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Annual Report and Accounts 2022
3
Contents
Strategic Report
Strategic Framework
4
Performance Highlights
6
Chairman’s Statement
8
Chief Executive O!cer’s Review
9
Chief Financial O!cer’s Review
13
Principal Risks and Uncertainties
15
Governance
Board of Directors
17
Corporate Governance Report
19
ESG
22
Section 172 Statement
24
Audit Commi"ee Report
25
Directors’ Remuneration Report
28
Directors’ Report
32
Financial Statements
Independent Auditor’s Report
37
Consolidated Financial Statements
44
Notes to the Financial Statements
49
Company Information
79
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4
Annual Report and Accounts 2022
1.
4.
2.
Cornerstone is…
A foreign exchange and payments
company offering multi-currency
accounts to businesses and individuals
With a strategy to grow via…
Development of enhanced products and services
- continued product innovation to o!er customers more
functionality
- expanding our network of product partners to be able to
service more countries and more currencies
Expanding our target customer base
- building di!erentiated processes and procedures to allow us to
cater to additional sectors and jurisdictions
Actively building our sales capabilities
- expanding our sales team, including through the acquisition of
teams
- developing our referral partner programme
- creating additional revenue streams from the di!erentiated
processes, procedures and products we create
Investing in our people
- continued professional development of all sta! members
- providing opportunities for employee feedback and actioning
our #nding
- threading EDI principles, policies and training throughout our
company
3.
5.
And di!erentiating ourselves by…
- enabling customers to interact with us however suits them –
whether online, over the phone or in person
- and always providing impeccable customer service
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Annual Report and Accounts 2022
5
to build a global payments capability
with a best-in-class multi–currency
account, which will…
allow us to realise our vision of being the go-to digital
account for businesses trading internationally and…
ful#l our purpose of making international payments and
foreign currency management available to more types of
business and enabling them to pay in or pay out, in any
currency, via any payment method anywhere in the world.
Our values are
We will achieve success by adhering to
our core values
Our mission is
customers !rst
We always put our
transparent
In all of our activities,
we are
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6
Annual Report and Accounts 2022
Performance Highlights
Revenue
£4.8m
(2021: £2.3m)
Gross Margin
60.9%
(2021: 51.6%)
Transacted payments totalling £584m (2021: £363m), up 61%
Number of active customers increased by 38% to 803 (2021: 583)
Acquired Capital Currencies, a well-established foreign exchange broker, and
Pangea FX, a specialist FX and treasury consultancy
Expanded our partnerships to increase the number of currencies, countries and
sectors that we service, and, post period, introduce new products
Entered an agreement to sell Avila House Ltd, a non-core subsidiary, for £300k
and licence our platform to the buyer, which completed post period
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Annual Report and Accounts 2022
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Transacted payments totalling
£584m
(2021: £363m)
Number of Customers
803
(2021: 583)
2022 Financial Summary
* Excluding share-based compensation, transaction costs and depreciation & amortisation
charges (see the Chief Financial O$cer’s Review for further detail)
Revenue increased 110% to £4.8m (2021: £2.3m)
Gross margin improved to 60.9% (2021: 51.6%)
Adjusted* EBITDA loss reduced to £0.9m (2021: £1.3m loss)
Loss before tax of £5.8m (2021: £4.2m loss)
Loss per share of 17.26p (2021: 21.24p loss)
Cash and cash equivalents at 31 December 2022 were £682k (31
December 2021: £348k)
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8
Annual Report and Accounts 2022
2022 was the year the COVID restrictions ended
and life slowly began to return to normal. Against
that backdrop, Cornerstone continued to deliver
on its strategy, improved operationally and
achieved a strong financial performance. We
completed our transition from a business with a
strong technology platform with a small but
growing number of customers to a business that
services customers directly with its own highly
effective sales force. This growth was accelerated
by two acquisitions during the year. We expanded
our offering, enhanced our platform and
strengthened our team. We achieved substantial
growth, with revenues more than doubling year-
on-year, improved our gross margin and reduced
our underlying loss.
This performance was built on the foundations
that we established over the last couple of years
under the leadership of Julian Wheatland, and
which have been strengthened following the
arrival of James Hickman as our new CEO in
September. This has brought a refocusing of our
strategy with our priority being to drive revenue
growth through enhancing our products and
services and expanding our customer base while
maintaining control over costs.
As James discusses in the Chief Executive
Officer's Review, this has already resulted in a
number of successes, which contributed to our
performance in 2022 and enabled an
exceptionally strong start to 2023. However, these
excellent trading results were only achieved as a
result of changes at an operational level within
the business.
We have formed and grown a strong integrated
team, marrying together the different disciplines
that drive the growth of the business. On behalf of
the Board, I would like to thank them for their hard
work and contribution to our growth. I am excited
for what they will deliver in 2023. We have taken
steps to improve engagement with, and the
wellbeing of, our people. At the same time, we
have also implemented changes to enhance our
approach to ESG more broadly, which is reflected
in our introduction of a dedicated ESG section in
our annual report this year. Together, this positions
Cornerstone for sustainable growth.
I also extend my thanks to my fellow Directors who
stepped down during the year. Their expertise was
invaluable as we commenced our life as a public
company, and we wish them all the best for their
future endeavours. In particular, I am deeply
grateful to Elliott Mannis, my predecessor as
Chairman, for his stewardship and who was
instrumental in Cornerstone’s growth and
development.
As we look ahead in 2023, we are on track for
another year of strong financial performance as
well as reaching further milestones as we work
towards building a global payments capability
with a best-in-class multi–currency account. On
behalf of the Board, I would like to thank our
shareholders for their support to date and we look
forward to updating them on our progress this
year and beyond.
Chairman’s Statement
GARETH EDWARDS
Chairman
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Annual Report and Accounts 2022
9
Chief Executive O!cer’s Review
The year to 31 December 2022 was a period of
significant change, which has continued into
2023, during which we implemented fundamental
improvements to our business. Cornerstone
delivered a strong performance in 2022 and took
actions to position us for an even greater 2023.
Two key milestones during the year were the
acquisitions of Capital Currencies, a well-
established foreign exchange broker, and Pangea
FX, a specialist FX and treasury consultancy. Both
businesses have made an excellent contribution
to Cornerstone. In particular, Capital Currencies
boosted our direct client base while Pangea FX
brought two senior sales executives who were
made responsible for leading our sales function.
Since joining Cornerstone as CEO in September
2022, my focus has been on driving direct sales
and fully commercialising our platform, while
maintaining control over costs. A key element of
this was growing our sales team, which started in
September, beginning with the appointments
from Pangea FX, and has been strengthened
thereafter and post year end. We have expanded
– and continue to expand – our network of
referral partners, which consists of corporates
that provide services to other businesses or high
net worth individuals (“HNWIs”), such as
accountants or real estate agents, and who
recommend Cornerstone to their clients for
currency transactions and payments.
We have taken multiple actions to commercialise
our platform more fully by enhancing and
expanding our offering – a key element of which is
increasing the number of counterparties that we
are connected to. This also reflects the refocusing
of our strategy on developing our own products
and services as opposed to seeking integrations
with enterprise resource planning or accounting
systems. As described further below, we have:
- Increased the number of currencies,
countries and sectors that we service
- Introduced new products
- Upgraded the platform user interface and
features
- Improved the transactional process
- Enhanced customer service
To further monetise our platform as well as realise
the value of a non-core asset, in December 2022
we entered a share purchase agreement (“SPA”)
for the sale of our subsidiary Avila House Ltd.
(“Avila”) to Aspire Commerce Ltd. (“Aspire”) as well
as entering a software licensing agreement for
Aspire to licence our platform. Upon completion
of the SPA post year end, we received £300k in
cash and the licensing agreement, which is for a
period of 12 months, will generate a minimum of
£290k. Cornerstone acquired Avila in 2020 as it is
registered with the Financial Conduct Authority
(“FCA”) as a small electronic money institution,
however, this more limited licence was
supplanted with our primary operating subsidiary,
Cornerstone Payment Solutions, subsequently
being approved by the FCA as an authorised
electronic money institution. This transaction with
Aspire reflects the value of an e-money
registration as well as our platform.
JAMES HICKMAN
Chief Executive O$cer
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To accelerate our transition to direct revenue, we
also took the strategic decision to o!board
almost all our historic white label business – only
maintaining a small number of accounts that
meet a particular pro#tability threshold. This
commenced towards the end of the year, but
primarily took place, and has been completed,
in the current year.
Performance
For the year under review, Cornerstone delivered
another twelve months of signi#cant growth in
revenue to £4.8m (2021: £2.3m). This re%ects a
substantial increase in revenue generated by
clients that we serve directly. The proportion of
total revenue that was accounted for by direct
clients increased to 78%, compared with 56% for
the previous year, being £3.8m (2021: £1.3m).
Revenue generated through our introducer
network accounted for 22% of total revenue
(2021: 44%) and was £1.1m (2021: £1.0m).
By client type, there was an increase in revenue
generated by both corporate accounts and
HNWIs. This includes particularly strong growth
in revenue from HNWIs, which was primarily due
to the addition of the Asia team. As a result, the
proportion of total revenue accounted for by
HNWIs increased to 53% (2021: 25%) with
corporate accounts contributing 47% (2021:
75%). However, for the majority of the HNWI
revenue (and nearly exclusively for the Asia
team's HNWI revenue), whilst the underlying
transaction is with an individual, the
relationship is via a corporate that provides
services to the HNWI – and, as a result, it is
a recurring revenue stream for us. As noted
above, we have been successfully
expanding this referral network.
Revenue continued to be generated from the
provision of foreign exchange and payments
services in the form of spot and forward
transactions, accounting for 92% and 8% of
revenue respectively (2021: 89% and 11%).
During 2022, transactions were conducted
between 58 di!erent currency pairs (2021: 42),
with 86% of transactions being between various
combinations of Sterling, Euros and US Dollars
(2021: 91%), re%ecting an expansion of our
payment capabilities.
During 2022, we transacted payments totalling
£584m compared with £363m in the previous
year.
Enhancing our offer
A key focus has, and continues to be, the
enhancement of our o!er, primarily through
growing our counterparty network to expand our
product capabilities. At the same time, we have
undertaken internal development to improve our
platform as well as our service provision.
Expanding our product
A core element of our strategy is to establish a
global payments network that will enable
Cornerstone customers to be able to pay in from,
and pay out to, any jurisdiction and via any
payment method. While it is still relatively early
days, we have taken important steps in
implementing this strategy.
10
Annual Report and Accounts 2022
Current
In development – nearing completion
In development – roadmap
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We have established new counterparty
partnerships, which enables us to broaden the
number of currencies and countries where we
can transact as well as expanding the business
sectors that we can serve. We can now pay out
to 70+ countries with 49 pay-out currencies and
32 pay-in currencies.
We have also made signi#cant progress towards
expanding our product o!ering with regards to
payment method. We expect to be able to
launch our #rst initiative later this year, which will
be a very exciting development for Cornerstone.
To be able to support our customers with more of
their business needs, we have formed strategic
partnerships with specialised and alternative
lenders to o!er a range of funding solutions. In
particular, we recently launched a lending
platform in partnership with Swoop Finance
(“Swoop”), which enables us to seamlessly refer
our customers to a lending partner that we have
pre-ve&ed to ensure that they can meet the
customers’ requirements. This service increases
our value to our customers while we also receive
commission on referrals. It also enhances our
competitive o!er to potential customers who
want to utilise Cornerstone’s FX services (rather
than those of their traditional bank), but who are
hesitant to move away from their traditional
bank as they require their lending facilities.
Enhancing our platform
During the year, we continued our internal
development work to improve our platform with
a focus on user interface and user experience.
We have also added certain features in response
to customer feedback to ensure that our
platform is tailored to their needs. These
improvements and the additional functionality,
alongside new counterparty partnerships as
noted above, have also enabled us to broaden
the target customer base, such as now being
able to cater for businesses in further sectors.
Improving our service
We are commi&ed to continuously improving the
service that we give to our customers. This
includes developments to enhance the
automation in our transactional processes to
increase the speed of payments. We have
introduced new customer service systems to
be&er track, and thereby improve, our response
times to customer queries. We are also working
on enhancements to our onboarding process to
make the transition to our platform as e!ortless
as possible for new customers.
Actions such as these, which stem from one of
our core values of always pu&ing our customers
#rst, mean that we are well prepared for the
introduction of the FCA’s Consumer Duty
regulation later this year, which sets higher and
clearer standards for consumer protection
across #nancial services. This also goes together
with our steadfast commitment to regulatory
compliance and transparency. We have always
adhered to the highest standards in this respect
and our governance has been strengthened with
the new additions to our Board, in particular with
John Burns bringing substantial experience in
regulation and compliance in the payments
industry.
Annual Report and Accounts 2022
11
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Outlook
The strong trading momentum that we
experienced in 2022 has been sustained into the
current year and, as previously announced,
increased during Q1 2023 resulting in a be&er-
than-expected revenue performance for the #rst
quarter. This also included Cornerstone
achieving its #rst, unaudited, quarter of being
EBITDA positive (on an adjusted basis).
While trading in Q2 2023 has reverted from
exceptionally high to the originally budgeted
levels of growth, we remain on track for a
signi#cant increase in revenue for full year 2023
over 2022 and are optimistic in terms of adjusted
EBITDA positivity. This re%ects the advancement
being made across our business and as we
realise the bene#ts of the enhancements that we
made to our operations and our o!er towards
the end of 2022 and to date in 2023.
We are also pleased to have completed the sale
of Avila, which, along with the licensing
agreement with Aspire, will support our cash
position. In addition, post year end we varied
certain incentivisation and se&lement
arrangements with Robert O'Brien, General
Manager APAC and Middle East, and Craig
Strong, Director of Capital Currencies (see note
20), which has also been immediately bene#cial
to the business.
As a result, and as we continue to broaden our
partnership network and our o!er, we remain
con#dent in the future and look forward to
reporting on our progress.
12
Annual Report and Accounts 2022
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Annual Report and Accounts 2022
13
Revenue for the 12 months to 31 December 2022
increased by 110% to £4.8m compared with
£2.3m for the previous year. This re%ects strong
underlying growth, driven by the revenue
generated by clients that we serve directly, as
well as the contribution from Capital Currencies
and Pangea FX, which were acquired during the
year.
As a result of the increased contribution to
revenue from clients that we serve directly,
gross margin improved substantially to 60.9% in
2022 (2021: 51.6%). The improvement in gross
margin combined with the increased revenue
enabled the Group to achieve signi#cant
growth in gross pro#t to £2.9m (2021: £1.2m).
Operating expenses were £8.6m in 2022
compared with £5.4m for the previous year. This
primarily re%ects movements of:
-
£1.9m increase in share-based (non-cash)
compensation to £4.3m (2021: £2.3m),
which predominantly relates to share-
based incentivisation for the Asia team
and the General Manager APAC and
Middle East;
-
£1.6m increase in other administrative
expenses to £4.2m (2021: £2.6m); and
partly o!set by
-
£0.3m decline in transaction costs
related to the Company’s IPO and its
acquisition strategy.
In the second half of the year, the Company
reached an agreement with Robert O’Brien, the
General Manager APAC and Middle East, and
the Asia team to vary the terms of their
incentivisation agreement, as a result of
performance being ahead of expectations. As a
result of the agreed se&lement, the Group
recognised an accelerated charge for the year
ended 31 December 2022 such that the full
value of the total charge estimated upon initial
recognition of £6.1m has been cumulatively
expensed (£4.3m for the year ended 31
December 2022 and £1.8m for the year ended 31
December 2021). Accordingly, there is no further
share-based compensation to be recognised in
future periods in respect of Mr. O’Brien and the
Asia team.
The £1.6m increase in other administrative
expenses included a £862k increase in sta!-
related costs (excluding share-based
compensation) primarily re%ecting the
additional hires made from mid-2021 onwards,
including the headcount acquired with Capital
Currencies and Pangea FX in 2022.
Depreciation and amortisation costs increased
by £249k, including £90k related to the
amortisation of the value a&ributed to the
customer base acquired through the
acquisitions of Capital Currencies and Pangea
FX. Rental and IT costs increased by £230k
largely owing to rent discounts realised during
the COVID-19 restrictions in 2021 and the
increased o$ce space in 2022 to cater to the
Chief Financial O!cer’s Review
JUDY HAPPE
Chief Financial O$cer
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expanded workforce. Legal and professional
fees increased by £142k due to the Company
becoming public part way through the
comparative period (6 April 2021).
Net #nance expenses were £133k (2021: net
#nance income of £1,262). This primarily re%ects
acquisition-related adjustments as well as loan
note interest, partially o!set by an increase in
other interest.
Loss before tax was £5.8m for 2022 (2021: £4.2m
loss), which primarily re%ects the greater
operating expenses. Loss per ordinary share on a
basic and diluted basis was 17.26 pence (2021:
21.24 pence loss), which re%ects an increase in
the weighted average number of ordinary shares
in issue to 32,506,335 (2021: 19,317,407).
Excluding share-based compensation,
transaction costs and depreciation &
amortisation charges, the Group’s adjusted
operating expenses (consisting of administrative
expenses) as a proportion of revenue improved
to 79% (2021: 107%). As a result, the Group’s
adjusted EBITDA loss was reduced to £0.9m
(2021: £1.3m).
As at 31 December 2022, the Group had cash
and cash equivalents of £682k (31 December
2021: £348k). This followed the raising, during the
year, of:
-
gross proceeds of £870k via the placing
of, and subscription for, new ordinary
shares, which was partly used to fund the
initial £586k cash consideration for the
acquisition of Capital Currencies; and
-
a total of approximately £1.1m through the
placing of new ordinary shares (£860k)
and the issue of a convertible loan note
(£225k).
The loan note was issued to one investor who
also took shares up to the maximum amount
allowed before obtaining FCA approval (9.9% of
the Company’s issued share capital).
Application for FCA approval was made during
the year and the loan note was converted
automatically into shares on approval being
received in February 2023.
Key Performance Indicators
The Group measures its performance using the
following key indicators:
Revenue
-
Why it is a KPI: This is the main source of
income to the business and drives our
business model.
-
Performance 2022: £4.8m (2021: £2.3m)
Gross Margin
-
Why it is a KPI: An indicator of the quality
of our earnings and the amount of pro#t
that could be available.
-
Performance 2022: 60.9% (2021: 51.6%)
Active Customers*
-
Why it is a KPI: It represents the size of our
customer base – the expansion of which is
core to our current strategy – and drives
revenue growth.
-
Performance 2022: 803 (2021: 583)
* The number of customers that traded with Cornerstone during the year to 31
December
Adjusted Operating Expenses**
-
Why it is a KPI: E!ective control of opex is
key to the Group’s strategy and an
indicator of sound management.
-
Performance 2022: £3.8m (2021: £2.5m)
**Administrative expenses excluding share-based compensation, transaction
costs and depreciation & amortisation charges
The Group reviews its KPIs on an ongoing basis
to ensure they remain relevant, which has
resulted in an alteration in the selected metrics
compared with the previous year to be&er re%ect
the current business.
14
Annual Report and Accounts 2022
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Principal Risks and Uncertainties
The Directors consider the principal risks and uncertainties facing the Group, and the key measures
taken to mitigate those risks, are as follows:
Risk
How the risk is managed
Risk change
Regulation
The Group’s subsidiary, Cornerstone
Payment Solutions Limited, is authorised
and regulated by the FCA as an Authorised
E-money Institution. In addition, Capital
Currencies is authorised and regulated by
the FCA as an Authorised Payment
Institution. It is also supervised by HMRC
with respect to the Money Laundering,
Terrorist Financing and Transfer of Funds
(Information on the Payer) Regulations 2017.
The withdrawal of, or any amendment to, a
regulatory approval required by the
subsidiaries or any of their Directors or
employees could result in an adverse
change to, or the cessation of, the Group’s
business or a material part thereof.
The FCA has recently shown increased
activity declaring that they are paying
closer a&ention to #rms’ compliance with
speci#c areas of regulation such as
consumer duty, wind down planning,
operational resilience and more.
The Group employs an experienced Compliance
and Money Laundering Reporting O$cer who is
responsible for monitoring the Group’s activities,
managing the Group’s regulatory and reporting
obligations and ensuring that all FCA
requirements are adhered to. During the year,
the Group strengthened its Board with the
appointment of John Burns, a Non-executive
Director with signi#cant experience regarding
regulation in the payments industry.
The Group retains the services of Compliancy
Services, a specialist regulatory and compliance
advisory service, to support the Compliance and
Money Laundering O$cer.
The Group monitors all FCA communication and
has multiple working groups, consisting of
employees from across the business, established
to ensure compliance with all regulatory
requirements.
-
Macro-
economic
International trade is a key driver of
demand for foreign exchange services. A
slowdown in international trade caused by
global macro-economic factors – such as
economic and political conditions (such as
the con%ict in the Ukraine and interest rate
volatility), and natural disasters and
epidemics / pandemics – could adversely
impact the Group’s business transaction
turnover.
The Group’s experienced management team
seeks to adapt to adverse conditions. The cost
base is closely monitored and cost saving
measures would be implemented to maintain
solvency if required. The Group is also focusing
on growing its sales teams with expertise across
multiple geographic locations to reduce
dependencies on speci#c regions.
With regards to the current con%ict in the
Ukraine, the Group does not have any business
in the Ukraine or Russia and does not have any
exposure to the Rouble. Therefore management
does not consider the Group to be adversely
impacted by the sanctions.
↑
Liquidity
There is a risk that the Group will not have
su$cient capital to meet the regulatory
capital requirement for an authorised
#nancial services business and that it is
unable to meet its #nancial obligations
when due.
The Group has an experienced #nance team
that provides e!ective management of the
Group’s operational #nancial exposures, with a
strong focus on cash control. This includes
ensuring su$cient ring fencing of capital to
meet its regulatory obligations. The Group is
also focused on reaching cash breakeven by the
end of the current year, with a series of measures
having been implemented to achieve this.
↓
Annual Report and Accounts 2022
15
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Credit
The Group is exposed to credit risk if a client
fails to deliver currency at maturity of the
contract or fails to deposit margin when a
margin call is made.
The Group operates a matched-principal
brokerage model, meaning it executes a
matching trade with its liquidity providers on
receipt of a client order. The Group does not
enter into speculative trades or trades funded
from its own balance sheet and does not fund
client margin calls from its own funds. In
addition, the Group has an experienced #nance
team that provides e!ective management of the
Group’s operational #nancial exposures, with a
strong focus on cash control.
-
Counterparty
There is a risk that the Group’s liquidity
services provider could terminate its
agreement with the Group or that its
systems may fail or are not operational for
a period of time, which could have a
materially adverse impact on the Group’s
business and operations.
The Group has a very good working relationship
with Velocity Trade International Ltd, its liquidity
services provider, and has been trading on
agreed terms for over ten years. The Group has
also appointed Banking Circle and Sucden as
further liquidity providers to which the Group
could transfer its business should Velocity
choose to terminate the agreement or should its
systems fail.
↓
Competition
There is a risk that competitors with greater
#nancial resources may develop so'ware
that is superior to the Group’s technology,
and they may also adopt more aggressive
pricing models or undertake more extensive
advertising and marketing campaigns. Such
competitors may also a&ract the Group’s
key employees or prospective employees,
which could impact the level of service that
the Group can give to its customers or the
ability to expand its service o!ering.
Signi#cant barriers to entry exist in the markets
in which the Group operates, such as the
requirement for regulatory authorisation and the
technical skill, expertise and experience
required to develop a proprietary technology
platform.
The Group’s management has extensive
experience in the foreign exchange payments
market, including of designing, building and
running IT systems and departments in the
#nancial services sector. The Group also intends
to leverage its ability to handle di$cult payment
%ows by targeting certain underserved markets/
industries where there will be fewer competitors.
The Board has established an employee share
incentive scheme and the majority of its senior
management are signi#cant shareholders or
option holders, aligning their interests with those
of the Group. The Group has also implemented
measures to enhance employee engagement.
-
Information
technology
There is a risk that the Group’s technology
platform may be compromised or
breached by cyber-a&acks and that it is
unable to prevent or detect unauthorised
access to, or disclosure of, clients’
con#dential personal and #nancial
information. Such an event could result in
breaches of obligations under applicable
laws or clients’ agreements and have an
adverse impact on the Group’s reputation
and #nancial performance.
The Group’s platform is entirely deployed on
Amazon Web Services, which is trusted by
numerous major organisations that require
robust, scalable, secure and cost-e!ective
services. AWS has a number of internationally
recognised certi#cations and accreditations
demonstrating compliance with third-party
assurance frameworks.
Additionally, the Group uses two factor
authentication utilising OAuth2 protocol for
client login and periodically commissions
penetration testing of its systems.
-
Partners
A key element of Cornerstone’s strategy is to
expand its partner network to increase its
o!ering to customers. There is a risk that the
Group will be unsuccessful in establishing
further partnerships, which would prevent it
from delivering on its strategy to accelerate
growth.
The Group’s management and Board comprise
individuals with substantial networks and
experience within the payments industry,
including previous experience of successfully
establishing and maintaining partnerships or
integrations in the market.
↓
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Board of Directors
Gareth Maitland Edwards, Non-Executive Chairman
Commi&ee Membership: Audit Commi&ee, Remuneration Commi&ee
Gareth is a quali#ed solicitor and was previously a partner at law #rm Pinsent Masons LLP,
where he held both the positions of Global Head of Corporate and International Development
Partner. He is currently a strategic consultant and an Executive Director of London Bridge
Capital Limited, an FCA authorised corporate #nance boutique. He has signi#cant public
markets experience and is Chairman of Nightcap plc and a non-executive director on the
Board of Various Eateries plc, all of which are quoted on the London Stock Exchange.
James Hickman, Chief Executive Officer
James has served as Chief Executive since September 2022. James has over 25 years’
experience in the #nancial services industry, of which the last 20 years have been in the FX
and payments industries. Most recently, James was Chief Revenue O$cer at Dublin-based
#ntech business, Fire Financial Services Limited. Previously, James spent nearly #ve years as
Chief Commercial O$cer at AIM-quoted Equals Group PLC. Prior to that, he was Managing
Director at Caxton Payments Limited (formerly Caxton FX Limited), a provider of foreign
exchange, international payments and prepaid cards. In each role, James was responsible for
growing sales, operations and managing key relationships. At Equals, his role also included
investor relations, fundraising and strategic acquisitions.
Judy Happe, ACA, Chief Financial Officer
Judy is an experienced corporate executive and Chief Financial O$cer with a background in
fundraising, mergers and acquisitions and post-deal integration. Most recently, Judy was CFO
of XenZone (now AIM-listed Kooth plc). Prior to that Judy was with AVG Technologies for seven
years including a period a'er its acquisition by Avast So'ware in October 2016. Starting as
#nance director, Judy moved through a number of roles giving her responsibility for post-deal
integration, management and guidance for AVG’s portfolio of acquisitions and acting as joint
single point of contact during the $1.3bn sale of AVG to Avast. Judy commenced her career as
a chartered accountant with Sa!ery Champness.
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William Newton, Chief Technology Officer/Chief Information Officer
William (“Bill”) has extensive operational experience within #nancial trading companies
having worked in the industry for over 30 years. He co-founded ITI Capital Limited (formerly
ODL Securities Limited), a derivatives, equities and FX brokerage, where he held a number of
senior management roles including IT Director. There, he designed various real-time risk and
regulatory reporting systems and was responsible for all back-o$ce development. He was
subsequently appointed CIO for London Capital Group Limited and managed a
reorganisation of its core systems and infrastructure. Bill co-founded Cornerstone Payment
Solutions Ltd, which was acquired by Cornerstone in September 2020.
John Burns, Non-Executive Director
Commi&ee Membership: Remuneration Commi&ee (Chair), Audit Commi&ee
John has over 40 years’ experience in the payments industry and was involved in legislative
policy development at the Financial Services Authority (now FCA). Prior to joining the Financial
Services Authority, he spent eight years at the Association for Payment Clearing Services and
the Payments Council. Other experience includes various positions with Clydesdale Bank
Plc and Lloyds Banking Group. John is currently Managing Director at Compliancy Services
Limited.
Simon Bullock, ACMA, Non-Executive Director
Commi&ee Membership: Audit Commi&ee (Chair), Remuneration Commi&ee
Simon has over 30 years’ experience in CFO and other #nance roles in public and private
companies operating in the UK and internationally. He has worked in strategic and
operational CFO roles across the technology and #nancial services sectors. This includes
Caxton FX Limited, a provider of foreign exchange, international payments and prepaid
cards; AIM-quoted Bonhill Group plc; Merit Group plc; Aurasian Minerals plc (now Adriatic
Metal Services (UK) Limited) and OnTheMarket plc. Simon is a Chartered Management
Accountant.
18
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Corporate Governance Report
The Board recognises the importance of sound
corporate governance and the Group has
adopted the Quoted Companies Alliance
Corporate Governance Code (QCA Code). The
Board considers that the Group complies with
the QCA Code in all respects, and details of its
compliance can be found on the Corporate
Governance page of Cornerstone’s website.
The Board
The Board is responsible for the management of
the business of the Group, se&ing the strategic
direction of the Group and establishing the
policies of the Group. It is the Board’s
responsibility to oversee the #nancial position of
the Group and monitor its business and a!airs
on behalf of the shareholders, to whom the
Directors are accountable. The Board will also
address issues relating to internal control and
the Group’s approach to risk management, and
it will monitor and promote a healthy corporate
culture. The primary duty of the Board is to act in
the best interests of the Group at all times.
The Group holds Board meetings monthly and as
required whenever issues arise that require the
urgent a&ention of the Board. Director
a&endance at the Board meetings held during
the year can be found in the table on page 21.
Processes are in place to ensure that each
Director is, at all times, provided with such
information as is necessary for them to
discharge their duties.
The Board has adopted Terms of Reference,
which have a clear and speci#c schedule of
ma&ers reserved for the Board, including
corporate governance, strategy, major
investments, #nancial reporting and internal
controls.
Board Directors
The Board comprises three Executive Directors,
a Non-Executive Chairman and two Non-
Executive Directors – both of which are deemed
to be independent. The Board considers that
Simon Bullock and John Burns are independent
in character and judgement and that there are
no business or other relationships likely to a!ect,
or which could appear to a!ect, their
judgement. The Board believes that it has an
appropriate balance of sector, #nancial and
public markets skills and experience, an
appropriate balance of personal qualities and
capabilities and an appropriate balance
between executive and non-executive directors.
The Non-Executive Directors are expected to
devote at least two days per month to the a!airs
of the Group and such additional time as may
be necessary to ful#l their roles. Brief
biographical details of each of the Directors are
set out in the Board of Directors section on
pages 17-18.
Board Committees
The Group has established a remuneration
commi&ee (the “Remuneration Commi&ee”) and
an audit commi&ee (the “Audit Commi&ee”) with
formally delegated duties and responsibilities.
Director a&endance at the commi&ee meetings
held during the year can be found in the table on
page 21.
The Remuneration Commi&ee comprises John
Burns as Chairman, Gareth Edwards and Simon
Bullock. During the year under review (until their
respective resignations), Daniel Mackinnon,
Philip Barry, Ellio& Mannis and Glyn Barker were
also members of the commi&ee. The commi&ee,
which meets not less than twice a year, is
responsible for the review and recommendation
of the scale and structure of remuneration for
senior management, including any bonus
arrangements or the award of share options with
due regard to the interests of the shareholders
and the performance of the Group.
The Audit Commi&ee comprises Simon Bullock
as Chairman, Gareth Edwards and John Burns.
During the year under review (until their
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19
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respective resignations), Daniel Mackinnon,
Ellio& Mannis and Glyn Barker were also
members of the commi&ee. The commi&ee,
which meets not less than twice a year, is
responsible for making recommendations to the
Board on the appointment of auditors and the
audit fee and for ensuring that the #nancial
performance of the Group is properly monitored
and reported. In addition, the Audit Commi&ee
will receive and review reports from
management and the auditors relating to the
interim report, the annual report and accounts
and the internal control systems of the Group.
Further details on the Audit Commi&ee’s
activities can be found in the Audit Commi&ee
Report on pages 25-27.
Board Effectiveness
The Non-Executive Chairman is responsible for
ensuring an e!ective Board and assessing its
performance. This assessment includes, but is
not limited to, the appropriate level of skill of
Board members, the conduct of Board meetings,
the decision-making process and the
e!ectiveness of the Board commi&ees. The
Board is of the opinion that each of its members
has the skills, knowledge, aptitude and
experience to perform the functions required of
a director of a listed company. The Board
comprises Executive and Non-Executive
Directors who are all of a high calibre and who
enable a well-functioning Board.
Stakeholders
The Board believes that its key stakeholders are
its employees, customers, investors and
partners, and it takes its corporate
responsibilities seriously with regards to
maintaining e!ective working relationships with
these groups. The Executive Directors, in
particular, maintain an ongoing dialogue with
stakeholders to inform strategy and the day-to-
day running of the business in order to achieve
long-term success. Further detail on the Group’s
stakeholder engagement can be found in the
ESG section on pages 22-23.
Share Dealing Code
The Group has adopted and operates a share
dealing code governing the share dealings of
the Directors and applicable employees with a
view to ensuring compliance with the AIM Rules.
The Directors consider that this share dealing
code is appropriate for a company whose shares
are admi&ed to trading on AIM. The Group takes
proper steps to ensure compliance by the
Directors and applicable employees with the
terms of the share dealing code and the relevant
provisions of the AIM Rules.
Annual General Meeting
The next Annual General Meeting of the Group
will be held at 11.00am on 20 June 2023 at the
o$ce of Gracechurch Group, 48 Gracechurch
Street, London, EC3V 0EJ.
20
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Meeting Attendance
The table below details Director a&endance at the Board and commi&ee meetings held during the
year.
* A&ended by invitation
1. Appointment as Chairman of the Company e!ective 31 August 2022, having previously been a Non-Executive Director
2. Appointment e!ective 12 September 2022
3. Appointment e!ective 22 February 2022
4. Appointment e!ective 11 October2022
5. Appointment e!ective 1 December 2022
6. Resigned e!ective 1 November 2022
7. Resigned e!ective 30 November 2022
8. Resigned e!ective 31 August 2022
9. Resigned e!ective 12 July 2022
10. Resigned e!ective 3 May 2022
11. Appointment e!ective 22 February 2022; resigned e!ective 25 July 2022
In addition to the Company’s formal Board meetings noted above, all of the Directors regularly discuss
ma&ers a!ecting the business and strategy of the Group.
Director
Board
Audit Commi&ee
Rem. Commi&ee
Current Directors (as at the date of the signing of the "nancial statements)
Gareth Edwards, Chairman1
12/12
2/2
2/2
James Hickman, CEO2
4/4
1*
1*
Judy Happe, CFO
12/12
2*
2*
William Newton, CTO /CIO3
11/12
-
-
Simon Bullock, Non-Executive
Director4
3/3
-
1/1
John Burns, Non-Executive Director5
1/1
-
1/1
Former Directors
Daniel Mackinnon, Non-Executive
Director6
7/10
1/2
1/1
Philip Barry, Non-Executive Director7
9/11
-
1/1
Elliot Mannis, Chairman8
8/8
1/1
1/1
Julian Wheatland, CEO9
6/6
2*
1*
Glyn Barker, Non-Executive Director10
2/4
1/1
1/1
Stephen Flynn, CTO11
6/6
-
-
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ESG
Cornerstone has taken important strides forward
in formalising its approach to environmental,
social and governance (“ESG”) ma&ers. During
the year, the Group established its #rst ESG
policy, which is published on the Group’s
website, and the Chief Operating O$cer was
appointed responsible for overseeing its
implementation while the Chief Executive O$cer
has overall responsibility for its e!ective
operation. As described further below, a number
of initiatives have been introduced to improve
the Group’s ESG performance and the Group is
in the process of establishing an employee led
ESG commi&ee to drive further progress.
The Group’s governance is reported on in the
Corporate Governance Report on pages 19 to 21.
This ESG section focuses on environmental and
social aspects.
Environmental
The Group’s operations have inherently low
emissions with its environmental impact being
largely limited to its o$ces. The Group believes
in further minimising its impact where possible,
such as encouraging all employees to reduce
their paper usage and providing waste recycling
options. In addition, the Board took the decision
to conduct half of its scheduled meetings
remotely and half in person to reduce the
Company’s carbon footprint. The Group seeks to
encourage energy-saving practices, such as
asking employees to turn o! their monitors when
they leave and avoid placing them on standby
and supporting its employees to cycle to work
with the provision (through its building) of indoor
bike racks and showers. The Group does not
have any company vehicles and none of its
employees drive to the o$ce.
Social
With regards to social responsibility, the Group’s
focus is to deepen its relationships with its key
stakeholders – namely, its employees,
customers, communities, investors and partners.
Employees
Engagement During the year, the Group
introduced company values and has taken steps
to support company culture and instil the new
values through holding events and workshops for
the workforce. The Group takes care to maintain
and encourage communication with, and
amongst, its employees, including the continued
use of internal communications platforms as a
tool for increasing engagement and facilitating
ad hoc, open dialogue – both work-related and
social-related. The Group holds monthly
gatherings to exchange ideas and insight into
areas of interest and is now introducing a
rewards system for employees embodying the
Group’s values.
Development The Group seeks to support
professional development and encourages
career development programmes. Currently, a
member of the #nance team is receiving paid
leave to study for an Association of Chartered
Certi#ed Accountants quali#cation and two
employees in the Group’s compliance function
are undertaking intensive courses to further their
knowledge with one becoming an accredited
#nancial crime specialist. The courses are being
paid for by Group and the employees receive
paid leave to study.
Wellbeing The Group supports employee
wellbeing, such as through o!ering hybrid
working. The Group now provides all employees
with health insurance, which is a premium
package and includes features such as
discounts for gym membership and a year’s
subscription to the Headspace mental wellness
support app. The Group also provides a healthy
snack bar in its London o$ce to encourage
healthy eating by its employees. An important
initiative that has been introduced, post year
end, is increasing the amount of parental leave
available to the secondary parent, to go beyond
the statutory minimum, which is part of the
Group’s new family leave policy as described
further below.
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Inclusion As a modern, forward-looking
company, Cornerstone is proud of its diversity
and the insight that it brings. The Group consists
of multilingual employees from several
nationalities with a range of di!erent
backgrounds and strives to create a diverse and
inclusive workplace that delivers for both
customers and employees. As of today, the
percentage of the Group’s workforce that is
female is 44% and the percentage that is people
from ethnic minorities is 37% while the
percentages for senior management are 29%
and 14% respectively.
During the year, the Group reviewed its Equality,
Diversity and Inclusion (“EDI”) policy. It has
introduced a new recruitment process that
be&er integrates EDI, and the Group is planning
to provide workshops for employees on its
implementation. Another key development is the
Group’s adoption of a family leave policy, which
supersedes and broadens what had previously
been maternity and paternity leave policies. The
family leave policy is gender agnostic and
applies equally whether the new parents are
biological parents (including via surrogacy) or
adoptive.
Customers
The Group regularly engages with customers to
ensure that the Group’s quality, e$ciency and
service levels meet both the standard expected
by the customer and the very high standards the
Group sets for itself. The Group has also
implemented a number of initiatives, towards the
end of the year and post period, to improve its
customer service, including:
- providing ongoing customer support training
for employees in sales and compliance
functions;
- hiring a dedicated desk assistant on the
sales desk whose role is solely to deliver
customer support;
- introducing a ticketing system that allows
customers to track the status of their requests
with the help desk – and also enable
Cornerstone to measure and improve its
performance; and
- establishing a working group that is focused
on ensuring Cornerstone continually evolves
its customer service and always works in the
best interests of its customers.
Communities
Given the nature of the Group’s business, it has a
limited societal impact, however, the Group
supports employees in their endeavours to make
a positive contribution. An example of this was
the Group facilitating a co!ee morning at its
London o$ce to raise money for a charity that
supports people living with cancer.
Investors
The Group seeks to engage with shareholders to
understand the needs and expectations of all
elements of the shareholder base.
The Board is commi&ed to open and ongoing
engagement with the Group’s shareholders to
understand the needs and expectations of all
elements of the shareholder base, and to ensure
that the Group’s strategy, #nancials and
business developments are communicated
e!ectively. The Board communicates with
shareholders primarily through the annual report
and accounts; the interim and full-year results
announcements; trading updates (where
required or appropriate); annual general
meetings; and the investor relations section of
the Cornerstone website.
Partners
The Group’s primary partners are its
counterparties and referral partners. There is a
regular and ongoing dialogue with these
business partners, proportional to their scale
and importance to the Group.
The Group’s principal counterparties, such as its
primary liquidity provider, are some of its longest
standing stakeholder relationships and the
Group aims to have regular interaction with
these partners.
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Section 172 Statement
Section 172 of the Companies Act 2006 requires each Director of the Group to act in the way he or she
considers, in good faith, would most likely promote the success of the Group for the bene#t of its
members as a whole. In this way, Section 172 requires a director to have regard, amongst other ma&ers,
to the: likely consequences of any decisions in the long-term; interests of the Group’s employees; need
to foster the Group’s business relationships with suppliers, customers and other material stakeholders;
impact of the Group’s operations on local communities and the environment; desirability of the Group
maintaining a reputation for high standards of business conduct; and need to act fairly between
members of the Group. In discharging its Section 172 duties, the Board has considered the factors set
out above and the views of key stakeholders.
Details of the key stakeholder engagement undertaken, and intended, by the Group to inform decision-
making and enhance Board understanding are set out below and in further detail in the ESG section on
pages 22-23.
Customers
The Directors engage with customers on an
ongoing basis to ensure that the Group’s quality,
e$ciency and service levels meet both the
standard expected by the customer and the very
high standards the Group sets for itself.
Employees
The Directors engage regularly with employees
and maintain an open dialogue. Due to the small
size of the Group’s current workforce, this is
currently conducted on a largely ad hoc basis,
but the Directors intend to implement a formal
structure as the team expands.
Partners
The Group operates a growing network of
partners consisting of counterparties, referral
partners and complementary service providers.
There is a regular and ongoing dialogue with
these business partners, proportional to their
scale and importance to the Group.
Investors
The Board is commi&ed to open and ongoing
engagement with the Group’s shareholders to
understand the needs and expectations of all
elements of the shareholder base. The Board
communicates with shareholders primarily
through the annual report and accounts,
announcements issued via the Regulatory News
Service and the Annual General Meeting.
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Audit Commi"ee Report
Dear shareholder,
I am pleased to present the Audit Commi&ee’s
report for 2022, which is my #rst as Chairman of
the Commi&ee – having joined the Board in
October 2022. I trust that this report will provide
you with an insight into our work, the ma&ers
handled and the focus of the Audit Commi&ee’s
deliberations during the year.
Membership and meetings
The members of the Audit Commi&ee during the
year and up to the date of the signing of this
report (unless as otherwise indicated) are:
Current members
- Simon Bullock, Non-Executive Director –
Chairman of the Committee (appointment
effective 11 October 2022)
- Gareth Edwards, Non-Executive Chairman
(Interim Chairman of the Committee from 1
September 2022 to 10 October 2022)
- John Burns, Non-Executive Director
(appointment effective 1 December 2022)
Former members (during 2022)
- Glyn Barker, Non-Executive Director
(Chairman of the committee until his
resignation as a director on 3 May 2022)
- Elliott Mannis, Non-Executive Chairman
(Interim Chairman of the committee from 3
May 2022 until his resignation on 31 August
2022)
- Daniel Mackinnon, Non-Executive Director
(resignation effective 1 November 2022)
The Audit Commi&ee members, which includes
our two Independent Non-Executive Directors,
bring relevant #nancial, commercial and capital
markets experience to the commi&ee’s
activities. In particular, I am a Chartered
Management Accountant with 30 years of
#nance experience, of which more than 20 years
have been at CFO level, including with AIM-
listed businesses. Further biographical details
can be found on pages 17-18.
The Audit Commi&ee meets at least twice a year
at appropriate intervals in the #nancial reporting
and audit cycle and otherwise as required. Only
members of the commi&ee have the right to
a&end the meetings. However, the Chief
Financial O$cer and external audit lead partner
are invited to a&end on a regular basis and
other non-members may be invited to a&end as
and when appropriate and necessary. During
the year, the Audit Commi&ee met on two
occasions.
The Company Secretary is secretary to the Audit
Commi&ee.
Governance and effectiveness
Outside of the formal meeting programme, the
Chairman of the Audit Commi&ee and, as
appropriate, the other commi&ee members,
maintain a dialogue with key individuals involved
in the Group’s governance, including the
Chairman of the Board (who is a member of the
commi&ee), the Chief Executive, the Chief
Financial O$cer and the external audit lead
partner.
The commi&ee undertakes its duties in
accordance with its terms of reference, which
are reviewed at least annually to ensure that
they remain #t for purpose and in line with best
practice guidelines.
Responsibilities and activities
The Audit Commi&ee’s responsibility is to ensure
that #nancial information published by the
Group properly presents its activities to
stakeholders in a way that is fair, balanced and
understandable. The Audit Commi&ee oversees
the e!ective delivery of audit services, including
making recommendations to the Board on the
appointment of auditors and the audit fee. In
addition, the Audit Commi&ee supports the
Annual Report and Accounts 2022
25
Strategic Report | Governance | Financial Statements | Company Information
Board in meeting its responsibilities in respect of
overseeing the Group’s internal control systems,
business risk management, arrangements for
whistleblowing and related compliance issues.
In its advisory capacity, the Audit Commi&ee
has con#rmed to the Board that, based on its
review of the Annual Report and #nancial
statements and internal controls that support
the disclosures, the Annual Report and #nancial
statements, taken as a whole, are fair, balanced
and understandable, and provide necessary
information for shareholders to assess the
Group’s position and performance, its business
model and strategy.
During the year, the Audit Commi&ee’s activities
included:
- Examining the Annual Report and financial
statements for the year to 31 December 2021
and the half-year report for the six months to
30 June 2022 and discussing them with
management and the external auditor to
assess whether the reports, taken as a whole,
were fair, balanced and understandable
prior to recommending these to the Board for
approval.
- Reviewing and challenging areas of
significant risks and judgement and the level
of disclosure.
- Monitoring auditor effectiveness and
independence.
- Reviewing the effectiveness of the Group’s
internal controls.
Significant judgements
The signi#cant ma&ers that the Audit
Commi&ee considered, and made certain
estimates and judgements upon, are set out in
the ‘Basis of Preparation’ section of the Notes to
the Financial Statements.
Risk management and internal
controls
In supporting the Board in maintaining an
e!ective internal control environment, the Audit
Commi&ee keeps under review the Group’s
internal #nancial controls systems and other
internal control and risk management systems;
reviews the methodology for reporting risk to the
Board; sets triggers for reporting and escalation
of signi#cant emerging risks; reviews the
adequacy and security of the Group’s
arrangements for its employees and contractors
to raise concerns, in con#dence, about possible
wrongdoing in #nancial reporting or other
ma&ers; and reviews the Group’s procedures for
detecting fraud and preventing bribery and
receive reports on non-compliance.
The Group has established a risk framework
including a risk register that is managed by the
Chief Financial O$cer and risk management
policies, including anti-bribery, corruption, anti-
money laundering and #nancial crime, #nancial
risk, fraud, information technology and security
policies. In addition, the detailed operational
and security elements of the risk register are
reviewed regularly by the senior management
team of the Group, also in line with the ongoing
risk and operational resilience reporting
requirements of the Financial Conduct Authority
(“FCA”).
In providing foreign exchange services to its
clients, the Group is subject to legal
requirements to deter and detect #nancial crime
and is required to maintain a framework with
appropriate mitigation measures and control
mechanisms to manage the operational and
security risks relating to the payment services it
provides. Accordingly, the Group has
implemented policies, controls and procedures
to mitigate and e!ectively manage the risks of
money laundering and terrorist #nancing. The
Group conducts reviews of its anti-money
laundering compliance using specialist third
party compliance experts, with the most recent
compliance audit concluding in March 2022. The
Group is also required to submit regular reports
to the FCA on a range of subject ma&ers in this
regard.
Further details of the Group’s #nancial risk
management are set out under note 17 to the
#nancial statements.
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Internal audit
At present, the Group does not have an internal
audit function. The Audit Commi&ee believes
that, owing to the Group’s size, management is
able to derive assurance as to the adequacy
and e!ectiveness of internal controls and risk
management procedures without an internal
audit function. However, the Audit Commi&ee
will keep under review the need for an internal
audit function as the business develops.
External auditor and independence
Haysmacintyre LLP were appointed as external
auditor in April 2021 following a competitive
tender process. The auditor con#rmed its
independence as auditor of the Group through
wri&en con#rmation to the Group, and the Audit
Commi&ee monitors the relationship to ensure
that auditor e!ectiveness, independence and
objectivity are maintained.
A summary of fees paid to the external auditor,
including the breakdown between fees for audit
and non-audit services, is set out in note 2 to the
#nancial statements.
SIMON BULLOCK
Audit Commi&ee Chairman
15 May 2023
Annual Report and Accounts 2022
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Directors’ Remuneration Report
The Remuneration Commi&ee presents its report
on Directors’ remuneration for the year ended 31
December 2022. The disclosures comply with the
requirement of the Companies Act 2006, the
Corporate Governance Code of the Quoted
Companies Alliance and applicable AIM Rules.
Remuneration Committee
The members of the Remuneration Commi&ee
during the year and up to the date of the signing
of this report (unless as otherwise indicated) are:
- John Burns (Chairman of the commi&ee),
Non-Executive Director (appointment
e!ective 1 December 2022)
- Gareth Edwards, Non-Executive Chairman
(Chairman of the commi&ee during the
year until the appointment of John Burns)
- Simon Bullock, Non-Executive Director
(appointment e!ective 11 October 2022)
- Daniel Mackinnon, Non-Executive Director
(resigned e!ective 1 November 2022)
- Ellio& Mannis, Non-Executive Chairman
(resigned e!ective 31 August 2022)
- Glyn Barker, Non-Executive Director
(resigned e!ective 3 May 2022)
The Remuneration Commi&ee met on two
occasions during 2022. The commi&ee is
responsible for the review and recommendation
of the scale and structure of remuneration for
the Chairman, the Executive Directors and senior
management, including any bonus
arrangements or the award of share options with
due regard to the interests of the shareholders
and the performance of the Group. The
remuneration of the Non-Executive Directors is a
ma&er for the Board or the shareholders (within
the limits set in the articles of association). No
director or senior manager shall be involved in
any decisions as to their own remuneration.
Service Agreements
The Executive Directors are employed under
service agreements that are subject to notice
periods, for both the Group and the individual, of
nine months for the Chief Executive O$cer and
Chief Information O$cer, and six months for the
Chief Financial O$cer. Their service agreements
include standard summary termination
provisions and post termination restrictive
covenants that apply for six months.
The Chief Executive O$cer and Chief Financial
O$cer are entitled to receive an annual salary
of £170,000 and £140,000 respectively, with an
entitlement to a pension contribution and
discretionary bonus. The Chief Information
O$cer is entitled to receive an annual salary of
£131,950, with an entitlement to a pension
contribution (which he has opted out of) and
discretionary bonus.
During the year under review, pursuant to her
service agreement, Judy Happe (the CFO), as
part of her remuneration she was entitled to
receive an annual grant of Options (“Top-up
Options”) equal to 1.5% of any increase in the
fully diluted capital of the Company in the 12
months immediately prior to the date of grant.
Post year end, as announced on 16 January
2023, the Board has agreed with Judy to vary the
terms of her original incentivisation
arrangements whereby she is no longer entitled
to receive Top-Up Options as part of her
remuneration. The Remuneration Commi&ee
believes the terms of her remuneration are now
more appropriate for a company at
Cornerstone’s stage of development.
The service agreement of the current CEO, who
assumed the role on 12 September 2022, does
not include an entitlement to Top-Up Options.
The prior CEO was entitled to receive an annual
grant of Top-up Options equal to 5.0% of any
increase in the fully diluted capital of the
Company in the 12 months immediately prior to
the date of grant.
Letters of Appointment
Non-Executive Directors are appointed under
le&ers of appointment with the Company. Non-
28
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Executive Director appointments are subject to
notice periods of three months for either the
Company or the individual.
The Chairman will receive a fee of £52,000 per
annum. Following the audited consolidated
turnover of the Group exceeding £8 million, the
Chairman will become entitled to receive a fee
of £70,000 per annum.
Each Non-Executive Director (excluding the
Chairman) will receive a fee of £30,000 per
annum. In addition, each Non-Executive Director
may be eligible for a discretionary allotment of
ordinary shares of the Company as determined
by the Board or relevant sub-commi&ee thereof
annually. Each Non-Executive Director is also
paid an additional £2,500 per annum for any
commi&ee chairmanship that the Board may
delegate to him.
In respect of the Non-Executive Directors who
resigned during the year and the Chairman,
pursuant to their le&ers of appointment (or in the
Chairman’s case, his previous le&er of
appointment), an element of their annual fee
was payable through the allotment of shares
priced at the average mid-market closing price
for the ten business days prior to such payment
being made. Further details of these payments
are set out in the table under the ‘Share-based
payments’ section below.
Directors’ Remuneration
The following table details the Directors’ remuneration for the years ended 31 December 2022 and 2021:
Salary/
Fees
£
Bonus(1)
£
Pension
£
Benefits
£
Total
2022
£
Total
2021(2)
£
Executive Directors
James Hickman, CEO(3)
52,308
11,684
0
300
64,292
-
Judy Happe, CFO
140,000
31,360
6,829
217
178,406
180,017
William Newton, CTO /CIO(4)
117,154
-
-(5)
-
117,154
110,000
Stephen Flynn, CTO(4)(6)
67,833
-
2,200
-
70,033
113,134
Julian Wheatland, CEO(7)
223,500
-
10,818
-
234,318
232,200
Non-Executive Directors(8)
Gareth Edwards, Chairman(9)
40,667
-
-
-
40,667(16)
41,250
Simon Bullock(10)
7,292
-
-
-
7,292
-
John Burns(11)
2,708
-
-
-
2,708
-
Philip Barry(12)
50,417
-
-
-
50,417
41,250
Daniel Mackinnon(13)
29,167
-
-
-
29,167(16)
41,250
Ellio& Mannis, Chairman(14)
52,000
-
-
-
52,000
58,500
Glyn Barker(15)
11,666
-
-
-
11,666(16)
41,250
Annual Report and Accounts 2022
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1. The Executive Directors proposed to defer the payment of their bonus until the Company generates positive cash %ow, which
was accepted by the Board
2. The amounts for 2021 have been restated to be presented on an accrual basis to incorporate share-based payments that
were made in 2022 and 2023 relating to service in 2021
3. Appointment e!ective 12 September 2022
4. William Newton and Stephen Flynn were appointed to the Board of Directors on 22 February 2022. On becoming Executive
Directors, they continued in their existing operational roles and with no changes to their remuneration packages
5. William Newton chose to opt-out of the Company’s pension scheme
6. Resigned e!ective 25 July 2022
7. Resigned as CEO and a Director e!ective 12 July 2022 and as an employee of the Company e!ective 28 November 2022
8. The fees for the Non-Executive Directors and Chairman who resigned during 2022 included share-based payments as
outlined below
9. Appointment as Non-Executive Chairman e!ective as of 31 August 2022, having previously been a Non-Executive Director
10. Appointment e!ective 11 October 2022
11. Appointment e!ective 1 December 2022
12. Resigned e!ective 30 November 2022
13. Resigned e!ective 1 November 2022
14. Resigned e!ective 31 August 2022
15. Resigned e!ective 3 May 2022
16. In December 2022, Glyn Barker, Gareth Edwards and Daniel Mackinnon waived their contractual entitlement to receive
share-based compensation for the year ended 31 December 2022
As at 31 December 2022, a total of £80,044 was owed to Directors and former Directors with respect to
their service in 2022 (31 December 2021: £161,306 with respect to 2021 service) and a total of £47,968 with
respect to their service in 2021 (with the 2021 amounts comprising share-based compensation that was
paid in January 2023 as described below). The outstanding share-based payments owed to former
Directors for the year ended 31 December 2022 will be paid during 2023. The Executive Directors’ bonus
payments for 2022 will be paid when the Company generates positive cash %ow.
Share-based payment
As noted above, the fees for the Non-Executive Directors who resigned during the year and the
Chairman included an element of share-based payment. During the year, shares were allo&ed to
Directors as follows, which was in respect of their service in 2021:
Gareth Edwards became Chairman of the Company e!ective 1 September 2022 having previously
been a Non-Executive Director. The ordinary shares issued to him during 2022 represented part
payment for the #nancial year to 31 December 2021. Post year end, on 13 January 2023, Gareth was
issued 136,641 ordinary shares at a price of 6.501 pence per ordinary share being the balance of
payment due to him for the 2021 #nancial year.
Ellio& Mannis, Glyn Barker, Daniel Mackinnon and Philip Barry received, on 13 January 2023, being a
period a'er their respective resignations as Directors of the Company, a combined total of £39,085
(equating to 601,220 ordinary shares) in share-based payments being the balance relating to their
service in 2021. Ellio& Mannis and Philip Barry will receive the outstanding amounts owed to them, for
the periods up to their resignations in the 2022 #nancial year, during 2023.
Date of allotment
Number of ordinary
shares
Price per ordinary
share
Gareth Edwards, Chairman
24 August 2022
61,017
10.025 pence
Daniel Mackinnon
24 August 2022
61,017
10.025 pence
Philip Barry
24 August 2022
61,017
10.025 pence
Ellio& Mannis
24 August 2022
85,424
10.025 pence
Glyn Barker
24 August 2022
61,017
10.025 pence
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Grant of Options to Directors
During the year, the Company granted Top-Up Options (as de#ned above) to Directors as follows:
1 Resigned as CEO and a Director e!ective 12 July 2022 and as an employee of the Company e!ective 28 November 2022
Directors’ Interests
1 Appointed e!ective 12 September 2022
2 William Newton’s holding includes 81,967 ordinary shares held in the name of his wife
3 Appointed e!ective 11 October 2022
4 Appointed e!ective 1 December 2022
5 Comprising 127,857 options granted in 2022 (see ‘Grant of Options to Directors’ above for details) and the unvested amount
(92,268 options) of 276,803 options granted on 2 December 2020, which vest as to one-third on each of the #rst three
anniversaries of the grant date, with an exercise price of 50 pence and expire #ve years from the date of grant
Date of grant
Number
of options
Vesting conditions
Exercise
price
Judy Happe, CFO
8 March 2022
127,857
One third vest on each of the
#rst three anniversaries of the
date of grant and expire #ve
years from the date of grant.
36.15
pence
Julian Wheatland,
CEO1
8 March 2022
426,190
The options expired on 28
November 2022.
N/A
Number of
ordinary
shares as at
the date of
this report
Number of
ordinary
shares as at
31/12/22
Options
unvested as
at 31/12/22
Options
vested but
not exercised
as at 31/12/22
Executive Directors
James Hickman, CEO(1)
69,410
-
-
-
Judy Happe, CFO
25,516
19,516
220,125(5)
184,535
William Newton, CTO /
CIO(2)
2,530,787
2,530,787
-
-
Non-Executive Directors
Gareth Edwards, Chairman
725,846
532,705
-
-
Simon Bullock(3)
100,000
-
-
-
John Burns(4)
6,000
-
-
-
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Directors’ Report
The Directors present their annual report and audited consolidated #nancial statements for the year
ended 31 December 2022.
Principal Activities
Cornerstone FS plc provides international payment, currency risk management and electronic account
services using its proprietary cloud-based multi-currency payments platform. The Group provides
these services to businesses and individuals. The Group’s subsidiaries are authorised and regulated by
the Financial Conduct Authority (“FCA”) as follows:
During the year under review, Avila House Ltd was a subsidiary of the Group, which is a Registered
Small Electronic Money Institution under the Electronic Money Regulations. In December 2022, the
Group entered a share purchase agreement to sell Avila House, with the transaction completing in
April 2023.
Business Review and Results
The review of the Group’s business, strategy, principal risks and uncertainties and outlook are included
in the Strategic Report section on pages 4-16. The consolidated #nancial statements for the year ended
31 December 2022 are set out on pages 44-78. The Group’s loss a'er taxation for the year was £5.6
million.
Dividends
The Directors do not recommend the payment of a dividend for 2022.
Directors
The following Directors held o$ce during the year and up to the date of the approval of these #nancial
statements (unless as otherwise indicated):
-
Gareth Edwards, Chairman
-
James Hickman, CEO (appointment e!ective 12 September 2022)
-
Judy Happe, CFO
-
William Newton, CTO /CIO (appointment e!ective 22 February 2022)
-
Simon Bullock (appointment e!ective 11 October 2022)
-
John Burns (appointment e!ective 1 December 2022)
Company Number
Company Name
FCA Permissions
NI602461
Cornerstone Payment Solutions
Ltd
Authorised Electronic Money Institution
under the Electronic Money Regulations
05021694
Capital Currencies Ltd
Authorised Payment Institution under the
Payment Services Regulations
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-
Daniel Mackinnon (resigned e!ective 1 November 2022)
-
Philip Barry (resigned e!ective 30 November 2022)
-
Ellio& Mannis (resigned e!ective 31 August 2022)
-
Julian Wheatland (resigned as a Director e!ective 12 July 2022)
-
Glyn Barker (resigned e!ective 3 May 2022)
-
Stephen Flynn (appointment e!ective 22 February 2022; resigned e!ective 25 July 2022)
Biographies of the Directors, including their Board commi&ee memberships, are set out on pages 17-18.
Details of the Directors’ remuneration and their interests in the share capital of the Group can be found
in the Directors’ Remuneration Report on pages 28-31.
Directors’ Indemnity
All Directors and o$cers of the Group have the bene#t of the indemnity provision contained in the
Group’s Articles of Association. The Group also has Directors’ and O$cers’ liability insurance in respect
of itself and its directors and o$cers.
Share Capital
Cornerstone FS plc is a public limited company incorporated in England and Wales and its shares are
quoted on the AIM market of the London Stock Exchange. As at the date of approval of this Directors’
Report, the outstanding issued share capital of the Group comprised 57,417,101 ordinary shares of £0.01
each. There are no shares held in treasury. Further detail on the Group’s share capital can be found in
note 15 to the #nancial statements.
Significant Shareholders
As at the date of approval of this Directors’ Report, to the best of the Group’s knowledge, the following
shareholders had a signi#cant interest in the Group’s issued share capital:
* William Newton’s holding includes 81,967 ordinary shares registered in the name of his wife
** David Ryan’s holding includes 600,000 ordinary shares registered in the name of his wife
Name
Number of shares
% of issued
share capital
Robert O’Brien
9,400,000
16.4
Mark Horrocks
7,692,307
13.4
Atlantic Partners Asia Holdings (SG) PTE Ltd
4,375,000
7.6
Linista Group Inc.
4,194,664
7.3
Philip Barry
3,403,407
5.9
William Newton*
2,530,787
4.4
Stephen Flynn
2,435,442
4.2
David Ryan**
2,400,000
4.2
Nicholas Slater
1,725,000
3.0
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Subsequent Events
The material post balance sheet events can be
found in note 20 to the #nancial statements. In
particular, this includes variation to certain
incentivisation and se&lement arrangements,
the issue of ordinary shares and grant of share
options to Directors, and the completion of the
sale of Avila House Ltd.
Financial Instruments
Disclosures regarding #nancial instruments are
provided in note 17 to the #nancial statements.
Donations
The Group did not make any political or
charitable donations during the year.
Corporate Governance
A review of the Group’s corporate governance is
provided in the Corporate Governance Report
on pages 19-21.
Stakeholder Engagement
Details of the Group’s engagement with
stakeholders can be found in the Section 172
Statement on page 24 and in the ESG section on
pages 22-23.
Auditor
Haysmacintyre LLP have expressed their
willingness to continue in o$ce as auditor. A
resolution to reappoint haysmacintyre as the
Group’s auditor will be proposed at the Annual
General Meeting on 20 June 2023.
Disclosure of Information to Auditor
The Directors who held o$ce at the date of
approval of this Directors’ Report con#rm that,
so far as they are each aware, there is no
relevant audit information of which the Group’s
auditors are unaware; and each Director has
taken all the steps they might reasonably be
expected to have taken as a Director to make
themselves aware of any relevant audit
information and to establish that the Group’s
auditor is aware of that information.
Going Concern
The Directors have run various scenario planning
forecasts alongside their best-estimate forecast
assumptions, including a scenario in which sales
growth falls below management expectations
and various cash mitigation measures are
implemented, which all indicate su$cient cash
resources to continue to #nance the Group’s
working capital requirements over the forecast
period of 18 months from the date of approval of
these #nancial statements. For these reasons,
the Directors continue to adopt the going
concern basis of accounting in preparing the
Group’s #nancial statements. Further detail can
be found in the ‘Going Concern’ section of the
Notes to the Financial Statements on page 51.
Statement of Directors’
Responsibilities
The Directors are responsible for preparing the
Strategic Report, the Directors’ Report and the
#nancial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare
Group and Company #nancial statements for
each #nancial year. The Directors are required
by the AIM Rules of the London Stock Exchange
to prepare Group #nancial statements in
accordance with International Financial
Reporting Standards (“IFRS”) as adopted by the
United Kingdom (“UK”) and have elected under
company law to prepare the Company #nancial
statements in accordance with IFRS as adopted
by the UK.
The #nancial statements are required by law and
IFRS adopted by the UK to present fairly the
#nancial position and performance of the Group
and Company; the Companies Act 2006
provides in relation to such #nancial statements
that references in the relevant part of that Act to
#nancial statements giving a true and fair view
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are references to their achieving a fair
presentation.
Under company law the Directors must not
approve the #nancial statements unless they are
satis#ed that they give a true and fair view of the
state of a!airs of the Group and the Company
and of the pro#t or loss of the Group for that
period.
In preparing each of the Group and Company
#nancial statements, the Directors are required
to:
-
select suitable accounting policies and
then apply them consistently;
-
make judgements and accounting
estimates that are reasonable and
prudent;
-
state whether they have been prepared in
accordance with IFRS adopted by the UK;
and
-
prepare the #nancial statements on the
going concern basis unless it is
inappropriate to presume that the Group
and the Company will continue in
business.
The Directors are responsible for keeping
adequate accounting records that are su$cient
to show and explain the Group’s and the
Company’s transactions and disclose with
reasonable accuracy at any time the #nancial
position of the Group and the Company and
enable them to ensure that the #nancial
statements comply with the Companies Act
2006. They are also responsible for safeguarding
the assets of the Group and the Company and
hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.
The Directors are responsible for the
maintenance and integrity of the corporate and
#nancial information included on the Group’s
website.
Legislation in the United Kingdom governing the
preparation and dissemination of #nancial
statements may di!er from legislation in other
jurisdictions.
On behalf of the Board
JAMES HICKMAN
Chief Executive O$cer
15 May 2023
Annual Report and Accounts 2022
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Strategic Report | Governance | Financial Statements | Company Information
36
Annual Report and Accounts 2022
Financial Statements
For the year ended 31 December 2022
Strategic Report | Governance | Financial Statements | Company Information
Independent Auditor’s Report
TO THE MEMBERS OF CORNERSTONE FS PLC
Opinion
We have audited the #nancial statements of Cornerstone FS PLC (the “Parent Company”) and its
subsidiaries (the “Group”) for the year ended 31 December 2022 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated and Parent Company Statement of Financial
Position, the Consolidated and Parent Company Statements of Cash Flows, the Consolidated and
Parent Company Statements of Changes in Equity and notes to the #nancial statements, including a
summary of signi#cant accounting policies. The #nancial reporting framework that has been applied in
their preparation is applicable law and UK adopted International Financial Reporting Standards
(IFRSs).
In our opinion, the #nancial statements:
- give a true and fair view of the state of the Group’s and of the Parent Company’s a!airs as at 31
December 2022 and of the Group’s loss for the year then ended;
- have been properly prepared in accordance with UK adopted international accounting
standards; and
- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the #nancial statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of the #nancial
statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
ful#lled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is su$cient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the #nancial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the #nancial statements is appropriate.
Our audit procedures to evaluate the directors’ assessment of the Group and the Parent Company’s
ability to continue to adopt the going concern basis of accounting included, but were not limited to:
- Undertaking an initial assessment at the planning stage of the audit to identify events or conditions
that may cast signi#cant doubt on the Group and the Parent Company’s ability to continue as a
going concern;
- Evaluating the methodology used by the directors to assess the Group and the Parent Company’s
ability to continue as a going concern;
Annual Report and Accounts 2022
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Strategic Report | Governance | Financial Statements | Company Information
- Reviewing the directors’ going concern assessment and evaluating the key assumptions used and
judgements applied;
- Reviewing the liquidity headroom and applying a number of sensitivities to the base forecast
assessment of the directors to ensure there was su$cient headroom to adopt the going concern
basis of accounting;
- Reviewing the appropriateness of the directors’ disclosures regarding going concern in the #nancial
statements.
Based on the work we have performed, we have not identi#ed any material uncertainties relating to
events or conditions that, individually or collectively, may cast signi#cant doubt on the Group and the
Parent Company's ability to continue as a going concern for a period of at least twelve months from
when the #nancial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described
in the relevant sections of this report.
Key audit matters
Key audit ma&ers are those ma&ers that, in our professional judgement, were of most signi#cance in
our audit of the #nancial statements of the current period and include the most signi#cant assessed
risks of material misstatement (whether or not due to fraud) we identi#ed. These ma&ers included
those which had the greatest e!ect on the overall audit strategy, the allocation of resources in the
audit; and directing the e!orts of the engagement team. These ma&ers were addressed in the context
of our audit of the #nancial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these ma&ers.
Key Audit Ma"er Description
How the ma"er was addressed in the audit
Carrying value of intangible assets in the
Group "nancial statements.
The Group’s Statement of Financial Position as
at 31 December 2022 includes total intangible
assets of £2.32m. This includes £1.09m of
Goodwill, £0.53m of Customer relationships,
£0.61m of Internally developed so'ware and
£0.09m of other intangibles.
There is a risk that intangible assets might be
impaired.
The Board concluded that there is no
impairment required to the carrying value of
those intangibles, based on their assessment of
the forecasted future cash %ows of the business.
Our audit work considered, but was not
restricted to, the following:
- A review of the calculation of separately
identi#able intangible assets and goodwill
for the acquisition of Capital Currencies
Limited and Pangea FX Limited in the year,
to ensure that it was appropriate and in
accordance with the terms of each
acquisition and IFRS 3: Business
combinations.
- Consideration of whether any separately
identi#able intangible assets existed on
acquisition.
- A review of key estimates and judgements
used in determining the value of goodwill,
such as
‣ The discount rates used by
management,
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‣ The estimated fair value of any
contingent consideration,
‣ The estimated fair value of any
intangible assets acquired as part of
the business combinations
- A review of the Impairment assessment
memorandum prepared by the Board in
respect of the carrying value of the
intangible assets, including goodwill, in
accordance with its forecast performance in
the scenarios considered.
- A review of the key estimates, assumptions
and judgements included in that assessment
- Sensitivity analysis of the forecasts
supporting the Impairment assessment
- A review of post year-end activity of the
business.
- A review of the opening balance sheets, and
therefore net asset position of all entities
acquired during the year
- A review of the disclosures made with
regards to the estimates and judgements
made in terms of allocating a value to
goodwill, as well as the disclosures covering
the impairment tests performed by the
Directors with regards to the goodwill as at
31 December 2022.
Our work performed on the carrying value of
intangible assets highlighted no material errors.
Carrying value of investments in the Parent
Company’s "nancial statements
The Parent Company’s Statement of Financial
Position as at 31 December 2022 includes a total
investment of £8.02m in 100% of the ordinary
share capital of Cornerstone Payment Solutions
Limited, Avila House Limited, Capital Currencies
Limited and Pangea FX Limited.
There is a risk that this investment might be
impaired.
Our audit work considered, but was not
restricted to, the following:
- A review of the Impairment assessment
memorandum prepared by the Board in
respect of the carrying value of the
investments in accordance with its forecast
performance in the scenarios considered.
- A review of the key estimates, assumptions
and judgements included in that assessment
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Our application of materiality
We apply the concept of materiality both in
planning and performing our audit, in evaluating
the e!ect of misstatements and in forming an
option. For the purpose of determining whether
the #nancial statements are free from material
misstatement, we de#ne materiality as the
magnitude of a misstatement or an omission
from the #nancial statements, or related
disclosures, that would make it probable that the
judgment of a reasonable person, relying on the
information would have been changed or
in%uenced by the misstatement or omission. We
also determine a level of performance
materiality, which we used to determine the
extent of testing need, to reduce to an
appropriately low level the risk that the
aggregate of uncorrected and undetected
misstatement exceeds materiality for the
#nancial statements as a whole.
The materiality for the Group #nancial
statements as a whole was set at £96,000. This
was determined with reference to 2% of revenue,
since the Group is driven by revenue and this is a
key performance indicator ("KPI").
On the basis of our risk assessment and review of
the Group’s control environment, performance
materiality was set at 75% of materiality, being
£72,000.
The reporting threshold to the Audit and Risk
Commi&ee was set as 5% of materiality, being
£4,800. If in our opinion errors below this level
warranted reporting on qualitative grounds,
these would also be reported.
The materiality for the Parent Company #nancial
statements was based on 1% of gross assets
since the Parent Company is a holding company
and its value is driven by the value of the
investments it holds in its subsidiary
undertakings. It was then restricted to the Group
materiality of £96,000.
On the basis of our risk assessment and review of
the Parent Company’s control environment,
performance materiality was set at 75% of
materiality, being £72,000 and the reporting
threshold was £4,800.
An overview of the scope of our audit
Our audit scope included all components of the
Group which are all registered companies in the
United Kingdom with limited activities in Dubai.
Our assessment of audit risk, our evaluation of
materiality and our allocation of performance
materiality determine our audit scope for the
Group. This enables us to form an opinion on the
#nancial statements. We take into account size,
risk pro#le, the organisation of the Group and
the internal control environment when assessing
the level of work to be performed.
For those entities where the level of activity that
occurred during the year was minimal we have
determined that these components were
insigni#cant and therefore not relevant to the
Group’s results for the year ended 31 December
2022, these entities were therefore not included
as part of our audit scope for the audit of the
Group #nancial statements.
Based on our assessment of the accounting
processes, the industry in which the Group
The Board concluded that there is no
impairment required to the carrying value of
those investments, based on their assessment of
the forecasted future cash %ows of the business.
- Sensitivity analysis of the forecasts
supporting the Impairment assessment
- A review of post year-end activity of the
business.
Our work performed on the carrying value of
investments in the Parent Company highlighted
no material errors.
40
Annual Report and Accounts 2022
Strategic Report | Governance | Financial Statements | Company Information
operates and the control environment we
concluded that it was appropriate to undertake
an entirely substantive audit approach. Our
audit procedures included testing of income and
expenditure, assets, liabilities and equities. We
have set out how we tested the key audit ma&ers
in the Key Audit Ma&ers section above.
Component and subsidiary materiality
Component materiality has been calculated
a'er determining the number of signi#cant
components within the Group and then applying
an appropriate multiplier to the Group
materiality of £96,000 (calculated using 2% of
turnover). As all of the entities that formed part
of our audit scope have turnover as one of their
main KPIs, we considered the use of Group
materiality based on turnover to be appropriate.
The total component materiality calculated was
then allocated between the relevant entities
accordingly based on their signi#cance to the
Group.
Where we have performed statutory audits of
the trading subsidiaries of the Group, we have
calculated their materiality on the basis of
turnover based materiality (as we have used for
the Group overall) where 2% of turnover was
considered to be materiality. We have ensured
that the individual materiality calculated for
subsidiary statutory audits did not exceed the
component materiality that would have been
allocated to these entities, should these have
been reviewed only as part of the audit of the
Group #nancial statements.
Other information
The directors are responsible for the other
information. The other information comprises the
information included in the annual report, other
than the #nancial statements and our auditor’s
report thereon. Our opinion on the #nancial
statements does not cover the other information
and, except to the extent otherwise explicitly
stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the #nancial
statements, our responsibility is to read the other
information and, in doing so, consider whether
the other information is materially inconsistent
with the #nancial statements or our knowledge
obtained in the audit or otherwise appears to be
materially misstated. If we identify such material
inconsistencies or apparent material
misstatements, we are required to determine
whether there is a material misstatement in the
#nancial statements or a material misstatement
of the other information. If, based on the work we
have performed, we conclude that there is a
material misstatement of this other information,
we are required to report that fact. We have
nothing to report in this regard.
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion, based on the work undertaken in
the course of the audit:
- the information given in the strategic report
and the directors’ report for the #nancial year
for which the #nancial statements are
prepared is consistent with the #nancial
statements; and
- the strategic report and the directors’ report
have been prepared in accordance with
applicable legal requirements.
Matters on which we are required to
report by exception
In the light of the knowledge and understanding
of the Group and the Parent Company and its
environment obtained in the course of the audit,
we have not identi#ed material misstatements in
the strategic report or the directors’ report.
We have nothing to report in respect of the
following ma&ers in relation to which the
Companies Act 2006 requires us to report to you
if, in our opinion:
- adequate accounting records have not been
kept by the Parent Company; or
- the Parent Company #nancial statements are
not in agreement with the accounting records
and returns; or
Annual Report and Accounts 2022
41
Strategic Report | Governance | Financial Statements | Company Information
- certain disclosures of directors’ remuneration
speci#ed by law are not made; or
- we have not received all the information and
explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’
responsibilities statement, the directors are
responsible for the preparation of the #nancial
statements and for being satis#ed that they give
a true and fair view, and for such internal control
as the directors determine is necessary to
enable the preparation of #nancial statements
that are free from material misstatement,
whether due to fraud or error.
In preparing the #nancial statements, the
directors are responsible for assessing the
Group’s and the Parent Company’s ability to
continue as a going concern, disclosing, as
applicable, ma&ers related to going concern
and using the going concern basis of
accounting unless the directors either intend to
liquidate the Group or the Parent Company or to
cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable
assurance about whether the #nancial
statements as a whole are free from material
misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will
always detect a material misstatement when it
exists. Misstatements can arise from fraud or
error and are considered material if, individually
or in the aggregate, they could reasonably be
expected to in%uence the economic decisions of
users taken on the basis of these #nancial
statements.
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We
design procedures in line with our
responsibilities, outlined above, to detect
material misstatements in respect of
irregularities, including fraud. The extent to
which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Explanation as to what extent the
audit was considered capable of
detecting irregularities, including
fraud.
Based on our understanding of the Company
and industry, we identi#ed that the principal
risks of non-compliance with laws and
regulations including the Financial Conduct
Authority (“the FCA”) and we considered the
extent to which non-compliance might have a
material e!ect on the #nancial statements. We
also considered those laws and regulations that
have a direct impact on the preparation of the
#nancial statements such as the Companies Act
2006, corporation tax, payroll taxes and VAT.
We evaluated management’s incentives and
opportunities for fraudulent manipulation of the
#nancial statements (including the risk of
override of controls), and determined that the
principal risks were related to posting
inappropriate journal entries to revenue and
management bias in accounting estimates. In
identifying and assessing risks of material
misstatement in respect to irregularities
including non-compliance with laws and
regulations, our procedures included but were
not limited to:
- Identifying at the planning stage of our audit
whether there were any other laws or
regulations the Group was subject to, and
where applicable a review of any compliance
issues with these laws and regulations;
- Inspecting correspondence with regulators
and tax authorities;
- Inspecting correspondence with the FCA to
assess whether any breach of FCA regulations
had occurred in the year;
- Discussions with management including
consideration of known or suspected
42
Annual Report and Accounts 2022
Strategic Report | Governance | Financial Statements | Company Information
instances of non-compliance with laws and
regulation and fraud;
- Evaluating management’s controls designed
to prevent and detect irregularities;
- Identifying and testing journals, in particular
journal entries posted with unusual account
combinations, or with unusual descriptions;
and
- Challenging assumptions and judgements
made by management in their critical
accounting estimate
Because of the inherent limitation of audit, there
is a risk that we will not detect all irregularities,
including those leading to a material
misstatement in the #nancial statements or non-
compliance with regulation. This risk increases
the more that compliance with a law or
regulation is removed from the events and
transactions re%ected in the #nancial
statements, as we will be less likely to become
aware of instances of non-compliance. The risk
is also greater regarding irregularities occurring
due to fraud than error, as fraud involves
intentional concealment, forgery, collusion,
omission or misrepresentation.
A further description of our responsibilities for
the audit of the #nancial statements is located
on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Use of our report
This report is made solely to the Company's
members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we
might state to the Company's members those
ma&ers we are required to state to them in an
Auditor's report and for no other purpose. To the
fullest extent permi&ed by law, we do not accept
or assume responsibility to anyone other than
the Company and the Company's members as a
body, for our audit work, for this report, or for the
opinions we have formed.
SIMON WILKS
(Senior Statutory Auditor)
For and on behalf of Haysmacintyre LLP
Statutory Auditors
15 May 2023
WILKS
10 Queen Street Place
London
EC4R 1AG
Annual Report and Accounts 2022
43
Strategic Report | Governance | Financial Statements | Company Information
Group Statement of Comprehensive
Income
For the year ended 31 December 2022
All amounts are derived from continuing operations.
The Notes to the Financial Statements form an integral part of these #nancial statements.
44
Annual Report and Accounts 2022
2022
2021
Notes
£
£
REVENUE
1
4,821,996
2,301,172
Cost of sales
(1,885,503)
(1,113,995)
GROSS PROFIT
2,936,493
1,187,177
ADMINISTRATIVE EXPENSES
2
Share-based compensation
15
(4,284,039)
(2,338,495)
Further adjustments to adjusted EBITDA (see below)
(500,529)
(554,902)
Other administrative expenses
(3,805,812)
(2,469,575)
TOTAL ADMINISTRATIVE EXPENSES
(8,590,380)
(5,362,972)
Adjusted EBITDA loss
(869,319)
(1,282,398)
Stated a'er the add back of:
- share-based compensation
15
4,284,039
2,338,495
- transaction costs
99,365
402,515
- amortisation of intangible assets
386,542
148,094
- depreciation of property, plant and equipment
14,622
4,293
LOSS FROM OPERATIONS
2
(5,653,887)
(4,175,795)
Finance and other income
3
37,947
1,622
Finance costs
3
(171,257)
(360)
LOSS BEFORE TAX
(5,787,197)
(4,174,533)
Income tax credit
6
175,365
70,764
________
________
LOSS FOR THE YEAR
(5,611,832)
(4,103,769)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(5,611,832)
(4,103,769)
Loss per ordinary share – basic & diluted (pence)
7
(17.26)
(21.24)
_______
_______
Strategic Report | Governance | Financial Statements | Company Information
Group and Company Statement of
Financial Position
As at 31 December 2022
A separate profit and loss account for the Parent company is omitted from the Group’s financial statements
by virtue of section 408 of the Companies Act 2006. The Company loss for the year ended 31 December
2022 was (£5,973,633) (year ended 31 December 2021: loss of (£3,823,651)).
The financial statements were approved by the Board of Directors and authorised for issue on 15 May 2023
and are signed on its behalf by:
JAMES HICKMAN
Chief Executive O$cer
Annual Report and Accounts 2022
45
Group
Group
Company
Company
31 December
2022
31 December
2021
31 December
2022
31 December
2021
Notes
£
£
£
£
ASSETS
NON-CURRENT ASSETS
Intangible assets
8
2,315,637
577,447
611,507
484,927
Tangible assets
10
39,677
21,542
-
-
Investments
11
-
-
8,017,622
6,349,758
_______
_______
_______
_______
2,355,314
598,989
8,629,129
6,834,685
CURRENT ASSETS
Trade and other receivables
12
1,339,110
493,244
700,720
248,996
Cash and cash equivalents
682,346
348,102
495,627
139,579
_______
_______
_______
_______
2,021,456
841,346
1,196,347
388,575
_______
_______
_______
_______
TOTAL ASSETS
4,376,770
1,440,335
9,825,476
7,223,260
_______
_______
_______
_______
EQUITY AND LIABILITIES
EQUITY
Share capital
15
480,362
202,776
480,362
202,776
Share premium
5,496,829
3,074,355
5,496,829
3,074,355
Share-based payment reserve
1,489,765
2,392,710
1,489,765
2,392,710
Deferred consideration reserve
950,920
-
950,920
-
Merger relief reserve
5,557,645
5,557,645
5,557,645
5,557,645
Reverse acquisition reserve
(3,140,631)
(3,140,631)
-
-
Retained earnings
(10,924,791)
(7,828,230)
(8,365,764)
(4,907,402)
_______
_______
_______
_______
TOTAL EQUITY
(89,901)
258,625
5,609,757
6,320,084
_______
_______
_______
_______
LIAIBILITIES
NON-CURRENT LIABILITIES
Loan notes
13
2,172,578
-
2,172,578
-
Deferred tax
6
99,816
-
-
-
_______
_______
_______
_______
2,272,394
-
2,172,578
903,176
CURRENT LIABILITIES
Trade and other payables
14
1,969,277
1,181,710
1,818,141
903,176
Loan notes
13
225,000
-
225,000
-
_______
_______
_______
_______
2,194,277
1,181,710
2,043,141
903,176
_______
_______
_______
_______
TOTAL EQUITY AND LIABILITIES
4,376,770
1,440,335
9,825,476
7,223,260
The Notes to the Financial Statements form an integral part of these #nancial statements.
Strategic Report | Governance | Financial Statements | Company Information
Group Statement of Changes in Equity
For the year ended 31 December 2022
The Notes to the Financial Statements form an integral part of these #nancial statements.
46
Annual Report and Accounts 2022
Share
capital
Share
premium
Share-
based
payment
reserve
Deferred
consideration
reserve
Merger
relief
reserve
Reverse
acquisition
reserve
Retained
earnings
Total
£
£
£
£
£
£
£
£
Balance at 1 January 2021
165,887
951,422
54,215
-
5,557,645
(3,140,631)
(3,724,461)
(135,923)
Issue of shares
36,889
2,208,447
-
-
-
-
-
2,245,336
Costs of raising equity
-
(85,514)
-
-
-
-
-
(85,514)
Share-based payments
(note 15)
-
-
2,338,495
-
-
-
-
2,338,495
Loss and total
comprehensive income
for the year
-
-
-
-
-
-
(4,103,769)
(4,103,769)
_______
_______
_______
_______
_______
_______
_______
_______
Balance at 31 December
2021
202,776
3,074,355
2,392,710
-
5,557,645
(3,140,631)
(7,828,230)
258,625
Issue of shares
210,423
1,905,234
-
-
-
-
-
2,115,657
Costs of raising equity
-
(87,310)
-
-
-
-
-
(87,310)
Share-based payments
(note 15)
-
-
4,284,039
-
-
-
-
4,284,039
Se"lement of equity-
based incentives
67,163
604,550
(5,186,984)
-
-
-
2,515,271
(2,000,000)
Deferred equity-based
consideration
-
-
-
950,920
-
-
-
950,920
Loss and total
comprehensive income
for the year
-
-
-
-
-
-
(5,611,832)
(5,611,832)
_______
_______
_______
_______
_______
_______
_______
_______
Balance at 31 December
2022
480,362
5,496,829
1,489,765
950,920
5,557,645
(3,140,631)
(10,924,791)
(89,901)
_______
_______
_______
_______
_______
_______
_______
_______
Strategic Report | Governance | Financial Statements | Company Information
Company Statement of Changes in
Equity
For the year ended 31 December 2022
The Notes to the Financial Statements form an integral part of these #nancial statements.
Annual Report and Accounts 2022
47
Share
capital
Share
premium
Share-based
payment
reserve
Deferred
consideration
reserve
Merger relief
reserve
Retained
earnings
Total
£
£
£
£
£
£
£
Balance at 1 January 2021
165,887
951,422
54,215
-
5,557,645
(1,083,751)
5,645,418
Issue of shares
36,889
2,208,447
-
-
-
-
2,245,336
Costs of raising equity
-
(85,514)
-
-
-
-
(85,514)
Share-based payments
(note 15)
-
-
2,338,495
-
-
-
2,338,495
Loss and total
comprehensive income
for the year
-
-
-
-
-
(3,823,651)
(3,823,651)
_______
_______
_______
_______
_______
_______
_______
Balance at 31 December
2021
202,776
3,074,355
2,392,710
-
5,557,645
(4,907,402)
6,320,084
Issue of shares
210,423
1,905,234
-
-
-
-
2,115,657
Costs of raising equity
-
(87,310)
-
-
-
-
(87,310)
Share-based payments
(note 15)
-
-
4,284,039
-
-
-
4,284,039
Se&lement of equity-
based incentives
67,163
604,550
(5,186,984)
-
-
2,515,271
(2,000,000)
Deferred equity-based
consideration
-
-
-
950,920
-
-
950,920
Loss and total
comprehensive income
for the year
-
-
-
-
-
(5,973,633)
(5,973,633)
_______
_______
_______
_______
_______
_______
_______
Balance at 31 December
2022
480,362
5,496,829
1,489,765
950,920
5,557,645
(8,365,764)
5,609,757
_______
_______
_______
_______
_______
_______
_______
Strategic Report | Governance | Financial Statements | Company Information
Group and Company Cash Flow
Statement
For the year ended 31 December 2022
The Notes to the Financial Statements form an integral part of these #nancial statements.
48
Annual Report and Accounts 2022
Group
Group
Company
Company
Year ended 31
December
2022
Year ended
31 December
2021
Year ended
31 December
2022
Year ended
31 December
2021
£
£
£
£
Notes
Loss before tax
(5,787,197)
(4,174,533)
(6,131,818)
(3,890,085)
Adjustments to reconcile pro#t before tax to
cash generated from operating activities:
Finance income
3
(37,947)
(1,622)
-
-
Finance costs
3
171,257
360
162,757
-
Equity-se&led share-based payment
32,595
-
32,595
-
Share-based compensation
15
4,284,039
2,338,495
4,284,039
2,338,495
Depreciation and amortisation
8 & 10
401,164
152,386
296,133
145,920
Increase in accrued income, trade and other
receivables
12
(845,866)
(54,577)
(451,724)
(141,678)
Increase in trade and other payables
14
757,250
682,374
896,573
559,196
_______
_______
_________
_______
Cash used in operations
(1,024,705)
(1,057,117)
(911,445)
(988,152)
Income tax received
6
158,188
70,764
158,188
66,434
_______
_______
_________
_______
Cash used in operating activities
(866,517)
(986,353)
(753,257)
(921,718)
Investing activities
Acquisition of property, plant and
equipment
10
(17,198)
(17,371)
-
-
Acquisition of intangible assets
8
(422,713)
(404,568)
(422,713)
(404,569)
Acquisition of subsidiary, net of cash
acquired
9
(552,128)
-
-
-
Investment in Group companies
11
-
-
(631,335)
(201,985)
_______
_______
_________
_______
Cash used in investment activities
(992,039)
(421,939)
(1,054,048)
(606,554)
Financing activities
Shares issued (net of costs)
15
1,992,694
1,571,457
1,992,694
1,571,457
Loans received
13
225,000
-
225,000
-
Interest and similar income
3
37,947
1,622
-
-
Interest and similar charges
3
(62,841)
(360)
(54,341)
-
_______
_______
__________
_______
Cash generated from "nancing activities
2,192,800
1,572,719
2,163,353
1,571,457
Increase in cash and cash equivalents
334,244
164,427
356,048
43,185
Opening cash and cash equivalents
348,102
183,675
139,579
96,394
_______
_______
________
_______
Closing cash and cash equivalents
682,346
348,102
495,627
139,579
_______
_______
________
_______
Strategic Report | Governance | Financial Statements | Company Information
Notes to the Financial Statements
For the year ended 31 December 2022
BASIS OF PREPARATION
Cornerstone FS plc is a public limited company, incorporated and domiciled in England. The Company
was admi&ed to AIM, London Stock Exchange's market for small and medium size growth companies,
on 6 April 2021. The registered o$ce of the Company is The Old Rectory, Addington, Buckingham,
England, MK18 2JR, and its principal business address is 75 King William Street, London EC4N 7BE. The
main activities are set out in the Strategic Report on pages 4-16.
These #nancial statements have been prepared in accordance with International Financial Reporting
Standards as adopted by the United Kingdom (“IFRS”) for the years ended 31 December 2021 and 31
December 2022, and with those parts of the Companies Act 2006 applicable to companies reporting
under IFRS. The #nancial statements have been prepared in sterling, which is the Group’s presentation
currency and the functional currency of each Group entity. They have been prepared using the
historical cost convention except for the measurement of certain #nancial instruments.
The parent company accounts have also been prepared in accordance with IFRS (as adopted by the
United Kingdom) and using the historical cost convention. The accounting policies set out below have
been applied consistently to the parent company where applicable.
Monetary amounts in these #nancial statements are rounded to the nearest pound.
The preparation of #nancial statements in conformity with IFRS requires the use of estimates and
assumptions that a!ect the reported amounts of assets and liabilities at the date of the #nancial
statements and the reported amounts of revenues and expenses during the reporting year. These
estimates and assumptions are based upon management’s knowledge and experience of the amounts,
events or actions. Actual results may di!er from such estimates.
The critical accounting estimates are considered to relate to the following:
Fair values of assets acquired in business combinations: The Group recognises the fair value of
customer relationships acquired through business combinations re%ecting discounted future cash
%ows from the acquired customers and incorporating an estimated rate of a&rition of the customer
base.
Deferred consideration: Total compensation for acquisitions includes an element of deferred
consideration payable, subject to the revenue performance post-acquisition. Management use
historical information and management forecasts to estimate a liability, using the discounted cash%ow
methodology, to derive a fair value of the deferred consideration payable.
Intangible assets: The Group recognises intangible assets in respect of so'ware development costs.
This recognition requires the use of estimates, judgements and assumptions in determining whether the
carrying value of such assets is impaired at each year end.
Investments in subsidiary undertakings (Company !nancial statements only): The Company’s
Statement of Financial Position includes investments stated at cost in its subsidiary undertakings. The
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continuing recognition at cost requires judgements and estimates including an assessment of whether
the carrying value of such investments is impaired at each year end.
NEW STANDARDS AND INTERPRETATIONS
As of the date of approval of these #nancial statements, the following Standards and Interpretations
which have not been applied in these #nancial statements were in issue but not yet e!ective:
- IFRS 17 Insurance Contracts (e!ective for periods commencing 1 January 2023)
- Amendments to IAS 1, presentation of #nancial statements on classi#cation of liabilities (e!ective
for periods commencing on or a'er 1 January 2023)
- Amendments to IAS 8 – de#nition of accounting estimates (e!ective for periods commencing 1
January 2023)
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will
have no material impact on the #nancial statements of the Group. The Group does not intend to apply
any of these pronouncements early.
IMPACT OF NEW INTERNATIONAL REPORTING STANDARDS, AMENDMENTS AND
INTERPRETATIONS
The following Standards and Interpretations have been considered and applied in these #nancial
statements:
- COVID-19-Related Rent Concessions beyond 30 June 2021 – Amendment to IFRS 16
- Onerous Contracts – Cost of Ful#lling a Contract (Amendments to IAS 37)
- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
There has been no material impact on the #nancial statements as a result of adopting these Standards
and Interpretations.
BASIS OF CONSOLIDATION
The consolidated #nancial statements incorporate the #nancial statements of the Company and its
subsidiary undertakings. Entities are accounted for as subsidiary undertakings when the Group is
exposed to or has rights to variable returns through its involvement with the entity and it has the ability
to a!ect those returns through its power over the entity.
Details of subsidiary undertakings and % shareholding:
Cornerstone Payment Solutions Ltd
- 100% owned by the Company
Cornerstone - Middle East FZCO
- 100% owned by the Company
Avila House Limited
- 100% owned by Cornerstone Payment
Solutions Limited
Capital Currencies Limited
- 100% owned by the Company
Pangea FX Limited
- 100% owned by the Company
All subsidiary undertakings have an accounting reference date ended 31 December.
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On 23 December 2022, the Company announced the agreement of the sale of Avila House Limited to
Aspire Commerce Ltd. Avila House remained under the control of the Group until the sale completed
on 26 April 2023 following receipt of regulatory approval from the Financial Conduct Authority (“FCA”).
BUSINESS COMBINATIONS
The Group #nancial statements recognise business combinations using the acquisition method when
control is transferred to the Group. The consideration transferred in the acquisition is generally
measured at fair value, as are the identi#able net assets acquired. Any goodwill that arises is tested
annually for impairment. Any gain on a bargain purchase is recognised in pro#t or loss immediately.
Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the se&lement of pre-existing
relationships. Such amounts are generally recognised in pro#t or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to
pay contingent consideration that meets the de#nition of a #nancial instrument is classi#ed as equity,
then it is not re-measured and se&lement is accounted for within equity. Otherwise, other contingent
consideration is re-measured at fair value at each reporting date and subsequent changes in the fair
value of the contingent consideration are recognised in pro#t or loss.
GOING CONCERN
During the year ended 31 December 2022, the Group made an adjusted EBITDA loss (excluding non-
cash share-based compensation, depreciation & amortisation costs and non-recurring transaction
costs) of £869,319. At 31 December 2022 the Group balance sheet showed a net liabilities position of
£89,901, including a negative pro#t and loss reserve of £10,924,791, and a cash balance of £682,346.
Post year-end, the Group’s balance sheet has strengthened with the conversion of a £225,000 loan
note to equity on 6 February 2023 following receipt of permission from the FCA for a shareholder to
increase their shareholding beyond 9.9% of the issued share capital of the Company. Further, the
Group received proceeds of £300,000 on 26 April 2023 following the completion of the sale of Avila
House Limited.
Although the Group has historically generated losses, the trading position of the Group has continued
to improve since the year-end with a strong focus on cost control combined with strong revenue
growth. As a result, the Group expects to begin generating a cash in%ow before #nancing activities
during 2023.
The Directors have prepared cash %ow forecasts covering a period to 31 December 2024. The Directors
have derived forecast assumptions that are their best estimate of the future development of the
Group’s business taking into account projected increase in revenues, continued investment in the
development of the so'ware platform and organic sales and marketing e!orts.
The Directors have prepared various scenario planning forecasts alongside their best-estimate
forecast assumptions, including a scenario in which sales growth falls below management
expectations and various cash mitigation measures are implemented, which all indicate su$cient cash
resources to continue to #nance the Group’s working capital requirements over the forecast period.
For these reasons, the Directors continue to adopt the going concern basis of accounting in preparing
the Group’s #nancial statements.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE
The Group applies IFRS 15 Revenue from Contracts with Customers for the recognition of revenue. IFRS
15 established a comprehensive framework for determining whether, how much and when revenue is
recognised. It a!ects the timing and recognition of revenue items, but not generally the overall amount
recognised.
The performance obligations of the Group’s revenue streams are satis#ed on the transaction date or
by the provision of the service for the period described in the contract. Revenue is not recognised
where there is evidence to suggest that customers do not have the ability or intention to pay. The
Group does not have any contracts with customers where the performance obligations have not been
fully satis#ed.
The Group derives revenue from the provision of foreign exchange and payment services. When a
contract with a client is entered into, it immediately enters into a separate matched contract with its
institutional counterparty.
Spot and forward revenue is recognised when a binding contract is entered into by a client and the
rate is #xed and determined. Revenue represents the di!erence between the rate o!ered to clients and
the rate received from its institutional counterparties.
INVESTMENTS
Investments in subsidiary undertakings are accounted for at cost less impairment.
FINANCIAL INSTRUMENTS
Financial assets and #nancial liabilities are recognised on the Group Statement of Financial Position
when the Group has become a party to the contractual provisions of the instrument.
Derivative "nancial instruments
Derivative #nancial assets and liabilities are carried as assets when their fair value is positive and as
liabilities when their fair value is negative. Changes in the fair value of derivatives are included in the
income statement. The Group’s derivative #nancial assets and liabilities at fair value through pro#t or
loss comprise solely of forward foreign exchange contracts.
Trade, loan and other receivables
Trade and loan receivables are initially measured at their transaction price. Trade and loan receivables
are held to collect the contractual cash %ows which are solely payments of principal and interest.
Therefore, these receivables are subsequently measured at amortised cost using the e!ective interest
rate method. The Directors have considered the impact of discounting trade and loan receivables
whose se&lement may be deferred for lengthy periods and concluded that the impact would not be
material.
An impairment loss is recognised for the expected credit losses on trade and loan receivables when
there is an increased probability that the counterparty will be unable to se&le an instrument’s
contractual cash %ows on the contractual due dates, a reduction in the amounts expected to be
recovered, or both.
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Impairment losses and any subsequent reversals of impairment losses are adjusted against the
carrying amount of the receivable and are recognised in pro#t or loss.
Trade payables
Trade payables are initially recognised at fair value and subsequently at amortised cost using the
e!ective interest method.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities are classi#ed according to the substance of the contractual arrangements entered
into. An instrument will be classi#ed as a #nancial liability when there is a contractual obligation to
deliver cash or another #nancial asset to another enterprise.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits held at call with banks and other short-
term highly liquid investments with original maturities of three months or less.
For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash
equivalents as de#ned above, net of any outstanding bank overdra' which is integral to the Group’s
cash management.
GOODWILL
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s
interest in the fair value of the identi#able assets and liabilities of a subsidiary, associate or jointly
controlled entity at the date of acquisition. Goodwill on acquisition of subsidiaries is separately
disclosed in note 9.
Goodwill is not amortised; it is recognised as an asset, allocated to cash generating units for the
purpose of impairment testing and reviewed for impairment at least annually. Any impairment is
recognised immediately in pro#t or loss and is not subsequently reversed.
OTHER INTANGIBLE ASSETS
An intangible asset, which is an identi#able non-monetary asset without physical substance, is
recognised to the extent that it is probable that the expected future economic bene#ts a&ributable to
the asset will %ow to the Group and that its cost can be measured reliably. The asset is deemed to be
identi#able when it is separable or when it arises from contractual or other legal rights.
Amortisation is charged on a straight-line basis through the pro#t or loss within administrative
expenses. The rates applicable, which represent the Directors’ best estimate of the useful economic
life, are as follows:
Customer relationships
– 5 years
Internally developed so'ware
– 3 years
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So'ware costs
– 3 years
Other intangible assets
– 3 years (no charge in the #rst period of ownership)
PROPERTY, PLANT AND EQUIPMENT
All property, plant and equipment is initially recorded at cost and is subsequently measured at cost
less accumulated depreciation and any recognised impairment loss.
Depreciation, which is charged through the pro#t or loss within administrative expenses, is provided at
rates calculated to write o! the cost less residual value of each asset over its expected useful life, as
follows:
Computer equipment - 25% straight line
Leasehold improvements - in line with the term of the underlying leased asset
The gain or loss arising on the disposal or retirement of an asset is determined as the di!erence
between the sales proceeds and the carrying amount of the asset and is recognised in pro#t or loss.
PROVISIONS
Provisions are recognised when the Group has a present obligation as a result of a past event which it
is probable will result in an out%ow of economic bene#ts that can be reliably estimated.
SHARE CAPITAL
Ordinary shares are classi#ed as equity. Incremental costs directly a&ributable to the issue of new
shares are shown in share premium as a deduction from the proceeds.
SHARE-BASED COMPENSATION
Where share options are awarded to employees, the fair value of the options at the date of grant is
charged to the income statement over the vesting period. Non-market vesting conditions are taken
into account by adjusting the number of equity instruments expected to vest at each balance sheet
date so that, ultimately, the cumulative amount recognised over the vesting period is based on the
number of options that eventually vest. Market vesting conditions are factored into the fair value of the
options granted.
As long as all other vesting conditions are satis#ed, a charge is made irrespective of whether the
market vesting conditions are satis#ed. The cumulative expense is not adjusted for failure to achieve a
market vesting condition.
Where the terms and conditions of options are modi#ed before they vest, the increase in the fair value
of the options, measured immediately before and a'er the modi#cation, is also charged to the income
statement over the remaining vesting period. Where equity instruments are granted to persons other
than employees, the income statement is charged with fair value of goods and services received.
Cancelled or se&led options are accounted for as an acceleration of vesting and the amount that
would have been recognised over the remaining vesting period is recognised immediately.
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The proceeds received net of any a&ributable transaction costs are credited to share capital (nominal
value) and share premium when the options are exercised.
Fair value is measured by use of the Black-Scholes pricing model which is considered by management
to be the most appropriate method of valuation.
EMPLOYEE BENEFITS
The Group operates a de#ned contribution pension scheme. The pension costs charged in the #nancial
statements represent the contribution payable by the Group during the year.
The costs of short-term employee bene#ts are recognised as a liability and an expense in the period
the related service is rendered at the undiscounted amount of the bene#ts expected to be paid in
exchange for that service.
TAXATION
Current income tax assets and liabilities are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted at the reporting date. Current income tax relating to items
recognised directly in equity or other comprehensive income is recognised in equity and not in the
consolidated statement of comprehensive income.
Deferred income tax is provided on all temporary di!erences at the reporting date arising between the
tax bases of assets and liabilities and their carrying amounts for #nancial reporting purposes. Deferred
tax assets and liabilities are o!set when the Group has a legally enforceable right to o!set current tax
assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax
authority.
Deferred tax assets have not been recognised in respect of the Group’s tax losses carried forward.
Research and Development tax credits are not recognised as receivables until the claims have been
submi&ed and agreed by HMRC.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting
judgements will, by de#nition, seldom equal the related actual results. The estimates and assumptions
that have a signi#cant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next #nancial year are discussed below.
IMPAIRMENT
At each accounting reference date, the Group reviews the carrying amounts of its intangibles,
property, plant & equipment and investments to determine whether there is any indication that those
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assets have su!ered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if any).
Where the asset does not generate cash %ows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs. An
intangible asset with an inde#nite useful life is tested for impairment annually and whenever there is an
indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash %ows are discounted to their present value using a pre-tax discount rate
that re%ects current market assessments of the time value of money and the risks speci#c to the asset
for which the estimates of future cash %ows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised immediately in pro#t or loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating
unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment
loss is recognised immediately in pro#t or loss, unless the relevant asset is carried in at a revalued
amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
DEFERRED CONSIDERATION
Total compensation for acquisitions includes an element of deferred consideration payable, subject to
the revenue performance post-acquisition. Management use historical information and management
forecasts to estimate a liability, using the discounted cash%ow methodology, to derive a fair value of
the deferred consideration payable.
SHARE-BASED COMPENSATION
The fair value of share-based awards is measured using the Black-Scholes model which inherently
makes use of signi#cant estimates and assumptions concerning the future applied by the Directors.
Such estimates and judgements include the expected life of the options and the number of employees
that will achieve the vesting conditions. Further details of the share option scheme are given in note 15.
ALTERNATIVE PERFORMANCE MEASURES
The Group uses the alternative performance measure of adjusted EBITDA/(EBITDA loss). This measure is
not de#ned under IFRS, nor is it a measure of #nancial performance under IFRS.
This measure is sometimes used by investors to evaluate a company’s operational performance with a
long-term view towards adding shareholder value. This measure should not be considered an
alternative, but instead supplementary, to pro#t/(loss) from operations and any other measure of
performance derived in accordance with IFRS.
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Alternative performance measures do not have generally accepted principles for governing
calculations and may vary from company to company. As such, the adjusted EBITDA/(EBITDA loss)
quoted within the Group Statement of Comprehensive Income should not be used as a basis for
comparison of the Group’s performance with other companies.
During the year ended 31 December 2022, the Group adopted adjusted EBITDA as an alternative
performance measure having made reference to underlying pro#t/(loss) from operations in prior
periods. The Group adopted the new alternative performance measure in order to more closely align
with competitors, #nancial analyst coverage and the Group’s own guidance.
ADJUSTED EBITDA/(EBITDA LOSS)
The Group uses adjusted EBITDA/(EBITDA loss), de#ned as pro#t/(loss) from operations, adding back
share-based compensation, transaction costs associated with the Group’s acquisition strategy and
depreciation & amortisation charge.
The adjusted EBITDA loss is reconciled back to the loss from operations within the Group Statement of
Comprehensive Income.
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1. REVENUE AND SEGMENTAL REPORTING
All of the Group’s revenue arises from its activities within the UK (although a proportion of revenue is
derived from customers incorporated or residing outside of the UK). Management considers there to be
only one operating segment within the business based on the way the business is organised and the
way results are reported internally.
Revenue is as follows:
2. LOSS FROM OPERATIONS
Amounts payable to the Group’s auditor in respect of both audit and non-audit services:
Group
Group
Year ended 31
December 2022
Year ended 31
December 2021
£
£
_______
_______
Total revenue
4,821,996
2,301,172
_______
_______
Group
Group
Year ended 31
December 2022
Year ended 31
December 2021
£
£
Loss from operations is stated a'er charging:
Share-based compensation
4,284,039
2,338,495
Transaction costs
99,365
402,515
Expensed so'ware development costs
86,941
97,556
Depreciation of property, plant and equipment
14,622
4,293
Amortisation of intangible assets
386,541
148,094
Short-term (2018 IAS 17 operating) lease rentals
252,308
86,434
_______
_______
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Annual Report and Accounts 2022
Year ended 31
December 2022
Year ended 31
December 2021
£
£
Audit Services
- Statutory audit
40,000
25,000
Other Services
Due diligence services
-
18,000
The auditing of accounts of associates of the Company
pursuant to legislation:
- Audit of subsidiaries and its associates
49,450
30,250
_______
_______
89,450
73,250
_______
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3. INTEREST AND SIMILAR ITEMS
4. EMPLOYEES
Year ended 31
December 2022
Year ended 31
December 2021
£
£
Total "nance and other income
Bank interest receivable
37,947
1,622
_______
_______
Total "nance costs
Unwinding of discount
108,416
-
Loan note interest
53,500
-
Other interest payable and charges
9,341
360
_______
_______
171,257
300
_______
_______
The average monthly numbers of employees in the Group (including the Directors) during the year was
made up as follows (the Company has no employees other than the Directors):
Year ended 31
December 2022
Year ended 31
December 2021
Number
Number
Directors
7
8
Employees
27
14
_______
_______
34
22
_______
_______
EMPLOYMENT COSTS
Year ended 31
December 2022
Year ended 31
December 2021
£
£
Wages and salaries
1,977,588
1,309,251
Social security costs
251,010
182,414
Pension costs
49,200
38,307
Share-based compensation
4,155,094
2,195,782
_______
_______
6,432,892
3,725,754
_______
_______
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During the year, 1,348,867 options were forfeited by Julian Wheatland, a former director, leading to a
share-based compensation credit for the year ended 31 December 2022 in respect of Mr. Wheatland of
£192,452 (year ended 31 December 2021: share-based compensation charge of £177,000).
During the year, no (2021: nil) Directors exercised any (2021: nil) share options.
5. PENSION COSTS
The Group operates a de#ned contribution pension scheme. The scheme and its assets are held by
independent managers. The pension charge represents contributions due from the Group and
amounted to £49,200 (2021: £38,307). At 31 December 2022 contributions of £59,054 remained
outstanding and are included within other payables (2021: £25,864).
REMUNERATION OF KEY MANAGEMENT PERSONNEL
The remuneration of the Directors, who are the key management personnel of the Group, is set out
below in aggregate. Further information about the remuneration of the individual directors is
provided in the Directors’ Remuneration Report on pages 28-31.
Year ended 31
December 2022
Year ended 31
December 2021
£
£
Salaries and fees
794,712
680,553
Bonus
43,044
76,800
Share-based compensation (credit) / charge
(125,443)
311,469
Social security costs
123,024
84,022
_______
_______
835,337
1,152,844
_______
_______
Number
Number
Number of Directors to whom retirement bene#ts are
accruing under a de#ned contribution scheme
3
3
_______
_______
Year ended 31
December 2022
Year ended 31
December 2021
£
£
The remuneration in respect of the highest paid Director
was:
Salaries and fees
140,000
180,000
Bonus
31,360
43,200
Share-based compensation charge
30,173
177,000
Pension and other bene#ts
7,046
9,000
_______
_______
208,579
409,200
_______
_______
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6. TAXATION
The tax on the loss on ordinary activities for the period was as follows:
As at 31 December 2022, the Group had prepared but not yet submi&ed a Research and Development
tax credits reclaim, the estimated net bene#t of which is approximately £135,000. During the year
ended 31 December 2022, the Group received a Research and Development tax credit refund of
£158,188 (2021: £70,764) in respect of its reclaim for the year ended 31 December 2021.
As at 31 December 2022, the Group had tax losses carried forward of £5,013,429 (31 December 2021:
£4,147,682). Deferred tax has not been recognised in respect of these tax losses. The standard rate of
corporation tax applicable to the Group for the year ended 31 December 2022 was 19%. The UK
government has announced, with e!ect from 1 April 2023, an increase in the corporation tax main rate
from 19% to 25% for companies with pro#ts over £250,000 and the introduction of a small pro#ts rate
of 19% applicable to companies with pro#ts of not more than £50,000, with marginal relief available for
pro#ts up to £250,000.
Group
Group
Year ended 31
December 2022
Year ended 31
December 2021
£
£
_______
_______
CURRENT TAX:
Current tax credit
(158,188)
(70,764)
Deferred tax credit
(17,177)
-
_______
_______
Income tax credit
(175,365)
(70,764)
_______
_______
Group
Group
Year ended 31
December 2022
Year ended 31
December 2021
£
£
Loss before taxation
(5,787,197)
(4,174,533)
_______
_______
Loss multiplied by main rate of corporation tax in the UK
of 19% (2021: 19%)
(1,099,567)
(793,161)
EFFECTS OF:
Surrender of tax losses for research & development tax
credit refund
(158,188)
(70,764)
Expenses not deductible for tax purposes
29,261
66,649
Share-based payments
814,037
444,314
Other adjustments in period
65,825
(702)
Tax losses carried forward
190,444
282,900
_______
_______
Current tax credit
(158,188)
(70,764)
_______
_______
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DEFERRED TAX
The Group recognised the following movement in deferred tax liabilities (year ended 31 December 2021:
£nil):
Based on the valuation of acquisition intangibles and enacted UK corporation tax rates, during the
year ended 31 December 2022 the Group has acquired deferred tax liabilities of £80,382 in relation to
its acquisition of Capital Currencies Limited and £36,611 in relation to its acquisition of Pangea FX
Limited (note 9). The deferred tax will be released to the income statement as the underlying intangible
assets are amortised or otherwise recognised via impairment in pro#t or loss.
7. LOSS PER SHARE
The loss per share of 17.26p (2021: 21.24p) is based upon the loss of £5,611,832 (2021: loss of £4,103,769)
and the weighted average number of ordinary shares in issue for the year of 32,506,335 (2021:
19,317,407).
The loss incurred by the Group means that the e!ect of any outstanding warrants and options would
be considered anti-dilutive and is ignored for the purposes of the loss per share calculation.
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Annual Report and Accounts 2022
Balance as at 1
January 2022
Acquired in
business
combination
Recognised to
pro"t or loss
Non-current
balance as at 31
December 2022
£
£
£
£
Intangibles
-
116,993
(17,177)
99,816
_______
_______
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_______
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8. GROUP INTANGIBLE ASSETS
Other intangible assets comprise regulatory licenses held at cost and are not amortised.
COMPANY INTANGIBLE ASSETS
Goodwill
Customer
relationships
Internally
developed
so#ware
So#ware
costs
Other
Total
£
£
£
£
£
£
COST
At 1 January 2022
-
-
647,485
15,611
92,520
755,616
Additions
-
-
422,713
-
-
422,713
Acquired through business
combinations
1,086,262
615,756
-
-
-
1,702,018
_______
_______
_______
_______
_______
_______
At 31 December 2022
1,086,262
615,756
1,070,198
15,611
92,520
2,880,347
AMORTISATION
At 1 January 2022
-
-
162,558
15,611
-
178,169
Charge for the period
-
90,408
296,133
-
-
386,541
_______
_______
_______
_______
_______
_______
At 31 December 2022
-
90,408
458,691
15,611
-
564,710
NET BOOK VALUE
At 31 December 2022
1,086,262
525,348
611,507
-
92,520
2,315,637
_______
_______
_______
_______
_______
_______
At 31 December 2021
-
-
484,927
-
92,520
577,447
_______
_______
_______
_______
_______
_______
Internally developed so#ware
Total
£
£
COST
At 1 January 2022
647,485
647,485
Additions
422,713
422,713
_______
_______
At 31 December 2022
1,070,198
1,070,198
AMORTISATION
At 1 January 2022
162,558
162,558
Charge for the period
296,133
296,133
_______
_______
At 31 December 2022
458,691
458,691
NET BOOK VALUE
At 31 December 2022
611,507
611,507
_______
_______
At 31 December 2021
484,927
484,927
_______
_______
Annual Report and Accounts 2022
63
Strategic Report | Governance | Financial Statements | Company Information
9. BUSINESS COMBINATIONS
CAPITAL CURRENCIES LIMITED
The Group acquired 100% of the share capital of Capital Currencies Limited (“Capital Currencies”) on 1
February 2022. Capital Currencies was a well-established foreign exchange broker located in
Tunbridge Wells, specialising in the provision of currency exchange and international payments.
Capital Currencies is authorised and regulated by the FCA as an authorised payment institution
permi&ed to provide payment services.
The rationale for the acquisition was to expand Cornerstone's presence in its core target market and, in
line with the Group's stated strategy, increase revenue generated by direct clients. By bringing Capital
Currencies' clients onto Cornerstone's technology platform, the Group bene#ts from the rationalisation
of payments to banking partners across the combined organisation as well as recognising other
synergistic savings, such as in compliance costs and overheads.
The recognised value of assets acquired and liabilities assumed and the fair value of consideration at
the date of acquisition were as follows:
Goodwill comprises the value of expected synergies arising from the acquisition and additional value
a&ributed by the acquirer in relation to the future expected cash %ows, which is not separately
recognised.
In determining the value of acquired customer relationships, forecast cash %ows were discounted using
a weighted average cost of capital (“WACC”) of 13%. Based on the valuation of the intangibles and
enacted UK corporation tax rates a deferred tax provision of £80,382 was recognised as a result of the
identi#ed intangible asset.
Deferred consideration related to the acquisition of Capital Currencies was agreed at acquisition as
payable as follows:
64
Annual Report and Accounts 2022
£
Intangibles
423,064
Tangible #xed assets
14,584
Trade and other receivables
27,842
Cash acquired
58,351
Trade and other payables
(57,939)
Deferred tax provision
(80,382)
_______
Net assets on acquisition
385,520
Goodwill on acquisition
1,043,319
_______
Total consideration
1,428,839
Initial consideration – cash
586,335
Deferred contingent consideration
842,504
_______
Total consideration
1,428,839
Strategic Report | Governance | Financial Statements | Company Information
- On the #rst anniversary of completion, two times Capital Currencies' revenue for the 12-month
period leading up to 31 January 2023, less the initial cash consideration already paid.
- On the second anniversary of completion, three times Capital Currencies' revenue for the 12-month
period leading up to 31 January 2024, less cumulative amounts already paid.
Deferred consideration has been assessed using historical information and management forecasts to
estimate amounts payable which have been discounted at a WACC of 13%.
As disclosed in note 20, on 18 March 2023, the Company announced it had agreed a variation of the
above deferred consideration payments that postponed the above measurement and se&lement
periods by one calendar year in each instance and gave the Company the option to se&le the deferred
consideration in cash. The discounted consideration shown above does not re%ect the impact of this
extension.
PANGEA FX LIMITED
The Group acquired 100% of the share capital of Pangea FX Limited (“Pangea”) on 1 September 2022.
Pangea FX is a specialist FX and treasury consultancy with a strategic focus on helping its clients
control the impact currency volatility has on their business, primarily through providing a bespoke
service to corporate clients in the UK.
The rationale for the acquisition was to accelerate the Group's growth through the addition of two
experienced senior sales executives – the principals of Pangea – who are responsible for leading the
Group's sales function in the UK and Dubai. The Group has also bene#ted from the migration of
Pangea’s existing client base to the Cornerstone platform as well as certain operational synergies such
as from closing the Pangea operating base and relocating the employees to the Group's main o$ce.
The recognised value of assets acquired and liabilities assumed and the fair value of consideration at
the date of acquisition were as follows:
Annual Report and Accounts 2022
65
£
Intangibles
192,962
Tangible #xed assets
976
Trade and other receivables
30,737
Cash acquired
856
Trade and other payables
(12,568)
Deferred tax provision
(36,611)
_______
Net assets on acquisition
176,081
Goodwill on acquisition
42,944
_______
Total consideration
219,025
Initial consideration – cash
25,000
Payment to discharge Directors’ loans
21,447
Loan notes (undiscounted)
172,578
_______
Total consideration
219,025
Strategic Report | Governance | Financial Statements | Company Information
Goodwill comprises the value of expected synergies arising from the acquisition and additional value
a&ributed by the acquirer in relation to the future expected cash %ows, which is not separately
recognised.
In determining the value of the acquired customer relationships that comprise the intangible assets,
forecast cash %ows were discounted using a WACC of 13%. Based on the valuation of the intangibles
and enacted UK corporation tax rates a deferred tax provision of £36,611 was recognised as a result of
the identi#ed intangible asset.
The payment of the loan note principal of £172,578 is contingent on achieving future revenue targets
over a period of two years from the acquisition date. Based on current and forecast performance it has
been assumed that the contingent consideration will be paid in full. A 6% coupon rate is payable on
the loan note principal, quarterly in arears. As the loan note debt instrument is expected to be held to
maturity, with the only related cash %ows being the principal and interest, the loan note principal is
shown without any time-value discount.
10. GROUP PROPERTY, PLANT AND EQUIPMENT
Computer
equipment
Leasehold
improvements
Total
£
£
£
COST
At 1 January 2022
33,046
-
33,046
Additions
17,198
-
17,198
Acquired through business combinations
976
14,583
15,559
_______
_______
_______
At 31 December 2022
51,220
14,583
65,803
AMORTISATION
At 1 January 2022
11,504
-
11,504
Charge for the period
8,275
6,347
14,622
_______
_______
_______
At 31 December 2022
19,779
6,347
26,126
NET BOOK VALUE
At 31 December 2022
31,441
8,236
39,677
_______
_______
_______
At 31 December 2021
21,542
-
21,542
_______
_______
_______
66
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Strategic Report | Governance | Financial Statements | Company Information
11. INVESTMENTS
The Company’s investment as at 31 December 2022 represents its investments in its direct subsidiaries
of £6,367,773 in Cornerstone Payment Solutions Ltd (2021: £6,347,773), £1,428,839 in Capital Currencies
(2021: £nil), £219,025 in Pangea FX Limited (2021: £nil) and £1,985 in Cornerstone – Middle East FZCO
(2021: £1,985).
During the year ended 31 December 2022, the Company invested a further £20,000 in support of the
increased regulatory capital requirements for Cornerstone Payment Solutions Ltd.
Further, as disclosed in note 9 investments in subsidiaries acquired in the year amounted to £1,428,839
in respect of Capital Currencies, which was acquired on 1 February 2022 (year-ended 31 December
2021: £nil) and £219,025 in respect of Pangea FX Limited (2021: £nil).
Shares in subsidiary and associate undertakings are stated at cost. As at 31 December 2022,
Cornerstone FS plc owned the following principal subsidiaries, which are included in the consolidated
accounts:
CS Commercial Limited and Cornerstone EBT Trustee Limited, which were dormant and 100% owned
by the Company, were both dissolved during the year.
Annual Report and Accounts 2022
67
Investments in
Subsidiaries
£
Cost or Valuation
At 1 January 2022
Additions
6,349,758
1,667,864
8,017,622
Net Book Value
At 31 December 2022
8,017,622
At 31 December 2021
6,349,758
Subsidiary
Principal Activity
Country of
Incorporation
Registered O$ce
Percentage of
Ownership
Cornerstone Payment
Solutions Ltd
Foreign Exchange
and Payment Services
Northern Ireland
1 Elm#eld Avenue,
Warrenpoint, Newry,
Co. Down, BT34 3HQ
100 per cent.
Cornerstone – Middle
East FZCO
Consultancy
United Arab
Emirates
Dubai Silicon Oasis, DDP,
Building A2, Dubai, United
Arab Emirates
100 per cent.
Avila House Limited
E-money and Payment
Services
England and
Wales
The Old Rectory,
Addington,
Buckinghamshire,
MK18 2JR
100 per cent.
Capital Currencies
Limited
Authorised Payment
Institution
England and
Wales
The Old Rectory, Addington,
Buckinghamshire,
MK18 2JR
100 per cent.
Pangea FX Limited
Foreign Exchange White
Label
England and
Wales
The Old Rectory, Addington,
Buckinghamshire,
MK18 2JR
100 per cent.
Strategic Report | Governance | Financial Statements | Company Information
12. CURRENT TRADE AND OTHER RECEIVABLES
For the year ended 31 December 2022 £nil was recorded as a bad debt expense (31 December 2021:
£nil).
As at 31 December 2022, the Group had a contingent asset in respect of Research and Development
tax credits for which a reclaim had been prepared, but not yet submi&ed. The estimated net bene#t of
the claim is approximately £135,000 (2021: £158,000) and has not been included in current receivables
due to its contingent nature.
13. LOAN NOTES
The current convertible loan note of £225,000 was issued pursuant to the Company’s fundraising on 5
August 2022 to a placee pending approval from the FCA to allow the placee to increase their
shareholding to over 10%. The FCA granted such approval and the loan note was converted into
3,461,538 new ordinary shares of one penny each at an exercise price of 6.5 pence per share on 6
February 2023 (see note 20).
Group
31 December
2022
Group
31 December
2021
Company
31 December
2022
Company
31 December
2022
£
£
£
£
Trade receivables
221,669
-
-
-
Prepayments and accrued income
131,010
90,360
39,465
31,118
Derivative #nancial assets at fair value
635,473
322,710
-
-
Other receivables
53,062
42,525
-
10,000
Amounts due from Group
undertakings
-
-
363,359
170,229
Taxes and social security
297,896
37,649
297,896
37,649
_______
_______
_______
_______
1,339,110
493,244
700,720
248,996
_______
_______
_______
_______
Group
Group
Company
Company
31 December
2022
31 December
2021
31 December
2022
31 December
2021
£
£
£
£
CURRENT
Convertible loan notes
225,000
-
225,000
-
_______
_______
_______
_______
NON-CURRENT
Loan notes
2,172,578
-
2,172,578
-
_______
_______
_______
_______
68
Annual Report and Accounts 2022
Strategic Report | Governance | Financial Statements | Company Information
The non-current non-convertible loan notes comprise £2,000,000 issued to Robert O’Brien (the "Robert
O'Brien loan note") and £172,578 of deferred consideration in relation to the acquisition of Pangea FX
Limited (see note 9). Both loan notes have a 6% coupon rate payable quarterly in arrears. The Robert
O’Brien loan note was issued pursuant to a se&lement of his share-incentivisation arrangement with
the Company and was due for repayment on 31 July 2025. Post year end, the repayment date was
varied to 31 July 2026. The Pangea FX Limited loan note is payable on 31 August 2024 contingent upon
achieving future revenue targets over a period of two years from the acquisition date. Based on current
and forecast performance it has been assumed that the loan notes will be paid in full.
14. CURRENT TRADE AND OTHER PAYABLES
15. SHARE CAPITAL AND RESERVES
At 31 December 2022 share subscriptions of £nil remained unpaid (31 December 2021: £nil).
The following changes in the share capital of the Company have taken place in year ended 31
December 2022:
- On 27 January 2022, 3,283,034 ordinary shares were issued at a price of £0.265 in connection with a
placing and subscription
- On 8 April 2022, 123,000 ordinary shares were issued at a price of £0.265 in consideration for investor
relations services
- On 5 August 2022, 13,230,765 ordinary shares were issued at a price of £0.065 in connection with a
placing
Group
Group
Company
Company
31 December
2022
31 December
2021
31 December
2022
31 December
2021
£
£
£
£
Trade payables
362,035
346,255
162,128
212,561
Derivative #nancial liabilities at fair value
563,676
290,292
-
-
Other tax and social security
515,750
60,349
50,640
10,923
Other payables and accruals
527,816
484,814
179,818
244,033
Amount due to Group undertakings
-
-
1,425,555
435,659
_______
_______
_______
_______
1,969,277
1,181,710
1,818,141
903,176
_______
_______
_______
_______
Annual Report and Accounts 2022
69
Allo"ed, called up and fully paid
Ordinary shares
Share capital
No.
£
Ordinary shares of £0.01 each as at 1 January 2022
20,277,582
202,776
Issue of new shares of £0.01
27,758,617
277,586
_______
_______
Ordinary shares of £0.01 each at 31 December 2022
48,036,199
480,362
_______
_______
Strategic Report | Governance | Financial Statements | Company Information
- On 5 August 2022, 6,386,818 ordinary shares were issued at a price of £0.100 being the equity
element of a se&lement with Robert O’Brien and his team related to their share-based
incentivisation agreement
- On 24 August 2022, 360,000 ordinary shares were issued at a price of £0.10025 in part se&lement of
the share-based remuneration for the non-executive board and company secretary in respect of the
year ended 31 December 2021
- On 7 October 2022, 4,375,000 ordinary shares were issued at a price of £0.008 upon conversion of a
loan note
All ordinary shares are equally eligible to receive dividends and the repayment of capital and represent
equal votes at meetings of shareholders.
The following describes the nature and purpose of each reserve within owner’s equity:
Share capital: Amount subscribed for shares at nominal value.
Share premium: Amount subscribed for share capital in excess of nominal value, less costs of share
issue.
Share-based payment reserve: The share-based payment reserve comprises the cumulative expense
representing the extent to which the vesting period of warrants and share options has passed and
management’s best estimate of the achievement or otherwise of non-market conditions and the
number of equity instruments that will ultimately vest.
Deferred consideration reserve: Re%ects equity-based contingent consideration on the acquisition of
subsidiaries.
Merger relief reserve: E!ect on equity of the consideration shares issued over their nominal value.
Reverse acquisition reserve: E!ect on equity of the reverse acquisition of Cornerstone Payment
Solutions Ltd.
Retained losses: Cumulative realised pro#ts less cumulative realised losses and distributions made,
a&ributable to the equity shareholders of the Company.
Options
The Company operates an Enterprise Management Incentive (“EMI”) Scheme equity-se&led share-
based remuneration scheme for employees.
Under the scheme the options are exercisable at any time. The options are also exercisable in the event
of a change of control. If the option holder’s employment within the Group is terminated, other than for
gross misconduct, any options vested may be exercised within 90 days of such termination (12 months
in the case of the option holder’s death), otherwise the options lapse #ve years a'er the date of grant.
The options also lapse, inter alia, if the option holder is adjudged bankrupt or proposes a voluntary
arrangement or other scheme in relation to his/her debts.
70
Annual Report and Accounts 2022
Strategic Report | Governance | Financial Statements | Company Information
The Black-Scholes model was used for calculating the cost of options. The model inputs for each of the
options issued were:
The expected volatility re%ects the assumption that historical volatility of comparable quoted
companies is indicative of future trends, which may not necessarily be the actual outcome.
The weighted average contractual life of the options is #ve years (2021: #ve years).
No options were exercised during the current year (2021: nil).
The Group’s share-based compensation charge for the year ended 31 December 2022 of £4,284,039
(2021: £2,338,495) consists of £128,943 in relation to warrants granted in Cornerstone (2021: £142,712), a
net credit of £222,577 in respect of the Cornerstone options (2021: charge of £306,833), £36,836 in
respect of equity se&led share-based payments related to the non-executive Board member’s service
agreements (2021: £81,370) and £4,340,837 of other share-based compensation (2021: £1,807,580).
Annual Report and Accounts 2022
71
31 December 2022
31 December 2021
Number
Weighted
average
exercise price
Number
Weighted
average
exercise price
£
£
Outstanding at the beginning of the
year
1,599,480
0.50
1,599,480
0.50
Granted during the year
1,893,454
0.23
-
-
Forfeited/waived during the year
(1,786,603)
(0.46)
-
-
_______
_______
_______
_______
Total outstanding
1,706,331
0.24
1,599,480
0.50
_______
_______
_______
_______
Total exercisable
184,535
0.50
533,160
0.50
_______
_______
_______
_______
GRANT DATE
8 March 2022
8 March 2022
8 March 2022 1 September 2022
Exercise price (pence)
36.2
61.0
26.5
10.0
Share price at grant date (pence)
16.5
16.5
16.5
9.0
Risk free rate
2.1%
2.1%
2.1%
2.7%
Expected volatility
90.1%
90.1%
90.1%
129.5%
Contractual life (years)
5
5
5
5
Strategic Report | Governance | Financial Statements | Company Information
Other share-based compensation
On 27 September 2021 the Company announced the appointment of Robert O’Brien as General
Manager APAC and Middle East. As part of his remuneration package over the #rst two years he and
his team were entitled to receive share-based incentivisation based on a multiple of revenue
generation and contribution to pro#t.
Upon initial recognition of the share-based incentivisation, the forecasted performance of Robert
O’Brien and his team over the two-year period, resulted in an expected share-based compensation
charge over the two-year period of £6,148,417 based on the share price at the grant date on 1 August
2021 of 29.5 pence per share.
On 4 August 2022, the Company announced the variation of the share incentive arrangement between
the Company and Robert O’Brien and his team. The terms of the original incentivisation arrangements
were varied such that 1) Mr. O’Brien was issued a loan note with a value of £2 million and carrying a
coupon rate of 6%, repayable by the Company on 31 July 2025 (which was subsequently varied to be
repayable on 31 July 2026); 2) Mr. O’Brien was issued and allo&ed 4,286,818 new ordinary shares at a
price of 10p per share; 3) the three senior members of Mr. O'Brien's team were allo&ed and issued
2,100,000 new ordinary shares at a price of 10p per share; and 4) the issue of a further 5,113,182 new
ordinary shares to Mr. O’Brien at a price of 10p per share following receipt from the FCA of permission
for Mr. O'Brien to increase his holding to more than 9.9% of the issued share capital of the Company. As
a result of the agreed se&lement, the Company recognised an accelerated charge for the year ended
31 December 2022 such that the full value of the total charge estimated upon initial recognition of
£6,148,417 has been cumulatively expensed (£4,340,837 for the year ended 31 December 2022 and
£1,807,580 for the year ended 31 December 2021).
A transfer from the share-based payment reserve to the pro#t and loss reserve of £5,186,984 was
recognised for the year ended 31 December 2022 re%ecting the issue of the £2 million loan note,
allotment of 6,386,818 new ordinary shares at a price of 10p per share to Robert O’Brien and his team
(£3,153,950) and the issue of 329,492 shares at a price of 10.025 pence per share on 28 August 2022 in
respect of equity-se&led remuneration under the non-executive Board member’s service agreements.
No warrants were granted in the year.
16 . RELATED PARTY TRANSACTIONS
Details of key management compensation are included in note 4. Key management are considered to
be the Directors of the Group.
Transactions with subsidiaries
During the year, the Company and Cornerstone Payment Solutions Ltd entered into various
transactions with each other including so'ware development charges, licenses fees and working
capital support. The net balance of transactions between the companies are held on an interest-free
inter-Group loan which has no terms for repayment. At the year end, the Company owed £1,404,408
(2021: £435,659) to Cornerstone Payment Solutions Ltd.
During the year, the Company also provided working capital support to Avila House Limited,
Cornerstone – Middle East FZCO and Capital Currencies Limited. The net balance of transactions
between the companies are held on an interest-free intra-Group loan which has no terms for
repayment. At the year end, Avila House Limited owed the Company £259,617 (2021: £150,041),
72
Annual Report and Accounts 2022
Strategic Report | Governance | Financial Statements | Company Information
Cornerstone – Middle East FZCO owed the Company £60,500 (2021: £20,188) and Capital Currencies
Limited owed the Company £43,242 (2021: £nil).
Other related parties
All of the amounts below were in respect of the year ended 31 December 2022.
During the year ended 31 December 2022, the Group generated revenue of £1,617,467 under a referral
agreement with Atlantic Partners Asia ("APA"), a signi#cant shareholder in the Company (year ended 31
December 2021: £481,330). As at 31 December 2022, APA owed the Group £221,669 (31 December 2021:
£nil).
As at 31 December 2022 an amount of £8,750 was due from Terry Everson, a director of Cornerstone
Payment Solutions Ltd and a shareholder in Cornerstone (31 December 2021: £8,750).
On 28 September 2022 William Newton, a director and signi#cant shareholder of the Company,
assigned his un-drawn convertible loan note of £350,000 to APA.
During the year ended 31 December 2022, William Newton repaid a loan made by the Group to him of
£10,000 (balance outstanding as at 31 December 2021: £10,000).
During the year ended 31 December 2022, the Group incurred charges of £45,000 (2021: £nil) under a
computer services agreement with JF Technology (UK) Ltd of whom Stephen Flynn (a former Director of
the Company and a signi#cant shareholder) is a director and a majority shareholder. As at 31
December 2022 £18,000 was payable to JF Technology (UK) Ltd (balance outstanding as at 31
December 2021: £nil).
The transactions with Robert O'Brien are disclosed in notes 13, 15 and 20.
17. FINANCIAL INSTRUMENTS
Financial Assets
Group
Group
Company
Company
31
December
2022
31
December
2021
31
December
2022
31
December
2021
£
£
£
£
DERIVATIVE FINANCIAL ASSETS
Foreign currency forward contracts with
customers
504,106
359,077
-
-
Foreign currency forward contracts with
institutional counterparty
131,367
33
-
-
_______
_______
_______
_______
635,473
359,110
-
-
Cash and cash equivalents
682,346
348,102
495,627
139,579
Trade receivables
221,669
-
-
-
Other receivables
184,072
132,885
402,824
211,347
_______
_______
_______
_______
1,723,560
840,097
898,451
350,926
_______
_______
_______
_______
Annual Report and Accounts 2022
73
Strategic Report | Governance | Financial Statements | Company Information
Financial Liabilities
All #nancial assets and liabilities have contractual maturity of less than one year with the exception of
loan notes of £2,172,578 (2021: £nil).
Derivative #nancial assets and liabilities
Derivative !nancial assets not designated as hedging instruments
Group
Group
Company
Company
31 December
2022
31 December
2021
31 December
2022
31 December
2021
£
£
£
£
DERIVATIVE FINANCIAL LIABILITIES
Foreign currency forward contracts with
customers
165,156
290,292
-
-
Foreign currency forward contracts with
institutional counterparty
398,520
-
-
-
_______
_______
_______
_______
563,676
290,292
-
-
Trade payables
362,035
346,255
162,128
212,561
Other payables
527,816
484,814
1,605,373
679,692
Loan notes
2,397,578
-
2,397,578
-
_______
_______
_______
_______
3,851,105
1,121,361
4,165,079
892,253
_______
_______
_______
_______
31 December 2022
31 December 2021
Fair Value
Notional
Principal
Fair Value
Notional
Principal
£
£
£
£
Foreign currency forward contracts with
customers
504,106
9,042,956
359,077
12,508,939
Foreign currency forward contracts with
institutional counterparty
131,367
3,377,597
33
12,544
_______
_______
_______
_______
635,473
12,420,553
359,110
12,521,483
_______
_______
_______
_______
74
Annual Report and Accounts 2022
Strategic Report | Governance | Financial Statements | Company Information
Derivative !nancial liabilities not designated as hedging instruments
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Foreign currency forward
contracts are measured at fair value on a recurring basis.
There are three levels of fair value hierarchy:
- Level 1 – the fair value of #nancial instruments traded in active markets is based on quoted market
prices at the end of the reporting period.
- Level 2 – valuation techniques for which the lowest level input that is signi#cant to the fair value
measurement is directly or indirectly observable.
- Level 3 – valuation techniques for which the lowest level input that is signi#cant to the fair value
measurement is unobservable.
Foreign currency forward contracts with customers generally require immediate se&lement on the
maturity date of the individual contract and fall into level 2 of the fair value hierarchy above. Level 2
comprises those #nancial instruments which can be valued using inputs other than quoted prices that
are observable for the asset or liability either directly (i.e., prices) or indirectly (i.e., derived from prices).
The fair value of forward foreign exchange contracts is measured using observable forward exchange
rates for contracts with a similar maturity at the reporting date.
The net gain on #nancial assets at fair value through pro#t or loss for year ended 31 December 2022
was £3,300 (2021: net loss of £29,661).
Financial instruments – risk management
Financial assets primarily comprise trade and other receivables, cash and cash equivalents and
derivative #nancial assets. Financial liabilities comprise trade and other payables, shareholder loans
and derivative #nancial liabilities. The main risks arising from #nancial instruments are market risk
(including foreign currency risk and interest rate risk), liquidity risk, credit risk and counterparty risk.
Market risk
Market risk for the Group comprises foreign exchange risk and interest rate risk. The Group operates as
a riskless matched principal broker for deliverable non-speculative spot and forward foreign currency
transactions, with each trade with its clients matched with an identical trade with an institutional
counterparty. Therefore, foreign exchange risk is mitigated through the matching of foreign currency
assets and liabilities between clients and institutional counterparties which move in parity.
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75
31 December 2022
31 December 2021
Fair Value
Notional
Principal
Fair Value
Notional
Principal
£
£
£
£
Foreign currency forward contracts with
customers
165,156
3,337,362
290,292
9,874,438
Foreign currency forward contracts with
institutional counterparty
398,520
8,715,534
-
-
_______
_______
_______
_______
563,676
12,052,896
290,292
9,874,438
_______
_______
_______
_______
Strategic Report | Governance | Financial Statements | Company Information
The Group’s cash balances are primarily held in Pound Sterling and the Group does not hold signi#cant
cash balances in foreign currencies.
Interest rate risk a!ects the Group to the extent that it implicitly impacts the price of foreign currency
forward contracts. However, this risk is mitigated in the same way as foreign currency risk.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its #nancial obligations as they fall due.
The Group has extensive controls to ensure that it has su$cient cash or working capital to meet its
cash requirements to mitigate this risk.
As per the Going Concern note above, the Directors have prepared a cash %ow forecast taking into
account a projected increase in revenues and continued investment in the development of the Group’s
platform and organic sales & marketing e!orts and the inherent risks and uncertainties facing the
Group’s business to assess the Group’s working capital requirements. The Board reviews cash %ow
projections on a regular basis and has authority controls in place so as not to commit to material
expenditure without being satis#ed that su$cient funding is available to the Group.
The Group also has systems in place to monitor the margin requirements of its clients and its margin
requirement with the institutional counterparty for the back-to-back foreign currency forward contract
on a real-time basis and request any necessary top up payment from the clients. The Group also has
the right to close any position if no margin is given.
Credit risk
Credit risk is the risk that clients do not meet their contractual obligations in respect of the currency
spot and forward contracts which leads to a #nancial loss. All customers are subject to credit
veri#cation checks. Approximately 90% of the Group’s trades are spot currency contracts which are
required to be se&led within two working days. For forward currency contracts, as noted above, clients
are required to provide margin that mitigates credit exposure. Trade limits are applied to all clients. The
Group has systems to monitor trade limits and collateral requirements on a real-time basis. The Group
does not have any signi#cant concentration of exposures within its client base.
Counterparty risk
Each trade between a client and the Group is matched with an identi#ed trade with Velocity Trade
International (“Velocity”), which is a global foreign exchange liquidity and trade provider that provides
pricing, execution and se&lement services for the Group.
The Group also has brokerage accounts with alternative institutional counterparties and could
transact with them instead if Velocity is unable to provide liquidity.
Management of se&led and open trades are conducted via Currency Cloud, the GV (formerly Google
Ventures) backed global payments and FX platform, and Banking Circle. Client funds are safeguarded
with Banking Circle in line with the Group’s requirements under the Electronic Money Regulations 2011
for additional protection and to reduce counterparty risk.
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18. FINANCIAL COMMITMENTS
The Group is not considered to have any operating lease commitments. The o$ces utilised by the
Group are serviced o$ces, which have a short notice period and therefore it has not been considered
necessary to disclose these as an operating lease commitment.
19. CAPITAL MANAGEMENT
The capital structure of the business consists of cash and cash equivalents, debt and equity. Equity
comprises share capital, share premium and retained losses and is equal to the amount shown as
‘Equity’ in the balance sheet. The Group’s current objectives when maintaining capital are to:
- safeguard the Group’s ability to operate as a going concern so that it can continue to pursue its
growth plans;
- provide a reasonable expectation of future returns to shareholders; and
- maintain adequate #nancial %exibility to preserve its ability to meet #nancial obligations, both
current and long term.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital
structure and adjusts it in the light of changes in economic conditions and the risk characteristics of
underlying assets.
The Company is subject to the following externally imposed capital requirements:
- as a public limited company, the Company is required to have a minimum issued share capital of
£50,000.
Cornerstone Payment Solutions Ltd, a wholly-owned subsidiary of the Company, is subject to the
following capital requirement under the Electronic Money Regulations 2011:
- 2% of the average outstanding e-money issued by the Electronic Money Institution (based on a 6-
month rolling average), or the initial capital requirement of €350,000, whichever is the higher.
Capital Currencies Limited, a wholly-owned subsidiary of the Company, is subject to the following
capital requirement under the Payment Service Regulations 2017:
- either 10% of #xed overheads for the preceding year or the initial capital requirement of €20,000,
whichever is the higher.
Cornerstone Payment Solutions Ltd and Capital Currencies Limited complied with the above
requirements for all periods during the year ended 31 December 2022.
20. EVENTS AFTER THE REPORTING DATE
Variation of Incentivisation and Se"lement Arrangements
On 8 March 2023, the Company announced that it had agreed to vary certain incentivisation and
se&lement arrangements with Robert O'Brien, General Manager APAC and Middle East, and Craig
Strong, Director of Capital Currencies.
The repayment date of Mr. O'Brien's £2 million loan note has been extended by one year such that it is
now repayable by the Company on 31 July 2026.
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Strategic Report | Governance | Financial Statements | Company Information
The Company has agreed with Mr. Strong to vary the terms of the original earn-out consideration in
respect of the Capital Currencies acquisition as follows:
- The #rst tranche of the earn-out consideration is now assessable on revenue performance for the
year ending 31 January 2024 and the second tranche is assessable on revenue performance for the
year ending 31 January 2025 – both representing an extension of one year.
- The Company now has the option, at its discretion, to satisfy one or both of the earn-out payments
in cash as opposed to one half of the #rst tranche being payable in ordinary shares and the other
half in convertible loan notes and the second tranche to be payable in ordinary shares.
Other events a$er the reporting date
On 13 January 2023, the Company issued and allo&ed 806,182 new ordinary shares at a price of 6.501
pence per share to a Non-Executive Director, the Company Secretary and four former Non-executive
Directors as part of their annual remuneration set out in the Company's admission document dated 26
March 2021.
On 13 January 2023, the Company granted options over ordinary shares of 1 penny each in the capital
of the Company. James Hickman was granted 1,000,000 options at an exercise price of 10 pence per
share and 1,000,000 options at an exercise price of 20 pence per share. Judy Happe was granted
550,000 options and Jordanna Curtis 200,000 both at an exercise price of 10 pence per share. In
addition, the Company granted a further 299,180 options to other sta! members. All options are
intended to qualify as Enterprise Management Incentive options pursuant to the Income Tax (Earnings
and Pensions) Act 2003.
On 6 February 2023, the Company issued and allo&ed 8,574,720 new ordinary shares following receipt
of permission from the FCA for Robert O’Brien and Mark Horrocks to increase their respective
shareholdings beyond 9.9% of the issued share capital of the Company. The shares were issued at a
price of 10 pence and 6.5 pence per share respectively. The shares issued to Mark Horrocks were for the
conversion of a £225,000 loan note issued to him as part of the Company's fundraising announced on 5
August 2022.
On 26 April 2023, the Group completed the sale of Avila House Ltd to Aspire Commerce Ltd and
received £300,000 in cash in consideration following the receipt of regulatory approval from the FCA.
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Company Information
Registered Office
The Old Rectory
Addington
Buckinghamshire
MK18 2JR
Company Registration Number
08367949
Principal Trading Address
75 King William Street
London
EC4N 7BE
1
Company Secretary
Hanh Jelf, TH Jelf LLP
Nominated & Financial Adviser
SPARK Advisory Partners Limited
5 St John’s Lane
London
EC1M 4BH
Broker
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London
W1S 2PP
Auditor
Haysmacintyre LLP
10 Queen Street Place
London
EC4R 1AG
Solicitor
TH Jelf LLP
The Old Rectory
Addington
Buckinghamshire
MK18 2JR
Registrar
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
Financial PR Adviser
Gracechurch Group
48 Gracechurch Street
London
EC3V 0EJ
Annual Report and Accounts 2022
79