I am pleased to report good progress in 2010. Our results recovered strongly from the impact of the global recession and, although the global economy remains fragile, we look to the future with confidence.

The diversification of our funding through bond issuance alongside the renewal and extension of our banking facilities in 2010 was particularly satisfying, enabling us to pursue our strategic growth plan.

More than three years have passed since International Personal Finance was established as an independent company and listed on the London Stock Exchange. Since then, our business model has been tested during the worst global recession in the past 80 years and has emerged successful and intact when many financial institutions have failed. We have demonstrated the resilience of our business model and the effectiveness of our risk management systems. It is testimony to the skill and hard work of our people that we remain on track to deliver the five year business plan we established three years ago.

Whilst everyday challenges have in recent times placed heavy demands on us, we have continued to devote time and resources to planning for the future. Our ambitious top-level strategy remains unchanged: we intend to continue to improve the efficiency and effectiveness of our home credit business model, to grow rapidly in our existing markets and progressively enter and develop new markets.

We understand that increasing the size and geographic spread of the business will present new management challenges and recognise that it is essential for us to continuously improve our processes, systems and people to meet these challenges. During the past three years we have focused heavily on strengthening our financial and credit control systems, and on creating standard operating processes and procedures in all of our markets. This has provided a solid platform on which to build our expansion.

We also recognise that, as we grow, we need to adapt our business culture to allow management control and responsibility to move closer to our customers. This will permit us to respond better to local conditions and build a business which gets the very best out of our people. The introduction of business and profit planning and accountability at branch level has devolved greater responsibility for delivering sustainable profit growth to our local field managers. This forms an important foundation for this change.

It is clear that a key driver of future growth and shareholder value will be the availability of well trained and highly skilled managers. Our business model is unusual, combining credit and collection skills alongside the motivation of a large direct sales force. This means that we rely heavily on home-grown talent. In 2010 we reshaped our talent development framework to ensure we deliver the talent we need to meet our growth ambitions. Developing our leaders of tomorrow is a high priority for the senior team.

We describe our business as the ‘human face of finance’ because we know our customers personally and make over 100 million customer visits each year. Our success depends on dedicated employees and agents delivering first class customer service. We are proud to be awarded high satisfaction scores by our customers but we know we can do better. During this year, we have introduced customer and agent charters that make clear our service standards and we introduced monthly measures of customer satisfaction for every branch in order to better measure our performance.

The world in which we live is changing rapidly with the ability to communicate, be entertained, to shop and to undertake banking transactions increasingly being based around mobile technology. This is the environment in which customers, employees and agents expect to operate in the future, and to which we must respond. We are currently testing the deployment of handheld computers to our employees and agents in Hungary. If the pilot is a success, we envisage this will make us more efficient and improve our service to customers.

Our business model carries risks inherent in a fast growing business operating in emerging markets and effective governance and Board oversight is a crucial control. This year we have undertaken a formal evaluation of the effectiveness of the Board and Board Committees which confirmed their effectiveness. In addition, for the first time, we have made explicit our risk appetite which is published as part of the Principal risks section of this report. It guides our actions and sits within a framework where risk is formally evaluated quarterly in each market and processes to identify and manage risk operate effectively.

With regard to the Board, I am delighted that Charles Gregson has agreed to extend his term of office as a non-executive director until a date no later than the 2012 annual general meeting. This will enable the Board to benefit from another year of his insights and enable an orderly succession.

Taken overall we are working to create a sustainable business; one that will be around for the long term. This means we must build lasting relationships with our stakeholders that are based around trust and fairness. We will hold this as a core objective that will guide our actions. We believe our business has a bright future and we look forward with confidence to 2011.

Christopher Rodrigues
Non-Executive Chairman