conditions (the "Conditions") include summaries of, and are subject to, the detailed provisions of the Trust Deed, which includes the form of the Bearer Notes, Certificates, Coupons and Talons referred to below. An Agency Agreement (as amended or supplemented as at the Issue Date, the "Agency Agreement") dated 12 April 2019 has been entered into in relation to the Notes between the Issuer, the Guarantors, the Trustee, HSBC Bank plc as initial issuing and paying agent and the other agents named in it. The issuing and paying agent, the other paying agents, the registrar, the transfer agents and the calculation agent(s) for the time being (if any) are referred to below respectively as the "Issuing and Paying Agent", the "Paying Agents" (which expression shall include the Issuing and Paying Agent), the "Registrar", the "Transfer Agents" (which expression shall include the Registrar) and the "Calculation Agent(s)".
Copies of the Trust Deed and the Agency Agreement are available to view on the Group's website at www.ipfin.co.uk.
The Noteholders and the holders of the interest coupons (the "Coupons") relating to interest bearing Notes in bearer form and, where applicable in the case of such Notes, talons for further Coupons (the "Talons") (the "Couponholders") are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and are deemed to have notice of those provisions applicable to them of the Agency Agreement.
As used in these Conditions, "Tranche" means Notes which are identical in all respects.
The Notes are issued in bearer form ("Bearer Notes") or in registered form ("Registered Notes") in each case in the Specified Denomination(s) shown hereon, provided that, in the case of any Notes which are to be admitted to trading on a regulated market within the European Economic Area or the United Kingdom or offered to the public in the United Kingdom in circumstances which require the publication of a Prospectus under the UK Prospectus Regulation, the minimum Specified Denomination shall be €1,000 (or its equivalent in any other currency as at the date of issue of the relevant Notes).
All Registered Notes shall have the same Specified Denomination.
The Notes are Fixed Rate Notes, Floating Rate Notes or Zero Coupon Notes, depending upon the Interest and Redemption/Payment Basis shown hereon.
Bearer Notes are serially numbered and are issued with Coupons (and, where appropriate, a Talon) attached, save in the case of Zero Coupon Notes in which case references to interest (other than in relation to interest due after the Maturity Date), Coupons and Talons in these Conditions are not applicable.
Registered Notes are represented by registered certificates ("Certificates") and, save as provided in Condition 2(c), each Certificate shall represent the entire holding of Registered Notes by the same holder.
Title to the Bearer Notes and the Coupons and Talons shall pass by delivery. Title to the Registered Notes shall pass by registration in the register that the Issuer shall procure to be kept by the Registrar in accordance with the provisions of the Agency Agreement (the "Register"). Except as ordered by a court of competent jurisdiction or as required by law, the holder (as defined below) of any Note, Coupon or Talon shall be deemed to be and may be treated as its absolute owner for all purposes whether or not it is overdue and regardless of any notice of ownership, trust or an interest in it, any writing on it (or on the Certificate representing it) or its theft or loss (or that of the related Certificate) and no person shall be liable for so treating the holder.
In these Conditions, "Noteholder" means the bearer of any Bearer Note or the person in whose name a Registered Note is registered (as the case may be), "holder" (in relation to a Notes Coupon or Talon) means the bearer of any Bearer Note, Coupon or Talon or the person in whose name a Registered Note is registered (as the case may be) and capitalised terms have the meanings given to them hereon, the absence of any such meaning indicating that such term is not applicable to the Notes.
(c) Exercise of Options or Partial Redemption in Respect of Registered Notes: In the case of an exercise of an Issuer's or Noteholder's option in respect of, or a partial redemption of, a holding of Registered Notes represented by a single Certificate, a new Certificate shall be issued to the holder to reflect the exercise of such option or in respect of the balance of the holding not redeemed. In the case of a partial exercise of an option resulting in Registered Notes of the same holding having different terms, separate Certificates shall be issued in respect of those Notes of that holding that have the same terms. New Certificates shall only be issued against surrender of the existing Certificates to the Registrar or any Transfer Agent. In the case of a transfer of Registered Notes to a person who is already a holder of Registered Notes, a new Certificate representing the enlarged holding shall only be issued against surrender of the Certificate representing the existing holding.
(d) Delivery of New Certificates: Each new Certificate to be issued pursuant to Conditions 2(b) or (c) shall be available for delivery within three business days of receipt of the form of transfer or Exercise Notice (as defined in Condition 6(e)) and surrender of the Certificate for exchange. Delivery of the new Certificate(s) shall be made at the specified office of the Transfer Agent or of the Registrar (as the case may be) to whom delivery or surrender of such form of transfer, Exercise Notice or Certificate shall have been made or, at the option of the holder making such delivery or surrender as aforesaid and as specified in the relevant form of transfer, Exercise Notice or otherwise in writing, be mailed by uninsured post at the risk of the holder entitled to the new Certificate to such address as may be so specified, unless such holder requests otherwise and pays in advance to the relevant Transfer Agent the costs of such other method of delivery and/or such insurance as it may specify. In this Condition 2(d), "business day" means a day, other than a Saturday or Sunday, on which banks are open for business in the place of the specified office of the relevant Transfer Agent or the Registrar (as the case may be).
(a) Negative Pledge: So long as any of the Notes remain outstanding (as defined in the Trust Deed), the Issuer and the Guarantors will not, and will procure, so far as they can by the proper exercise of voting and other rights or powers of control exercisable by them in relation to their respective Subsidiaries, that no such Subsidiary will, create or permit to subsist any mortgage, charge, pledge, lien or other encumbrance (other than any arising by operation of law) (a "Security Interest") upon the whole or any part of their respective undertakings or assets (present or future) to secure any Relevant Indebtedness (as defined below) or to secure any guarantee or indemnity given by the Issuer or any Guarantor or any of their respective Subsidiaries in respect of any Relevant Indebtedness, without at the same time as, or prior to, the creation of such Security Interest according to the Notes and the Coupons, to the satisfaction of the Trustee, the same security or such other arrangement (whether or not it includes the creation of a Security Interest) as the Trustee shall in its absolute discretion deem not materially less beneficial to the Noteholders or as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders save that the Issuer or any Subsidiary may create or have outstanding (without any obligation to secure the Notes or Coupons) a Permitted Security Interest.
In this Condition 4(a):
"Group" has the meaning given to it in Condition 10;
"Permitted Security Interest" means a Security Interest on the undertaking or assets of a company acquired by a member of the Group after the Issue Date, provided that such Security Interest was not created in contemplation of such acquisition and the principal amount secured by such Security Interest is not subsequently increased (or any Security Interest renewing or replacing the same);
"Relevant Indebtedness" means (i) any present or future indebtedness (whether being principal, premium, interest or other amounts) which is in the form of, or represented or evidenced by, bonds, notes, debentures, loan stock or other securities and which is for the time being, or is capable of being, quoted, listed, dealt in or traded on a stock exchange or over the counter or other recognised securities market, and (ii) any guarantee or indemnity in respect of any such indebtedness; and
"Subsidiary" has the meaning given to it in Condition 10.
to supply to the Trustee, as soon as available, but in any event not later than:
The Trustee shall be entitled to rely on such compliance certificates or any certificate delivered under Condition 4(d)(iii) without further investigation or liability and will not otherwise be responsible for monitoring compliance with Conditions 4(b) and 4(c);
that it shall procure that each set of consolidated financial statements of the Issuer delivered pursuant to Condition 4(d)(i) is prepared using IFRS unless, in relation to any set of financial statements, it gives notice to the Trustee and to the Noteholders in accordance with Condition 16 that there has been a change in generally accepted accounting principles in the United Kingdom and it delivers to the Trustee:
to supply to the Trustee a copy of all documents dispatched by the Issuer to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched.
In these Conditions 4(b) to (d):
"Consolidated EBITDA" has the meaning given to it in Condition 10;
"Consolidated Interest Payable" means, in respect of any period, the aggregate of all amounts of interest and equivalent financial expenses of the Issuer or its Subsidiaries payable to persons who are not the Issuer or such a Subsidiary (calculated on a consolidated basis but after deducting any interest receivable from persons who are not the Issuer or such a Subsidiary) attributable to such period and shall:
In calculating Consolidated Interest Payable for any period, due account shall be taken of (and a consequential adjustment, whether positive or negative, shall be made to reflect) the net benefit or loss (as the case may be) to the Issuer and its Subsidiaries for or in respect of any payments accruing to or from them in such period pursuant to any settlements due on interest rate swaps, hedging or analogous contracts for the mitigation of interest rate fluctuations or movements which they have entered into with third parties in respect of Moneys Borrowed but any item of income or expense that is material (either individually or in aggregate) and either of an unusual or a non-recurring nature shall be excluded, in each case, as determined in accordance with IFRS;
"Consolidated Net Worth" means, at any time, as determined in accordance with IFRS, the aggregate of:
but after:
"Consolidated Total Borrowings" means, at any time, the aggregate of the amount of Moneys Borrowed of the Issuer and its Subsidiaries determined on a consistent basis (and determined in accordance with IFRS) and eliminating inter-company items and (to the extent not otherwise required by IFRS) items arising under netting arrangements which are subject to contractual rights of set-off.
For the purposes of this definition:
"Gross Tangible Assets" has the meaning given to it in Condition 10;
"Group" has the meaning given to it in Condition 10;
"IFRS" has the meaning given to it in Condition 10;
"IFRS 7" has the meaning given to it in Condition 10;
"IFRS 9" has the meaning given to it in Condition 10;
"Moneys Borrowed" has the meaning given to it in Condition 10;
"Rolling Twelve Months" means a period of twelve consecutive calendar months treated as a single accounting period;
"Semi-Annual Date" means the last day of the first six-month period of each financial year of the Issuer;
"Subsidiary" has the meaning given to it in Condition 10; and
"Year-End Date" means the last day of each financial year of the Issuer.
(a) Interest on Fixed Rate Notes: Each Fixed Rate Note bears interest on its outstanding nominal amount from the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest, such interest being payable in arrear on each Interest Payment Date. The amount of interest payable shall be determined in accordance with Condition 5(h).
(1) Screen Rate Determination (Term Rate) – If Screen Rate Determination – Applicable (Term Rate) is specified hereon as the manner in which the Rate of Interest is to be determined:
(expressed as a percentage rate per annum) for the Reference Rate which appears or appear, as the case may be, on the Relevant Screen Page as at either 11.00 a.m. (Brussels time), in the case of EURIBOR, or the Relevant Time specified hereon in the Relevant Financial Centre specified hereon, in the case of a Reference Rate other than EURIBOR, on the Interest Determination Date in question as determined by the Calculation Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Calculation Agent for the purpose of determining the arithmetic mean of such offered quotations.
(2) Screen Rate Determination (Overnight Rate) – If Screen Rate Determination – Applicable (Overnight Rate) is specified hereon as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Accrual Period will be the rate of return of a daily compounded interest investment, as calculated by the Calculation Agent on the Interest Determination Date as follows, with the resulting percentage rounded if necessary to the fifth decimal place (with 0.000005 being rounded upwards):
$$
\left[\prod_{i=1}^{d_0}\left(1+\frac{\text{SONIA}_{i\text{-plBD}}\times n_i}{365}\right)\right.\text{-}1\right]\times\frac{365}{d}
$$
where for the purposes of this Condition 5(iii)(2):
"d" is the number of calendar days in the relevant Interest Accrual Period;
"do" is the number of London Banking Days in the relevant Interest Accrual Period;
"i" is a series of whole numbers from one to do, each representing the relevant London Banking Day in chronological order from, and including, the first London Business Day in the relevant Interest Accrual Period;
"London Banking Day" or "LBD" means any day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets are open for general business and to settle payments in London;
"ni", for any London Banking Day "i", means the number of calendar days from and including such London Banking Day "i" up to but excluding the following London Banking Day;
"Observation Look-back" means the number of days specified as such hereon;
"p" means, in respect of any Interest Accrual Period, the number of London Banking Days included in the Observation Look-back specified in the applicable Final Terms (or, if no such number is specified, five London Banking Days);
"SONIA" means, in respect of any London Banking Day, a reference rate equal to the daily SONIA rate for such London Banking Day as provided by the administrator of SONIA to authorised distributors and as then published on the Relevant Screen Page or, if the Relevant Screen Page is unavailable, as otherwise published by such authorised distributors (on the London Banking Day immediately following such London Banking Day), provided that:
preceding Interest Determination Date, the initial Rate of Interest which would have been applicable to such Notes for the first Interest Accrual Period had the Notes been in issue for a period equal in duration to the scheduled first Interest Accrual Period but ending on (and excluding) the Interest Commencement Date; and
"SONIAi-pLBD" means, in respect of any London Business Day falling in the relevant Interest Accrual Period, the SONIA reference rate for the London Business Day falling "p" London Business Days prior to the relevant London Business Day "i".
If the Issuer determines that a Benchmark Event occurs in relation to an Original Reference Rate when any Rate of Interest (or any component part thereof) remains to be determined by reference to such Original Reference Rate, the Issuer shall use its reasonable endeavours to appoint an Independent Adviser, as soon as reasonably practicable, to determine a Successor Rate or, failing which, an Alternative Rate (in accordance with Condition 5(c)(ii)), and, in either case, an Adjustment Spread and any Benchmark Amendments (in accordance with Condition 5(c)(iv)). In making such determination, the Independent Adviser appointed pursuant to this Condition 5(c) shall act in good faith and in a commercially reasonable manner as an expert. In the absence of bad faith or fraud, the Independent Adviser shall have no liability whatsoever to the Issuer, the Trustee, the Paying Agents, the Noteholders or the Couponholders for any determination made by it, pursuant to this Condition 5(c).
If (x) the Issuer is unable to appoint an Independent Adviser; or (y) the Independent Adviser appointed by it fails to determine a Successor Rate or, failing which, an Alternative Rate in accordance with this Condition 5(c)(i) prior to the relevant Interest Determination Date, the Rate of Interest applicable to the next succeeding Interest Accrual Period shall be equal to the Rate of Interest last determined in relation to the Notes in respect of the immediately preceding Interest Accrual Period. If there has not been a first Interest Payment Date, the Rate of Interest shall be the initial Rate of Interest. Where a different Margin or Maximum or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period, the Margin or Maximum or Minimum Rate of Interest relating to the relevant Interest Accrual Period shall be substituted in place of the Margin or Maximum or Minimum Rate of Interest relating to that last preceding Interest Accrual Period. For the avoidance of doubt, this paragraph shall apply to the relevant next succeeding Interest Accrual Period only and any subsequent Interest Accrual Periods are subject to the subsequent operation of, and to adjustment as provided in, the first paragraph of this Condition 5(c)(i).
If the Independent Adviser determines that:
The Adjustment Spread (or the formula or methodology for determining the Adjustment Spread) shall be applied to the Successor Rate or the Alternative Rate (as the case may be). If the Independent Adviser is unable to determine the quantum of, or a formula or methodology for determining, such Adjustment Spread, then the Successor Rate or Alternative Rate (as the case may be) will apply without an Adjustment Spread.
If any Successor Rate or Alternative Rate and, in either case, the applicable Adjustment Spread is determined in accordance with this Condition 5(c) and the Independent Adviser determines (A) that amendments to these Conditions, the Trust Deed and/or the Agency Agreement are necessary to ensure the proper operation of such Successor Rate or Alternative Rate and/or (in either case) the applicable Adjustment Spread (such amendments, the "Benchmark Amendments") and (B) the terms of the Benchmark Amendments, then the Issuer shall, subject to giving notice thereof in accordance with Condition 5(c)(v), without any requirement for the consent or approval of Noteholders or Couponholders, vary these Conditions, the Trust Deed and/or the Agency Agreement to give effect to such Benchmark Amendments with effect from the date specified in such notice.
At the request of the Issuer, but subject to receipt by the Trustee of a certificate signed by two directors of the Issuer pursuant to Condition 5(c)(v), the Trustee shall (at the expense of the Issuer), without any requirement for the consent or approval of the Noteholders or Couponholders, be obliged to concur with the Issuer in effecting any Benchmark Amendments (including, inter alia, by the execution of a deed supplemental to or amending the Trust Deed or the Agency Agreement) and the Trustee shall not be liable to any party for any consequences thereof, notwithstanding any provision of this Condition 5(c) to the contrary, the Trustee shall not be obliged so to concur if in the opinion of the Trustee doing so would impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce or amend the protective provisions afforded to the Trustee in these Conditions or the Trust Deed or Agency Agreement (including, for the avoidance of doubt, any supplemental trust deed or supplemental agency agreement) in any way.
In connection with any such variation in accordance with this Condition 5(c)(iv), the Issuer shall comply with the rules of any stock exchange on which the Notes are for the time being listed or admitted to trading.
Any Successor Rate, Alternative Rate or Adjustment Spread and the specific terms of any Benchmark Amendments determined under this Condition 5(c) will be notified promptly by the Issuer to the Trustee, the Calculation Agent, the Paying Agents and, in accordance with Condition 16, the Noteholders. Such notice shall be irrevocable and shall specify the effective date of the Benchmark Amendments, if any.
No later than notifying the Trustee of the same, the Issuer shall deliver to the Trustee a certificate signed by two directors of the Issuer:
The Trustee shall be entitled to rely on such certificate (without liability to any person) as sufficient evidence thereof. The Successor Rate or Alternative Rate and the Adjustment Spread and the Benchmark Amendments (if any) specified in such certificate will (in the absence of manifest error or bad faith in the determination of the Successor Rate or Alternative Rate and the Adjustment Spread and the Benchmark Amendments (if any) and without prejudice to the Trustee's ability to rely on such certificate as aforesaid) be binding on the Issuer, the Trustee, the Calculation Agent, the Paying Agents and the Noteholders.
Without prejudice to the obligations of the Issuer under Condition 5(c)(i), (ii), (iii) and (iv), the Original Reference Rate and the fallback provisions provided for in Condition 5(b)(iii) will continue to apply unless and until the Issuer determines a Benchmark Event has occurred.
As used in this Condition 5(c):
"Adjustment Spread" means either (a) a spread (which may be positive, negative or zero) or (b) a formula or methodology for calculating a spread, in each case to be applied to the Successor Rate or the Alternative Rate (as the case may be) and is the spread, formula or methodology which:
"Alternative Rate" means an alternative benchmark or screen rate which the Independent Adviser determines in accordance with Condition 5(c)(ii) is customarily applied in international debt capital markets transactions for the purposes of determining rates of interest (or the relevant component part thereof) in the same Specified Currency as the Notes.
"Benchmark Amendments" has the meaning given to it in Condition 5(c)(iv).
"Benchmark Event" means:
(3) a public statement by the supervisor of the administrator of the Original Reference Rate that the Original Reference Rate has been or will be permanently or indefinitely discontinued; or
(4) a public statement by the supervisor of the administrator of the Original Reference Rate as a consequence of which the Original Reference Rate will be prohibited from being used either generally or in respect of the Notes; or
provided that, in the case of sub-paragraphs (2), (3) and (4), the Benchmark Event shall occur on the date of the cessation of publication of the Original Reference Rate, the discontinuation of the Original Reference Rate or the prohibition of use of the Original Reference Rate, as the case may be, and not the date of the relevant public statement.
The occurrence of a Benchmark Event shall be determined by the Issuer and promptly notified to the Trustee, the Calculation Agent and the Paying Agents. For the avoidance of doubt, neither the Trustee, the Calculation Agent nor the Paying Agents shall have any responsibility for making such determination.
"Independent Adviser" means an independent financial institution of international repute or an independent financial adviser with appropriate expertise appointed by the Issuer under Condition 5(c)(i).
"Original Reference Rate" means the originally-specified benchmark or screen rate (as applicable) used to determine the Rate of Interest (or any component part thereof) on the Notes.
"Relevant Nominating Body" means, in respect of a benchmark or screen rate (as applicable):
"Successor Rate" means a successor to or replacement of the Original Reference Rate which is formally recommended by any Relevant Nominating Body.
5(b)(ii), the Interest Amounts and the Interest Payment Date so published may subsequently be amended (or appropriate alternative arrangements made with the consent of the Trustee by way of adjustment) without notice in the event of an extension or shortening of the Interest Period. If the Notes become due and payable under Condition 10, the accrued interest and the Rate of Interest payable in respect of the Notes shall nevertheless continue to be calculated as previously in accordance with this Condition but no publication of the Rate of Interest or the Interest Amount so calculated need be made unless the Trustee otherwise requires. The determination of any rate or amount, the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties.
"Business Day" means:
"Day Count Fraction" means, in respect of the calculation of an amount of interest on any Note for any period of time (from and including the first day of such period to but excluding the last) (whether or not constituting an Interest Period or an Interest Accrual Period, the "Calculation Period"):
(v) if "30/360", "360/360" or "Bond Basis" is specified hereon, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:
Day Count Fraction = [360 x (Y2 –Y1)] + [30 x (M2 – M1)] + (D2 – D1) 360
where:
"Y1" is the year, expressed as a number, in which the first day of the Calculation Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
"D1" is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30;
(vi) if "30E/360" or "Eurobond Basis" is specified hereon, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:
Day Count Fraction =
$$
\frac{[360 \times (Y_2 - Y_1)] + [30 \times (M_2 - M_1)] + (D_2 - D_1)}{360}
$$
where:
"Y1" is the year, expressed as a number, in which the first day of the Calculation Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
"D1" is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31, in which case D2 will be 30;
(vii) if "30E/360 (ISDA)" is specified hereon, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:
Day Count Fraction =
$$
\frac{[360 \times (Y_2 - Y_1)] + [30 \times (M_2 - M_1)] + (D_2 - D_1)}{360}
$$
where:
"Y1" is the year, expressed as a number, in which the first day of the Calculation Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
"D1" is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30;
"Determination Period" means the period from and including a Determination Date in any year to but excluding the next Determination Date; and
"Determination Date" means the date(s) specified as such hereon or, if none is so specified, the Interest Payment Date(s).
"Euro-zone" means the region comprised of Member States of the European Union that adopt the single currency in accordance with the Treaty on the Functioning of the European Community, as amended.
"Interest Accrual Period" means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Period Date and each successive period beginning on (and including) an Interest Period Date and ending on (but excluding) the next succeeding Interest Period Date.
"Interest Commencement Date" means the Issue Date or such other date as may be specified hereon.
"Interest Determination Date" means, with respect to a Rate of Interest and Interest Accrual Period, the date specified as such hereon or, if none is so specified, (i) if the Specified Currency is Sterling, either (a) if Screen Rate Determination – Applicable (Overnight Rate) is specified hereon, the number of London Banking Days specified as the Observation Look-back hereon (or, if no such number is specified, five London Banking Days) prior to the end of such Interest Accrual Period, or (b) otherwise, the first day of such Interest Accrual Period, or (ii) if the Specified Currency is neither Sterling nor euro, the day falling two Business Days in London for the Specified Currency prior to the first day of such Interest Accrual Period, or (iii) if the Specified Currency is euro, the day falling two TARGET Business Days prior to the first day of such Interest Accrual Period.
"Interest Period" means the period beginning on and including the Interest Commencement Date and ending on but excluding the first Interest Payment Date and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date.
"Interest Period Date" means each Interest Payment Date unless otherwise specified hereon.
"ISDA Definitions" means the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc.
"Rate of Interest" means the rate of interest payable from time to time in respect of the Notes and that is either specified or calculated in accordance with the provisions hereon.
"Reference Banks" means, in the case of a determination of EURIBOR, the principal Euro-zone office of four major banks in the Euro-zone inter-bank market and, in the case of a determination of any other Reference Rate, the principal Relevant Financial Centre's office of four major banks in the Relevant Financial Centre's inter-bank market, in each case selected by the Issuer on the advice of an investment bank of international repute or as specified hereon.
"Reference Rate" means either EURIBOR, PIBOR, WIBOR, PRIBOR, ROBOR, BUBOR, SONIA, TIIE or STIBOR, as specified hereon.
"Relevant Financial Centre" has the meaning specified hereon.
"Relevant Screen Page" means such page, section, caption, column or other part of a particular information service as may be specified hereon.
"Relevant Time" has the meaning specified hereon.
"Specified Currency" means the currency specified as such hereon or, if none is specified, the currency in which the Notes are denominated.
"TARGET System" means the Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET2) System which was launched on 19 November 2007 or any successor thereto.
(k) Calculation Agent: The Issuer shall procure that there shall at all times be one or more Calculation Agents if provision is made for them hereon and for so long as any Note is outstanding (as defined in the Trust Deed). Where more than one Calculation Agent is appointed in respect of the Notes, references in these Conditions to the Calculation Agent shall be construed as each Calculation Agent performing its respective duties under the Conditions. If the Calculation Agent is unable or unwilling to act as such or if the Calculation Agent fails duly to establish the Rate of Interest for an Interest Accrual Period or to calculate any Interest Amount, Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount, as the case may be, or to comply with any other requirement, the Issuer shall (with the prior approval of the Trustee) appoint a leading bank or financial institution engaged in the interbank market (or, if appropriate, money, swap or over-the-counter index options market) that is most closely connected with the calculation or determination to be made by the Calculation Agent (acting through its principal London office or any other office actively involved in such market) to act as such in its place. The Calculation Agent may not resign its duties without a successor having been appointed as aforesaid.
Unless previously redeemed or purchased and cancelled as provided below, each Note shall be finally redeemed on the Maturity Date specified hereon at its Final Redemption Amount (which, unless otherwise provided hereon, is its nominal amount).
Where such calculation is to be made for a period of less than one year, it shall be made on the basis of the Day Count Fraction shown hereon.
or regulations of the United Kingdom or any political subdivision or authority thereof or therein having power to tax, including any treaty to which the United Kingdom is a party, or any change in the application or interpretation of such laws or regulations, including a decision of any court or tribunal and any generally published pronouncements by any tax authority, which change, amendment or pronouncement becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Notes, and (ii) such obligation cannot be avoided by the Issuer (or the relevant Guarantor(s), as the case may be) taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer (or the relevant Guarantor(s), as the case may be) would be obliged to pay such additional amounts were a payment in respect of the Notes (or the Guarantee, as the case may be) then due. Prior to the publication of any notice of redemption pursuant to this Condition 6(c), the Issuer shall deliver to the Trustee a certificate signed by two directors of the Issuer stating that the obligation referred to in (i) above cannot be avoided by the Issuer (or the relevant Guarantor(s), as the case may be) taking reasonable measures available to it and the Trustee shall be entitled to accept such certificate as sufficient evidence of the satisfaction of the conditions precedent set out in (i) and (ii) above, in which event it shall be conclusive and binding on Noteholders and Couponholders.
(d) Redemption at the Option of the Issuer: If Call Option is specified hereon, the Issuer may, on giving not less than 15 nor more than 30 days' irrevocable notice to the Noteholders (or such other notice period as may be specified hereon), redeem all or, if so provided, some of the Notes on any Optional Redemption Date. Any such redemption of Notes shall be at their Optional Redemption Amount together with interest accrued to the date fixed for redemption. Any such redemption or exercise must relate to Notes of a nominal amount at least equal to the Minimum Redemption Amount to be redeemed specified hereon and no greater than the Maximum Redemption Amount to be redeemed specified hereon.
If Make-Whole Redemption is specified hereon, the Issuer may, on giving not less than 15 nor more than 30 days' irrevocable (other than in the circumstances set out in the next sentence) notice to the Noteholders (or such other notice period as may be specified hereon), redeem all or, if so provided, some of the Notes at any time or from time to time (i) where no particular period during which Make-Whole Redemption is applicable is specified, at any time prior to their Maturity Date, or (ii) where Make-Whole Redemption is specified as only being applicable for a certain period, during such period, in each case on the date for redemption specified in such notice (the "Make-Whole Redemption Date") at the Make-Whole Redemption Amount. Any such notice of redemption may, at the Issuer's discretion, be subject to one or more conditions precedent, in which case such notice shall state that, in the Issuer's discretion, the Make-Whole Redemption Date may be delayed by the Issuer until such time following which any or all such conditions shall be satisfied (or waived by the Issuer in its sole discretion), or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied (or waived by the Issuer in its sole discretion) by the Make-Whole Redemption Date, or by the Make-Whole Redemption Date as so delayed. The Make-Whole Redemption Amount shall be calculated by the Calculation Agent (or such other person as may be agreed between the Issuer and the Calculation Agent from time to time, in which case reference to Calculation Agent in this Condition shall be read as references to such person) and shall be the greater of: (x) 100% of the principal amount of the Notes as at the Make-Whole Redemption Date to be so redeemed and (y) the sum of the then present values of the remaining scheduled payments of principal and interest on such Notes to their Maturity Date (or, if Call Option is specified hereon, the next Optional Redemption Date on which the Issuer may redeem such Notes at their nominal amount) (not including any interest accrued on the Notes to, but excluding, the relevant Make-Whole Redemption Date) each such remaining scheduled payment of principal and interest being discounted to the relevant Make-Whole Redemption Date on an annual basis at the Reference Bond Rate plus the Make-Whole Redemption Margin, if any, specified hereon, plus, in each case, any interest accrued on such Notes to, but excluding, the Make-Whole Redemption Date.
All Notes in respect of which any such notice is given (and not rescinded in accordance with this Condition) shall be redeemed on the later of: (i) the date specified in such notice in accordance with this Condition or (ii) the Make-Whole Redemption Date so delayed in accordance with this Condition.
In the case of a partial redemption the notice to Noteholders shall also contain the certificate numbers of the Bearer Notes, or in the case of Registered Notes shall specify the nominal amount of Registered Notes drawn and the holder(s) of such Registered Notes, to be redeemed, which shall have been drawn in such place as the Trustee may approve and in such manner as it deems appropriate, subject to compliance with any applicable laws and stock exchange or other relevant authority requirements.
In this Condition:
"CA Selected Bond" means a government security or securities selected by the Calculation Agent as having an actual maturity comparable with the remaining term of the relevant Notes, that would be utilised, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities denominated in the Specified Currency and of a comparable maturity to the remaining term of the relevant Notes;
"Determination Date" means the date which is the fifth Business Day prior to the relevant Make-Whole Redemption Date.
"Make-Whole Redemption Margin" shall be as specified hereon.
"Quotation Time" shall be as specified hereon.
"Reference Bond" shall be as specified hereon or, in case of redemption in full of such bond prior to the Make-Whole Redemption Date, the CA Selected Bond.
"Reference Bond Price" means, with respect to any Make-Whole Redemption Date, (a) the arithmetic average of the Reference Government Bond Dealer Quotations for the Determination Date, after excluding the highest and lowest such Reference Government Bond Dealer Quotations, or (b) if the Calculation Agent obtains fewer than four such Reference Government Bond Dealer Quotations, the arithmetic average of all such quotations.
"Reference Bond Rate" means with respect to any Determination Date, the rate per annum equal to the annual or semi-annual yield (as the case may be) to maturity or interpolated yield to maturity (on the relevant day count basis) of the Reference Bond, assuming a price for the Reference Bond (expressed as a percentage of its nominal amount) equal to the Reference Bond Price for such Determination Date.
"Reference Government Bond Dealer" means each of five banks selected by the Issuer, or their affiliates, which are (A) primary government securities dealers, and their respective successors, or (B) market makers in pricing corporate bond issues.
"Reference Government Bond Dealer Quotations" means, with respect to each Reference Government Bond Dealer and any Determination Date, the arithmetic average, as determined by the Calculation Agent, of the bid and offered prices for the Reference Bond (expressed in each case as a percentage of its nominal amount) at the Quotation Time on the Determination Date quoted in writing to the Calculation Agent by such Reference Government Bond Dealer.
(e) Redemption at the Option of Noteholders: If Put Option is specified hereon, the Issuer shall, at the option of the holder of any Note, upon the holder of such Note giving not less than 15 nor more than 30 days' notice to the Issuer (or such other notice period as may be specified hereon), redeem such Note on the Optional Redemption Date(s) at its Optional Redemption Amount together with interest accrued to the date fixed for redemption.
To exercise such option the holder must deposit (in the case of Bearer Notes) such Note (together with all unmatured Coupons and unexchanged Talons) with any Paying Agent or (in the case of Registered Notes) the Certificate representing such Note(s) with the Registrar or any Transfer Agent at its specified office, together with a duly completed option exercise notice ("Exercise Notice") in the form obtainable from any Paying Agent, the Registrar or any Transfer Agent (as applicable) within the notice period. No Note or Certificate so deposited and option exercised may be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer.
(f) Redemption Following Change of Control: If Change of Control Put is specified hereon and a Change of Control Put Event occurs, the holder of any such Note will have the option (a "Change of Control Put Option") (unless prior to the giving of the relevant Change of Control Put Event Notice (as defined below) the Issuer has given notice of redemption under Condition 6(c) or 6(d) above) to require the Issuer to redeem or, at the Issuer's option, purchase (or procure the purchase of) that Note on the Change of Control Put Date (as defined below) at 101% of its nominal amount together with interest accrued to (but excluding) the Change of Control Put Date.
Promptly upon the Issuer becoming aware that a Change of Control Put Event has occurred the Issuer shall, and the Trustee, if so requested by the holders of at least one-fifth in principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of the Noteholders, shall, (subject in each case to the Trustee being indemnified and/or secured and/or prefunded to its satisfaction) give notice (a "Change of Control Put Event Notice") to the Noteholders in accordance with Condition 16 specifying the nature of the Change of Control Put Event and the procedure for exercising the Change of Control Put Option.
To exercise the Change of Control Put Option, the holder of a Bearer Note must deliver such Note to the specified office of any Paying Agent at any time during normal business hours of such Paying Agent falling within the period (the "Change of Control Put Period") of 30 days after a Change of Control Put Event Notice is given, accompanied by a duly signed and completed notice of exercise in the form (for the time being current) obtainable from the specified office of any Paying Agent (a "Change of Control Put Notice"). The Note should be delivered together with all Coupons appertaining thereto maturing after the date which is seven days after the expiration of the Change of Control Put Period (the "Change of Control Put Date"), failing which the Paying Agent will require payment from or on behalf of the Noteholder of an amount equal to the face value of any missing such Coupon. Any amount so paid will be reimbursed to the Noteholder against presentation and surrender of the relevant missing Coupon (or any replacement therefor issued pursuant to Condition 14) at any time after such payment, but before the expiry of the period of five years from the date on which such Coupon would have become due, but not thereafter. The Paying Agent to which such Note and Change of Control Put Notice are delivered will issue to the Noteholder concerned a non-transferable receipt in respect of the Note so delivered. Payment in respect of any Note so delivered will be made, if the holder duly specified a bank account in the Change of Control Put Notice to which payment is to be made, on the Change of Control Put Date by transfer to that bank account and, in every other case, on or after the Change of Control Put Date against presentation and surrender or (as the case may be) endorsement of such receipt at the specified office of any Paying Agent. A Change of Control Put Notice, once given, shall be irrevocable. For the purposes of these Conditions, receipts issued pursuant to this Condition 6(f) shall be treated as if they were Notes.
To exercise the Change of Control Put Option, the holder of a Registered Note must deposit the Certificate evidencing such Note(s) with the Registrar or any Transfer Agent at its specified office, together with a duly signed and completed Change of Control Put Notice obtainable from the Registrar or any Transfer Agent within the Change of Control Put Period. No Certificate so deposited and option so exercised may be withdrawn without the prior consent of the Issuer. Payment in respect of the Note(s) evidenced by any Certificate so deposited will be made, if the holder duly specified a bank account in the Change of Control Put Notice to which payment is to be made, on the Change of Control Put Date by transfer to that bank account and, in every other case, by cheque drawn on a Bank and mailed to the holder (or to the first named of joint holders) of such Note at its address appearing in the Register.
The Issuer shall redeem or purchase (or procure the purchase of) the relevant Notes on the Change of Control Put Date unless previously redeemed (or purchased) and cancelled.
If 85% or more in principal amount of the Notes then outstanding have been redeemed or purchased pursuant to this Condition 6(f), the Issuer may, on giving not less than 30 nor more than 60 days' notice to the Noteholders (such notice being given within 30 days after the Change of Control Put Date), redeem or purchase (or procure the purchase of), at its option, all but not some only of the remaining outstanding Notes at 101% of their principal amount, together with interest accrued to (but excluding) the date fixed for such redemption or purchase.
The Trustee is under no obligation to ascertain whether a Change of Control Put Event or Change of Control or any event which could lead to the occurrence of or could constitute a Change of Control Put Event or Change of Control has occurred, or to seek any confirmation from any Rating Agency pursuant to paragraph (ii) or (iii) above or pursuant to the definition of Negative Rating Event below, and, until it shall have notice pursuant to the Trust Deed to the contrary, the Trustee may assume that no Change of Control Put Event or Change of Control or other such event has occurred.
In this Condition 6(f):
"Change of Control Period" means the period commencing on the Relevant Announcement Date and ending 90 days after the Change of Control or, where a Rating Agency has publicly announced that the Notes are under consideration for rating review or, as the case may be, rating (such public announcement being within the period ending 90 days after the Change of Control), the later of (i) such 90th day after the Change of Control and (ii) the date falling 60 days after such public announcement;
a "Negative Rating Event" shall be deemed to have occurred if at such time as there is no rating assigned to the Notes by a Rating Agency (i) the Issuer does not, either prior to, or not later than 21 days after, the occurrence of the Change of Control seek, and thereafter throughout the Change of Control Period use all reasonable endeavours to obtain, a rating of the Notes, or any other unsecured and unsubordinated debt of the Issuer, from a Rating Agency or (ii) if the Issuer does so seek and use such endeavours, it is unable to obtain such a rating of at least the Negative Rating Event Specified Rating specified hereon (or, where a rating was ascribed to the Notes on the Issue Date (the "Initial Rating"), a rating that is one rating category lower than the Initial Rating) by the end of the Change of Control Period from a Rating Agency;
"Rating Agency" means Moody's Investors Service Limited ("Moody's"), Fitch Ratings Ltd. ("Fitch") or Standard & Poor's Credit Market Services Europe Limited ("S&P") or any of their respective successors or any rating agency (a "Substitute Rating Agency") substituted for any of them by the Issuer from time to time with the prior written approval of the Trustee; and
"Relevant Potential Change of Control Announcement" means any public announcement or statement by the Issuer, any actual or potential bidder or any adviser acting on behalf of any actual or potential bidder relating to any potential Change of Control where, within 180 days following the date of such announcement or statement, a Change of Control occurs.
If the rating designations employed by any of Moody's, Fitch or S&P are changed from those which are described in the definition of "Negative Rating Event" above, or if a rating is procured from a Substitute Rating Agency, the Issuer shall determine the rating designations of Moody's, Fitch or S&P or such Substitute Rating Agency (as appropriate) as are most equivalent to the prior rating designations of Moody's, Fitch or S&P and this Condition 6(f) shall be construed accordingly.
representing such Notes to the Registrar and, in each case, if so surrendered, shall, together with all Notes redeemed by the Issuer, be cancelled forthwith (together with all unmatured Coupons and unexchanged Talons attached thereto or surrendered therewith). Any Notes so surrendered for cancellation may not be reissued or resold and the obligations of the Issuer in respect of any such Notes shall be discharged. Notes held by or on behalf of the Issuer, the Guarantors or any of its or their respective Subsidiaries shall not entitle the holder to vote at any meeting of Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of Noteholders or for the purposes of Condition 10.
(a) Bearer Notes: Payments of principal and interest in respect of Bearer Notes shall, subject as mentioned below, be made against presentation and surrender of the relevant Notes (in the case of all payments of principal and, in the case of interest, as specified in Condition 7(f)(v)) or Coupons (in the case of interest, save as specified in Condition 7(f)(ii)), as the case may be, at the specified office of any Paying Agent outside the United States by a cheque payable in the relevant currency drawn on, or, at the option of the holder, by transfer to an account denominated in such currency with, a Bank. "Bank" means a bank in the principal financial centre for such currency or, in the case of euro, in a city in which banks have access to the TARGET System.
Issuer or the relevant Guarantor shall be acquitted and discharged of so much money as is represented by any such withholding or deduction as if such sum had actually been paid to the Noteholder or Couponholder.
(e) Appointment of Agents: The Issuing and Paying Agent, the Paying Agents, the Registrar, the Transfer Agents and the Calculation Agent initially appointed by the Issuer and the Guarantors and their respective specified offices are listed below. The Issuing and Paying Agent, the Paying Agents, the Registrar, the Transfer Agents and the Calculation Agent act solely as agents of the Issuer and the Guarantors and do not assume any obligation or relationship of agency or trust for or with any Noteholder or Couponholder. The Issuer and the Guarantors reserve the right at any time with the approval of the Trustee to vary or terminate the appointment of the Issuing and Paying Agent, any other Paying Agent, the Registrar, any Transfer Agent or the Calculation Agent(s) and to appoint additional or other Paying Agents or Transfer Agents, provided that the Issuer and the Guarantors shall at all times maintain (i) an Issuing and Paying Agent, (ii) a Registrar in relation to Registered Notes, (iii) a Transfer Agent in relation to Registered Notes, (iv) one or more Calculation Agent(s) where the Conditions so require, (v) Paying Agents having specified offices in at least one major European city, and (vi) such other agents as may be required by any other stock exchange on which the Notes may be listed in each case, as approved by the Trustee.
In addition, the Issuer and the Guarantors shall forthwith appoint a Paying Agent in New York City in respect of any Bearer Notes denominated in U.S. dollars in the circumstances described in paragraph (c) above.
Notice of any such change or any change of any specified office shall promptly be given to the Noteholders.
only bears interest after its Maturity Date shall be payable on redemption of such Note against presentation of the relevant Note or Certificate representing it, as the case may be.
All payments of principal and interest by or on behalf of the Issuer or any Guarantor in respect of the Notes and the Coupons shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the United Kingdom or any political subdivision or authority thereof or therein having power to tax unless such withholding or deduction is required by law. In that event, except to the extent that the withholding or deduction is made in respect of FATCA, or any agreement entered into pursuant to FATCA, the Issuer or, as the case may be, the Guarantors shall pay such additional amounts as shall result in the receipt by the Noteholders and Couponholders of such amounts as would have been received by them had no such withholding or deduction been required, except that no such additional amounts shall be payable with respect to anything done (including any withholding or deduction made) under or pursuant to FATCA or with respect to any Note or Coupon:
As used in these Conditions, "Relevant Date" in respect of any Note or Coupon means the date on which payment in respect of it first becomes due or (if any amount of the money payable is improperly withheld or refused) the date on which payment in full of the amount outstanding is made or (if earlier) the date seven days after that on which notice is duly given to the Noteholders that, upon further presentation of the Note (or relative Certificate) or Coupon being made in accordance with the Conditions, such payment will be made, provided that payment is in fact made upon such presentation. References in these Conditions to (i) "principal" shall be deemed to include any premium payable in respect of the Notes, all Final Redemption Amounts, Early Redemption Amounts, Optional Redemption Amounts, Amortised Face Amounts and all other amounts in the nature of principal payable pursuant to Condition 6 or any amendment or supplement to it, (ii) "interest" shall be deemed to include all Interest Amounts and all other amounts payable pursuant to Condition 5 or any amendment or supplement to it and (iii) "principal" and/or "interest" shall be deemed to include any additional amounts that may be payable under this Condition or any undertaking given in addition to or in substitution for it under the Trust Deed. For the avoidance of doubt, any withholding or deduction made in respect of any agreement entered into pursuant to FATCA shall be treated as a withholding or deduction required by law.
Claims against the Issuer or any Guarantor for payment in respect of the Notes and Coupons (which, for this purpose, shall not include Talons) and the Guarantee shall be prescribed and become void unless made within 10 years (in the case of principal) or five years (in the case of interest) from the appropriate Relevant Date in respect of them.
If any of the following events (each an "Event of Default") occurs, the Trustee at its discretion may, and if so directed by the holders of at least one-fifth in nominal amount of the Notes then outstanding or by an Extraordinary Resolution of the Noteholders shall, subject to being indemnified and/or secured and/or prefunded to its satisfaction (but, in the case of the happening of any of the events mentioned in paragraph (b) below and, in relation to a Material Subsidiary, any of the events mentioned in paragraphs (c) to (i) inclusive below, only if the Trustee shall have certified in writing that such event is, in its opinion, materially prejudicial to the interests of the Noteholders), give notice to the Issuer that the Notes are, and they shall immediately become, due and payable at their Early Redemption Amount together (if applicable) with accrued interest:
(c) any Moneys Borrowed owing by the Issuer or any Guarantor or any Material Subsidiary is validly declared to be due and payable prior to the date on which the same would otherwise become due and payable by reason of an event of default (howsoever described) in relation thereto or the Issuer or any Guarantor or Material Subsidiary defaults in the repayment of any Moneys Borrowed at the maturity thereof as extended by any applicable grace period (or in the case of any Moneys Borrowed payable on demand, within seven days of such demand) or if any guarantee or indemnity in respect of Moneys Borrowed of any party given by the Issuer or any Guarantor or any Material Subsidiary shall not be paid when due and called upon (as extended by any applicable grace period), provided that the aggregate amount of the relevant Moneys Borrowed, guarantees and indemnities in respect of which one of the events mentioned in this paragraph (c) has occurred exceeds £5,000,000 (or its equivalent in any other currency or currencies as at the date the same became due and payable or the relevant event of default occurs or such payment is not made) and, in any such case, the liability of the Issuer, Guarantor or Material Subsidiary is not being contested in good faith;
(d) an administrator is appointed in relation to the Issuer or any Guarantor or any Material Subsidiary or a final order is made or an effective resolution is passed for the windingup or dissolution of the Issuer or any Guarantor or any Material Subsidiary or other analogous bankruptcy or insolvency proceedings and, where possible, is not discharged or stayed within a period of 30 days (in each case except for the purposes of and followed by a reconstruction, amalgamation, reorganisation, consolidation or voluntary winding-up either (i) on terms previously approved by the Trustee in writing or by an Extraordinary Resolution of the Noteholders or (ii) in the case of a Material Subsidiary (other than a Guarantor), the result of which will be that all or substantially all of the Material Subsidiary's assets and undertaking will be transferred to or otherwise be vested in another solvent entity within the Group which is or thereupon becomes a Material Subsidiary. If any two directors of such transferee entity certify that, in their opinion, such entity is solvent, the Trustee shall be entitled to rely on such certification without further investigation or liability);
(k) any event occurs that under the laws of any relevant jurisdiction has an analogous effect to any of the events referred to in paragraphs (e), (f), (g) or (h) above.
In this Condition 10:
"Consolidated EBITDA" means, in respect of any period, the consolidated profit of the Group and the profits of any joint venture and associates of the Group for that period:
all as determined in accordance with IFRS
"Gross Tangible Assets" means, in relation to the Issuer or any Subsidiary of the Issuer or grouping of the foregoing referred to in the Conditions, the total of the fixed and current assets of such entity or grouping, but excluding:
as determined in accordance with IFRS.
"Group" means the Issuer and its Subsidiaries for the time being.
"IFRS" means international accounting standards within the meaning of Regulation 1606/2002 on the Application of International Accounting Standards as applied by the Issuer in connection with the preparation of its annual audited financial statements for the financial years ended 31 December 2020 and 31 December 2019.
"IFRS 7" means International Financial Reporting Standard 7 (Financial Instruments: Disclosures), as in force at 31 December 2020 and as applied by the Issuer in connection with the preparation of its annual audited financial statements for the financial year ended 31 December 2020.
"IFRS 9" means International Financial Reporting Standard 9 (Financial Instruments), as in force at 31 December 2020 and as applied by the Issuer in connection with the preparation of its annual audited financial statements for the financial year ended 31 December 2020.
A company is a "Subsidiary" of another company, if that other company:
or if it is a Subsidiary of a company that is itself a Subsidiary of that other company.
"Lease" means any lease entered into by any member of the Group as lessee which would be classified as a "lease" under IFRS.
"Material Subsidiary" means each Subsidiary of the Issuer from time to time, whether owned at the date of the issuance of Notes or acquired subsequently:
In the case of such a Subsidiary which itself has Subsidiaries (the "Relevant Group"), the calculation shall be made by comparing the Gross Tangible Assets or consolidated profit (calculated in the same manner as Consolidated EBITDA is calculated), as the case may be, of the Relevant Group to the Gross Tangible Assets or Consolidated EBITDA of the Group.
A certificate of two directors or a director and a secretary of the Issuer or any Guarantor (as the case may be) listing their respective Subsidiaries and stating that in their opinion a Subsidiary is or is not or was or was not at any particular time or throughout any particular period a Material Subsidiary shall, in the absence of manifest error, be conclusive and binding on all parties.
"Moneys Borrowed" of any person means, without duplication:
(a) Meetings of Noteholders: The Trust Deed contains provisions for convening meetings of Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution (as defined in the Trust Deed) of a modification of any of these Conditions or any provisions of the Trust Deed. Such a meeting may be convened by Noteholders holding not less than 10% in nominal amount of the Notes for the time being outstanding. The quorum for any meeting convened to consider an Extraordinary Resolution shall be two or more persons holding or representing a clear majority in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting two or more persons being or representing Noteholders whatever the nominal amount of the Notes held or represented, unless the business of such meeting includes consideration of proposals, inter alia, (i) to amend the dates of maturity or redemption of the Notes or any date for payment of interest or Interest Amounts on the Notes, (ii) to reduce or cancel the nominal amount of, or any premium payable on redemption of, the Notes, (iii) to reduce the rate or rates of interest in respect of the Notes or to vary the method or basis of calculating the rate or rates or amount of interest or the basis for calculating any Interest Amount in respect of the Notes, (iv) if a Minimum and/or a Maximum Rate of Interest or Redemption Amount is shown hereon, to reduce any such Minimum and/or Maximum, (v) to vary any method of, or basis for, calculating the Final Redemption Amount, the Early Redemption Amount or the Optional Redemption Amount, including the method of calculating the Amortised Face Amount, (vi) to vary the currency or currencies of payment or denomination of the Notes, (vii) to modify or cancel the Guarantee (other than in circumstances described in Condition 11(c) below), or (viii) to modify the provisions concerning the quorum required at any meeting of Noteholders or the majority required to pass the Extraordinary Resolution, in which case the necessary quorum shall be two or more persons holding or representing not less than 75%, or at any adjourned meeting not less than 25%, in nominal amount of the Notes for the time being outstanding. Any Extraordinary Resolution duly passed shall be binding on Noteholders (whether or not they were present at the meeting at which such resolution was passed) and on all Couponholders.
The Trust Deed provides that a resolution in writing signed by or on behalf of the holders of not less than 75% in nominal amount of the Notes outstanding shall for all purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of Noteholders duly convened and held. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.
(b) Modification of the Trust Deed: The Trustee may agree, without the consent of the Noteholders or Couponholders, to (i) any modification of any of the provisions of the Trust Deed that is, in its opinion, of a formal, minor or technical nature or is made to correct a manifest error, and (ii) any other modification (except as mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of the provisions of the Trust Deed that is in the opinion of the Trustee not materially prejudicial to the interests of the Noteholders. Any such modification, authorisation or waiver shall be binding on the Noteholders and the Couponholders and, if the Trustee so requires, such modification shall be notified to the Noteholders as soon as practicable.
In addition, the Trustee shall be obliged to concur with the Issuer in effecting any modifications as set out in Condition 5(c)(iv) without the consent of the Noteholders and Couponholders.
(c) Substitution: The Trust Deed contains provisions permitting the Trustee to agree, subject to such amendment of the Trust Deed and such other conditions as the Trustee may require, but without the consent of the Noteholders or the Couponholders, to the substitution of the Issuer's successor in business or any Subsidiary (as defined in the Trust Deed) of the Issuer or its successor in business in place of the Issuer, or of any previous substituted company, as principal debtor under the Trust Deed and the Notes.
The Trust Deed also contains provisions requiring the Trustee to agree, without the consent of the Noteholders or the Couponholders, to the release of a guarantor in certain circumstances. In addition the Trust Deed contains provisions requiring the Issuer to procure the accession of a new guarantor in certain circumstances. Any such release or accession will occur if there is a release of a guarantor, or the accession of a new guarantor, under the terms of the Issuer's multi-currency facilities agreement dated 18 November 2010 (as subsequently amended, restated, modified, re-financed or replaced from time to time, the "Facilities Agreement") and will take effect as soon as is reasonably practicable following such release or accession under the Facilities Agreement. The Issuer will provide to the Trustee not less than 45 days' notice of any planned change of guarantor under the Facilities Agreement before any such change is to take effect under the Facilities Agreement.
(d) Entitlement of the Trustee: In connection with the exercise of its functions (including but not limited to those referred to in this Condition) the Trustee shall have regard to the interests of the Noteholders as a class and shall not have regard to the consequences of such exercise for individual Noteholders or Couponholders and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders.
At any time after the Notes become due and payable, the Trustee may, at its discretion and without further notice, institute such proceedings against the Issuer and/or any Guarantor as it may think fit to enforce the terms of the Trust Deed, the Notes and the Coupons, but it need not take any such proceedings unless (a) it shall have been so directed by an Extraordinary Resolution or so requested in writing by Noteholders holding at least one-fifth in nominal amount of the Notes outstanding, and (b) it shall have been indemnified and/or secured and/or prefunded to its satisfaction. No Noteholder or Couponholder may proceed directly against the Issuer or any Guarantor unless the Trustee, having become bound so to proceed, fails to do so within a reasonable time and such failure is continuing.
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility. The Trustee is entitled to enter into business transactions with the Issuer, the Guarantors and any entity related to the Issuer or any Guarantor without accounting for any profit.
The Trustee may rely without liability to Noteholders or Couponholders on a report, confirmation or certificate or any advice of any accountants, financial advisers, financial institution or any other expert, whether or not addressed to it and whether their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto entered into by the Trustee or in any other manner) by reference to a monetary cap, methodology or otherwise. The Trustee may accept and shall be entitled to rely on any such report, confirmation or certificate or advice and such report, confirmation or certificate or advice shall be binding on the Issuer, the Guarantors, the Trustee and the Noteholders. However, the Trustee will have no recourse to the Issuer's auditors in respect of such certificates or reports unless the Issuer's auditors have agreed to address such certificates or reports to the Trustee.
If a Note, Certificate, Coupon or Talon is lost, stolen, mutilated, defaced or destroyed, it may be replaced, subject to applicable laws, regulations and stock exchange or other relevant authority regulations, at the specified office of the Issuing and Paying Agent in Luxembourg (in the case of Bearer Notes, Coupons or Talons) and of the Registrar (in the case of Certificates) or such other Paying Agent or Transfer Agent, as the case may be, as may from time to time be designated by the Issuer for the purpose and notice of whose designation is given to Noteholders, in each case on payment by the claimant of the fees and costs incurred in connection therewith and on such terms as to evidence, security and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed Note, Certificate, Coupon or Talon is subsequently presented for payment or, as the case may be, for exchange for further Coupons, there shall be paid to the Issuer on demand the amount payable by the Issuer in respect of such Notes, Certificates, Coupons or further Coupons) and otherwise as the Issuer may require. Mutilated or defaced Notes, Certificates, Coupons or Talons must be surrendered before replacements will be issued.
The Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue further securities either having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest on them) and so that such further issue shall be consolidated and form a single series with the outstanding securities of any series (including the Notes) or upon such terms as the Issuer may determine at the time of their issue. References in these Conditions to the Notes include (unless the context requires otherwise) any other securities issued pursuant to this Condition and forming a single series with the Notes. Any further securities forming a single series with the outstanding securities of any series (including the Notes) constituted by the Trust Deed or any deed supplemental to it shall, and any other securities may (with the consent of the Trustee), be constituted by the Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of securities of other series where the Trustee so decides.
Notices to the holders of Registered Notes shall be mailed to them at their respective addresses in the Register and deemed to have been given on the fourth weekday (being a day other than a Saturday or a Sunday) after the date of mailing. Notices to the holders of Bearer Notes shall be valid if published in a daily newspaper of general circulation in London (which is expected to be the Financial Times). If in the opinion of the Trustee any such publication is not practicable, notice shall be validly given if published in another leading daily English language newspaper with general circulation in Europe. Any such notice shall be deemed to have been given on the date of such publication or, if published more than once or on different dates, on the first date on which publication is made, as provided above.
Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the holders of Bearer Notes in accordance with this Condition.
No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act 1999.
Each Series of Notes in bearer form will be represented on issue by a temporary global note in bearer form (each a "Temporary Global Note") or a permanent global note in bearer form (each a "Permanent Global Note" (and, together with a Temporary Global Note, the "Global Notes")). Notes in registered form will be represented by registered certificates (each a "Certificate"), one Certificate being issued in respect of each Noteholder's entire holding of Registered Notes of one Series. Registered Notes issued in global form will be represented by registered global certificates ("Global Certificates"). If the Global Notes are stated in the applicable Final Terms to be issued in new global note ("NGN") form, the Global Notes will be delivered on or prior to the original issue date of the relevant Tranche (as defined in "Summary") to a common safekeeper (the "Common Safekeeper") for Euroclear Bank SA/NV ("Euroclear") and Clearstream Banking S.A. ("Clearstream, Luxembourg"). Global Notes which are not issued in NGN form ("Classic Global Notes" or "CGNs") and Global Certificates will be deposited on the issue date of the relevant Tranche with a common depositary on behalf of Euroclear and Clearstream, Luxembourg. If the Global Certificates are stated in the applicable Final Terms to be issued under the New Safekeeping Structure ("NSS"), the Global Certificates will be delivered on or prior to the original issue date of the Tranche to the Common Safekeeper. The provisions governing the exchange of interests in Global Notes for other Global Notes and definitive Notes are described in this Section.
Where the Notes issued in respect of any Tranche are in NGN form or are held under the NSS, Euroclear and Clearstream, Luxembourg will be notified by or on behalf of the Issuer whether or not such Notes are intended to be held in a manner which would allow Eurosystem eligibility. Neither depositing the Global Notes or Global Certificates (as the case may be) with the Common Safekeeper nor indicating that they are to be held in a manner which would allow Eurosystem eligibility necessarily mean that the Notes will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon satisfaction of the Eurosystem eligibility criteria.
Global Notes which are issued in CGN form and Global Certificates may be delivered on or prior to the original issue date of the Tranche to a Common Depositary (other than Global Certificates in NSS form, which shall be delivered to a Common Safekeeper).
If the Global Note is a CGN, upon the initial deposit of a Global Note with a common depositary for Euroclear and Clearstream, Luxembourg (the "Common Depositary") or registration of Registered Notes in the name of any nominee for Euroclear and Clearstream, Luxembourg and delivery of the related Global Certificate to the Common Depositary, Euroclear or Clearstream, Luxembourg will credit each subscriber with a nominal amount of Notes equal to the nominal amount thereof for which it has subscribed and paid. If the Global Note is an NGN, the nominal amount of the Notes shall be the aggregate amount from time to time entered in the records of Euroclear or Clearstream, Luxembourg. The records of such clearing system shall be conclusive evidence of the nominal amount of Notes represented by the Global Note and a statement issued by such clearing system at any time shall be conclusive evidence of the records of the relevant clearing system at that time.
Notes that are initially deposited with the Common Depositary may also be credited to the accounts of subscribers with (if indicated in the relevant Final Terms) other clearing systems through direct or indirect accounts with Euroclear and Clearstream, Luxembourg held by such other clearing systems. Conversely, Notes that are initially deposited with any other clearing system may similarly be credited to the accounts of subscribers with Euroclear, Clearstream, Luxembourg or other clearing systems.
Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or any other permitted clearing system ("Alternative Clearing System") as the holder of a Note represented by a Global Note or a Global Certificate must look solely to Euroclear, Clearstream, Luxembourg or any such Alternative Clearing System (as the case may be) for his share of each payment made by the Issuer to the bearer of such Global Note or the holder of the underlying Registered Notes, as the case may be, and in relation to all other rights arising under the Global Notes or Global Certificates, subject to and in accordance with the respective rules and procedures of Euroclear, Clearstream, Luxembourg, or such Alternative Clearing System (as the case may be). Such persons shall have no claim directly against the Issuer in respect of payments due on the Notes for so long as the Notes are represented by such Global Note or Global Certificate and such obligations of the Issuer will be discharged by payment to the bearer of such Global Note or the holder of the underlying Registered Notes, as the case may be, in respect of each amount so paid.
In certain circumstances, Investors may also hold interests in the Notes through CREST through the issuance of CDIs, representing interests in the underlying Notes. CDIs are constituted under English law and transferred through CREST and will be issued by the CREST Depository pursuant to the CREST Deed Poll. Neither the Notes nor any rights attached thereto will be issued, settled, held or transferred within the CREST system other than through the issue, settlement holding or transfer of CDIs. CDI holders will not be entitled to deal directly in the Notes and, accordingly, all dealings in the Notes will be effected through CREST in relation to the holding of CDIs.
Each Temporary Global Note will be exchangeable, free of charge to the holder, on or after its Exchange Date:
In relation to any issue of Notes which are expressed to be Temporary Global Notes exchangeable for definitive notes, such Notes shall be issued only in a principal amount which is an integral multiple of the Specified Denomination.
Each Permanent Global Note will be exchangeable, free of charge to the holder, on or after its Exchange Date in whole but not, except as provided under paragraph 3.4 below, in part for Definitive Notes if the Permanent Global Note is held on behalf of Euroclear or Clearstream, Luxembourg or an Alternative Clearing System and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or in fact does so.
In the event that a Global Note is exchanged for Definitive Notes, such Definitive Notes shall be issued in Specified Denomination(s) only. A Noteholder who holds a principal amount of less than the minimum Specified Denomination will not receive a definitive Note in respect of such holding and would need to purchase a principal amount of Notes such that it holds an amount equal to one or more Specified Denominations.
If the Final Terms state that the Notes are to be represented by a Global Certificate on issue, the following will apply in respect of transfers of Notes held in Euroclear or Clearstream, Luxembourg or an Alternative Clearing System. These provisions will not prevent the trading of interests in the Notes within a clearing system whilst they are held on behalf of such clearing system, but will limit the circumstances in which the Notes may be withdrawn from the relevant clearing system.
Transfers of the holding of Notes represented by any Global Certificate pursuant to Condition 2(b) may only be made in part:
provided that, in the case of the first transfer of part of a holding pursuant to paragraph 3.3(i) above, the Registered Holder has given the Registrar not less than 30 days' notice at its specified office of the Registered Holder's intention to effect such transfer.
If the Global Note is a CGN, on or after any due date for exchange, the holder of a Global Note may surrender such Global Note or, in the case of a partial exchange, present it for endorsement to or to the order of the Issuing and Paying Agent. In exchange for any Global Note, or the part thereof to be exchanged, the Issuer will (i) in the case of a Temporary Global Note exchangeable for a Permanent Global Note, deliver, or procure the delivery of, a Permanent Global Note in an aggregate nominal amount equal to that of the whole or that part of a Temporary Global Note that is being exchanged or, in the case of a subsequent exchange, endorse, or procure the endorsement of, a Permanent Global Note to reflect such exchange or (ii) in the case of a Global Note exchangeable for Definitive Notes, deliver, or procure the delivery of, an equal aggregate nominal amount of duly executed and authenticated Definitive Notes or if the Global Note is a NGN, the Issuer will procure that details of such exchange be entered pro rata in the records of the relevant clearing system. In this Prospectus, "Definitive Notes" means, in relation to any Global Note, the definitive Bearer Notes for which such Global Note may be exchanged (if appropriate, having attached to them all Coupons that have not already been paid on the Global Note and a Talon). Definitive Notes will be security printed in accordance with any applicable legal and stock exchange requirements in or substantially in the form set out in the Schedules to the Trust Deed. On exchange in full of each Permanent Global Note, the Issuer will, if the holder so requests, procure that it is cancelled and returned to the holder together with the relevant Definitive Notes.
"Exchange Date" means, in relation to a Temporary Global Note, the day falling after the expiry of 40 days after its issue date and, in relation to a Permanent Global Note, a day falling not less than 60 days after that on which the notice requiring exchange is given and on which banks are open for business in the city in which the specified office of the Issuing and Paying Agent is located and in the city in which the relevant clearing system is located.
Following their delivery into a clearing system, interests in Notes may be delivered, held and settled in CREST by means of the creation of CDIs representing the interests in the relevant Underlying Notes. The CDIs will be issued by the CREST Depository to CDI Holders and will be governed by English law.
The CDIs will represent indirect interests in the interest of the CREST Nominee in the Underlying Notes. Pursuant to the CREST Manual, Notes held in global form may be settled through CREST, and the CREST Depository will issue CDIs. The CDIs will be independent securities, constituted under English law which may be held and transferred through CREST.
Interests in the Underlying Notes will be credited to the CREST Nominee's account with Euroclear and the CREST Nominee will hold such interests as nominee for the CREST Depository which will issue CDIs to the relevant CREST participants.
Each CDI will be treated by the CREST Depository as if it were one Underlying Note, for the purposes of determining all rights and obligations and all amounts payable in respect thereof. The CREST Depository will pass on to CDI Holders any interest or other amounts received by it as holder of the Underlying Notes on trust for such CDI Holder. CDI Holders will also be able to receive from the CREST Depository notices of meetings of holders of Underlying Notes and other relevant notices issued by the Issuer.
Transfers of interests in Underlying Notes by a CREST participant to a participant of Euroclear and/or Clearstream, Luxembourg will be effected by cancellation of the CDIs and transfer of an interest in such Underlying Notes to the account of the relevant participant with Euroclear or Clearstream, Luxembourg.
The CDIs will have the same International Securities Identification Number ("ISIN") as the ISIN of the Underlying Notes and will not require a separate listing on the official list of the FCA.
Prospective subscribers for Notes represented by CDIs are referred to Chapter 3 of the CREST Manual which contains the form of the CREST Deed Poll entered into by the CREST Depository. The rights of the CDI Holders will be governed by the arrangements between CREST, Euroclear and/or Clearstream, Luxembourg and the Issuer including the CREST Deed Poll (in the form contained in Chapter 3 of the CREST International Manual (which forms part of the CREST Manual)) executed by the CREST Depository. These rights may be different from those of holders of Notes which are not represented by CDIs.
If issued, CDIs will be delivered, held and settled in CREST, by means of the CREST International Settlement Links Service. The settlement of the CDIs by means of the CREST International Settlement Links Service has the following consequences for CDI Holders:
CREST Manual and the CREST Rules, copies of which are available from CREST at 33 Cannon Street, London EC4M 5SB or by calling +44 (0) 207 849 0000 or from the CREST website at www.euroclear.com/site/public/EUI.
The Temporary Global Notes, Permanent Global Notes and Global Certificates contain provisions that apply to the Notes that they represent, some of which modify the effect of the terms and conditions of the Notes set out in this Prospectus. The following is a summary of certain of those provisions:
No payment falling due after the Exchange Date will be made on any Global Note unless exchange for an interest in a Permanent Global Note or for Definitive Notes is improperly withheld or refused. Payments on any Temporary Global Note issued in compliance with TEFRA D before the Exchange Date will only be made against presentation of certification as to non-U.S. beneficial ownership in the form set out in the Agency Agreement. All payments in respect of Notes represented by a Global Note in CGN form will be made against presentation for endorsement and, if no further payment falls to be made in respect of the Notes, surrender of that Global Note to or to the order of the Issuing and Paying Agent or such other Paying Agent as shall have been notified to the Noteholders for such purpose. If the Global Note is a CGN, a record of each payment so made will be endorsed on each Global Note, which endorsement will be prima facie evidence that such payment has been made in respect of the Notes. If the Global Note is a NGN, the Issuer shall procure that details of each such payment shall be entered pro rata in the records of the relevant clearing system and in the case of payments of principal, the nominal amount of the Notes recorded in the records of the relevant clearing system and represented by the Global Note will be reduced accordingly. Payments under the NGN will be made to its holder. Each payment so made will discharge the Issuer's obligations in respect thereof. Any failure to make the entries in the records of the relevant clearing system shall not affect such discharge. For the purpose of any payments made in respect of a Global Note, the relevant place of presentation shall be disregarded in the definition of "business day" set out in Condition 7(h) (Non-Business Days).
Claims against the Issuer in respect of Notes that are represented by a Permanent Global Note will become void unless it is presented for payment within a period of 10 years (in the case of principal) and five years (in the case of interest) from the appropriate Relevant Date (as defined in Condition 8).
The holder of a Permanent Global Note or of the Notes represented by a Global Certificate shall (unless such Permanent Global Note or Global Certificate represents only one Note) be treated as being two persons for the purposes of any quorum requirements of a meeting of Noteholders and, at any such meeting, the holder of a Permanent Global Note shall be treated as having one vote in respect of each integral currency unit of the Specified Currency of the Notes. (All holders of Registered Notes are entitled to one vote in respect of each integral currency unit of the Specified Currency of the Notes comprising such Noteholder's holding, whether or not represented by a Global Certificate.)
Cancellation of any Note represented by a Permanent Global Note that is required by the Conditions to be cancelled (other than upon its redemption) will be effected by reduction in the nominal amount of the relevant Permanent Global Note.
Notes represented by a Permanent Global Note may only be purchased by the Issuer or any of its subsidiaries if they are purchased together with the rights to receive all future payments of interest (if any) thereon.
Any option of the Issuer provided for in the Conditions of any Notes while such Notes are represented by a Permanent Global Note shall be exercised by the Issuer giving notice to the Noteholders within the time limits set out in and containing the information required by the Conditions, except that the notice shall not be required to contain the serial numbers of Notes drawn in the case of a partial exercise of an option and accordingly no drawing of Notes shall be required. In the event that any option of the Issuer is exercised in respect of some but not all of the Notes of any Series, the rights of accountholders with a clearing system in respect of the Notes will be governed by the standard procedures of Euroclear and/or Clearstream, Luxembourg (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a pool factor or a reduction in nominal amount, at their discretion) or any other Alternative Clearing System (as the case may be).
Any option of the Noteholders provided for in the Conditions of any Notes while such Notes are represented by a Permanent Global Note may be exercised by the holder of the Permanent Global Note giving notice to the Issuing and Paying Agent within the time limits relating to the deposit of Notes with a Paying Agent set out in the Conditions substantially in the form of the notice available from any Paying Agent, except that the notice shall not be required to contain the serial numbers of the Notes in respect of which the option has been exercised, and stating the nominal amount of Notes in respect of which the option is exercised and at the same time, where the Permanent Global Note is a CGN, presenting the Permanent Global Note to the Issuing and Paying Agent, or to a Paying Agent acting on behalf of the Issuing and Paying Agent, for notation. Where the Global Note is a NGN, the Issuer shall procure that details of such exercise shall be entered pro rata in the records of the relevant clearing system and the nominal amount of the Notes recorded in those records will be reduced accordingly.
Where the Global Note is a NGN, the Issuer shall procure that any exchange, payment, cancellation, exercise of any option or any right under the Notes, as the case may be, in addition to the circumstances set out above shall be entered in the records of the relevant clearing systems and upon any such entry being made, in respect of payments of principal, the nominal amount of the Notes represented by such Global Note shall be adjusted accordingly.
In considering the interests of Noteholders while any Global Note is held on behalf of, or Registered Notes are registered in the name of any nominee for, a clearing system, the Trustee may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to such Global Note or Registered Notes and may consider such interests as if such accountholders were the holders of the Notes represented by such Global Note or Global Certificate.
Each Global Note provides that the holder may cause such Global Note, or a portion of it, to become due and repayable in the circumstances described in Condition 10 by stating in the notice to the Issuing and Paying Agent the nominal amount of such Global Note that is becoming due and repayable.
So long as any Notes are represented by a Global Note and such Global Note is held on behalf of a clearing system, notices to the holders of Notes of that Series may be given by delivery of the relevant notice to that clearing system for communication by it to entitled accountholders in substitution for publication as required by the Conditions or by delivery of the relevant notice to the holder of the Global Note.
Each payment in respect of Registered Notes whilst in global form will be made to, or to the order of, the person whose name is entered on the Register at the close of business on the record date which shall be on the Clearing System Business Day immediately prior to the date for payment, where Clearing System Business Day means Monday to Friday inclusive except 25 December and 1 January.
While any Global Note is held on behalf of, or any Global Certificate is registered in the name of any nominee for, a clearing system, then:
manner shall be binding on all Noteholders and Couponholders, even if the relevant consent or instruction proves to be defective. As used in this paragraph, "commercially reasonable evidence" includes any certificate or other document issued by Euroclear, Clearstream, Luxembourg or any other relevant clearing system, or issued by an accountholder of them or an intermediary in a holding chain, in relation to the holding of interests in the Notes. Any such certificate or other document may comprise any form of statement or print out of electronic records provided by the relevant clearing system (including Euroclear's EUCLID or Clearstream, Luxembourg's CreationOnline system) in accordance with its usual procedures and in which the accountholder of a particular principal or nominal amount of the Notes is clearly identified together with the amount of such holding. The Issuer and/or the Guarantors shall not be liable to any person by reason of having accepted as valid or not having rejected any certificate or other document to such effect purporting to be issued by any such person and subsequently found to be forged or not authentic.
Set out below is the form of Final Terms which will be completed for each Tranche of Notes issued under the Programme with a denomination of less than €100,000 (or its equivalent in another currency) other than in respect of Notes admitted to trading only on a UK Regulated Market, or a specific segment thereof, to which only qualified investors, as defined in the UK Prospectus Regulation, have access
Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] Guaranteed by IPF Holdings Limited, International Personal Finance Investments Limited, IPF International Limited and IPF Digital Group Limited under the EUR 1,000,000,000 Euro Medium Term Note Programme
The Notes are not intended to be offered, sold or otherwise made available to, and should not be offered, sold or otherwise made available to, any retail investor in the European Economic Area (the "EEA"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); (ii) a customer within the meaning of Directive (EU) 2016/97 (the "Insurance Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (the "EU Prospectus Regulation"). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the "EU PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the EU PRIIPs Regulation.]
Solely for the purposes of [the/each] manufacturer's product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties, professional clients and retail clients, each as defined in MiFID II; and EITHER1 [(ii) all channels for distribution of the Notes are appropriate[, including investment advice, portfolio management, non-advised sales and pure execution services] 2] OR3 [(ii) all channels for distribution to eligible counterparties and professional clients are appropriate; and (iii) the following channels for distribution of the Notes to retail clients are appropriate – investment advice[,/ and] portfolio management[,/ and][ non-advised sales ][and pure execution services][, subject to the distributor's suitability and appropriateness obligations under MiFID II, as applicable]]. [Consider any negative target market]. Any person subsequently offering, selling or recommending the Notes (a "distributor") should take into consideration the manufacturer['s/s'] target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer['s/s'] target market assessment) and determining appropriate distribution channels[, subject to the distributor's suitability and appropriateness obligations under MiFID II, as applicable] 4.
Solely for the purposes of [the/each] manufacturer's product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes
1 Include for bonds that are not ESMA complex.
2 This list may not be necessary especially for bonds that are not ESMA complex where all channels of distribution may be appropriate.
3 Include for certain ESMA complex bonds. This list may need to be amended, for example, if advised sales are deemed necessary. If there are advised sales, a determination of suitability will be necessary. In addition, if the Notes constitute "complex" products, pure execution services are not permitted to retail without the need to make the determination of appropriateness required under Article 25(3) of MiFID II.
4 If the Notes constitute "complex" products, pure execution services are not permitted to retail without the need to make the determination of appropriateness required under Article 25(3) of MiFID II. If there are advised sales, a determination of suitability will be necessary.
is retail clients, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of UK domestic law by virtue of the EUWA, and eligible counterparties, as defined in the FCA Handbook Conduct of Business Sourcebook ("COBS") and professional clients, as defined in Regulation (EU) No 600/2014 as it forms part of UK domestic law by virtue of the EUWA ("UK MiFIR"); and EITHER5 [(ii) all channels for distribution of the Notes are appropriate[, including investment advice, portfolio management, non-advised sales and pure execution services]] OR6 [(ii) all channels for distribution to eligible counterparties and professional clients are appropriate; and (iii) the following channels for distribution of the Notes to retail clients are appropriate – investment advice[,/ and] portfolio management[,/ and] [non-advised sales] [and pure execution services][, subject to the distributor's suitability and appropriateness obligations under COBS, as applicable]]. [Consider any negative target market]. Any person subsequently offering, selling or recommending the Notes (a "distributor") should take into consideration the manufacturer['s/s'] target market assessment; however, a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the "UK MiFIR Product Governance Rules") is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer['s/s'] target market assessment) and determining appropriate distribution channels[, subject to the distributor's suitability and appropriateness obligations under COBS, as applicable] 7.]]
[Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the "Conditions") set forth in the Prospectus dated 26 August 2021 [and the supplement[s] to it dated [●] which are incorporated by reference in the Prospectus dated [●] 2021] [and the supplement[s] to it dated [●]] which [together] constitute[s] a base prospectus for the purposes of the UK Prospectus Regulation (the "Prospectus"). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 8 of the UK Prospectus Regulation and must be read in conjunction with the Prospectus[, save in respect of the Conditions which are extracted from the Prospectus dated [8 May 2018]/[12 April 2019]/[13 March 2020]] [and the drawdown prospectus dated [11 June 2018]/[10 November 2020]].8 Full information on the Issuer, the Guarantors and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Prospectus. However, a summary of the issue of the Notes is annexed to these Final Terms. The Prospectus has been published on the website of the Regulatory News Service operated by the London Stock Exchange at: http://www.londonstockexchange.com/exchange/prices-and-news/news/market- news/marketnews-home.html.]
| 1. | (i) | Issuer: | International Personal Finance plc |
|---|---|---|---|
| (ii) | Guarantor: | IPF Holdings Limited, International Personal Finance Investments Limited, IPF International Limited and IPF Digital Group Limited |
|
| 2. | [(i)] | Series Number: | [●] |
| (ii) | Tranche Number: | [●] | |
| [(iii) | Date on which the Notes fungible: | [Not Applicable/The Notes shall become consolidated, form a single series and be interchangeable for trading purposes with the [●] on [●/the Issue Date/exchange of the Temporary Global Note for interests in the Permanent Global Note, as referred to in paragraph [23] below [which is expected to occur on or about [●]]].] |
|
| 3. | Specified Currency or Currencies: | [●] |
5 Include for bonds that are not ESMA complex (in the UK context, as reflected in COBS).
6 Include for certain ESMA complex bonds (in the UK context, as reflected in COBS). This list may need to be amended, for example, if advised sales are deemed necessary. If there are advised sales, a determination of suitability will be necessary. In addition, if the Notes constitute "complex" products, pure execution services are not permitted to retail without the need to make the determination of appropriateness.
7 If the Notes constitute "complex" products, pure execution services are not permitted to retail without the need to make the determination of appropriateness. If there are advised sales, a determination of suitability will be necessary.
8 Include for tap issuances.
| 4. | Aggregate Nominal Amount: | [●] | |||
|---|---|---|---|---|---|
| [(i)] | Series: | [●] | |||
| [(ii) | Tranche: | [●] | |||
| 5. | Issue Price: | [●] per cent. of the Aggregate Nominal Amount [plus accrued interest from [●]] |
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| 6. | (i) | Specified Denominations: | [●] | ||
| [●] and integral multiples of [●] in excess thereof up to and including [●]. No Notes in definitive form will be issued with a denomination above [●]. |
|||||
| (ii) | Calculation Amount | [●] | |||
| 7. | (i) | Issue Date: | [●] | ||
| (ii) | Interest Commencement Date | [●] | |||
| 8. | Maturity Date | [●] | |||
| 9. | Interest Basis: | [[●] per cent. Fixed Rate] [[EURIBOR/SONIA/PIBOR/ WIBOR/PRIBOR/BUBOR/ROBOR /TIIE/STIBOR/●] +/– [●] per cent. Floating Rate] [Zero Coupon] (see paragraph [14][15][16] below) |
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| 10. | Change of Interest Basis: | [Applicable/Not Applicable] | |||
| 11. | Put/Cal Options: | [Investor Put] [Change of Control Put] [Issuer Call] [Make-Whole Redemption] [Clean-up Call Option] [(further particulars specified below)] |
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| 12. | [and [●], | Date [Board] approval for issuance[●] respectively]] of Notes [and Guarantee] obtained: |
[●] and [●], respectively]]. |
||
| PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE | |||||
| 1. | Fixed Rate Note Provisions | [Applicable/Not Applicable] | |||
| (i) | Rate[(s)] of Interest: | [●] per cent. per annum payable in arrear on each Interest Payment Date |
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| (ii) | Interest Payment Date(s): | [●] in each year |
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| (iii) | Fixed Coupon Amount[(s)]: | [●] per Calculation Amount |
|||
| (iv) | Broken Amount(s): | [●] per Calculation Amount, payable on the Interest Payment Date falling [in/on] [●] |
|||
| (v) | Day Count Fraction: | [Actual/Actual/Actual/Actual – ISDA] [Actual/365 (Fixed)] [Actual/365 (Sterling)] [Actual/360] [30/360/360/360/Bond Basis] [30E/360/Eurobond Basis] [30E/360 (ISDA)] [Actual/Actual-ICMA] |
|||
| (vi) | [Determination Dates: | [●] in each year] |
Relevant Financial Centre: [●]
Relevant Time: [●]
Relevant Screen Page: [●]
(ii) Specified Interest Payment Dates: [[●] in each year, subject to adjustment in accordance with the Business Day Convention set out in (v) below]
(v) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention]
(ix) Screen Rate Determination: [Applicable (Term Rate)/Applicable (Overnight Rate)]
Reference Rate: [EURIBOR/PIBOR/WIBOR/PRIBOR/ROBOR/ BUBOR/SONIA/TIIE/ STIBOR]
Interest Determination Date(s): [[●]/[●] London Banking Days prior to the end of each Interest Accrual Period]
[Observation Look-back: [●] London Banking Days]
[Actual/365 (Sterling)] [Actual/360] [30/360/360/360/Bond Basis] [30E/360/Eurobond Basis] [30E/360 (ISDA)] [Actual/Actual-ICMA]]]
(ii) Optional Redemption Amount(s): [●] per Calculation Amount
Call Option [Applicable/Not Applicable]
| (iv) | Notice period: | [●] | ||
|---|---|---|---|---|
| 5. | Make-Whole Redemption | [Applicable/Applicable from, and including, [●] to, but excluding, [●]/ Not Applicable] |
||
| (i) | Make Whole Redemption Margin: | [●] | ||
| (ii) | Quotation Time: | [●] | ||
| (iii) | Reference Bond: | [●] | ||
| (iv) | If redeemable in part: | |||
| (a) | Minimum Redemption Amount: |
[●] per Calculation Amount |
||
| (b) | Maximum Redemption Amount: |
[●] per Calculation Amount |
||
| (v) | Notice period: | [●] | ||
| 6. | Clean-up Call Option | [Applicable/Not Applicable] | ||
| Notice period: | [●] | |||
| 7. | Put Option | [Applicable/Not Applicable] | ||
| (i) | Investor Put: | [Applicable/Not Applicable] | ||
| (a) | Optional Redemption Date(s): |
[●] | ||
| (b) | Optional Redemption Date method, if any, or calculation of such amount(s): |
[●] per Calculation Amount |
||
| (c) | Notice period: | [●] | ||
| (ii) | Change of Control Put: | [Applicable/Not Applicable] | ||
| (a) | Optional Redemption Amount(s) |
[101 per cent. per Calculation Amount | ||
| (b) | Negative Rating Event Specified Rating (Condition 6(f)): |
[●] | ||
| [(c) | Put Period: | [●]] | ||
| [(d) | Put Date: | [●]] | ||
| 8. | Final Redemption Amount of each Note: [Applicable/Not Applicable] | |||
| 9. | Early Redemption Amount Early Redemption Amount(s) per Calculation Amount payable on redemption for taxation reasons or on event of default of other early redemption: |
[[●] per Calculation Amount] |
143
| 10. | Form of Notice: | Bearer Notes: [Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes in the limited circumstances specified in the Permanent Global Note] |
|---|---|---|
| [Temporary Global Note exchangeable for Definitive Notes on [●] days' notice] |
||
| [Permanent Global Note exchangeable for Definitive Notes in the limited circumstances specified in the Permanent Global Note] |
||
| Registered Notes: Global Note registered in the name of a nominee for [a common depositary for Euroclear and Clearstream, Luxembourg/a common safekeeper for Euroclear and Clearstream, Luxembourg] |
||
| 11. | Name and address of Registrar: | [Not Applicable]/[●] |
| 12. | New Global Note (Bearer Notes): | [Yes] [No] |
| 13. | Global Certificates (Registered Notes): | [Yes] [No] |
| 14. | New Safekeeping Structure (Registered Notes): |
[Yes] [No] |
| 15. | Financial Centre(s): | [Not Applicable/give details] |
| 16. | Talons for future Coupons to be attached to Definitive Notes (and dates on which such Talons mature): |
[No/Yes.] |
| 17. | Prohibition of Sales to EEA Retail Investors: |
[Applicable/Not Applicable] |
| (If the Notes constitute packaged products "Not Applicable" should be specified. If the Notes may constitute "packaged" products and no KID will be prepared, "Applicable" should be specified.) |
||
| 18. | [Floating Rate Notes only – Benchmark: | Amounts payable under the Notes will be calculated by reference to [●] which is provided by [●]. As at [●], [●] [appears/does not appear] on the register of administrators and benchmarks established and maintained by the European Securities and Markets Authority pursuant to Article 36 of Regulation (EU) 2016/1011 (the "EU Benchmarks Regulation") and [●], [●] [appears/does not appear] on the register of benchmarks and administrators established and maintained by the FCA pursuant to Article 36 of Regulation (EU) 2016/1011 as it forms part of UK domestic law by virtue of the EUWA (the "UK Benchmarks |
144
Regulation")]
[(Relevant third party information) has been extracted from (specify source). [Each of the] [The] Issuer [and the Guarantor(s)] confirms that such information has been accurately reproduced and that, so far as it is aware and is able to ascertain from information published by (specify source), no facts have been omitted which would render the reproduced information inaccurate or misleading.]
Signed on behalf of International Personal Finance plc
By: ............................................ Duly authorised
The Guarantors Signed on behalf of IPF Holdings Limited
By: ............................................
Duly authorised
Signed on behalf of International Personal Finance Investments Limited
By: ............................................
Duly authorised
Signed on behalf of IPF International Limited
By: ............................................
Duly authorised
Signed on behalf of IPF Digital Group Limited
By: ............................................
Duly authorised
(i) UK Admission: [Not Applicable/Application has been made by the Issuer (or on its behalf) for the Notes to be admitted to trading on [the London Stock Exchange's regulated market]], [a] UK Regulated Market[s], [●], with effect from [●].]
Ratings: [The Notes to be issued have been rated]/[Notes issued under the Programme are generally rated]:
[Fitch: [●]]
[Moody's: [●]]]
[Explanation of ratings to be included.]
3. [INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE/OFFER] [Save as discussed in ["Subscription and Sale"], so far as the Issuer is aware, no person
involved in the offer of the Notes has an interest material to the offer./[●]
Indication of yield: [●]
As set out above, the yield is calculated at the Issue Date on the basis of the Issue Price. It is not an indication of future yield.
As set out above, the yield is calculated at the Issue Date on the basis of the Issue Price. It is not an indication of future yield.
| ISIN Code: | [●] |
|---|---|
| Common Code: | [●] |
| CFI: | [●] |
| FISN: | [●] |
Any clearing system(s) other than [Not Applicable]/[●] Euroclear Bank SA/NV and Clearstream Banking S.A. and the relevant identification number(s):
Names and addresses of additional [●] Paying Agent(s) (if any):
Names and addresses of Calculation [●] Agent(s) (if not HSBC Bank plc):
Intended to be held in a manner which would allow Eurosystem eligibility:
[Yes. Note that the designation "yes" simply means that the Notes are intended upon issue to be deposited with one of the ICSDs as common safekeeper[, and registered in the name of a nominee of one of the ICSDs acting as common safekeeper] and does not necessarily mean that the Notes will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.]
/[No. Whilst the designation is specified as "no" at the date of these Final Terms, should the Eurosystem eligibility criteria be amended in the future such that the Notes are capable of meeting them the Notes may then be deposited with one of the ICSDs as common safekeeper [, and registered in the name of a nominee of one of the ICSDs acting as common safekeeper] [include this text for Registered Notes]. Note that this does not necessarily mean that the Notes will then be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem at any time during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.]
(iii) Indication of the overall amount [●] per cent. of the Aggregate Nominal Amount
| (iv) | US Selling Restrictions: | Reg. S Compliance Category [1/2/3]; TEFRA C/ TEFRA D/TEFRA not applicable]] |
|||
|---|---|---|---|---|---|
| (v) Prohibition of Sales to Belgian Consumers: |
[Applicable]/[Not Applicable] | ||||
| (vi) | UK Public Offer: | [Applicable]/[Not Applicable] | |||
| (a) | Name, LEI (if applicable) and address of financial intermediaries authorised to offer the Notes: |
[●] | |||
| (b) | Offer Period: | From [●] to [●]. |
|||
| (c) | Further conditions attached to the consent to use. |
[Not Applicable]/[●] | |||
| (d) | General consent: | [Not Applicable]/[Applicable] | |||
| 9. | TERMS AND CONDITIONS OF THE OFFER | ||||
| Offer Price: | [Issue Price] [●] | ||||
| Conditions to which the offer is subject: | [Not Applicable]/[●] | ||||
| Description of the application process any possible amendments, for which the offer will be open): (including the time period, including Description of possibility to reduce subscriptions and manner for refunding excess amount paid by applicants: Details of the minimum and/or maximum amount of application: Details of the method and time limits for paying up and delivering the Notes: Manner in and date on which results of the offer are to be made public: Procedure for exercise of any right of pre-emption, negotiability of subscription rights and treatment of subscription rights not exercised: Whether tranche(s) have been reserved for certain countries and, if so, which tranche is so reserved: Process for notification to applicants of the amount allotted and the indication whether dealing may begin before notification is made: |
[Not Applicable]/[●] | ||||
| [Not Applicable]/[●] | |||||
| [Not Applicable]/[●] | |||||
| [Not Applicable]/[●] | |||||
| [Not Applicable]/[●] | |||||
| [Not Applicable]/[●] | |||||
| [Not Applicable]/[●] | |||||
| [Not Applicable]/[●] | |||||
| or purchaser: | Amount of any expenses and taxes specifically charged to the subscriber |
[Not Applicable]/[●] | |||
| takes place. | Name(s) and address(es), to the extent known to the Issuer, of the placers in the various countries where the offer |
[None]/[●] |
[●]
Set out below is the form of Final Terms which will be completed for each Tranche of Notes issued under the Programme with a denomination of at least €100,000 (or its equivalent in another currency) or less than €100,000 if admitted to trading only on a regulated market, or a specific segment thereof, to which only qualified investors, as defined in the EU Prospectus Regulation or the UK Prospectus Regulation (as applicable), have access
International Personal Finance plc Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] Guaranteed by IPF Holdings Limited, International Personal Finance Investments Limited, IPF International Limited and IPF Digital Group Limited under the EUR 1,000,000,000 Euro Medium Term Note Programme
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (the "EEA". For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); (ii) a customer within the meaning of Directive (EU) 2016/97 (the "Insurance Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (the "EU Prospectus Regulation"). Consequently no key information document required by Regulation (EU) No 1286/2014 (the "PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in the EEA or in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA or in the UK may be unlawful under the PRIIPs Regulation.]
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom (the "UK"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended, varied, superseded or substituted from time to time (the "EUWA"); (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the "FSMA") and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of UK domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 as it forms part of UK domestic law by virtue of the EUWA. Consequently no key information document required by Regulation (EU) No 1286/2014 as it forms part of UK domestic law by virtue of the EUWA (the "UK PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.]
Solely for the purposes of [the/each] manufacturer's product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties and professional clients, each as defined in MiFID II; and EITHER9 (ii) all channels for distribution of the Notes are appropriate[, including investment advice, portfolio management, non-advised sales and pure execution services] 10] OR11 [(ii) all channels for distribution to eligible counterparties and professional clients are appropriate[, subject to the distributor's suitability and appropriateness obligations under MiFID II, as applicable]]. Any person subsequently offering, selling or recommending the Notes (a "distributor") should take into
9 Include for bonds that are not ESMA complex.
consideration the manufacturer['s/s'] target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer['s/s'] target market assessment) and determining appropriate distribution channels[, subject to the distributor's suitability and appropriateness obligations under MiFID II, as applicable]. 12
Solely for the purposes of [the/each] manufacturer's product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is only eligible counterparties, as defined in the FCA Handbook Conduct of Business Sourcebook ("COBS"), and professional clients, as defined in Regulation (EU) No 600/2014 as it forms part of UK domestic law by virtue of the EUWA ("UK MiFIR"); and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the Notes (a "distributor") should take into consideration the manufacturer['s/s'] target market assessment; however, a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the "UK MiFIR Product Governance Rules") is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer['s/s'] target market assessment) and determining appropriate distribution channels.]
[Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the "Conditions") set forth in [the Prospectus dated 26 August 2021 [and the supplement[s] to it dated [●]] which are incorporated by reference in] the Prospectus dated [●] 2021 [and the supplement(s) to it dated [●]] which [together] constitute[s] a base prospectus for the purposes of the EU Prospectus Regulation (the "Prospectus"). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 8 of the EU Prospectus Regulation and must be read in conjunction with the Prospectus[, save in respect of the Conditions which are extracted from the Prospectus dated [8 May 2018]/[12 April 2019]/[13 March 2020]] [and the drawdown prospectus dated [11 June 2018]/[10 November 2020]]. 13 Full information on the Issuer, the Guarantors and the offer of the Notes is only available on the basis of the combination of these Final Terms, the Prospectus [and the supplement(s) dated [●]]. The Prospectus has been published on the website of the Regulatory News Service operated by the Euronext Dublin at: https://www.euronext.com/en/markets/dublin.] 14
[Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the "Conditions") set forth in the Prospectus dated 26 August 2021 [and the supplement[s] to it dated [●] [which are incorporated by reference in the Prospectus dated [●] 2021] [and the supplement[s] to it dated [●] which [together] constitute[s] a base prospectus for the purposes of the UK Prospectus Regulation (the "Prospectus"). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 8 of the UK Prospectus Regulation and must be read in conjunction with the Prospectus[, save in respect of the Conditions which are extracted from the Prospectus dated [8 May 2018]/[12 April 2019]/[13 March 2020]] [and the drawdown prospectus dated [11 June 2018]/[10 November 2020]]. Full information on the Issuer, the Guarantors and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Prospectus. The Prospectus has been published on the website of the Regulatory News Service operated by the London Stock Exchange at: http://www.londonstockexchange.com/exchange/prices-andnews/news/market- news/market-news-home.html.] 15
10 This list may not be necessary especially for bonds that are not ESMA complex where all channels of distribution may be appropriate.
11 Include for certain ESMA complex bonds. This list may need to be amended, for example, if advised sales are deemed necessary. If there are advised sales, a determination of suitability will be necessary. In addition, if the Notes constitute "complex" products, pure execution services are not permitted to retail without the need to make the determination of appropriateness required under Article 25(3) of MiFID II.
12 If the Notes constitute "complex" products, pure execution services are not permitted to retail without the need to make the determination of appropriateness required under Article 25(3) of MiFID II. If there are advised sales, a determination of suitability will be necessary.
13 Include for tap issuance.
14 Include only where UK Wholesale Notes are to be admitted to trading on a UK Regulated Market.
15 Include only where EU Notes are to be admitted to trading on an EEA Regulated Market.
[(i)] Issuer: International Personal Finance plc
[(ii)] Guarantor: IPF Holdings Limited, International Personal Finance Investments Limited, IPF International Limited and IPF Digital Group Limited
[(iii)] Date on which the Notes [Not Applicable/The Notes shall be consolidated, become fungible: form a single series and be interchangeable for trading purposes with the [●] on [●/the Issue Date/exchange of the Temporary Global Note for interests in the Permanent Global Note, as referred to in paragraph [23] below [which is expected to occur on or about [●] ]].]
[●] and integral multiples of [●] in excess thereof up to and including [●]. No Notes in definitive form will be issued with a denomination above [●]
Interest Basis: [[●] per cent. Fixed Rate] [[EURIBOR/SONIA/PIBOR/WIBOR/PRIBOR/RO BOR/BUBOR/TIIE/STIBOR/●] +/– [●] per cent. Floating Rate] [Zero Coupon] (see paragraph [14][15][16] below)
Redemption/Payment Basis: Subject to any purchase and cancellation of early redemption, the Notes will be redeemed on the Maturity Date at [100] per cent of their nominal amount.
Change of Interest Basis: Applicable/Not Applicable]Put/Call Options:
[Change of Control Put] [Issue Call] [Make-Whole Redemption] [Clean-up Call Option] [(further particulars specified below)] 13. Date [Board] approval for issuance [●] [and [●]] of Notes [and Guarantee] respectively obtained.
| 14. | Fixed Rate Note Provisions | [Applicable/Not Applicable] | |
|---|---|---|---|
| (i) | Rate[(s)] of Interest: | [●] per cent. per annum [payable in arrear on each Interest Payment Date] |
|
| (ii) | Interest Payment Date(s): | [●] in each year |
|
| (iii) | Fixed Coupon Amount[(s)]: | [●] per Calculation Amount |
|
| (iv) | Broken Amount(s): | [●] per Calculation Amount payable on the Interest Payment Date falling [in/on] [●] |
|
| (v) | Day Count Fraction: | [Actual/Actual/Actual/Actual – ISDA] [Actual/365 (Fixed)] [Actual/365 (Sterling)] [Actual/360] [30/360/360/360/Bond Basis] [30E/360/Eurobond Basis] [30E/360 (ISDA)] [Actual/Actual-ICMA] |
|
| (vi) | [Determination Dates: | [●] in each year] |
|
| 15. | Floating Rate Note Provisions | [Applicable/Not Applicable] | |
| (i) | Interest Period(s): | [●] | |
| (ii) | Specified Interest Payment Dates: | [[●] in each year, subject to adjustment in accordance with the Business Day Convention set out in (iv) below] |
|
| (iii) | First Interest Payment Date: | [●] | |
| (iv) | Interest Period Date: | [●] | |
| (v) | Business Day Convention: | [Floating Rate Convention/Following Business day Convention/Modified Following Business Day Convention/Preceding Business Day Convention] |
|
| (vi) | Business Centre(s): | [●] | |
| (vii) | Manner in which the Rate(s) of Interest is/are to be determined: |
Screen Rate Determination | |
| (viii) | Party responsible for calculating the Rate(s) of Interest and/or Interest Amount(s) (if not the [Agent]): |
[●] | |
| (ix) | Screen Rate Determination: | [Applicable (Term Rate)/Applicable (Overnight Rate)] |
|
| – Reference Rate | [EURIBOR/PIBOR/WIBOR/PRIBOR/ROBOR/ BUBOR/SONIA/TIIE/STIBOR] |
||
| – Interest Accrual Period | [●] | ||
| – Relevant Financial Centre: | [●] | ||
| – Relevant time: | [●] | ||
| – Interest Determination Date(s): | [●]/[●] London Banking Days prior to the end of |
each Interest Accrual Period]
| – Relevant Screen Page: | [●] |
|---|---|
– [Observation Look-back: [●] London Banking Days]
(xii) Day Count Fraction: [Actual/Actual/Actual/Actual – ISDA] [Actual/365(Fixed)] [Actual/365 (Sterling)] [Actual/360] [30/360/360/360/Bond Basis] [30E/360/Eurobond Basis] [30E/360 (ISDA)] [Actual/Actual-ICMA]
(iii) [Day Count Fraction in relation [[Actual/Actual/Actual/Actual – ISDA] to Early Redemption Amounts: [Actual/365 (Fixed)] [Actual/360] [Actual/365 (Sterling)] [30/360/360/360/Bond Basis] [30E/360/Eurobond Basis] [30E/360 (ISDA)] [30E/360 (ISDA)] [Actual/Actual-ICMA]]]
| (b) | Optional Redemption Date method, if any, of calculation of such amount(s): |
[●] per Calculation Amount |
||
|---|---|---|---|---|
| (c) | Notice period: | [●] | ||
| (ii) | Change of Control Put: | [Applicable/Not Applicable] | ||
| (a) | Optional Redemption Amount(s): |
101 per cent. of the Calculation Amount | ||
| (b) | Negative Rating Event Specified Rating (Condition 6(f)): |
[●] | ||
| [(c) | Put Period: | [●]] | ||
| [(d) | Put Date: | [●]] | ||
| 21. | each Note: | Final Redemption Amount of | [●] per Calculation Amount |
|
| 22. | Early Redemption Amount | |||
| redemption: | Early Redemption Amount(s) per Calculation Amount payable on redemption for taxation reasons or on event of default or other early |
[[●] per Calculation Amount] |
||
| GENERAL PROVISIONS APPLICABLE TO THE NOTES | ||||
| 23. | Form of Notes: | Bearer Notes: | ||
| [Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes in the limited circumstances specified in the Permanent Global Note] |
||||
| [Temporary Global Note exchangeable for Definitive Notes on [●] days' notice] |
||||
| [Permanent Global Note exchangeable for Definitive Notes in the limited circumstances specified in the Permanent Global Note] |
||||
| Registered Notes: | ||||
| [Global Note registered in the name of a nominee for [a common depositary for Euroclear and Clearstream, Luxembourg/a common safekeeper for Euroclear and Clearstream, Luxembourg]] |
||||
| 24. | Name and address of Registrar: | Not Applicable]/[●] | ||
| 25. | New Global Note (Bearer Notes): | [Yes] [No] | ||
| 155 | ||||
Notice period: [●]
[Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes in the limited circumstances specified in the Permanent Global Note]
[Temporary Global Note exchangeable for
[Permanent Global Note exchangeable for Definitive Notes in the limited circumstances specified in the Permanent Global Note]
[Global Note registered in the name of a nominee for [a common depositary for Euroclear and Clearstream, Luxembourg/a common safekeeper for Euroclear and Clearstream,
(i) Investor Put: [Applicable/Not Applicable]
| 26. | Global Certificates (Registered Notes): | [Yes] [No] |
|---|---|---|
| 27. | New Safekeeping Structure (Registered Notes): |
[Yes] [No] |
| 28. | Financial Centre(s): | [Not Applicable/give details] |
| 29. | Talons for future Coupons or attached to Definitive Notes (and dates on which such Talons mature): |
[No/Yes] |
| 30. | Prohibition of Sales to EEA Retail Investors: |
[Applicable/Not Applicable] |
| – (If the Notes constitute packaged products "Not Applicable" should be specified. If the Notes may constitute "packaged" products and no KID will be prepared, "Applicable" should be specified.) |
||
| 31. | Prohibition of Sales to UK Retail Investors: |
[Applicable/Not Applicable] |
| (If the Notes constitute packaged products "Not Applicable" should be specified. If the Notes may constitute "packaged" products and no KID will be prepared, "Applicable" should be specified.) |
||
| 32. | [Floating Rate Notes only – Benchmark: | Amounts payable under the Notes will be calculated by reference to [●] which is provided by [●]. As at [●], [●] [appears/does not appear] on the register of administrators and benchmarks established and maintained by the European Securities and Markets Authority pursuant to Article 36 of Regulation (EU) 2016/1011 (the "EU Benchmarks Regulation") and [●], [●] [appears/does not appear] on the register of benchmarks and administrators established and maintained by the FCA pursuant to Article 36 of Regulation (EU) 2016/1011 as it forms part of UK domestic law by virtue of the EUWA (the "UK Benchmarks Regulation")] |
[Relevant third party information] has been extracted from [specify source]. Each of the Issuer and the Guarantors confirms that such information has been accurately reproduced and that, so far as it is aware and is able to ascertain from information published by [specify source], no facts have been omitted which would render the reproduced information inaccurate or misleading.]
Signed on behalf of International Personal Finance plc
By: ............................................
Duly authorised
Signed on behalf of IPF Holdings Limited
By: ............................................
Duly authorised
Signed on behalf of International Personal Finance Investments Limited
By: ............................................
Duly authorised
Signed on behalf of IPF International Limited
By: ............................................ Duly authorised
Signed on behalf of IPF Digital Group Limited
By: ............................................
Duly authorised
| 1. | LISTING | |||
|---|---|---|---|---|
| (i) | UK Admission: 16 |
[Not Applicable/Application has been made by the Issuer (or on its behalf) for the Notes to be admitted to trading on [London Stock Exchange's regulated market], [a] UK Regulated Market[s], [●] with effect from [●].] |
||
| [Each set of Final Terms in respect of UK Notes will be submitted to [the FCA and the LSE] [and] [●] the operator[s] of [a] UK Regulated Market[s] and published by the Issuer in accordance with the UK Prospectus Regulation and in compliance with the other requirements of UK law, if applicable.] |
||||
| (ii) | EEA Admission: 17 |
[Not Applicable/Application has been made by the Issuer (or on its behalf) for the Notes to be admitted to trading on [the Euronext Dublin Regulated Market]/[the EU Regulated Market operated by BondSpot S.A. in Poland]/[the EU Regulated Market operated by the Warsaw Stock Exchange] /[Nasdaq Stockholm AB]/[the EU Regulated Market operated by the Budapest Stock Exchange] with effect from [●]. |
||
| [Each set of Final Terms in respect of EU Notes will be submitted to [the CBI and Euronext Dublin]/[the EU Regulated Market operated by BondSpot S.A. in Poland]/[the EU Regulated Market operated by the Warsaw Stock Exchange]/[Nasdaq Stockholm AB]/[the EU Regulated Market operated by the Budapest Stock Exchange] [following receipt of a certificate of approval in respect of the passporting of the Prospectus being provided and published by the Issuer in accordance with the EU Prospectus Regulation and in compliance with the other requirements of the local law of the relevant EEA Member State, if applicable.] |
||||
| 2. | RATINGS | |||
| Ratings: | The Notes to be issued have been rated: [Fitch: [●]] |
|||
| [Moody's: [●]]] | ||||
3. [INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE/OFFER]
[Save as discussed in ["Subscription and Sale"], so far as the Issuer is aware, no person involved in the offer of the Notes has an interest material to the offer./[●]
[Explanation of ratings to be included.]
16 Include only where UK Wholesale Notes are to be admitted to trading on a UK Regulated Market. Where no such offering is to be made, "Not Applicable" should be selected.
17 Include only where EU Notes are to be admitted to trading on an EEA Regulated Market. Where no such offering is to be made, "Not Applicable" should be selected.
| (i) | Reasons for the offer: | [●] | |
|---|---|---|---|
| (ii) | Use of proceeds: | [●] | |
| [(iii)] | Estimated net proceeds: | [●] | |
| [(iv)] | Estimated total expenses related to the admission of trading: |
[●] | |
| 5. | Fixed Rate Notes only – YIELD Indication of yield: |
[●] | |
| 6. | OPERATIONAL INFORMATION ISIN Code: |
[●] | |
| Common Code: | [●] | ||
| CFI: | [●] | ||
| FISN: | [●] | ||
| Any clearing system(s) other than Euroclear Bank SA/NV and Clearstream Banking S.A. and the relevant |
[Not Applicable]/[●] |
identification number(s): Names and addresses of additional [●]
Paying Agent(s) (if any):
[Names and addresses of Calculation [●] Agent(s) (if not HSBC Bank plc):
Intended to be held in a manner which would allow Eurosystem eligibility:
[Yes. Note that the designation "yes" simply means that the Notes are intended upon issue to be deposited with one of the ICSDs as common safekeeper[, and registered in the name of a nominee of one of the ICSDs acting as common safekeeper] and does not necessarily mean that the Notes will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.]
/[No. Whilst the designation is specified as "no" at the date of these Final Terms, should the Eurosystem eligibility criteria be amended in the future such that the Notes are capable of meeting them the Notes may then be deposited with one of the ICSDs as common safekeeper [, and registered in the name of a nominee of one of the ICSDs acting as common safekeeper].
Note that this does not necessarily mean that the Notes will then be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem at any time during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.]
[Prohibition of Sales to Belgian [Applicable/Not Applicable] Consumers:]
US Selling Restrictions: [Reg. S Compliance Category [1/2/3]; TEFRA C/ TEFRA D/TEFRA not applicable]
Association and BDM. As at the date of this Prospectus, the EMMI and the CFBF appear on the EU Benchmarks Register, but not the UK Benchmarks Register. The GPW does not appear on the UK Benchmarks Register, but does appear on the EU Benchmarks Register. The BoE, the EBF, the NBR, MNB, the Swedish Bankers' Association and BDM do not appear on the EU Benchmarks Register or the UK Benchmarks Register, as benchmarks set by central banks and certain public authorities are subject to certain exemptions pursuant to Article 2 of the EU Benchmarks Regulation and Article 2 of the UK Benchmarks Regulation. As far as the Issuer is aware, the transitional provisions in Article 51 of the UK Benchmarks Regulation apply such that none of the EMMI, the CFBF or GPW are currently required to obtain authorisation/registration (or, if located outside the UK, recognition, endorsement or equivalence) under the UK Benchmarks Regulation. The registration status of any administrator under one or both of the EU Benchmarks Regulation and the UK Benchmarks Regulation is a matter of public record and, save where required by applicable law, the Issuer does not intend to update the applicable Final Terms to reflect any change in the registration status of an administrator.
The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium, the address of Clearstream, Luxembourg is 42 Avenue JF Kennedy, L-1855 Luxembourg and the address of CREST is Euroclear UK & Ireland, 33 Cannon Street, London EC4M 5SB. The address of any alternative clearing system will be specified in the applicable Final Terms.
(10) The issue price and the amount of the relevant Notes will be determined, before filing of the relevant Final Terms of each Tranche with the Relevant Competent Authority, based on the prevailing market conditions. The Issuer does not intend to provide any post-issuance information in relation to any issues of Notes.
This Prospectus and the Final Terms for EU Notes will be published on the website of Euronext Dublin at:
https://www.euronext.com/en/markets/dublin
This Prospectus and the Final Terms for UK Notes will be published on the website of the Regulatory News Service operated by the London Stock Exchange at:
http://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html
(14) The yield for any particular Series of Notes will be specified in the applicable Final Terms and will be calculated on the basis of the compound annual rate of return if the relevant Notes were to be purchased at the Issue Price on the Issue Date and held to maturity. Set out below is an example formula for the purposes of calculating the yield of Fixed Rate Notes or Zero Coupon Notes. The Final Terms in respect of any Floating Rate Notes will not include any indication of yield.
Is sue Price = Rate of Interest*
\n
$$
\frac{1 - \left(\frac{1}{(1 + Yield)^{n}}\right)}{Yield} + \left[\text{Final Redemption Amount*} \frac{1}{(1 + Yield)^{n}}\right]
$$
Where:
"Rate of Interest" means the Rate of Interest expressed as a percentage as specified in the applicable Final Terms and adjusted according to the frequency (and in the case of Zero Coupon Notes, means "0") i.e. for a semi-annual paying Note, the rate of interest is half the stated annualised rate of interest in the Final Terms;
"Yield" means the yield to maturity calculated on a frequency commensurate with the frequency of interest payments as specified in the applicable Final Terms (and in the case of Zero Coupon Notes, means the Amortisation Yield as specified in the applicable Final Terms); and
"n" means the number of interest payments to maturity.
Set out below is a worked example illustrating how the yield on a Series of Fixed Rate Notes could be calculated on the basis of the above formula. It is provided for purposes of illustration only and should not be taken as an indication or prediction of the yield for any Series of Notes; it is intended merely to illustrate the way which the above formula could be applied.
Where:
N = 6 Rate of Interest = 3.875% Issue Price = 99.392 Final Redemption Amount = 100
99.392= 3.875*
$$
\frac{1 - \left(\frac{1}{(1 + \text{Yield})^6}\right)}{\text{Yield}} = \left[100^* \frac{1}{(1 + \text{Yield})^6}\right]
$$
Yield = 3.99% (calculated by iteration)
The yield specified in the applicable Final Terms in respect of a Series of Notes will not be an indication of future yield.
The following is an index that indicates the location in this Prospectus where certain terms have been defined.
| £ | |
|---|---|
| £m | |
| $\epsilon$ | |
| €m | |
| $$$ | |
| \$m | |
| 30/360 | |
| 30E/360 (ISDA) | |
| 30E/360 | |
| 360/360 | |
| Acceptance Statement 40, 92 | |
| Act | |
| Actual/360 | |
| Actual/365 (Fixed) | |
| Actual/365 (Sterling) 111 | |
| Actual/Actual - ISDA 111 | |
| Actual/Actual | |
| Actual/Actual-ICMA 113 | |
| Agency Agreement, | |
| Alternative Clearing System131 | |
| Alternative Performance Measures 57 | |
| APM | |
| APR | |
| Arranger | |
| Authorised Offeror Contract 92 | |
| Authorised Offeror Terms90 | |
| Authorised Offerors | |
| Bank | |
| Bearer Notes | |
| Bond Basis | |
| business day | |
| Business Day | |
| Calculation Agent(s) | |
| Calculation Period | |
| CCD | |
| CDI Holders | |
| CDIs |
| Certificate | |
|---|---|
| Certificates | |
| CGNs | |
| Change of Control | |
| Change of Control Period120 | |
| Change of Control Put Date 119 | |
| Change of Control Put Event Notice 119 | |
| Change of Control Put Event 118 | |
| Change of Control Put Notice119 | |
| Change of Control Put Option 118 | |
| Change of Control Put Period 119 | |
| Classic Global Notes 131 | |
| Clearstream, Luxembourg 131 | |
| CNB | |
| commercially reasonable evidence, 138 | |
| Common Depositary | |
| Common Safekeeper 131 | |
| Condition | |
| Consolidated EBITDA 101, 126 | |
| Consolidated Interest Payable 101 | |
| Consolidated Net Worth 101 | |
| Consolidated Total Borrowings 102 | |
| Couponholders | |
| Coupons | |
| CREST Deed Poll | |
| CREST Depository | |
| CREST International Settlement Links Service |
|
| CREST Manual | |
| CREST Nominee | |
| CREST Rules | |
| CREST | |
| Czech Act on Banks | |
| Czech Capital Markets Act81 | |
| D 1 | |
| D 2 | |
| Day Count Fraction |
| Dealers 1 | |
|---|---|
| Dealer Agreement 77 | |
| Definitive Notes 133 | |
| Designated Territory85 | |
| Determination Date 113, 117 | |
| Determination Period 122 | |
| Electronic Consent 137 | |
| EEA 2, 139, 150 | |
| EU 10 | |
| EUR 4 | |
| euro 4 | |
| Eurobond Basis 112 | |
| Euroclear 131 | |
| Euro-zone113 | |
| EU Benchmarks Regulation 5, 144, 156 | |
| EU CRA Regulation 4 | |
| EU PRIIPS Regulation 139 | |
| EU Prospectus Regulation 2, 139, 150 | |
| Event of Default 124 | |
| Exchange Date133 | |
| Exercise Notice 118 | |
| Facilities Agreement128 | |
| FATCA 121 | |
| FCA 2 | |
| Final Terms 2 | |
| Financial Centres 123 | |
| Financial Instruments and Exchange Act 80 |
|
| Fitch 120 | |
| FSCS 5, 27 | |
| FSMA 4, 150 | |
| General Consent 40, 90 | |
| Global Certificates 131 | |
| Global Notes131 | |
| Governance Code 61 | |
| Gross Tangible Assets 102, 126 | |
| Group 2, 41, 100, 102, 126 | |
| Guarantee 2, 31, 99 | |
| Guarantor 2, 31 | |
| Guarantors 2, 31, 97 | |
| holder 98 | |
| Hungarian Banking Act83 | |
| Hungarian Capital Markets Act92 |
|---|
| IFRS 7 102, 126 |
| IFRS 9 102, 127 |
| IFRS 57, 102, 126 |
| Initial Rating 120 |
| Insurance Distribution Directive 3, 139, 150 |
| Interest Accrual Period113 |
| Interest Amount 113 |
| Interest Commencement Date 114 |
| Interest Determination Date 114 |
| Interest Period Date 114 |
| Interest Period 114 |
| interest 124 |
| Investor's Currency 28 |
| Investor89 |
| IPF 2, 31, 41 |
| IPF Management 15 |
| IPFIL38 |
| ISDA Definitions 114 |
| ISIN 134 |
| Issue Date 97 |
| Issuer 2, 31, 93, 97 |
| Issuing and Paying Agent97 |
| M1 112, 113 |
| M2 112, 113 |
| Material Subsidiary127 |
| Mexico 84 |
| MiFID II2, 139, 150 |
| Moneys Borrowed 102, 127 |
| Moody's 4, 120 |
| n 164 |
| NBH 82 |
| NBR 5, 84 |
| Negative Rating Event 120 |
| NGN 131 |
| Noteholder 98 |
| Notes 2, 92 |
| Offer Period 8 |
| ORB 28 |
| Paying Agents 97 |
| Permanent Global Note 131 |
| Permitted Security Interest100 |
| Polish Act on Offerings81 |
|---|
| principal 124 |
| Proceedings 130 |
| Programme2 |
| Prospectus 2, 92, 140, 151 |
| Provident Financial162 |
| Public Offering 81 |
| Rate of Interest114, 164 |
| Rating Agency 120 |
| Record Date 121 |
| Reference Banks 114 |
| Reference Rate 114 |
| Register 98 |
| Registered Notes 97 |
| Registrar97 |
| Relevant Announcement Date 118 |
| Relevant Date123 |
| Relevant Financial Centre 114 |
| Relevant Group 127 |
| Relevant Indebtedness100 |
| Relevant State 78 |
| Relevant Potential Change of |
| Control Announcement120 |
| Relevant Screen Page 114 |
| Relevant Time 114 |
| RFSA 83 |
| Rolling Twelve Months 102 |
| Romanian Banking Law 84 |
| Romanian Capital Markets Laws 83 |
| Rules 90 S&P 120 |
| Securities Act 6, 77 |
| Security Interest 99 Semi-Annual Date 102 |
| Slovak Act on Banks 82 |
| Slovak Bonds Act 82 |
| Slovak Securities and Investment Act 82 |
| Slovak Stock Exchange Act 82 |
| Specific Consent 40, 90 |
| Specified Currency 114 |
| sterling 4 |
| Substitute Rating Agency 120 | |
|---|---|
| Talons97 | |
| TARGET Business Day 111 | |
| TARGET System 114 | |
| Temporary Global Note 131 | |
| Tranche 97 | |
| Transfer Agents 97 | |
| Trust Deed 39, 97 | |
| Trustee 39, 97 | |
| UK Benchmarks Regulation 6, 145, 156 | |
| UK CRA Regulation 5 | |
| UK PRIIPS Regulation 4, 150 | |
| UK Prospectus Regulation 2 | |
| UK Public Offer3, 79, 93 | |
| UK Public Offers89 | |
| Underlying Notes 29 | |
| Y1 112 | |
| Y2 112 | |
| Year-End Date 102 | |
| Yield 164 |
Number Three Leeds City Office Park Meadow Lane Leeds LS11 5BD
Leeds LS11 5BD
Number Three Leeds City Office Park Meadow Lane Leeds LS11 5BD
HSBC Bank plc 8 Canada Square Canary Wharf London E14 5HQ
London E14 5HQ
HSBC Bank plc Peel Hunt LLP 8 Canada Square 100 Liverpool Street Canary Wharf London EC2M 2AT
Ciudad Grupo Santander Avenida de Cantabria s/n Edificio Encinar, Planta Baja, 28660, Boadilla del Monte, Madrid, Spain
HSBC Bank plc
8 Canada Square Canary Wharf London E14 5HQ
8th Floor 100 Bishopsgate London EC2N 4AG
Deloitte LLP 1 City Square Leeds LS1 2AL
To the Issuer as to To the Dealers and the English law Trustee as to English law
Slaughter and May Linklaters LLP One Bunhill Row One Silk Street
London EC1Y 8YY London EC2Y 8HQ
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