REG - Wise PLC - WISE PLC PRELIMINARY RESULTS FY END 31 MARCH 2024
13/06/2024 07:00
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RNS Number : 2296S Wise PLC 13 June 2024
Wise plc
Preliminary results for the financial year ended 31 March 2024
"2024 was another strong year of growth for Wise. We moved £118.5bn around
the world for 12.8m customers, 29% more customers than last year, with much of
this growth driven by the popularity of the Wise account. This led to a 31%
growth in underlying income(( 1 )) to £1.2bn with an underlying profit before
tax of £242m (up 226%). We are investing in infrastructure and customer
experiences to serve as much of this huge, under-served cross-border payments
market as possible, including starting FY25 by reducing fees further for our
customers."
Kristo Käärmann, Co-founder and Chief Executive Officer
Highlights for the twelve months ended 31 March 2024
Growth driven by 13 years of investment into our vision of money without
borders
● 12.8m active customers served in FY24 (+29% YoY), moving £118.5bn
(+13% YoY) across borders, with growth across segments and regions.
● More customers than ever have adopted multiple features with their
Wise account; 48% of personal and 60% of business customers - holding more
than £16bn (+44% YoY) through the account (cash and Assets), with usage
growing rapidly.
Growing fast and increasingly profitable
● Customer growth, account adoption and higher interest rates drove
underlying income up +31% YoY to £1.2bn (Revenue £1.1bn). After accounting
for costs and reinvestment, we generated £242m of underlying profit before
tax (+226% YoY), equivalent to an underlying profit before tax margin of
21%.
● Reported profit before tax rose to £481m (+229%) with basic earnings
per share of 34.2p.
Investments made in FY24 will contribute to future growth
● We continue to enhance our infrastructure: connecting to the
Australian domestic payment system (NPP) increasing our direct connections to
5; achieving a tier 1 licence in Japan removing the ¥1m transfer limit; and
collaborating with Swift to make it easier for banks and their customers to
use Wise.
● Operational efficiencies achieved in FY24 enabled a reduction in
cross-border pricing of more than 2bps (effective from Q1 FY25), while 62% of
payments are now instant.
● Wise Assets 'Interest' launched in 5 more European countries, allowing
more customers to earn an interest-like return by holding their money in
government guaranteed assets.
● We made it easier to receive money around the world, including
introducing Wise Invoicing for business customers.
Investing relentlessly to serve as much of this huge, under-served market as
possible
● We will continue to invest in the substantial opportunity that
exists for Wise.
● Over the medium term we expect to operate to an underlying profit
before tax margin of 13-16% (equivalent to an underlying adjusted EBITDA
margin of 20-23%); sustainably reinvesting into the flywheel of growth, while
generating the capital needed to support a fast-growing global financial
services business.
● Driven by customer growth, we expect underlying income growth of
15-20% CAGR over the medium term from FY24. FY25 underlying income growth over
FY24 expected to be between 15-20% (20-25% when adjusting for outperformance
in FY24 which led to price reductions at the start of FY25).
Financials - underlying basis
Financial year ended 31 March
2024 2023 Yoy Movement
£m £m £m %
Revenue 1,052.0 846.1 24%
Interest expense on customer balances - (3.7) (100%)
Underlying interest income (first 1% yield) 120.7 49.6 143%
Underlying income 1,172.7 892.0 31%
Cost of sales (307.4) (308.2) (0%)
Net credit losses on financial assets (12.5) (17.8) (30%)
Underlying gross profit 852.8 566.0 51%
Administrative expenses (615.9) (494.5) 25%
Net interest income from corporate investments 19.7 2.8 604%
Other operating income, net 5.7 10.7 (47%)
Underlying operating profit 262.3 85.0 209%
Finance expense (20.5) (10.7) 92%
Underlying profit before tax 241.8 74.3 226%
Interest income above the first 1% yield 364.5 90.6 302%
Benefits paid relating to customer balances (124.9) (18.4) 578%
Reported profit before tax 481.4 146.5 229%
Income tax credit/(expense) (126.8) (32.5) 290%
Profit for the year 354.6 114.0 212%
Underlying basis of reporting - margins (%)
Underlying gross profit margin 72.7% 63.4% 9%
Underlying profit before tax margin 20.6% 8.3% 12%
Adjusted EBITDA - as previously reported
Adjusted EBITDA 573.0 235.8 143%
Adjusted EBITDA margin % 40.6% 24.4% 16%
Underlying adjusted EBITDA
Underlying adjusted EBITDA 333.4 167.3 100%
Underlying adjusted EBITDA margin % 28.4% 18.7% 10%
Free cash flow (FCF) 486.6 156.0 212%
FCF conversion (FCF as a % of reported profit before tax) 101.1% 106.6% (6%)
Growth Metrics
FY24 FY23 YoY Movement
Customers (thousand) 12,838.2 9,962.7 29%
Personal (thousand) 12,212.4 9,442.9 29%
Business (thousand) 625.8 519.8 20%
Volume per customer (£ thousand) 9.2 10.5 (12%)
Personal (£ thousand) 7.1 8.1 (12%)
Business (£ thousand) 50.0 53.7 (7%)
Volume (£ billion) 118.5 104.5 13%
Personal (£ billion) 87.2 76.6 14%
Business (£ billion) 31.3 27.9 12%
Customer balances (£ billion) 13.3 10.7 24%
Assets Under Custody (£ billion) 2.9 0.5 523%
Underlying income (£ million) 1,172.7 892.0 31%
Personal (£ million) 884.4 681.0 30%
Business (£ million) 288.3 211.0 37%
Note: Differences between 'total' rows and the sum of the constituent
components of personal and business are due to rounding.
¹ Total number of unique customers who have completed at least one
cross-border transaction in the given period.
² Average cross-border volume per each active customer, calculated as
cross-border volume divided by total active customers in the period.
³ Cross-border volume only.
(4) Customer balances do not include Assets Under Custody which are not
recognised on the balance sheet.
(5) Underlying income is an alternative performance measure comprising
revenue, first 1% of gross yield of interest income on customer balances, and
any interest expense on customer balances. It does not include interest income
above the first 1% gross yield or benefits paid on customer balances.
(6)Total fees on cross-border transfers as a % of volume.
An update from Kristo, our Co-founder and CEO
We're building the best way to move and manage the world's money, making Wise
increasingly useful and valuable to people and businesses globally
At Wise, we're solving a massive problem for people and businesses. It is
estimated that people around the world move £2 trillion worth of money across
borders each year, while businesses move an additional £9 trillion.
Most of this money moves on a slow, expensive, inconvenient and opaque legacy
financial system. We're fundamentally changing this. Making it faster and
easier to move money around the world, at a much lower and more transparent
price. We've done this by building an alternative infrastructure and network
for cross-border transactions.
In 2011, we started by building the infrastructure needed to send money from
one country to another. Guided by our customers' feedback, we've built more
products they need and love. Today, with their Wise accounts, people and
businesses can send, spend and hold money in over 40 currencies, receive money
using domestic account details, and use a debit card to spend like a local.
And via Wise Platform, we're also able to offer people and businesses this
same Wise experience through their local bank.
This customer-led approach is driving our growth. 12.8m customers used Wise to
move money across borders in FY2024, 29% more than last year. Driven by
customer growth, account adoption, and higher interest rates, we have seen
underlying income grow by a CAGR of 41% and underlying profit before tax by a
CAGR of 83% over the last three years.
We continue to grow quickly but sustainably. We remain well-controlled;
reinvesting and generating a growing level of profitability.
Infrastructure that sets us apart
Our products and services are powered by our unique and increasingly powerful
infrastructure as a replacement to the traditional correspondent system. We do
this by connecting directly to local payment systems, and working with 90+
banking and payment partners around the world to ensure our service is
effective and always available.
This network is connected in real time through our proprietary technology and
global operations, as we operate under our 65+ regulatory licences around the
world. We moved over £118bn across borders through this network last year.
We continue to invest in the network. This year we completed our integration
with the New Payments Platform in Australia 一 meaning we are now directly
connected to a total of 5 domestic payment systems globally.
We also continue to deepen our global licensing footprint. This year we
completed a rigorous multi-year process to obtain a Type 1 Funds Transfer
Service Provider licence in Japan. We are one of the first international
financial services companies operating in the country to be granted this kind
of licence, removing the 1 million yen limit on individual transfers we were
subject to under the previous licence.
Operationally, we serve our customers at speed, with greatest convenience and,
critically, with controls in place to protect both them and us from financial
crime. This includes the design of our products, the checks completed when
onboarding new customers and the continuous real-time monitoring of all
transactions using machine learning to support the team.
The components of our infrastructure combine to enable a service which is
reliable, fast (with more than 62% of transfers completed instantly in Q4
FY2024), and low cost (at an average price of 0.67% in FY2024).
Delivering products and features our customers love
We serve our customers with cross-border transfers and other services through
three products: the Wise Account for personal customers, Wise Business for
small and medium-sized businesses and Wise Platform for banks and other
enterprises.
In FY2024 we continued to expand our products' availability. This includes
launching a service for expats in China to send money home, removing charges
for holding balances in Australia, enabling businesses in Brazil to receive up
to 10,000 USD from Wise customers and increasing limits on transfers to
Indonesia to 2bn IDR.
We rolled out Wise Assets 'Interest' into 5 European countries in FY2024,
allowing more customers to earn an interest-like return on their euro (EUR)
and sterling (GBP) balances via investments in low-risk funds backed by
government assets. Wise Assets 'Stocks' launched in 11 European countries,
letting customers hold their balances as ownership in the world's largest
public companies.
We continued to increase functionality too. With the launch of WiseTag (a
unique link or QR code) customers can now easily receive or request money from
other Wise users without needing a mobile number or account details. We took
it a step further for business customers, who got access to Wise Invoicing
which makes it easier for businesses to receive money in more than 9
currencies.
Wise Platform enables banks, other financial institutions and enterprises to
bring the benefits of the Wise infrastructure to their customers conveniently
through their own existing apps and accounts. In FY2024 Wise Platform
continued to grow cross-border volumes in line with the rest of the business
as we added more partners including Mox, Agoda, and Webexpenses, bringing the
total to more than 85. We began to expand the features we provide to Platform
partners too, for example providing Wise-issued cards to Tiger Brokers
customers in Singapore and Parpera's in Australia.
Championing price transparency
Recent regulatory changes in the EU and warnings from the US consumer
protection body, the Consumer Financial Protection Bureau (CFPB) to operators
in the US are a big step forward towards bringing price transparency to life
for consumers and businesses around the world. These changes are recognition
of the value that clear and honest communication has for customers.
We believe that transparency should be non-negotiable. People and businesses
should be clearly told upfront what a service is going to cost them so they
can make a well-informed decision, rather than being tricked by 'fee-free'
marketing or inflated exchange rates to disguise the real fees. That's why we
always show customers a clear breakdown of what they will pay with Wise and
why we have a fee comparison table on our homepage.
It's good to see more policymakers agree with us. We expect price transparency
to become a basic expectation over time from customers and regulators. Over
that time we will continue to build a great, transparent service for
customers, available at the lowest cost.
Investment in growth is paying off
Investing in our growth is continuous and over the last 3 years to FY2024
we've been able to demonstrate the value of these investments with active
customers growing by a 29% CAGR, cross-border volumes by 30% CAGR to £118.5
billion, and customer balances rose by a 53% CAGR to £13.3 billion.
The growing level of adoption, a growing customer base, and higher central
bank rates were the drivers behind a 31% growth in underlying income to
£1,172.7 million in FY2024 over FY2023.
After spending what is required to provide our services, we reinvest back into
the growth of the business through marketing, better service, more products
and infrastructure, and lower prices. All of which contributes to customer
growth over time.
After accounting for these costs and reinvestments, we generated £241.8
million pounds of underlying profit before tax in FY2024. This represented a
226% increase over FY2023 and an underlying PBT margin of 21% in FY2024.
Reported profit before tax increased significantly to £481.4 million and
basic earnings per share to 34.2 pence, an increase of more than x3 over
FY2023 for each.
Onwards
I'm really pleased that we were able to help 12.8 million customers move money
across borders in FY2024, but that equates to less than 5% of the people who
have such a need and less than 1% of businesses. We have come a long way from
our first customer and already shifted people's expectations to money without
borders, but we're still in the beginning of our mission. We will keep
focusing on the things that make our customers evangelical about Wise, we'll
continue to scale a company which creates massive value for customers and
owners alike over the long-term. The best is yet to come.
A financial update from Kingsley, our interim CFO
We're serving more people and businesses with more products and features,
making Wise increasingly valuable for all.
FY2024 was another year of strong customer-led growth and progress for Wise.
We continued investing in building the products and features that customers
need to move and manage their money around the world. This is working. Over
12.8 million customers used Wise for cross-border transactions in FY2024 and a
growing number of customers are using us for much more. This has resulted in
higher levels of profitability and growth across a broad base of geographies,
customers and products.
Basis of presentation
For FY2024, we made the decision to change the way we present our financial
information. As part of our commitment to transparency in everything we do, we
believe these changes will provide a better representation of our underlying
financial performance, as well as a clearer presentation of Wise's core
business performance and longer term growth trajectory.
This change of reporting consists of:
- A presentation of and focus on "underlying" financial performance,
which excludes net interest income above the first 1% gross interest yield.
- The lead earnings metric in our reporting will be "underlying profit
before tax". To date the lead earnings metric has been "Adjusted EBITDA".
- From underlying profit before tax, we will then report the
adjustment needed to reconcile to our reported profit before tax. This
consists of:
- Interest income above the first 1% yield; less
- Benefits paid relating to customer balances.
More customers, more growth
In FY2024 active customers grew by 29% to 12.8 million, with 5.4 million new
customers joining Wise and completing their first cross-border transaction.
This growth in customers drove a 13% growth in cross-border volumes to £118.5
billion (16% growth on a constant currency basis), with double-digit growth
across all five of our geographical segments (Europe, United Kingdom, North
America, Asia Pacific, and the rest of the world).
Active Personal customers grew 29% to 12.2 million, with Personal volumes
growing by 14% to £87.2 billion. At the end of FY2024, with an adoption rate
of 48%, almost half of all Personal customers are now using the Wise Account.
The roll-out and popularity of the Wise Account is driving strong growth in
the smaller (<£10k per quarter) Personal volume per customer (VPC)
segment. In particular, when a Wise Account customer only uses their card for
cross-border activity in a quarter ('card-only', as opposed to completing
transfers), they typically have a cross-border VPC of £500 to £1,000, and
the proportion of these 'card-only' customers in a given quarter is growing
fast.
In Q1 FY2021 the proportion of active personal customers who were 'card-only'
in this way was c. 3%, compared to our most recent quarter, Q4 FY2024, when
this had risen to 17%.
The Personal segment VPC in Q4 FY2024 was c£3,000, which was down 11%
compared to Q4 FY2023. Excluding these fast growing, lower-VPC 'card-only'
customers, Personal VPC would be c.15% higher than reported in Q4 FY2024 and
would have decreased by c. 6% compared to Q4 FY2023. Approximately half of
this reduction is explained by translation into GBP and the other half mainly
by the slower pace of growth among higher VPC customers (e.g. >£10k per
quarter) since interest rates began to rise.
Active Business customers increased by 20% to 0.63 million, with 60% having
adopted the account and with Business volumes increasing by 12% to £31.3
billion. The onboarding of new business customers in the second half of FY2024
was slower compared to the first half as we temporarily paused onboarding in
the UK and EU due to operational capacity constraints at a time of high
demand. We re-opened on a phased basis across countries, with some initially
applying refined criteria to prioritise higher quality applications. Entering
FY2025, we had resumed business customer onboarding across all major markets.
In total, cross-border revenue grew by 17% to £795.2m, driven by the growth
in customers and volumes in addition to a 2bps higher cross take rate of
0.67%.
Rising adoption of the account resulted in 'Card and other revenue' growing by
54% to £256.8m. Underlying interest income rose by 2.4x to £120.7m, due to a
24% growth in customer balances to £13.3 billion combined with higher
interest income yields as rates began to rise mid-way through FY2023.
Underlying income, which consists of cross-border revenue, card and other
revenue, and underlying interest income, increased 31% to £1,172.7 million
(Revenue £1,052.0 million, up 24% over FY2023). This includes Personal and
Business segments growing 30% and 37% respectively. When we look at our
different regions, we see all regions growing at pace.
The appeal of the Wise Account has driven customer growth and the value of
these customers is noticeable. Within a quarter, Personal Wise account
customers generate on average c25% more underlying income than Personal
customers who only complete cross-border transfers. For Wise Business account
customers it's even higher at c100%. Account customers tend to be more active
over time with longer lives too.
Underlying gross profit grew 51%, creating capacity to reinvest back into
growth
Cost of sales and net credit losses reduced by 2% to £319.9 million in
FY2024. The implementation of enhanced controls reduced the levels of
account-related costs such as chargebacks and overdrawn balances. We also
continue to refine our management of FX costs which, especially in a period of
low FX volatility, resulted in significantly lower costs in FY2024. Product
losses and FX costs vary over time and we consider a year-on-year reduction in
absolute terms as an exception that is unlikely to be repeated given the
growth of the business.
Rapid underlying income growth of 31% and falling cost of sales combined to
drive underlying gross profit up 51% in FY2024 to £852.8 million. This
represents an underlying gross profit margin of 73%, significantly higher than
the 63% in FY2023. Reported Gross profit was £1,092.4 million, an increase of
£454.2 million (71%) on FY2023.
Gross profit provides us with the capacity to cover our operating expenses,
invest in building a better experience for our customers and deliver our
target underlying profit margin. Through reinvestment, we deepen our
competitive advantage with infrastructure and products that continually
improve, attracting more and more customers which leads to more gross profit
to reinvest, and so the cycle continues.
Striving to reduce prices sustainably over time is an important form of
investment for Wise. In recent years we have seen more price increases than
decreases as we've needed to cover growing investments in our operational
capabilities and have seen certain other costs fluctuate, such as FX and
product losses. Entering FY2025 we were pleased to reduce cross-border prices
by over 2 basis points, sustainably reinvesting gross profit margin into lower
prices - the most common reason customers choose to join Wise.
Administrative expenses for the year increased by 25% to £615.9 million. This
reflects investment into future growth as well as in the capacity required to
onboard and serve a fast growing active customer base who are increasingly
using more features.
At 31 March 2024, we had over 5,500 Wisers, a more than 2,000 increase over
the last two years. The growth in our team resulted in employee benefit
expenses increasing 28% to £377.3 million in FY2024. We expect to add around
1,000 roles over the course of FY2025. These Wisers will help us on our
mission; building products, improving our infrastructure, supporting our core
functions and helping to attract and serve even more customers.
For example, investing in our servicing teams will help us better manage any
rapid rises in demand, such as we saw earlier this year. We are also
continuing to grow the teams responsible for combating financial crime,
overall compliance and risk management, which remain essential in a
fast-moving and ever-changing regulatory environment.
A focus on the effectiveness of incremental marketing through FY2024 resulted
in spend of £36.5 million which was broadly flat on FY2023 and our marketing
team growing by 27%, while the number of new customers rose by approximately
20% to 5.4 million. We expect our enhanced understanding of the incremental
benefits of marketing across segments and channels to unlock greater levels of
marketing investment through FY2025. This is planned to include targeted
expansion into brand marketing in a couple of markets (with an initial
campaign already launched in Australia in Q1 FY2025), as well as greater
levels of performance marketing spend.
Our economics remain healthy, as the combination of products that customers
love, efficient marketing and evangelical customers means that our marketing
investments remain small relative to the number of customers joining Wise,
with the blended payback within 6 months in FY2024.
Technology costs increased by 25% to £53.5 million and expenses relating to
consultancy and outsourced services increased by 28% to £90.4 million, both
reflecting the greater services required to support the growth of the
business.
We remain highly profitable and well capitalised
In FY2024 we generated an underlying profit before tax of £241.8 million, a
226% increase over FY2023 with a margin that was high at 21%.
To then arrive at our reported IFRS profit before tax, our 'interest income
above the first 1% yield' of £364.5 million, less the value of 'benefits paid
relating to customer balances' of £124.9 million, is added to the underlying
profit before tax.
As per our interest income framework, of this £364.5 million of interest
income, it is intended for 20% (£72.9 million) to be retained while aiming to
return the remaining 80% (£291.6 million in FY2024) to customers. We partly
achieved this with £124.9 million being paid to customers in the year,
leaving £166.7 million being incidentally retained, the majority of which
relates to the UK where we are currently unable to pay interest to Wise
Account holders under the terms of our licence.
Reported profit before tax increased significantly to £481.4 million and
earnings per share to 34.2 pence, a 2x increase over FY2023 for each.
As at 31 March 2024, we held £14.5 billion of cash and highly liquid
investment grade assets, up 26% from £11.5 billion at the end of FY2023. This
includes assets in respect of the £13.3 billion of customer balances. It also
includes £1.1 billion of our 'own cash' (£0.7 billion at the end of FY2023),
with the increase driven by the £486.6 million of reported free cash flow
generated by the business (see definition in appendix). On this basis, our
reported free cash flow conversion rate for FY2024 was 101% of reported profit
before tax (107% in FY2023, based on comparison to reported profit before tax,
rather than Adjusted EBITDA as previously).
We are well capitalised for the future and as at 31 March 2024, our Group
eligible capital was £870.4 million, including the now audited FY24 profits,
significantly above our minimum regulatory capital requirements.
Our capital position, built through sustained profitability, enabled us to
initiate a programme in FY2023 to reduce the dilutive impact on share count
that arises through stock based compensation. £10 million of our capital was
used in FY2023 by our Employee Benefit Trust to fund such share purchases and
this rose to £69.9 million in FY2024, covering the impact of new grants
issued during the year. We intend to continue this programme into FY2025,
purchasing shares to cover new grants at a broadly similar level to FY2024.
Looking beyond the short term with a relentless focus on the long term
opportunity
We have grown quickly, doubling the active customers we serve over just three
years, but the opportunity for Wise remains substantial; many millions of
people and small businesses move trillions of pounds across-borders while
over-paying for a poor service.
To further unlock this opportunity we will continue to invest into our long
term growth potential. We fundamentally believe that the market leader over
time will be the provider of the cheapest, fastest and most convenient
service, with the broadest coverage. This can only be achieved through
building the best global infrastructure while driving growth through
relentlessly pursuing incremental improvements in price, speed and
convenience.
We plan to continue reinvesting back into our growth each year over the medium
term while organically generating the capital needed for a fast growing global
financial services business.
We therefore expect to operate at an underlying profit before tax margin of
13-16% over the medium term, equivalent to targeting an underlying adjusted
EBITDA margin of 20-23%.
We expect our reported profit before tax to continue to be higher than
underlying profit before tax as long as the effective interest rate we achieve
on customer balances is greater than 1%. Under our framework, 20% of any
interest above the first 1% yield will be retained and added to profit before
tax (£72.9 million in FY2024).
The other 80% will be returned to customers where possible. In FY2024, 35
percentage points (ppts) of the 80ppts were paid to customers. We were unable
to return the other 45ppts for several reasons including where the deposits
are in jurisdictions where we're unable to pay interest for regulatory reasons
(eg the UK, c30ppts), where we do not yet pay interest on all currencies, and
in some geographies such as the US where customers are required to 'opt-in' to
receiving interest but have not yet done so. Where customers do not currently
receive interest on their balance, our priority is to launch and promote our
Assets Interest product, which provides a market rate of interest, while still
providing all of the other benefits of the Wise Account. This option is
currently available for UK, EU and Singapore customers.
Over the medium term, we expect our investments to drive a continuing high
level of customer growth, resulting in a 15%-20% CAGR growth in underlying
income from a FY2024 base.
Underlying income growth in FY2025 is also expected to be within this range of
15-20%. Improvements in efficiency were gained in FY2024 resulting in an
inflated level of earnings and providing the opportunity to reduce our average
cross-border pricing by more than 2 basis points, which was effective from
early in Q1 FY2025. Adjusting for the connected nature of this outperformance
in FY2024 and price reduction in FY2025, our expected growth would have
otherwise been 20-25% in FY2025.
We have also initiated a second re-price in Q1 FY2025, off the back of a
significant improvement in our cost allocation methodology, in order to ensure
customers only pay in proportion to the costs we incur in providing the
specific service. This is intended to be broadly revenue neutral overall, but
will lead to price reductions for higher value transactions, particularly on
main currency routes.
Growing fast and increasingly profitable
We have built a business with world-class fundamentals, and our rapid growth
and increasing profitability is a testament to that. With continuing
investment into long term growth, we are poised to capture even more of the
massive market opportunity ahead. We are delivering on our mission and
creating massive value for both our customers and shareholders.
Results presentation
A presentation of the full year results will be held at 9.30am BST Thursday,
13 June 2024 at Wise's London offices in Shoreditch. We invite you to join the
live stream using this https://vimeo.com/event/4289959
(https://vimeo.com/event/4289959) .
Enquiries
Martin Adams / Lawrence Nates - Investor Relations
owners@wise.com (mailto:owners@wise.com)
Sana Rahman - Communications
press@wise.com
Brunswick Group
Charles Pretzlik / Sarah West / Nick Beswick
Wise@brunswickgroup.com
+44 (0) 20 7404 5959
About Wise
Wise is a global technology company, building the best way to move and manage
the world's money. With Wise Account and Wise Business, people and businesses
can hold over 40 currencies, move money between countries and spend money
abroad. Large companies and banks use Wise technology too; an entirely new
network for the world's money.
Co-founded by Kristo Käärmann and Taavet Hinrikus, Wise launched in 2011
under its original name TransferWise. It is one of the world's fastest growing
tech companies and is listed on the London Stock Exchange under the ticker
WISE.
In fiscal year 2024, Wise supported around 12.8 million people and businesses,
processing approximately £118.5 billion in cross-border transactions, and
saving customers over £1.88 billion.
DISCLAIMER
This report may include forward-looking statements, which are based on current
expectations and projections about future events. These statements may
include, without limitation, any statements preceded by, followed by or
including words such as "target", "believe", "expect", "aim", "intend", "may",
"anticipate", "estimate", "forecast," "plan", "project", "will", "can have",
"likely", "should", "would", "could" and any other words and terms of
similar meaning or the negative thereof. These forward-looking statements are
subject to risks, uncertainties and assumptions about Wise and its
subsidiaries. In light of these risks, uncertainties and assumptions, the
events in the forward-looking statements may not occur.
Past performance cannot be relied upon as a guide to future performance and
should not be taken as a representation that trends or activities underlying
past performance will continue in the future, and the statements in this
report speak only as at the date of this report. No representation or warranty
is made or will be made that any forward-looking statement will come to pass
and there can be no assurance that actual results will not differ materially
from those expressed in the forward-looking statements.
Wise expressly disclaims any obligation or undertaking to update, review or
revise any forward-looking statements contained in this report and disclaims
any obligation to update its view of any risks or uncertainties described
herein or to publicly announce the results of any revisions to the
forward-looking statements made in this report, whether as a result of new
information, future developments or otherwise, except as required by law.
The information contained in this report is not intended to provide, and
should not be relied upon for, investment, tax, legal or financial advice. To
the maximum extent permitted by applicable law and regulation, Wise disclaims
all representations, warranties, conditions and guarantees, whether express,
implied, statutory or of other kind. To the maximum extent permitted by
applicable law and regulation, Wise shall not be liable for any loss, damage
or expense whatsoever, whether direct or indirect, howsoever arising, whether
in contract, tort (including negligence), strict liability or otherwise, for
direct, indirect, incidental, consequential, punitive or special damages
arising out of or in connection with this document, including (without
limitation) any course of action taken on the basis of the same
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 March 2024
2024 2023
Note £m £m
Revenue 3 1,052.0 846.1
Interest income on customer balances 4 485.2 140.2
Interest expense on customer balances - (3.7)
Benefits paid relating to customer balances 5 (124.9) (18.4)
Cost of sales 6 (307.4) (308.2)
Net credit losses on financial assets 6 (12.5) (17.8)
Gross profit 1,092.4 638.2
Administrative expenses 7 (615.9) (494.5)
Net interest income from corporate investments 19.7 2.8
Other operating income, net 5.7 10.7
Operating profit 501.9 157.2
Finance expense 9 (20.5) (10.7)
Profit before tax 481.4 146.5
Income tax expense 10 (126.8) (32.5)
Profit for the year 354.6 114.0
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss:
Fair value gain/(loss) on investments, net 10.9 (5.5)
Currency translation differences (7.0) 3.0
Total other comprehensive income/(loss) 3.9 (2.5)
Total comprehensive income for the year 358.5 111.5
Earnings per share
Basic, in pence 11 34.20 11.07
Diluted, in pence 11 33.73 10.94
Alternative performance measures
Income¹ 1,412.3 964.2
Underlying income² 1,172.7 892.0
Underlying PBT³ 241.8 74.3
( 1) Income is defined as revenue plus interest income on customer balances,
less interest expense on customer balances and benefits paid relating to
customer balances.
( 2) Underlying Income is a measure of income retained from customers and it
is comprised of revenue from customers and the first 1% yield of interest
income on customer balances that Wise retains.
( 3) Underlying PBT is a profitability measure calculated as profit before
tax using Underlying Income and excluding Benefits paid relating to customer
balances.
All results are derived from continuing operations.
The accompanying notes form an integral part of these Group consolidated
financial statements.
Consolidated statement of financial position
As at 31 March 2024
2024 2023
Note £m £m
Non-current assets
Deferred tax assets 10 103.0 113.2
Property, plant and equipment 12 34.3 21.1
Intangible assets 13 6.5 11.4
Trade and other receivables 14 32.1 17.9
Total non-current assets 175.9 163.6
Current assets
Current tax assets 4.0 6.7
Trade and other receivables 14 442.8 250.0
Short-term financial investments 18 4,033.9 3,804.5
Derivative financial assets 18 1.6 -
Cash and cash equivalents 15 10,479.2 7,679.4
Total current assets 14,961.5 11,740.6
Total assets 15,137.4 11,904.2
Non-current liabilities
Trade and other payables 16 46.1 29.7
Provisions 2.3 2.7
Deferred tax liabilities 2.4 1.1
Borrowings 17 14.8 7.8
Total non-current liabilities 65.6 41.3
Current liabilities
Trade and other payables 16 13,872.7 11,022.9
Derivative financial liabilities 18 1.6 -
Provisions 2.2 2.5
Current tax liabilities 6.0 4.0
Borrowings 17 209.4 256.6
Total current liabilities 14,091.9 11,286.0
Total liabilities 14,157.5 11,327.3
Equity
Share capital 19 10.2 10.2
Equity merger reserve (8.0) (8.0)
Share-based payment reserve 306.5 247.4
Own shares reserve (55.5) (10.4)
Other reserves (12.4) (23.3)
Currency translation reserve (3.8) 3.2
Retained earnings 742.9 357.8
Total equity 979.9 576.9
Total liabilities and equity 15,137.4 11,904.2
The accompanying notes form an integral part of these Group consolidated
financial statements.
Consolidated statement of changes in equity
For the year ended 31 March 2024
Share capital Equity merger reserve¹ Share-based payment reserves Own shares reserve Other Reserves(2) Currency translation reserve Retained earnings Total equity
Note £m £m £m £m £m £m £m £m
At 1 April 2022 10.2 (8.0) 200.5 (0.4) (17.8) 0.2 224.5 409.2
Profit for the year - - - - - - 114.0 114.0
Fair value loss on investments, net - - - - (5.5) - - (5.5)
Currency translation differences - - - - - 3.0 - 3.0
Total comprehensive income for the year - - - - (5.5) 3.0 114.0 111.5
Issue of share capital - - - - - - - -
Shares acquired by ESOP Trust 20 - - - (10.1) - - - (10.1)
Share-based compensation expense 21 - - 58.0 - - - (0.3) 57.7
Tax on share-based compensation 10 - - 8.0 - - - - 8.0
Employee share schemes 21 - - (19.1) 0.1 - - 19.6 0.6
At 31 March 2023 10.2 (8.0) 247.4 (10.4) (23.3) 3.2 357.8 576.9
Profit for the year - - - - - - 354.6 354.6
Fair value loss on investments, net - - - - 10.9 - - 10.9
Currency translation differences - - - - - (7.0) - (7.0)
Total comprehensive income for the year - - - - 10.9 (7.0) 354.6 358.5
Issue of share capital - - - - - - - -
Shares acquired by ESOP Trust 20 - - - (69.9) - - - (69.9)
Share-based compensation expense 21 - - 72.5 - - - - 72.5
Tax on share-based compensation 10 - - 40.8 - - - - 40.8
Employee share schemes 21 - - (54.2) 24.8 - - 30.5 1.1
At 31 March 2024 10.2 (8.0) 306.5 (55.5) (12.4) (3.8) 742.9 979.9
1. The merger reserve arises from the Group pre-listing reorganisation
accounted for as a capital reorganisation. Upon the reorganisation, the
Group's Ordinary Shares have been represented as those of Wise plc. The
difference between Wise Payments Limited net assets and the nominal value of
the shares in issue is recorded in the merger reserve.
2. Other reserves predominantly relate to investments into highly liquid
bonds measured at FVOCI. For these investments, changes in fair value are
accumulated within the FVOCI reserve within equity. On disposal of these debt
investments, any related balance within the FVOCI reserve is reclassified to
profit or loss. During the year £10.9m of fair value gains were recognised in
the other comprehensive income (2023: fair value losses of £5.5m), including
£3.5m of tax credit (2023: £2.4m tax charge). Refer to note 10 for further
information on the tax recognised on bonds.
The accompanying notes form an integral part of these Group consolidated
financial statements.
Consolidated statement of cash flows
For the year ended 31 March 2024
2024 2023
Note £m £m
Cash generated from operations 22 2,994.9 3,847.1
Interest received 344.4 103.9
Interest paid (16.7) (12.4)
Corporate income tax paid (73.7) (18.7)
Net cash generated from operating activities 3,248.9 3,919.9
Cash flows from investing activities
Payments for property, plant and equipment (10.6) (3.6)
Payments for intangible assets (2.4) (5.2)
Payments for financial assets at FVOCI (9,552.3) (8,655.9)
Proceeds from sale and maturity of financial assets at FVOCI 9,422.6 6,077.2
Proceeds from sublease 0.1 0.2
Net cash used in investing activities (142.6) (2,587.3)
Cash flows from financing activities
Funding relating to share purchases and employee share schemes (68.4) (10.1)
Proceeds from issues of shares and other equity 1.0 0.6
Proceeds from borrowings 17 420.0 529.0
Repayments of borrowings 17 (470.0) (359.0)
Principal elements of lease payments 17 (7.1) (5.9)
Interest paid on leases 17 (1.1) (0.7)
Net cash generated (used in)/from financing activities (125.6) 153.9
Net increase in cash and cash equivalents 2,980.7 1,486.5
Cash and cash equivalents at beginning of the year 15 7,679.4 6,056.3
Effects of exchange rate changes on cash and cash equivalents (180.9) 136.6
Cash and cash equivalents at end of the year 15 10,479.2 7,679.4
The accompanying notes form an integral part of these Group consolidated
financial statements.
Notes to the Group consolidated financial statements
For the year ended 31 March 2024
Note 1. Presentation of the consolidated financial statements
1.1 General information
Wise plc (the 'Company') is a public limited company and is incorporated and
domiciled in England. The address of its registered office is 6th Floor, Tea
Building, 56 Shoreditch High Street, London E1 6JJ. The principal activity of
the Company and its subsidiaries (the 'Group') is the provision of
cross-border and domestic financial services. Further information on the
Group's operations and principal activities is presented in the Strategic
Report.
1.2 Accounting information and policies
Introduction
This section describes the basis of preparation of the consolidated financial
statements and the Group's accounting policies that are applicable to the
financial statements as a whole. The Group's material accounting policies and
critical accounting estimates and judgements specific to a note, are included
in the note to which they relate. Furthermore, the section details new
accounting standards, amendments and interpretations, that the Group has
adopted in the current financial year or will adopt in subsequent years.
(a) Basis of preparation
The consolidated financial statements of the Group have been prepared in
accordance with the UK-adopted International Accounting Standards in
conformity with the applicable legal requirements of the Companies Act 2006.
The accounting policies applied are consistent with those of the preceding
financial year, unless otherwise stated.
The financial statements are prepared on a going concern basis. All financial
information is presented in millions of pounds sterling ('£'), which is the
Group's presentation currency, rounded to the nearest £0.1m, unless otherwise
stated. The financial statements have been prepared under the historical cost
convention modified to include the fair valuation of particular financial
instruments, to the extent required or permitted under IFRS as set out in the
relevant accounting policies.
(b) Going concern
The Group's business activities together with the factors likely to affect its
future development and position are set out in the Strategic report.
The financial statements are prepared on a going concern basis as the
Directors are satisfied that the Group has the available resources to continue
in business for the foreseeable future.
The going concern assessment is based on the detailed forecast prepared by
management and approved by the Board (base plan). As part of the going concern
review, the Directors have considered severe, but plausible, downside
scenarios to stress test the viability of the business. These downside
scenarios covered reduction in revenues, profitability, cash position and
liquidity as well as the Group's ability to meet its regulatory capital and
liquidity requirements. Appropriate assumptions have been made in respect to
revenue growth and profitability, based on the economic outlook over the
forecast period. Appropriate sensitivities have been applied in order to
stress test the base plan, considering situations with lower revenue growth
and profitability compared to the base plan, where future trading is less than
forecasted. Management expects that sufficient liquidity and regulatory
capital requirement headroom are maintained throughout the forecast period.
The Directors have made inquiries of management and considered forecasts for
the Group and have, at the time of approving these financial statements, a
reasonable expectation that the Group has adequate resources to continue in
operations for the foreseeable future. Further details are contained in the
Viability Statement of the Strategic Report.
(c) Basis of consolidation
The financial statements comprise the consolidated financial statements of
Wise plc and its subsidiaries as at 31 March 2024.
Subsidiaries are all entities over which the Group has control. The Group
controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those
returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is obtained
by the Group and are de-consolidated from the date that control ceases.
Inter-company transactions, balances and unrealised gains on transactions
between companies within the Group are eliminated on consolidation. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the transferred asset. Group accounting policies are
consistently applied to all entities and transactions.
(d) Current versus non-current classification
The Group presents assets and liabilities in the statement of financial
position based on current or non-current classification.
An asset is current when it satisfies any of the following criteria:
● expected to be realised or intended to be sold or consumed in the
normal operating cycle;
● held primarily for the purpose of trading;
● expected to be realised within 12 months after the reporting period;
● cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting
period.
All other assets are classified as non-current.
A liability is current when it satisfies any of the following criteria:
● it is expected to be settled in the normal operating cycle;
● it is held primarily for the purpose of trading;
● it is due to be settled within 12 months after the reporting period;
● there is no unconditional right to defer the settlement of the
liability for at least twelve months after the reporting period.
The Group classifies all other liabilities as non-current. Deferred tax assets
and liabilities are classified as non-current assets and liabilities.
(e) Foreign currencies translation
The Group's consolidated financial statements are presented in pounds
sterling. Items included in the financial statements of each of the Group's
entities are measured using the currency of the primary economic environment
in which the entity operates ('the functional currency').
Transactions and balances
Transactions in foreign currencies are initially recorded by the Group's
entities at their respective functional currency spot rates at the date the
transaction is recognised.
Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies at year-end exchange rates are recognised in
profit or loss (either as cost of sales or administrative expenses).
Non-monetary assets and liabilities are translated at historical exchange
rates if held at historical cost, or year-end exchange rates if held at fair
value, and the resulting foreign exchange gains or losses are recognised in
either the income statement or shareholders' equity depending on the treatment
of the gain or loss on the asset or liability.
Group companies
On consolidation, the results and financial position of foreign operations
(none of which has the currency of a hyperinflationary economy) are translated
into pounds sterling as follows:
● assets and liabilities for each balance sheet presented are
translated at the closing exchange rate at the reporting date;
● income and expenses are translated at average monthly exchange
rates; and
● all resulting exchange differences are recognised in other
comprehensive income.
(h) Changes in material accounting policies and disclosures
Adoption of new or revised standards and interpretations
The following new or revised standards and interpretations became effective
for the Group from 1 April 2023:
a. Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of
Accounting Policies
Although the amendments did not result in any changes to the accounting
policies themselves, they impacted the accounting policy information disclosed
in the financial statements. The amendments require the disclosure of
'material', rather than 'significant', accounting policies. Management
reviewed the accounting policies and made updates to the information disclosed
in the annual report in line with the amendments.
b. Amendments to IAS 12- International Tax Reform-Pillar Two Model Rules
Pillar Two legislation has been enacted or substantively enacted in certain
jurisdictions in which the Group operates. The Group has applied a temporary
mandatory exception from deferred tax accounting for the impacts of the top-up
taxes and accounts for it as a current tax when it is incurred. The Group has
performed an initial assessment of the potential exposure to Pillar Two income
taxes. This assessment is based on the most recent information available
regarding the financial performance of the constituent entities in the Group.
Based on the initial assessment performed, the Group does not expect any
material top up taxes. The Group is continuing to monitor potential future
implications.
c. Other amendments:
● IFRS 17 - Insurance Contracts
● Amendments to IAS 8 - Definition of Accounting Policies
● Amendments to IAS 12 - Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
The adoption of the other amendments did not have a material impact on the
Group. There are no other new or revised standards or interpretations that are
effective for the first time for the financial year beginning on or after 1
April 2023 that would be expected to have a material impact on the Group.
New standards, amendments and interpretations not yet adopted
The following amendments have been published by the IASB and are effective for
annual periods beginning on or after 1 January 2024; the amendments have not
been early-adopted by the Group:
a. Amendment to IAS 1 - Classification of Liabilities as Current or
Non-current and Non-current Liabilities with Covenants
The amendments, as issued in 2020, aim to clarify the requirements on
determining whether a liability is current or non-current, and apply
retrospectively for annual reporting periods beginning on or after 1 January
2024. It is anticipated that the application of those amendments may have an
impact in the Group's consolidated financial statements in future periods.
b. New standard issue - IFRS 18 Primary financial statements
The new standard will become effective, in the consolidated Group financial
statements, for annual reporting periods beginning on or after 1 January 2027
and its impact is under assessment.
c. Other amendments:
● Amendments to IFRS 16- Lease Liability in a Sale and Leaseback
● Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements
● Amendments to IAS 21 - Lack of Exchangeability
● Amendments to IFRS 10 and IAS 28 - Sale of contribution of assets
between an investor and its associate or joint venture
None of the other amendments are expected to have a material impact on the
Group in the current or future reporting periods or on foreseeable future
transactions.
1.3. Critical accounting judgements and key sources of estimation uncertainty
Details of critical judgments which the Directors consider could have a
significant impact on these financial statements are set out in the following
notes:
● Customer balances (recognition of the financial assets and their
respective liabilities on the balance sheet) - note 15 and note 16
● Net gains and losses from foreign exchange differences (accounting)
- note 6
Management has concluded that there are no critical accounting areas of
estimation.
Note 2. Segment information
Accounting policy
The Group is managed on the basis of a single segment.The information
regularly reported to the Chief Operating Decision Maker ('CODM'), which is
currently the Board of Directors of the Group, for the purposes of resource
allocation and the assessment of performance, is based wholly on the overall
activities of the Group. Based on the Group's business model, the Group has
determined that it has only one reportable segment under IFRS 8, which is
provision of cross-border and domestic financial services.
The Group's revenue, assets and liabilities for the reportable segment can be
determined by reference to the statement of comprehensive income and the
statement of financial position. The analysis of revenue by type of customer
and geographical region is set out in note 3.
At the end of each reporting period, the majority of the non-current assets
were carried by Wise Payments Limited in the UK. Based on the location of the
non-current asset, the following geographical breakdown of non-current assets
is prepared:
2024 2023
£m £m
Non-current assets by geographical region*
United Kingdom 40.5 34.8
Rest of Europe 13.9 8.6
Rest of the world 15.6 4.6
Total non-current assets 70.0 48.0
* Non-current assets exclude deferred tax assets and financial instruments.
Note 3. Revenue
Accounting policy
The Group primarily generates revenue from money transfers, conversion
services and debit card services.
A customer enters into the contract with the Group at the time of opening a
Wise Account or initiating a money transfer. The customer agrees to the
contractual terms by formally accepting the terms and conditions of the
respective service, on Wise's website or the App. For debit card services, a
customer enters into the contract with the Group at the time the card, either
virtual or physical, is made available for use and the customer is able to
either make a payment or a withdrawal.
The fees charged to customers for Wise's services are shown to them upfront
prior to a transaction, or conversion being initiated. The applicable fees
depend on a number of factors, including the currency route, the transaction
size, the type of transaction being undertaken and the payment method used.
The fees for card transactions are in accordance with the agreed terms and
conditions.
The revenue is recognised at the point in time the performance obligation has
been satisfied. For money transfers, the revenue is recognised upon delivery
of funds to the recipient and for money conversions, when a customer balance
is converted into a different currency in their account. For cards, the
revenue is recognised upon transaction capture, unless it relates to the
provision or replacement of physical cards, in which case the revenue is
recognised over time throughout the period the debit card services are
provided.
The time required for the Group to process the payment to the recipient and
therefore to satisfy its performance obligations, largely depends on the
processing time its banking partners require to deliver funds to the
recipient. As such the revenue is deferred until the funds are delivered.
Transactions in certain jurisdictions, where the Group has settlement accounts
with Central Banks, transfers between Wise accounts or conversions within a
Wise Account, are generally fulfilled instantly.
Rebates
Wise offers certain rebates in the form of a fee refund or cashback for
eligible revenue generating transactions. The rebate is recognised as a
liability at the time of completion of the eligible transaction and is
deducted from revenue.
Other - Assets revenue
The Group also generates revenue from its multi-currency investment feature,
Wise Assets ('Assets'). This feature allows customers to purchase units in
investment funds, provided by fund managers, using their Wise account balance.
The Group generates revenue from charging a fee based on the value of the
assets under custody. The revenue is accrued on a daily basis and is
recognised over time, in line with the period the Group provides its services
to Assets customers. The Group acts as a matched principal broker and does not
retain control nor benefits from the Assets, thus it does not recognise the
financial assets and the respective liabilities for the Assets, and
derecognises customer funds on purchase.
Below is the revenue split by customer type:
Year ended 31 March
2024 2023
£m £m
Revenue by customer type
Personal 815.3 656.3
Business 236.7 189.8
Total revenue 1,052.0 846.1
The revenue split by customer type, personal or business, represents the
underlying users of Wise products. Wise Account and standalone money transfers
are attributed to personal, Wise Business to business, and Wise Platform is
attributed to either, based on the ultimate customers of the partner that Wise
is contracted with.
Disaggregation of revenues
In the following table, revenue is disaggregated by major geographical market:
Year ended 31 March
2024 2023
£m £m
Revenue by geographical region
Europe (excluding UK) 323.9 269.6
United Kingdom 202.5 170.1
North America 214.5 179.0
Asia-Pacific 216.2 161.6
Rest of the world 94.9 65.8
Total revenue 1,052.0 846.1
The geographical market depends on the type of the service provided and is
based either on customer address or the source currency.
No individual customer contributed more than 10% to the total revenue in 2024
and 2023.
Note 4. Interest income on customer balances
Accounting policy
Interest income on customer balances is earned from holding customer funds as
cash and cash equivalents or investing them into highly liquid permitted
financial assets. These amounts are recognised in the income statement using
the effective interest rate method.
Year ended 31 March
2024 2023
£m £m
Interest income
Interest income from cash at banks 162.2 53.0
Interest income from investments in money market funds (MMFs) 153.7 16.2
Interest income from investments in listed bonds 169.3 71.0
Total interest income 485.2 140.2
Note 5. Benefits paid relating to customer balances
Accounting policy
Benefits paid relating to customer balances include incentives and other
benefits provided to customers for holding eligible balances in their Wise
accounts. These are calculated as a percentage of those eligible balances and
they are recognised in the income statement in the period for which the
customer receives the benefit.
Year ended 31 March
2024 2023
£m £m
Benefits paid relating to customer balances
Cashback (EU) 107.9 18.1
Interest (US) 17.0 0.3
Total benefits paid relating to customer balances 124.9 18.4
Note 6. Cost of sales and net credit losses on financial assets
Accounting policy
Cost of sales comprises the costs that are directly associated with the
Group's principal revenue stream of money transfer, conversion services and
debit card services. This includes:
• banking and other fees, net of applicable rebates, incurred in processing
customer transfers and the costs of providing cards to customers;
• net foreign exchange costs generated due to customer transactions. Within
the same line are included the net foreign exchange differences from the
revaluation of customer balances at period end. Other product costs include
product losses that are directly generated from consumer transactions,
including chargeback losses, as well as taxes directly attributable to
customer activity.
Critical accounting judgement
Net gains and losses from foreign exchange differences
Management applied judgement in classifying net foreign exchange gains and
losses from customer transactions, including the costs related to the
difference between the published mid-market rate offered to customers and the
rate obtained by the Group in acquiring currency, as cost of sales. The Group
considers these costs as directly related to and incurred as part of providing
services to customers.
Breakdown of expenses by nature:
Year ended 31 March
2024 2023
£m £m
Cost of sales
Banking and customer related fees 252.5 225.5
Net foreign exchange loss and other product costs 54.9 82.7
Total cost of sales 307.4 308.2
Net credit losses on financial assets
Amounts charged to credit losses on financial assets 12.5 17.8
Total net credit losses 12.5 17.8
Expected credit losses are presented as net credit losses within gross profit
and subsequent recoveries of amounts previously written off are credited
against the same line item.
Subsequent recoveries of amounts previously written off are immaterial in both
current and prior year.
Within cost of sales are included £4.6m of net losses arising from changes in
foreign exchange rates related to the translation of customer balances (2023:
£24.5m).
Note 7. Administrative expenses
Year ended 31 March
2024 2023
£m £m
Administrative expenses
Employee benefit expenses* 377.3 294.8
Marketing 36.5 37.4
Technology 53.5 42.7
Consultancy and outsourced services 90.4 70.4
Other administrative expenses 42.0 30.6
Depreciation and amortisation 18.3 23.2
Less: Capitalisation of staff costs (2.1) (4.6)
Total administrative expenses 615.9 494.5
* For further details on employee benefit expenses including accounting
policies, refer to note 8.
During the year, the Group (including its overseas subsidiaries) obtained the
following services from the Company's auditors:
Year ended 31 March
2024 2023
£m £m
Audit fees
Fees payable to the Company's auditors and its associates 2.7 2.8
for the audit of Company and Group consolidated Financial
Statements
Audit of the financial statements of the Company's 1.8 1.5
subsidiaries
Total audit fees 4.5 4.3
Non-audit fees
Assurance services other than the auditing of the Company's accounts 0.8 0.5
Total non-audit fees 0.8 0.5
Note 8. Employee benefit expenses
The aggregate remuneration of employees for the year ended 31 March 2024 was
as follows:
Year ended 31 March
2024 2023
£m £m
Salaries and wages 248.9 194.6
Share-based payment compensation expense 72.5 58.2
Social security costs 37.7 29.6
Pension costs 8.6 6.3
Other employment taxes and insurance cost 9.6 6.1
Total employee benefit expense 377.3 294.8
Refer to note 21 for details on awards granted to employees and the accounting
policy for share-based payments.
Remuneration of key management personnel is disclosed in note 24.
The monthly average number of employees during the year ended 31 March 2024
was as follows:
2024 2023
Number of employees Number of employees
Product development 1,341 1,170
Servicing 3,396 2,593
Marketing 270 212
Other functions 492 436
Total average number of employees 5,499 4,411
Note 9. Finance expense
Accounting policy
Interest expense related to the revolving credit facility is recognised in
finance expense over the term of the facility using the effective interest
method. The effective interest rate represents the true cost of borrowing and
is the rate that discounts the estimated future cash payments through the
expected life of the revolving credit facility.
Year ended 31 March
2024 2023
Finance expense £m £m
Interest expense related to revolving credit facility 19.2 9.3
Interest on lease liabilities 1.1 0.7
Other financial expenses 0.2 0.7
Total finance expense 20.5 10.7
Note 10. Tax
Accounting policy
The tax expense for the year comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.
The current tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the balance sheet date in the countries where the
Company and its subsidiaries operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred tax is recognised on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the Group
financial statements. Deferred tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by the balance sheet date and
are expected to apply when the related deferred tax asset is realised, or the
deferred tax
liability is settled.
Deferred tax assets are recognised only to the extent that it is probable that
future taxable profit will be available against which the temporary
differences can be utilised. Deferred tax assets on share-based payments are
recognised for the share options not exercised at the balance sheet date. The
deferred tax assets on share-based payments are determined based on the share
price at the balance sheet date. The impact of recognition is split between
income tax expense in profit or loss for the year, for the element up to the
cumulative remuneration expense; and the share-based payment reserve,
recognised directly in equity, for the element in excess of the related
cumulative remuneration expense.
The impact of the recognition of deferred tax assets on losses is split
between the share-based payment reserve, for the element of the tax deduction
on exercise in excess of the related cumulative remuneration expense, and the
income tax expense in profit or loss for the balance of the loss.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred tax assets and liabilities relate to income taxes levied
by the same taxation authority on either the same taxable entity or different
taxable entities and there is an intention to settle the balances on a net
basis.
Tax expense:
Year ended 31 March
2024 2023
£m £m
Current income tax for the year
UK corporation tax 78.5 17.7
Foreign corporation tax 13.4 9.0
Adjustment in respect of prior years 2.3 (1.3)
Total current tax expense for the year 94.2 25.4
Deferred income tax for the year
Increase in deferred tax 36.4 6.9
Adjustment in respect of prior years (3.8) 0.2
Total deferred tax expense for the year 32.6 7.1
Total tax expense for the year 126.8 32.5
Factors affecting tax expense for the year:
Year ended 31 March
2024 2023
£m £m
Profit before taxation 481.4 146.5
Profit multiplied by the UK tax rate of 25% (2023: 19%) 120.4 27.8
Adjustments in respect of prior periods (1.5) (1.1)
Effect of expenses not deductible 0.4 0.7
Movement in tax provisions 3.1 1.5
Employee option plan 0.8 1.2
Difference in overseas tax rates 3.7 3.7
Change in rate of recognition of deferred tax (0.1) (1.3)
Total tax expense for the year 126.8 32.5
The Group's effective tax rate (ETR) before other comprehensive income (OCI)
is a 26% charge (2023: 22% charge).
This equates to the applicable UK corporation tax rate of 25%, adjusted for a
number of factors such as non-deductible employee option plans, movements in
provisions and higher overseas tax rates.The prior year ETR can be explained
by the same key factors, but was lower for the year-ended 31 March 2023 as the
applicable UK corporate tax rate was 19%.
Amounts recognised in other comprehensive income:
2024 2023
£m £m
Current tax
Recognition of current tax liability on listed bonds 0.1 (0.1)
Deferred tax
Recognition of deferred tax asset on listed bonds (3.6) 2.5
Total amounts recognised in other comprehensive income (3.5) 2.4
Amounts recognised directly in equity:
2024 2023
£m £m
Current tax
Deduction for exercised options 15.7 5.0
Deferred tax
Recognition of deferred tax asset on share-based payments* 25.1 3.0
Total amounts recognised directly in equity 40.8 8.0
* Recognition of deferred tax on share-based payments consists of future
share-based payments deductions and carry forward losses generated by
share-based payments.
The deferred tax asset in relation to share-based payments was recognised
based on the share price at the balance sheet date which was £9.29 (2023:
£5.40).
Deferred tax assets and liabilities
Movements during the year
Year ended 31 March 2024
1 April 2023 Recognised in income Recognised in equity/OCI FX 31 March 2024
£m £m £m £m £m
Property, plant and equipment 0.3 0.8 - - 1.1
Share-based payments 61.6 6.1 25.1 (0.2) 92.6
Intangibles (1.0) (0.6) - - (1.6)
Provisions 3.0 2.0 - - 5.0
Tax losses 40.2 (38.9) - - 1.3
Other 8.0 (2.1) (3.6) (0.1) 2.2
Closing deferred tax asset 112.1 (32.7) 21.5 (0.3) 100.6
Represented by:
Deferred tax assets 113.2 103.0
Deferred tax liabilities (1.1) (2.4)
Total 112.1 100.6
Year ended 31 March 2023
1 April 2022 Recognised in income Recognised in equity/OCI FX 31 March 2023
£m £m £m £m £m
Property, plant and equipment 0.1 0.4 - (0.2) 0.3
Share-based payments 49.9 8.4 3.1 0.2 61.6
Intangibles (2.2) 1.2 - - (1.0)
Provisions 2.7 0.3 - - 3.0
Tax losses 57.2 (17.5) - 0.5 40.2
Other 5.4 0.1 2.5 - 8.0
Closing deferred tax asset 113.1 (7.1) 5.6 0.5 112.1
Represented by:
Deferred tax assets 113.6 113.2
Deferred tax liabilities (0.5) (1.1)
Total 113.1 112.1
The deferred tax asset is predominantly generated in the UK and the US and
mainly comprises unexercised share options which are forecast to be exercised
within four years and as such are less sensitive to changes in long-term
profit forecasts.
The deferred tax assets are reviewed at each reporting date to determine
recoverability and to determine a reasonable time frame for utilisation. To
determine this, the Group uses the approved Group forecast used for the
viability statement and going concern analysis. The Group considers it is
probable that there will be sufficient taxable profits in the coming years to
realise the deferred tax asset. Consequently, the Group has unrecognised
deductible temporary differences of £nil (2023: £nil), with the net deferred
tax asset being recognised in full as at 31 March 2023 and 2024.
Both the UK and the US utilised brought forward losses in FY2023 and in
FY2024, with the UK taxable losses fully utilised as at 31 March 2024.
Therefore, there are no deferred tax assets in respect of losses recognised in
the UK as at 31 March 2024. The Group expects deferred tax assets of £30.1m
to unwind within 12 months which will predominantly relate to exercised share
options in the UK and US. The deferred tax asset on share options will also be
impacted by the future share price.
The Organisation for Economic Co-operation and Development (OECD)/G20
Inclusive Framework on Base Erosion and Profit Shifting published on 20
December 2021 the Pillar Two model rules designed to address the tax
challenges arising from the digitalisation of the global economy.
The Group operates in the United Kingdom (amongst other locations), which have
enacted or substantively enacted new legislation to implement the global
minimum top-up taxes by 31 March 2024. The earliest period for which
substantively enacted legislation is effective for the Group is the year ended
31 March 2025, therefore there is no current tax impact of Pillar Two income
taxes for the year ended 31 March 2024. The Group has performed an assessment
of the Group's potential exposure to Pillar Two income taxes. This assessment
is based on the most recent information available regarding the financial
performance of the constituent entities in the Group. Based on the assessment
performed, the Group does not expect any material top up taxes. The Group is
continuing to monitor potential future implications.
Note 11. Earnings per share
Basic earnings per share has been calculated by dividing the profit
attributable to the owners of the Group by the weighted average number of
ordinary shares outstanding during the financial year, after deducting shares
held by the Employee Share Ownership Plan (ESOP) Trust.
Diluted earnings per share has been calculated after adjusting the weighted
average number of shares used in the basic calculation to assume the
conversion of all potentially dilutive shares. For the purposes of diluted
earnings per share it is assumed that any performance conditions attached to
the schemes have been met at the balance sheet date.
Year ended 31 March
2024 2023
Profit for the year (£m) 354.6 114.0
Weighted average number of ordinary shares for basic EPS (in millions of 1,036.7 1,029.4
shares)
Plus the effect of dilution from Share options (in millions of shares) 14.7 13.0
Weighted average number of ordinary shares adjusted for the effect of dilution 1,051.4 1,042.4
(in millions of shares)
Basic EPS, in pence 34.20 11.07
Diluted EPS, in pence 33.73 10.94
Note 12. Property, plant and equipment
Accounting policy
Property, plant and equipment is stated at historical cost less accumulated
depreciation and any accumulated impairment losses. Items of property, plant
and equipment are derecognised on disposal or when no future economic benefits
are expected to arise from the continued use of the asset.
Computer equipment is not recorded in property, plant and equipment, but
expensed as low-value short-lived equipment in the Group.
The accounting policy for right-of-use assets is included in note 17.
Depreciation
Depreciation is charged on a straight-line basis from the time the asset is
available for use, so as to allocate the cost of assets less their residual
value over their estimated useful lives. The estimated useful lives assigned
to principal categories of assets are as follows:
● Right-of-use assets: lease term (1-7 years)
● Leased office improvements: shorter of 5 years or lease term
● Office equipment: 2 years
Impairment of property, plant and equipment
Reviews are carried out if there is an indication that assets may be impaired,
to ensure that property, plant and equipment are not carried at above their
recoverable amounts.
Right-of-use assets Leased office improvements Office equipment Assets under construction Total
£m £m £m £m £m
At 1 April 2022
Cost 25.8 10.5 4.9 0.2 41.4
Accumulated depreciation (11.6) (4.8) (2.4) - (18.8)
Net book value 14.2 5.7 2.5 0.2 22.6
Additions 3.3 0.9 1.5 1.7 7.4
Reclassifications - 1.4 - (1.4) -
Depreciation charge (5.7) (2.3) (1.6) - (9.6)
Write-offs - (0.1) - - (0.1)
Foreign currency translation differences 0.1 0.2 0.5 - 0.8
At 31 March 2023
Cost 29.4 13.0 6.6 0.5 49.5
Accumulated depreciation (17.5) (7.2) (3.7) - (28.4)
Net book value 11.9 5.8 2.9 0.5 21.1
Additions 15.3 0.1 - 10.3 25.7
Reclassifications - 3.4 2.0 (5.4) -
Depreciation charge (7.3) (2.5) (1.6) - (11.4)
Write-offs - (0.8) - - (0.8)
Foreign currency translation differences (0.4) - 0.2 (0.1) (0.3)
At 31 March 2024
Cost 39.0 15.4 8.1 5.3 67.8
Accumulated depreciation (19.5) (9.4) (4.6) - (33.5)
Net book value 19.5 6.0 3.5 5.3 34.3
Refer to note 18 for disclosure of security.
Note 13. Intangible assets
Accounting policy
Intangible assets predominantly relate to internally generated software and
other intangible assets and are stated at cost less accumulated amortisation.
Internally generated software
The Group develops software used in the provisioning of its services. Only the
development costs that are directly attributable to the design, development
and testing of new software controlled by the Group are capitalised. Other
development expenditures that do not meet the recognition criteria under IAS
38 are recognised as an expense as incurred. Development costs previously
recognised as an expense are not recognised as an asset in a subsequent
period.
Costs associated with maintaining computer software are recognised as an
expense as incurred. Directly attributable costs that are capitalised as part
of the software product comprise software development employee costs.
Other intangible assets
Other intangible assets primarily include licences and domain purchases. They
are amortised on a straight-line basis over their useful economic life or the
term of the contract.
Amortisation
The Group amortises intangible assets on a straight-line basis over 3 years,
except for mobile applications which are amortised over 2
years and licence purchases that are amortised over a period of 2-10 years.
Impairment of intangible assets
Intangible assets are assessed for impairment whenever there is an indicator
that they might be impaired, for example when the assets are no longer in use
and need to be decommissioned.
Software Other intangible assets Total
£m £m £m
At 1 April 2022
Cost 39.0 4.9 43.9
Accumulated amortisation (23.0) (0.6) (23.6)
Net book value 16.0 4.3 20.3
Additions 4.6 0.1 4.7
Amortisation charge (11.4) (2.2) (13.6)
At 31 March 2023
Cost 28.3 5.0 33.3
Accumulated amortisation (19.1) (2.8) (21.9)
Net book value 9.2 2.2 11.4
Additions 2.0 - 2.0
Amortisation charge (6.5) (0.4) (6.9)
At 31 March 2024
Cost 11.0 4.6 15.6
Accumulated amortisation (6.3) (2.8) (9.1)
Net book value 4.7 1.8 6.5
In addition to the capitalised amounts as software, the Group expensed
£115.8m of product engineering costs for the year ended 31 March 2024 (2023:
£91.8m). These costs directly relate to the development of the Group's
product offerings and primarily comprise employee costs of the engineering and
product teams that do not meet the capitalisation criteria.
During the year, the Group removed from the asset register intangible assets
with a total cost of £19.7m (2023: £15.3m), that have been fully amortised.
Note 14. Trade and other receivables
Accounting policy
Trade and other receivables primarily consist of amounts due from payment
processors, partners, customers and collateral deposits the Group holds with
its counterparts. Trade and other receivables are initially recognised at fair
value and subsequently measured at amortised cost less impairment for expected
credit losses. The carrying values of current trade receivables approximate
their fair values due to their short maturity.
The Group recognises impairment loss allowances for expected credit losses
('ECL') on financial assets that are measured at amortised cost. The Group's
receivables are considered to qualify for the simplified approach, which
requires expected lifetime credit losses to be recognised from the initial
recognition of the receivables.
Refer to note 18 for further information on expected credit losses.
The impairment loss allowance recognised during the year, relates to
chargebacks and negative customer balances. For chargebacks, the Group has
established a provision matrix that is based on its historical credit loss
experience, adjusted for forward-looking factors specific to the debtors and
the economic environment. For overdrafts, if an active non fraudulent account
goes more than 30 days past due, according to the Group policy, it is
perceived as an indication of a significant increase in credit risk and the
receivable is provided in full.
2024 2023
£m £m
Non-current trade and other receivables
Office lease deposits 2.8 2.4
Other non-current receivables 29.3 15.5
Total non-current trade and other receivables 32.1 17.9
Current trade and other receivables
Receivables from payment processors 95.6 86.8
Receivables from partners 93.6 41.0
Collateral deposits 25.0 44.8
Prepayments 30.1 19.4
Receivables from customers* 131.6 23.9
Receivables from broker 19.9 15.2
Interest receivable 30.9 11.7
Other receivables 16.1 7.2
Total current trade and other receivables 442.8 250.0
*Receivables from customers disclosed are net of expected credit loss
provision of £41.3m as at 31 March 2024 (2023: £31.5m). The movement in the
year is predominantly related to increased activity and the related increase
in customer balances, which resulted in the increase of negative customers'
balances older than 30 days. Customer chargebacks decreased by £1.6m to
£2.5m at 31 March 2024 (31 March 2023: £4.1m) and negative customer balances
increased by £11.5m to £38.9m (31 March 2023: £27.4m).
Note 15. Cash and cash equivalents
Accounting policy
Cash and cash equivalents include cash on hand, on-demand deposits, term
deposits used for meeting short term cash commitments, money market funds
(MMFs) and other short-term high quality liquid investments with original
maturities of 3 months or less, and e-money held with payment processing
partners. Due to the short duration of the cash and cash equivalents (less
than 3 months), the fair value approximates the carrying value at each
reporting period.
Cash in transit to customers represents cash that has been paid out from the
Group bank accounts but has not been delivered to the bank account of the
beneficiary.
Cash collateral deposits the Group holds with its counterparties are
recognised under 'Trade and other receivables' in the statement of financial
position.
Customer deposits
As disclosed above, the Group recognises financial assets and liabilities for
the funds customers hold in their Wise accounts and the funds collected from
customers, as part of the money transfer settlement process, that have not yet
been processed. The liability is recognised upon receipt of cash or capture
confirmation (depending on pay-in method), and is derecognised when cash is
delivered to the beneficiary.
Principles to determine the point of delivery are the same as applied in
revenue recognition, see note 3.
Critical accounting judgement
Customer balances
The Group recognises financial assets and corresponding liabilities for the
funds customers hold in their Wise Accounts and the funds the Group receives
as part of the money transfer settlement process. At the point that the cash
is received from the customer, the Group becomes party to a contract and has a
right and an ability to control the economic benefit from the cash flows
associated with this balance. Additionally, pursuant to IAS 32, the Group
considers it does not have a legally enforceable right to set off these
financial assets and liabilities, or an intention to settle them on a net
basis or settle them simultaneously. Therefore, Management has concluded that
the recognition of the financial assets and their respective liabilities on
the balance sheet is appropriate.
2024 2023
£m £m
Cash and cash equivalents
Cash at banks, in hand and in transit between Group bank accounts 6,570.3 4,827.8
Cash in transit to customers 132.8 182.0
Investment into money market funds 3,776.1 2,669.6
Total cash and cash equivalents 10,479.2 7,679.4
Cash at banks, in hand and in transit between Group bank accounts include term
deposits of £285.8m (2023: £nil). Their settlement date is three months or
less.
Of the £10,479.2m (2023: £7,679.4m) cash and cash equivalents at the year
end, £1,061.1m (2023: £671.1m) is the corporate cash balance of the Group.
This balance is not related to customer funds, which are held in Wise
Accounts, or collected from customers as part of the money transfer settlement
process.
The Group is subject to various regulatory safeguarding compliance
requirements with respect to customer funds. Such requirements may vary across
the different jurisdictions in which the Group operates. As at 31 March 2024,
the Group held £5,290.5m (2023: £3,832.9m) of customer funds as cash in
segregated, safeguarding bank accounts at investment grade banking
institutions and term deposits. The remainder of safeguarded customer deposits
were held across highly liquid global money market funds (MMFs), treasury
bonds and investment grade corporate paper, as allowed by local regulations.
Note 16. Trade and other payables
Accounting policy
Accounts payable consist of obligations to pay for goods and services that
have been acquired in the ordinary course of business from suppliers on the
basis of normal credit terms and do not bear interest.
Wise Accounts relate to the funds customers hold in their Wise accounts and
the funds the Group receives as part of the money transfer settlement process.
They are non-derivative liabilities to individuals or business customers for
money they hold with the Group and do not constitute borrowings. Refer to note
15 for details of the judgement Management has exercised in relation to
customers' balances and the recognition of the financial assets and their
respective liabilities on the balance sheet.
Outstanding money transmission liabilities represent transfers that have not
yet been paid out or delivered to a recipient.
Payables are initially recognised at fair value and subsequently measured at
amortised cost.
Trade and other payables are unsecured unless otherwise indicated; due to the
short-term nature of current payables, their carrying values approximate their
fair value.
As at 31 March As at 31 March
2024 2023
£m £m
Non-current trade and other payables
Accounts payable and accrued expenses 7.4 4.6
Other payables 38.7 25.1
Total non-current trade and other payables 46.1 29.7
Current trade and other payables
Outstanding money transmission liabilities 235.9 191.3
Wise Accounts 13,261.0 10,676.4
Accounts payable 7.9 8.2
Accrued expenses 76.3 52.2
Deferred revenue 12.9 8.0
Payables to payment processors 216.8 53.6
Other taxes 22.7 11.1
Other payables 39.2 22.1
Total current trade and other payables 13,872.7 11,022.9
Wise Accounts
The table below illustrates the currencies in which Wise Accounts are held:
2024 2023
£m £m
Wise accounts
USD 4,881.8 3,892.6
EUR 4,717.6 3,571.8
GBP 2,092.2 2,058.4
AUD 338.0 222.8
CAD 205.1 155.6
CHF 183.9 183.2
JPY 182.7 83.0
Other 659.7 509.0
Total 13,261.0 10,676.4
Note 17. Borrowings
Accounting policy
Revolving credit facility (RCF)
The RCF is recognised initially at fair value, net of transaction costs
incurred, and is subsequently carried at amortised cost. Any difference
between the proceeds (net of transaction costs) and the redemption value is
recognised as interest expense using the effective interest method over the
term of the borrowing. Fees paid on the establishment of loan facilities are
recognised as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case, the fee is
deferred and treated as a transaction cost when the draw-down occurs. The
Group presents the impact of transaction costs as part of financing cash
flows.
The Group uses the facility primarily for short-term funding, as such the
facility has been recorded as a current liability on the balance sheet.
Leases
Where the Group is the lessee, the right-of-use of assets are recorded within
the 'Property, plant and equipment' line in the statement of financial
position and are measured at an amount equal to the lease liability. They are
related to office spaces leased in various locations and depreciated on a
straight-line basis with the charge recognised in administrative expenses. The
liability, recognised as part of borrowings, is measured at a discounted value
and any interest is charged to finance charges. The Group presents the
payments of principal and interest on lease liabilities as part of financing
cash flows.
The Group has elected not to apply the requirements of IFRS 16 to short-term
leases (leases with a lease term of 12 months or less) and leases for which
the underlying asset is of low value. Low-value assets comprise IT and office
equipment with a purchase price under £5,000. Payments associated with
short-term and low-value assets are recognised on a straight-line basis as an
expense in profit or loss.
Extension and termination options are included in a number of property and
equipment leases across the Group and they are exercisable only by the Group
and not by the lessors. The Group initially assesses at lease commencement
whether it is reasonably certain it will exercise the options and subsequently
reassesses if there is a significant event or significant changes in
circumstances within its control. The Group has concluded it is not reasonably
certain that the options will be exercised.
2024 2023
£m £m
Current
Revolving credit facility 202.7 249.9
Lease liabilities 6.7 6.7
Total current borrowings 209.4 256.6
Non-current
Lease liabilities 14.8 7.8
Total non-current borrowings 14.8 7.8
Total borrowings 224.2 264.4
Debt movement reconciliation:
Revolving credit facility Lease liabilities Total
£m £m £m
As at 31 March 2022 78.5 17.2 95.7
Cash flows:
Proceeds 529.0 - 529.0
Transaction costs related to revolving credit facility (1.5) - (1.5)
Repayments (359.0) (5.9) (364.9)
Interest expense paid (6.4) (0.7) (7.1)
Non-cash flows:
New leases - 3.2 3.2
Interest expense 9.3 0.7 10.0
As at 31 March 2023 249.9 14.5 264.4
Cash flows:
Proceeds 420.0 - 420.0
Transaction costs related to revolving credit facility (0.5) - (0.5)
Repayments (470.0) (7.1) (477.1)
Interest expense paid (15.8) (1.1) (16.9)
Non-cash flows:
New leases - 15.3 15.3
Interest expense 19.2 1.1 20.3
Foreign currency translation differences (0.1) (0.2) (0.3)
Other lease movements - (1.0) (1.0)
As at 31 March 2024 202.7 21.5 224.2
Revolving credit facility (RCF)
The Group has access to a multi-currency revolving facility offered by a
syndicate of eight lenders, namely: HSBC Innovation Banking Limited, National
Westminster Bank Plc, Citibank N.A., London Branch, JP Morgan Chase Bank N.A.,
London Branch, Goldman Sachs Lending Partners LLC, Barclays Bank Plc, Morgan
Stanley Senior Funding Inc., and The Governor and Company of the Bank of
Ireland. In December 2023, the Group exercised an accordion feature within the
agreement to increase the total available committed funding capacity by an
additional £100.0m, increasing the total facility size from £300.0m to
£400.0m. The maturity date of the facility is in August 2025, and the
agreement offers two, one year, extension options.
The facility bears interest at a rate per annum equal to SONIA plus a margin
determined by reference to adjusted leverage (calculated as a ratio of debt to
adjusted EBITDA). The agreement contains certain customary covenants,
including to maintain a maximum total net leverage ratio not in excess of 3:1
and interest cover (calculated as a ratio of adjusted EBITDA to finance
charges in accordance with the terms of the agreement) not less than a ratio
of 4:1 in respect of any relevant period.
The Group monitors compliance with the covenants throughout the reporting
period and has complied with all financial covenants for this and all
reporting periods. The undrawn available committed funds as at 31 March 2024
was £200.0m (2023: £50.0m).
The facility is secured by certain customary security interests and pledges
including over shares in certain Group entities (Wise plc, Wise Financial
Holdings Ltd, Wise Payments Limited, Wise US Inc., Wise Europe SA and Wise
Australia Pty Ltd), and fixed and floating pledges over assets and
undertakings of Wise Payments Limited, excluding customer and partner funds,
share capital or equity contributions maintained for regulatory purposes, cash
paid into a bank or collateral account in connection with, and for the benefit
of, relevant card scheme providers and assets held in safeguarded accounts or
otherwise segregated for regulatory purposes.
Lease liabilities
As at 31 March 2024, the lease liabilities are £21.5m (2023 £14.5m) and
relate to the expected terms remaining on UK, US, Estonia, Hungary, Singapore,
Belgium and Brazil office space leases discounted at between 2.21% and 15.75%.
The leases expire between 2024-2030.
The total expense, relating to short-term leases to which the lessee
recognition and measurement requirement have not been applied, for the year
ended 31 March 2024 is £1.0m (2023: £1.4m).
The Group has extension options in office leases, which have not been
exercised as at 31 March 2024. The potential future lease payments, should the
Group exercise the extension options, would result in an increase in the lease
liability of £3.6m.
The Group has a termination option in an office lease, which has not been
exercised as at 31 March 2024. The potential future lease payments, should
the Group exercise the termination option, would result in a decrease in the
lease liability of £0.5m.
Note 18. Financial instruments and risk management
Accounting policy
Financial assets
The Group classifies its financial assets, at initial recognition, and
subsequently measures them at:
● amortised cost;
● fair value through profit or loss (FVTPL); and
● fair value through other comprehensive income (FVOCI).
The classification of financial assets at initial recognition depends on the
financial asset's contractual cash flows and the Group's business model for
managing them. The Group's business model for managing financial assets refers
to how they are used in order to generate cash flows. The business model
determines whether cash flows will result from collecting contractual cash
flows, selling the financial assets, or both. Cash flows in relation to
purchase or sale of these instruments are classified as investing activities
in the consolidated cash flow statement.
Financial assets at amortised cost
The Group classifies its financial assets at amortised cost only if both of
the following criteria are met:
● the asset is held within a business model whose objective is to
collect the contractual cash flows; and
● the contractual terms give rise to cash flows that are solely
payments of principal and interest.
Financial assets at amortised cost are subsequently measured using the
effective interest method and are subject to impairment. Gains and losses are
recognised in the profit or loss when the asset is derecognised, modified or
impaired. Financial assets measured at amortised cost are predominantly trade
and other receivables and cash and cash equivalents.
Financial assets at fair value through other comprehensive income (FVOCI)
The Group classifies debt securities (e.g. bonds) as FVOCI, as the contractual
cash flows are solely payments of principal and interest, and the objective of
the Group's business model is achieved both by collecting contractual cash
flows and selling financial assets.
Financial assets through profit or loss (FVTPL)
Financial assets are classified at fair value through profit or loss where
they do not meet the criteria to be measured at amortised cost or fair value
through other comprehensive income. Financial assets through profit or loss
include derivative assets.
Impairment of financial assets
The Group recognises impairment loss allowances for expected credit losses
('ECL') on financial assets that are measured at amortised cost or fair value
through other comprehensive income. The ECL assessment considers both the
12-month Expected Credit Loss (ECL) and the lifetime ECL, as per IFRS 9
requirements.
For debt instruments held at FVOCI, collateral deposits the Group holds with
its counterparties and receivable from payment processors, the Group applies
the low credit risk simplification. The Group's policy only allows exposures
to financial institutions with sound credit quality rating and limits the
exposure to a maximum amount. Furthermore, as per Group's investment policy,
the debt instruments held at FVOCI consist solely of quoted bonds that are
graded in the top investment categories (rated A- and above) and, therefore,
are considered to be low credit risk investments.
ECLs on such instruments are measured on a 12-month basis; nevertheless, when
there has been a significant increase in credit risk since initial
recognition, the allowance will be based on the lifetime ECL. At every
reporting date, the Group evaluates whether or not these financial instruments
are considered to have low credit risk using all reasonable and supportable
information that is available without undue cost or effort. The Group uses
external credit ratings if available both to determine whether the financial
instrument has significantly increased in credit risk and to estimate ECLs. If
a bank or other financial institution has no external credit rating, the Group
evaluates its credit quality, where necessary, by analysing its financial
position, past experience, and other factors.
The Group's remaining trade and other receivables qualify for the simplified
approach in calculating ECLs, as they do not contain a significant financing
component. Therefore, the Group does not track changes in credit risk, but
instead recognises a loss allowance based on lifetime ECLs at each reporting
date. To measure the ECLs, trade receivables have been grouped based on shared
credit risk characteristics and the days past due. The Group's expected credit
loss policy is to reassess all trade receivables over 30 days past due, and
provide an ECL allowance if the balance is deemed to be at risk.
In calculating the ECL on the receivable recognised for chargebacks, the Group
has established a provision matrix that is based on its historical credit loss
experience, adjusted for forward-looking factors specific to the debtors and
the economic environment. For negative customer balances, if an active - non
fraudulent account goes more than 30 days past due, according to the Group
policy, it is perceived as an indication of a significant increase in credit
risk and the receivable is provided in full.
Financial liabilities
Financial liabilities are measured at amortised cost, except for the
derivative liabilities, which are classified as financial liabilities measured
at fair value through profit or loss.
Derivative financial instruments
Derivative financial instruments are used to manage exposure to market risks.
The principal derivative instruments used by the Group are foreign currency
swaps, foreign exchange forwards and non-deliverable foreign exchange
forwards. Such derivative financial instruments are initially recognised at
fair value on the date on which a derivative contract is entered into and are
subsequently remeasured at fair value through profit and loss at each
reporting date.
The Group does not hold or issue derivative financial instruments for trading
or speculative purposes.
The fair value of the derivative financial instruments are determined by
mark-to market valuation technique. The key inputs in the valuation model are
the observable foreign exchange rates for the currencies involved. These
inputs are considered level 2 within the fair value hierarchy, as they are
observable, but may not be quoted directly for the specific instruments.
In the course of its business, the Group is exposed to the main financial
risks: liquidity, credit, and market risk from its use of financial
instruments. The Group's financial risk management programme seeks to minimise
potential adverse effects on the Group's financial
performance.
a. Liquidity risk
Liquidity risk is the risk that the Group cannot meet its financial
obligations as they fall due. Management monitors rolling forecasts of the
Group's liquidity requirements to ensure it has sufficient cash to meet
operational needs.
The Group's approach to managing liquidity risk is to ensure that it always
has enough liquid resources to meet its liabilities when due, under both
normal and stressed conditions, without incurring losses or risking damage to
the Group's position above the Group's liquidity risk appetite. The Group
utilises an internal liquidity adequacy assessment process to assess the
Group's liquid resources; this process includes an assessment of net stressed
liquidity outflows over a number of severe yet plausible stress scenarios.
This ensures the Group maintains prudent levels of liquid resources at all
times to meet both regulatory and the internal liquidity risk requirements.
The Group assessed the concentration risk associated with refinancing its debt
and concluded that it is low. This conclusion is based on the diverse mix of
available liquidity sources available to Wise alongside robust internal cash
reserves. The Group has not experienced any difficulties in sourcing
additional liquidity over the past twelve months.
The breakdowns of trade payables and borrowings into current and non-current
are shown in notes 16 and 17. See also note 18 (e) for the maturity profile of
the Group's financial liabilities based on contractual undiscounted payments.
b. Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations. The credit risk exposure is managed at Group level against the
Group's credit risk appetite. Wise actively manages credit concentration risk
and it is Wise's policy to impose credit limits in order to control the
exposure (amount and period) Wise has with each counterparty considering their
level of risk. These limits are set based on the credit rating or perceived
credit quality of each counterparty and approval must be obtained from the
Asset - Liability Committee (ALCO).
The Group's maximum exposure to credit risk by class of financial asset is as
follows:
2024 2023
£m £m
Asset category
Cash and cash equivalents 10,479.3 7,679.4
Short-term financial investments 4,033.9 3,804.5
Trade and other receivables 415.4 233.1
Derivative financial assets 1.6 -
Total assets subject to credit risk 14,930.2 11,717.0
Credit risk is mitigated as the majority of these financial assets are held
with investment grade financial institutions or invested in highly rated
financial instruments with credit ratings assigned by reputable credit rating
agencies such as Moody's, Standard & Poor's and Fitch Ratings.
The Group's financial assets breakdown by credit ratings is as follows:
External Credit rating (Moody's)
2024 2023
£m £m
Cash and cash equivalents
AAA 3,776.1 2,669.6
AA/Aa 1,978.2 2,887.8
A 4,114.5 1,658.7
BBB/Baa 80.0 83.4
BB/Ba,B 56.0 28.4
CCC/Caa 2.1 3.1
Unrated * 201.4 76.0
Cash in transit 271.0 272.4
Total cash and cash equivalents subject to credit risk 10,479.3 7,679.4
Short-term financial investments
Aa, A 4,033.9 3,804.5
Total short-term financial instruments subject to credit risk 4,033.9 3,804.5
Trade and other receivables and derivative financial assets
AA/Aa 130.6 12.4
A 83.4 85.9
BBB/Baa 4.8 2.7
BB/Ba,B - 41.6
Unrated* 198.2 90.5
Total trade and other receivables and derivative financial assets subject to 417.0 233.1
credit risk
* 'Unrated' includes payment providers, banks and customers with no public
credit rating.
c. Market risk
Interest rate risk
The Group is exposed to interest rate risk from floating interest rate
borrowings (refer to note 17) and manages the potential that financial
expenses increase when interest rates increase. Sensitivity analysis is used
to assess the interest rate risk.
The Group is exposed to interest rate risk from fixed rate interest rate
assets and liabilities on Wise's balance sheet. The main fixed interest rate
exposure for Wise is driven by the safeguarded assets (mainly sovereign bonds)
held as part of the investment portfolio. The interest rate risk is measured
and monitored through an interest rate stress (175 basis points move in
interest rates) applied on the bond assets, with an impact of £38.4m across
all bond holdings.
Foreign exchange risk
The Group is exposed to foreign exchange rate movement from holding assets and
liabilities in different currencies and guaranteeing customers a foreign
exchange rate on their international transfers for a short period of time.
Wise actively monitors foreign exchange risk, and exposures are managed
through a combination of natural hedging and treasury products hedging.
The Group uses a combination of foreign currency swaps, foreign exchange
forwards and non-deliverable foreign exchange forwards to hedge its exposure
to foreign currency risk:
2024 2023
Carrying amount assets Carrying amount liabilities Notional amount Carrying amount assets Carrying amount liabilities Notional amount
£m £m £m £m £m £m
Derivative financial instruments
Foreign currency swaps 1.2 0.8 494.9 - 0.1 196.0
Foreign exchange forwards 0.4 0.5 486.5 0.2 - 143.3
Non-deliverable foreign exchange forwards - 0.3 45.6 - 0.1 26.9
Total derivative financial instruments 1.6 1.6 1,027.0 0.2 0.2 366.2
The remaining maturity of all open treasury positions as at 31 March 2024 is
between 1 to 19 days (31 March 2023: between 3 to 11 days).
The notional contract amounts of those derivatives held to manage the foreign
exchange exposure indicate the nominal value of transactions outstanding at
the balance sheet date. They do not represent amounts at risk. Post balance
sheet date all open treasury positions have been realised or settled.
The Group's exposure to foreign exchange risk by currency
The table below presents the Group's net position (difference between
financial assets and liabilities) across its main currencies at the end of
each reporting period
2024 2023
£m £m
Net exposure by currency
HUF(*) (96.6) (2.1)
USD(*) 60.8 18.0
AUD(*) 59.3 (8.2)
BRL 52.6 22.6
EUR(*) (45.2) (56.8)
THB(*) (43.1) 17.0
SGD(*) 37.3 13.6
JPY(*) (16.5) (17.0)
PHP 15.2 16.9
CAD(*) 11.1 (7.8)
Other currencies (4.8) (30.9)
2024 2023
£m £m
Sensitivity to 5% exchange rate
change
HUF (4.8) (0.1)
USD 3.0 0.9
AUD 3.0 (0.4)
BRL 2.6 1.1
EUR (2.3) (2.8)
THB (2.2) 0.9
SGD 1.9 0.7
JPY (0.8) (0.9)
PHP 0.8 0.8
CAD 0.6 (0.4)
Other currencies (0.2) (1.5)
*The Group mitigates the exposure to foreign exchange risk from movements in
these currencies with a combination of treasury products. For further
information on the instruments the Group utilises to manage its foreign
exchange risk, refer to the 'Foreign exchange risk' section above.
The Group's sensitivity to foreign exchange fluctuations by currency is as
follows:
A 5% strengthening or weakening of GBP against all other currencies, with all
other variables being constant, would result in a foreign exchange loss or
gain of £1.6m (2023: £1.7m), excluding the tax effect.
The Group considers a 5% strengthening or weakening of the functional currency
against the non-functional currency of its subsidiaries as a reasonably
possible change in foreign exchange rates.
d. Capital risk
Capital risk is the risk that the Group has an insufficient level or
composition of capital to support its normal business activities and to meet
its regulatory capital requirements, both under normal operating environments
and stressed conditions.
The Group's capital comprises ordinary share capital, other reserves and
retained earnings.
The Group's objectives when managing capital risk are
to:
● safeguard the Group's ability to continue as a going concern, so
that the Group can continue to provide returns for shareholders and benefits
for other stakeholders;
● maintain an optimal capital structure to reduce the cost of capital;
● adhere to regulatory requirements in each jurisdiction; and
● fund an orderly wind-down in an adverse reverse scenario.
Further information on the Group's policies and processes for managing
capital, along with the disclosure requirements under MIFIDPRU 8, can be found
on our Owner relations website: https://wise.com/owners/.
The Group is subject to prudential regulatory consolidation which follows the
rules in the sourcebook for MIFID investment firms ('MIFIDPRU'). This is the
case due to the existence of TINV Ltd, a group UK FCA-regulated investment
firm subject to the same rules.
Both TINV Ltd (MIFID investment firm) and the Group (MIFID investment group)
are classified as Non-small and Non-interconnected investment firms
('non-SNI').
The Group has complied with all external regulatory requirements in relation
to capital in the year.
Overall own funds requirement
The Group own funds requirement is subject to the variable own funds
requirement that is the highest of :
1. its permanent minimum capital requirement (i.e. its initial capital
requirement);
2. its fixed overheads requirement ('FOR'); and
3. its K-factor requirement ('KFR').
The Group also follows and adheres to the Overall Own Funds Threshold
Requirement as this is derived by the Group's Internal Capital Adequacy
Assessment ('ICARA') and approved by the board. ICARA is a continuous risk
assessment process which considers the business model implication on capital
and liquidity on an ongoing basis pursuant to the guidance of MIFIDPRU 7.
e. Carrying amounts and fair values of financial instruments
The carrying value of the Group's financial assets and liabilities by
measurement basis is presented below:
2024 2023
£m £m
Financial assets at amortised cost
Long-term receivables 2.8 2.4
Short-term trade and other receivables 412.6 230.7
Cash and cash equivalents 10,479.3 7,679.4
Total financial assets at amortised cost 10,894.7 7,912.5
Financial liabilities at amortised cost
Non-current lease liabilities (14.8) (7.8)
Non-current trade and other payables - (0.1)
Current lease liabilities (6.7) (6.7)
Current borrowings (202.7) (249.9)
Current trade and other payables (13,806.0) (10,979.6)
Total financial liabilities at amortised cost (14,030.2) (11,244.1)
Financial assets at FVOCI
Short-term financial investments 4,033.9 3,804.5
Total financial assets at FVOCI 4,033.9 3,804.5
Financial assets at FVTPL
Derivative financial assets 1.6 -
Financial assets at FVTPL total 1.6 -
Financial liabilities at FVTPL
Derivative financial instruments (1.6) -
Financial liabilities at FVTPL total (1.6) -
Fair value hierarchy
Assets and liabilities carried at fair value or for which fair values are
disclosed have been classified into three levels according to the quality and
reliability of information used to determine the fair values.
● Level 1: The fair value of financial instruments traded in active
markets is based on quoted market prices at the end of the reporting period.
Products classified as level 1 predominantly comprise treasury bonds and
investment grade corporate paper. The quoted market price used for financial
assets held by the Group is the current close price at the balance sheet
date.
● Level 2: The fair value of financial instruments that are not traded
in an active market is determined using valuation techniques with the inputs
that are observable either directly or indirectly. The Group classifies
foreign exchange contracts as level 2 financial instruments. These instruments
are valued by observable foreign exchange rates. There were no changes to the
valuation technique during the period.
● Level 3: If one or more of the significant inputs is not based on
observable market data, the instrument is included in level 3. The Group does
not currently have any financial instruments in level 3.
The following table presents the Group's assets and liabilities that are
measured at fair value by the level in the fair value hierarchy as at the
reporting date:
Total Level 1 Level 2 Level 3
At 31 March 2024 £m £m £m £m
Financial assets measured at fair value
Short-term financial investments 4,033.9 4,033.9 - -
Derivative financial assets 1.6 - 1.6 -
Total financial assets measured at fair value 4,035.5 4,033.9 1.6 -
Financial liabilities measured at fair value
Derivative financial liabilities (1.6) - (1.6) -
Total financial liabilities measured at fair value (1.6) - (1.6) -
Total Level 1 Level 2 Level 3
At 31 March 2023 £m £m £m £m
Financial assets measured at fair value
Short-term financial investments 3,804.5 3,804.5 - -
Derivative financial assets - - - -
Total financial assets measured at fair value 3,804.5 3,804.5 - -
Financial liabilities measured at fair value
Derivative financial liabilities - - - -
Total financial liabilities measured at fair value - - - -
Contractual maturity of financial liabilities based on undiscounted cash
flows:
2024 2023
£m £m
Less than 1 year
Current lease liabilities (8.6) (7.3)
Current borrowings (209.9) (256.6)
Current trade and other payables (13,806.0) (10,979.6)
Total financial liabilities (14,024.5) (11,243.5)
Between 1 and 5 years
Non-current lease liabilities (16.9) (8.2)
Non-current borrowings (1.0) (2.9)
Non-current trade and other payables - (0.1)
Total financial liabilities (17.9) (11.2)
Current and non-current borrowings include principal and interest.
Note 19. Share capital
Allotted, called up and fully paid
As at 31 March 2024 As at 31 March 2023
Class Nominal value, £ Number of shares Share capital, £ Nominal value, £ Number of shares Share capital, £
Class A Ordinary 0.01 1,024,777,252 10,247,773 0.01 1,024,677,252 10,246,773
Class B Ordinary 0.000 000 001 398,889,814 - 0.000 000 001 398,889,814 -
Total 1,423,667,066 10,247,773 1,423,567,066 10,246,773
During the year, the Group allotted 100,000 Class A Ordinary Shares of £0.01
related to share options granted under the Company's legacy incentive plans
prior to the Company's admission to trading on the London Stock Exchange
(2023: 87,396 Class A Ordinary Shares of £0.01 related to customer
shareholder programme).
Each Class A Ordinary shareholder is entitled to one vote for each Class A
Ordinary Share held, subject to any restrictions on total voting rights as set
out in the Company's Articles of Association. Class A Ordinary shareholders
are entitled to interim or annual dividends to the extent declared and do not
hold any preferential rights to dividends. Class A Ordinary Shares are
non-redeemable.
Each Class B shareholder is entitled to nine votes for each Class B Share
held, subject to any restrictions on total voting rights as set out in the
Company's Articles of Association. Class B Shares carry no rights to
distributions of dividends except on distribution of assets, up to their
nominal value, on a liquidation or winding up. Class B Shares are strictly
non-transferable, non-tradable and non-distributable to any person or entity
whatsoever.
Note 20. Own share reserve
Accounting policy
Own share reserve
Own share reserve represents the weighted average cost of shares of Wise plc
that are held by the employee share trust for the purpose of fulfilling
obligations in respect of various employee share plans. Own shares are treated
as a deduction from equity, and on exercising of employee awards, are
transferred from own shares to retained earnings at their weighted average
cost.
Employee share trust
The Group provides financing to the Employee Share Ownership Plan (ESOP) Trust
to either purchase the Company's shares on the open market, or to subscribe
for newly issued share capital, to meet the Group's obligation to provide
shares when employees exercise their options or awards. Costs of running the
ESOP Trust are charged to the consolidated income statement. The Group
consolidates this share trust.
Shares held by the ESOP Trust are deducted from reserves and presented in
equity as own shares until such time that employees exercise their awards. The
consideration paid, including any directly attributable incremental costs (net
of income taxes), on purchase of Company's equity instruments is deducted from
equity.
Purchase of own shares
During the financial year, Wise continued the programme, which commenced in
2023, to purchase Wise shares in the market through the ESOP Trust in order to
reduce the impact of dilution from stock-based compensation. As of 31 March
2024, a total of 9,071,706 shares were purchased from the market at an average
of £7.56 per share. Directly attributable costs of £0.5m have been charged
to equity.
Note 21. Share-based employee compensation
Accounting policy
The Group operates a number of employee equity-settled schemes as part of its
reward strategy, which are designed to provide long-term incentives for all
employees to deliver long-term shareholder returns. Under the plans,
participants are granted share awards of the Company, which vest gradually
over the vesting period and are equity settled for shares within Wise plc.
The total amount to be expensed is determined by reference to the fair value
of the awards granted and it is calculated using the closing share price at
the grant date. It is recognised in employee benefit expenses together with a
corresponding increase in equity (share-based payment reserve), over the
period in which the service and the performance conditions are fulfilled (the
vesting period). Upon exercise of share options, the impact is recognised in
retained earnings.
For non-market-based awards, vesting conditions are included in the
assumptions of the number of options and awards that are expected to vest. At
each reporting date, the entity revises its estimates of the number of options
and awards that are expected to vest. It recognises the impact of the revision
to original estimates, if any, in the statement of comprehensive income, with
a corresponding adjustment to the share-based payment reserve. For awards
subject to a market-based performance condition, no subsequent adjustments may
be made.
Employee share award plans
The awards are subject to service conditions, i.e. the requirement for
recipients of awards to
remain in employment with the Group over the vesting period, which typically
is 4 years.
For the market-based award
For the market-based award, the vesting is conditional on achievement of the
relative total shareholder return (TSR) compared to the FTSE 250 and volume
growth performance measures over the 3-year performance period.
Transactions on the share award plans during the year were as follows:
As at 31 March 2024 As at 31 March 2023
Weighted average exercise price per award, £ Number of awards Weighted average exercise price per award, £ Number of awards
Beginning of year 0.08 65,648,858 0.11 58,305,023
Granted during the year - 11,460,714 - 19,229,526
Exercised during the year 0.06 19,895,709 0.07 8,694,892
Forfeited during the year 0.01 3,623,805 0.03 3,190,799
End of year 0.08 53,590,058 0.08 65,648,858
Vested and exercisable as at end of year 0.15 30,049,308 0.14 38,644,818
The share-based payment compensation expense for the year ended 31 March 2024
is £72.5m (2023: £58.3m).
During the year £54.2m (2023: £19.1m) of share-based payments were vested
and exercised and were recycled to retained earnings.
Share options outstanding at the end of the year have the following expiry
dates and exercise prices:
Grant date range 12 months ended 31 March Expiry date range 12 months ended 31 March Weighted average exercise price Number of awards as at 31 March 2024 Number of awards as at 31 March 2023
2014 2024 - - 232,310
2015 2025 - 221,193 1,256,199
2016 2026 0.10 1,267,842 1,678,385
2017 2027 0.15 1,498,924 2,690,444
2018 2028 0.24 2,823,387 4,275,362
2019 2029 0.16 6,430,466 9,288,573
2020 2030 0.19 8,376,895 13,051,895
2021 2031 0.16 5,036,241 7,490,612
2022 2032 - 5,807,083 8,123,460
2023 2033 - 12,120,478 17,561,618
2024 2034 - 10,007,549 -
Total 53,590,058 65,648,858
Weighted average remaining contractual life of options outstanding at end of 6.8 years 7.1 years
year
The weighted average share price at the date of exercise for share options
exercised in 2024 was £7.15 (2023: £4.98).
Valuation of share awards
The assessed fair value at the grant date of share awards granted during the
year ended 31 March 2024 was £6.52 per option on average (2023: £5.12). The
fair value of the share awards granted is calculated using the closing share
price at the grant date.
Note 22. Cash generated from operating activities
2024 2023
Note(s) £m £m
Cash generated from operations
Profit for the year 354.6 114.0
Adjustments for:
Depreciation and amortisation 7,12,13 18.3 23.2
Non-cash share-based payments expense 72.5 58.2
Foreign currency exchange differences 21.5 (61.5)
Current tax expense 10 126.8 32.5
Interest income and expenses (484.6) (129.4)
Fair value loss on financial assets at FVOCI 0.3 -
Effect of other non-monetary transactions 2.1 1.7
Changes in operating assets and liabilities:
Increase in prepayments and receivables (119.2) (66.8)
Increase in trade and other payables 58.0 23.8
Increase in receivables from customers and payment processors (72.7) (29.1)
Increase in liabilities to customers, payment processors and deferred revenue 228.6 78.7
Increase in Wise accounts 2,788.7 3,801.8
Cash generated from operations 2,994.9 3,847.1
Note 23. Commitments and contingencies
The Group's minimum future payments from non-cancellable agreements as at year
end are detailed below:
2024 2023
£m £m
Infrastructure subscriptions
No later than 1 year 34.3 1.7
Later than 1 year and no later than 5 years 64.3 0.3
Total 98.6 2.0
Significant capital expenditure contracted
No later than 1 year 0.6 -
Later than 1 year and no later than 5 years 27.7 16.1
Later than 5 years 55.5 23.3
Total 83.8 39.4
The Group does not have any other material commitments, capital commitments or
contingencies as at 31 March 2024 and 31 March 2023.
Note 24. Transactions with related parties
Related parties of the Group and Wise plc include subsidiaries, key management
personnel (KMP), close family members of KMP and entities that are controlled
or jointly controlled by KMP or their close family members. Wise identifies
the Board of Directors as KMP.
Balances and transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note.
Details of the Directors' remuneration and interest in shares are disclosed in
the Remuneration report. Additional information for key management
compensation and particulars of transactions with related parties are
presented below, in accordance with IAS 24 Related Party Disclosures
requirements.
2024 2023
£m £m
Compensation of KMP of the Group
Short-term employee benefits 0.6 0.5
Share-based payment expense 0.8 2.1
Non-Executive Directors' fees 1.2 0.3
Total compensation paid to key management personnel 2.6 2.9
Short-term employee benefits include salaries for KMP. Refer to the
Remuneration report for the remuneration of each Director.
Share-based payment expense is related to employee share option plans (more
information about the plans is provided in note 21).
In the financial year ended 31 March 2024, the KMP of the Group held deposits
of £5.6m (financial year ended 2023: 0.9m) in Wise Accounts or Wise Assets.
Note 25. Post balance sheet events
No material post balance sheet events have been identified.
Alternative performance measures
The Group uses a number of alternative performance measures ("APMs") within
its financial reporting. These measures are not defined under the requirements
of IFRS and may not be comparable with the APMs of other companies.
The Group believes these APMs provide stakeholders with additional useful
information in providing alternative interpretations of the underlying
performance of the business and how it is managed and they are used by the
Directors and management for performance analysis and reporting. These APMs
should be viewed as supplemental to, but not a substitute for, measures
presented in the financial statements which are prepared in accordance with
IFRS.
Underlying interest income The first 1% yield of interest income on customer balances that Wise plans to
retain
Income Income is calculated as revenue plus interest income on customer balances,
less interest expense on customer balances and benefits paid relating to
customer balances
Underlying income The measure of income that will be retained from customers, which is
calculated as revenue plus 'Underlying Interest Income'
Underlying operating profit The calculation of underlying operating profit using 'underlying income' and
excluding the Benefits paid relating to customer balances
Underlying profit before tax Measure of profitability which is calculated as profit for the year, excluding See definition in Annual Report for calculation method
the impact of interest income from customer balances above the first 1% yield
and benefits paid relating to customer balances. The Group believes that
Underlying profit before tax is a useful measure for investors as it provides
a measure of underlying performance and growth that is not inflated by the
excess interest income that we will look to pass back to our customers
Underlying profit before tax margin Underlying profit before tax as a percentage of underlying Income
Adjusted EBITDA Measure of profitability which is calculated as profit for the year excluding See definition in Annual Report for calculation method
the impact of income taxes, finance income and expense, depreciation and
amortisation, share-based payment compensation expense as well as exceptional
items.
At the time of our listing in 2021, stock-based compensation was satisfied
through the issuance of new shares and we therefore elected to remove this
non-cash expense from our chosen lead metric for earnings ('Adjusted EBITDA').
Our strong cash generation and capital position has allowed us to initiate a
programme of purchasing Wise shares through our Employee Benefit Trust to
reduce the dilutive impact of stock-based compensation. Therefore the Adjusted
EBITDA measure of earnings has, in our view, become less useful in
understanding the performance of the underlying business and as a result our
reporting going forward will focus to a greater extent on 'underlying profit
before tax' and its representation as a margin of underlying income.
Adjusted EBITDA margin Adjusted EBITDA as a percentage of income
Underlying adjusted EBITDA Measure of profitability which takes 'Adjusted EBITDA' and adjusts the
calculation to remove the excess Interest Income on Customer Balances above
the amount of 'Underlying Interest Income' and also removes benefits paid
relating to customer balances.
Underlying adjusted EBITDA margin Underlying adjusted EBITDA as a percentage of underlying income
Free cash flow (FCF) Measure of cash flow which takes into account the net cash flows from See definition in Annual Report for calculation method
operating activities less the change in working capital (excluding timing
differences for receipts of interest income, income tax payments, change in
collateral and pass-through items), the costs of purchasing property, plant
and equipment, intangible assets capitalisation and payments for leases. It is
a non-statutory measure used by the Board and the senior management team to
measure the ability of the Group to support future business expansion,
distributions or financing
FCF conversion Free cash flow as a percentage of profit before tax
Underlying free cash flow (UFCF) Free cash flow as defined but starting from underlying profit before tax
Underlying FCF conversion Free cash flow as a percentage of Underlying profit before tax
Corporate Cash Corporate cash represents cash and cash equivalents that are not considered See Corporate Cash APM for calculation detail
customer-related balances. Measure of the Group's ability to generate cash and
maintain liquidity
Cross border fees saved Fees saved by our personal customers when using Wise for cross- currency See definition in Annual Report for calculation
transfers versus other providers. This measure is used by the Group to
demonstrate the value proposition to stakeholders
Underlying profit before tax
2024 2023
£m £m £m
Revenue 1,052.0 846.1
Interest expense on customer balances - (3.7)
Underlying interest income (first 1% yield) 120.7 49.6
Underlying income 1,172.7 892.0
Cost of sales (307.4) (308.2)
Net credit losses on financial assets (12.5) (17.8)
Underlying gross profit 852.8 566.0
Administrative expenses (615.9) (494.5)
Net interest income from corporate investments 19.7 2.8
Other operating income, net 5.7 10.7
Underlying operating profit 262.3 85.0
Finance expense (20.5) (10.7)
Underlying profit before tax 241.8 74.3
Underlying profit before tax margin 20.6% 8.3%
Interest income above the first 1% yield 364.5 90.6
Benefits paid relating to customer balances (124.9) (18.4)
Reported profit before tax 481.4 146.5
Income tax credit/(expense) (126.8) (32.5)
Profit for the year 354.6 114.0
Free cash flow
2024 2023
£m £m
Underlying profit before tax 241.8 74.3
Underlying income 1,172.7 892.0
Underlying profit before tax margin 20.6% 8.3%
Corporate cash working capital change excluding collaterals 8.2 3.7
Adjustment for exceptional and pass-through items in the working capital (0.2) (2.0)
Depreciation and amortisation 18.3 23.2
Payments for lease liabilities (8.1) (6.6)
Capitalised expenditure - Property, plant and equipment (10.6) (3.6)
Capitalised expenditure - Intangible assets (2.4) (5.2)
Underlying free cash flow (UFCF) 247.0 83.8
UFCF conversion (UFCF as a % of Underlying profit before tax) 102.1% 113.1%
Adjustments to Profit before tax
Interest income above the first 1% yield 364.5 90.6
Benefits paid relating to customer balances (124.9) (18.4)
Profit before tax 481.4 146.5
Free cash flow (FCF) 486.6 156.0
FCF conversion (FCF as a % of reported profit before tax) 101.1% 106.6%
Income
2023 2022
£m £m
Revenue 1,052.0 846.1
Interest income on customer balances 485.2 140.2
Interest expense on customer balances - (3.7)
Benefits paid relating to customer balances (124.9) (18.4)
Income 1,412.3 964.2
Adjusted and Underlying adjusted EBITDA
2024 2023
£m £m
Profit for the year 354.6 114.0
Adjusted for:
Income tax expense 126.8 32.5
Finance expense 20.5 10.7
Net interest income from operating assets* (19.7) (2.8)
Depreciation and amortisation 18.3 23.2
Share-based payment compensation expense 72.5 58.2
Adjusted EBITDA 573.0 235.8
Income 1,412.3 964.2
Adjusted EBITDA margin 40.6% 24.4%
Interest income net of customer benefits (360.3) (118.1)
Underlying interest income 120.7 49.6
Underlying adjusted EBITDA 333.4 167.3
Underlying income 1,172.7 892.0
Underlying adjusted EBITDA margin 28.4% 18.7%
Corporate cash
The tables below show a non-IFRS view of the 'Corporate cash' metric that is
used by the Group management as a key performance indicator in assessment of
the Group's ability to generate cash and maintain liquidity. Corporate cash
represents cash and cash equivalents that are not considered customer related
balances.
Information presented in the table below is based on the Group's internal
reporting principles and might differ from the similar information provided in
IFRS disclosures:
2024 2023
£m £m
Operating Cashflow
Net Profit 354.6 114.0
Adjustments for non-cash transactions:
Interest income net of customer benefits (360.3) (121.8)
Current tax expense 126.8 32.5
Non-cash share-based payments expense 72.5 59.1
Depreciation and amortisation 18.3 23.2
Effect of other non-monetary transactions 24.7 (22.1)
Change in corporate working capital (including collaterals) 27.8 (8.8)
Cash generated from operations: 264.4 76.1
Receipt of interest 344.4 103.9
Unwind portion of bond premium/discount 140.8 23.3
Benefits paid to customers (118.3) (11.6)
Payment of income tax and interest charges (90.4) (31.0)
Net corporate cash generated from operating activities 540.9 160.7
Capitalised expenditure - property, plant and equipment (10.6) (3.6)
Capitalised expenditure - for intangible assets (2.4) (5.2)
Proceeds from sublease 0.1 0.2
Net corporate cash (used in) investing activities (12.9) (8.6)
Funding of share purchases by Employee Benefit Trust (68.4) (10.1)
Proceeds from issues of shares and other equity 1.0 0.6
Proceeds from borrowings 420.0 529.0
Repayment of borrowings (470.0) (359.0)
Principal elements of lease payments (7.1) (5.9)
Interest paid on leases (1.1) (0.7)
Net corporate cash from financing activities (125.6) 153.9
Total increase / (decrease) in corporate cash 402.4 306.0
Corporate cash at beginning of year 671.1 357.8
Effect of exchange rate differences on corporate cash (12.4) 7.3
Corporate cash at end of year 1,061.1 671.1
2024 2023
£m £m
Breakdown of corporate and customer cash
Cash and cash equivalents and short-term financial investments 14,513.2 11,483.9
Receivables from customers and payment processors 287.7 129.7
Adjustments for:
Outstanding money transmission liabilities and other customer payables (479.4) (266.1)
Wise accounts (13,260.4) (10,676.4)
Corporate cash at end of the year 1,061.1 671.1
Corporate cash includes some elements of current trade and other receivables
which are due to Wise and this includes 'Receivables from payments processors'
as disclosed in note 14, as well as receivables from customers and partners.
Those balances are reported under 'Other receivables' in note 14, but exclude
those elements which are considered customer related balances.
Similarly, corporate cash includes the 'Outstanding money transmission
liabilities' and the payables reported under 'Deferred revenue' and 'Other
payables' in note 16, which are not considered customer related balances.
(( 1 )) Underlying income is an alternative performance measure comprising
revenue, first 1% of gross yield of interest income on customer balances, and
any interest expense on customer balances. It does not include interest income
above the first 1% gross yield or benefits paid on customer balances.
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