Annual Report and Accounts 2023
3
Strategic Report
Strategic Framework
4
Performance Highlights
6
Chairman’s Statement
7
Chief Executive Officer’s Review
9
Investment Case
12
Chief Financial Officer’s Review
13
Principal Risks and Uncertainties
16
Governance
Board of Directors
19
Corporate Governance Report
21
ESG
24
Section 172 Statement
26
Audit Committee Report
27
Directors’ Remuneration Report
30
Directors’ Report
34
Financial
Statements
Independent Auditor’s Report
39
Consolidated Financial Statements
46
Notes to the Financial Statements
52
Company
Information
83
Contents
4
Annual Report and Accounts 2023
1.
2.
Finseta* is…
A foreign exchange and payments
company offering multi-currency
accounts to businesses and individuals
With a strategy to grow via…
Expanding our geographic footprint and capabilities
- establishing new counterparty relationships to increase the number of
currencies our clients can transact with and countries they can send
money to
- expanding our regulatory capabilities on a global scale to bene!t
from local payment rails and lower transaction costs
Enhancing our product and service o!ering
- expanding our global payments network to cater for further payment
methods as well as broaden our o#er to additional jurisdictions and
industries
- strengthening our compliance function to be able to serve clients
with complex requirements
- continued product innovation to o#er clients more functionality and
an improved experience
Investing in people
- growing our expert team
- continued professional development of all sta# members
- engaging with our team and being a responsible employer
- expanding and strengthening our network of introducers
3.
Strategic Report Governance Financial Statements Company Information
* As announced on 20 March 2024, the Company (Cornerstone FS plc) intends to change its name to Finseta plc. The Company
has been operating as Finseta since 18 April 2024 in anticipation of the name change. As at the close of business on Friday 3
May 2024, being the latest practicable date prior to the publication of this document, the change of name had not been
e#ected by Companies House.
Annual Report and Accounts 2023
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 and high-net-worth individuals
transacting 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.
We will achieve success by adhering to
our core values
Our MISSION is…
clients !rst
We always put our
transparent
In all of our activities,
we are
Strategic Report Governance Financial Statements Company Information
6
Annual Report and Accounts 2023
Performance Highlights
Strategic Report Governance Financial Statements Company Information
*Excluding share-based compensation, transaction costs, depreciation &
amortisation charges, pro!t from the disposal of a subsidiary, other operating
income related to interest on client balances and non-cash based accounting
adjustments in respect of the Group’s corporate premises (see the Chief Financial
O$cer’s Review for further detail)
* * De!ned as customers who traded through Finseta during the 12-month periods to
31 December 2023 and 2022 respectively
Growth in active customers** to 906 (2022: 803) and average transaction value
increased by 33%
Proportion of revenue accounted for by direct clients increased to 95% (2022: 78%)
re%ecting the strategic decision to rationalise the majority of the historic white label
business
New counterparty partnerships established to broaden the number of currencies and
countries where the Group can transact – now able pay out to over 150 countries in 58
currencies
Launched Finseta Solutions as a new o#ering focused on servicing clients with
complex requirements, with strong progress made to date
Received regulatory approval, post year end, to provide payment services in Canada
Signed agreement with Mastercard, post year end, to launch corporate card scheme
Selected Finseta as new company name to re%ect di#erentiated o#er and as part of
strategic growth plan
Revenue
£9.6m
2023
2022
£9.6m
£4.8m
Gross margin
63.4%
2023
2022
63.4%
60.9%
Adjusted* EBITDA
£1.7m
2023
2022
£1.7m
£(0.9)m
Pro!t before tax
£1.3m
2023
2022
£1.3m
£(5.8)m
Basic earnings per share
3.77p
2023
3.77p
(17.26)p
Cash generated from
operations
£2.0m
2023
2022
£2.0m
£(1.0)m
2022
Cash and cash
equivalents
£2.3m
2023
£2.3m
£0.7m
2022
Strategic Report Governance Financial Statements Company Information
Annual Report and Accounts 2023
7
2023 was an excellent year for our business.
Once again, we delivered record revenue, with
growth of 100%, and achieved key milestones
with our maiden year of positive EBITDA, pro!t
before tax and positive cash%ow. This re%ects
the continuing strong progress being made
under the new management team in
implementing our strategy while improving our
operations. While we still have further to go, I
am proud of what we have achieved to date.
Our priority for the year was to drive revenue
growth through enhancing our products and
services, extending our o#ering and expanding
our client base while maintaining control over
costs. As discussed by James Hickman, CEO,
and Judy Happe, CFO, in their statements, this
was successfully delivered, resulting in the
impressive !nancial performance for the year
while also strengthening our foundations and
our ability to execute in the future.
In particular, we undertook two important
initiatives that will contribute to our future
growth. Firstly, we began expanding our global
payments network methods, including working
with Mastercard to sign an agreement shortly
a&er year-end to launch a corporate card
scheme. This represents a potential additional
revenue stream for Finseta and gives our clients
greater choice and %exibility in managing their
business expenses.
The second key initiative was to continue to
expand our geographical footprint and
regulatory capabilities. During the year, we
established a wholly-owned subsidiary
registered in Canada and commenced the
authorisation process with the Financial
Transactions and Reports Analysis Centre
of Canada, subsequently being granted a
Money Services Business licence in February
2024. This will allow us to operate as a
payments company in Canada and provide
payments services to Canadian businesses and
individuals.
Both of these initiatives mark signi!cant steps
towards our goal of o#ering our clients the
ability to pay in or pay out, in any currency, via
any payment method anywhere in the world
(subject to regulatory restrictions).
Our achievements in 2023 would not have been
possible without the great contribution of our
employees, whom, on behalf of the Board, I
thank. It goes without saying that they are
highly valued. It is no exaggeration to say that
we could not have achieved these results
without them. Nevertheless, we constantly seek
to improve our team engagement and ensure
that we are a responsible employer, as outlined
further in our ESG report on pages 24 to 25.
The well-functioning Board was unchanged
through 2023, and to date. The directors bring a
range of complementary expertise and
experience – both within and outside of
payments and FX markets – and the Board is
balanced between executive and non-
executive roles. This contributes to a strong
stewardship.
Chairman’s Statement
GARETH EDWARDS
Chairman
AS WE LOOK AHEAD IN 2024, WE ARE ON TRACK FOR
ANOTHER YEAR OF STRONG FINANCIAL PERFORMANCE
AS WELL AS REACHING FURTHER MILESTONES.”
“
Strategic Report Governance Financial Statements Company Information
8
Annual Report and Accounts 2023
As part of our strategic growth plan, and
re%ecting the transition we have made to date,
we were pleased to adopt Finseta as our new
name. This decision was driven by our desire to
be'er align our brand identity with our mission,
values, and the comprehensive range of
services we provide, and to be'er di#erentiate
the business in the marketplace.
We announced our intention to change the
name of the Company from Cornerstone FS plc
to Finseta plc on 20 March 2024 and as at the
close of business on Friday 3 May 2024 (the
latest practicable date prior to the issue of this
document), the change of name had not been
e#ected by Companies House. Since 18 April
2024, the Company has been operating as
‘Finseta’ in anticipation of the name change. As
soon as the name change of the Company
occurs we will, of course, announce it to the
market and the Company’s ordinary shares will
commence trading on AIM under the new
company name and the new TIDM of ‘FIN’.
As we look ahead in 2024, we are on track for
another year of strong !nancial performance as
well as reaching further milestones, including
the opening of a full-service o$ce in Canada
and the launch of our corporate card scheme.
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.
GARETH EDWARDS
Chairman
7 May 2024
Growth in active customers to
906
(2022: 803)
Proportion of revenue accounted
for by direct clients increased to
95%
(2022: 78%)
Now able to pay out to over
150
countries in 58
currencies
Strategic Report Governance Financial Statements Company Information
Annual Report and Accounts 2023
9
Chief Executive O!cer’s Review
I am pleased to present this annual report for my
first full year as CEO. We made substantial
strategic and operational progress, culminating in
a set of excellent financial results that significantly
exceeded the Board’s expectations at the start of
the year. Our focus has been on driving direct sales
and fully commercialising the platform, while
carefully managing our cost base. We continued to
realise the value of our non-core assets, with the
completion of the sale of Avila House and entering
an agreement to sell Capital Currencies. At the
same time, we advanced key initiatives that will be
drivers of our future growth in the near term.
Performance
We delivered substantial growth in revenue,
which doubled to £9.6m (2022: £4.8m), driven by
year-on-year increases in active customers and
average transaction value. Active customers,
calculated as clients who traded during the 12
months ended 31 December 2023, increased to
906 compared with 803 for the 12 months to 31
December 2022 as we continued to expand our
sales team and payment capabilities. Average
transaction value increased by 33% year-on-
year driven by an increased focus on providing
an exceptional level of service to our business
and high net worth individual (“HNWI”) clients.
There was a signi!cant increase in revenue
generated by clients that we serve directly. The
proportion of total revenue that was accounted
for by direct clients was 95%, being £9.2m
(2022: £3.8m), compared with 78% in
2022. Revenue generated through our white
label partners was £497k (2022: £1.1m), which
re%ects our strategic decision to manage down
almost all of our historic white label business –
only maintaining a small number of accounts
that meet appropriate pro!tability thresholds.
By client type, there was an increase in revenue
generated by both private clients (primarily
HNWIs) and corporate accounts. Particularly
strong growth was seen from private clients,
with the proportion of total revenue accounted
for by private clients increasing to 64% (2022:
53%) with corporate accounts contributing
34% (2022: 47%). For the majority of private
client revenue, whilst the underlying transaction
is with an individual, the relationship is via a
corporate that provides services to the
individual. In addition, we generated £200k in
revenue (2022: £nil), accounting for 2% of total
revenue, through licencing our so&ware to the
acquirers of Avila House.
Executing on our strategy
Our growth strategy is founded on the three pillars
of product, geography and people – and we
executed on all three during 2023. This contributed
to our growth during the year, but also established
drivers for growth in the years to come.
Product
Our aim is to o#er our clients the ability to pay
in from, and pay out to, any jurisdiction (subject
to regulatory restrictions) in any currency and
via any payment method. While it is still
relatively early days, important steps have been
taken in advancing this strategy during the
year.
JAMES HICKMAN
Chief Executive O$cer
WE DELIVERED SUBSTANTIAL GROWTH IN REVENUE,
WHICH DOUBLED TO £9.6M DRIVEN BY YEAR-ON-YEAR
INCREASES IN ACTIVE CUSTOMERS AND AVERAGE
TRANSACTION VALUE.”
“
Strategic Report Governance Financial Statements Company Information
Currencies & countries
We continued to expand our global payments
network by establishing new counterparty
partnerships. This 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 over 150
countries in 58 currencies compared with over 70
countries and 49 currencies this time last year.
Payment method
We made significant progress during the year
towards expanding our payment method offering,
which culminated in the signing of a long-term
agreement in January 2024 with Mastercard to
launch a corporate card scheme. We expect to
launch the scheme during Q3 of the current year,
when we will be able to issue commercial cards co-
branded and supported by Mastercard for our
corporate customers. This additional payment rail
will provide our clients with greater choice and
flexibility in managing their business expenses.
Service
A key di#erentiator of our o#er is the high level of
personalised service that we provide our clients.
Through this, along with the experience of our
team and the strength of our compliance
capabilities, we are able to build solutions
tailored to meet our clients’ needs, even when
those needs are complex. In 2023, we took this a
step further by establishing a new o#ering,
Finseta Solutions, that is speci!cally focused on
providing solutions to clients that are harder to
service, due to, for example, the sector in which
they operate. This gives us access to a further
cohort of potential clients and is a higher value
service o#ering while also supporting our goal of
enabling clients to transact how, when and
where they need. Finseta Solutions has made
great progress to date, and is continuing to
grow.
One of our core values is that we always put
clients !rst and, as part of that, we are
commi'ed to continuously improving the service
that we provide. During the year, this included
making enhancements to the user interface and
user experience of our platform. We also
continued our development work to increase the
automation in transactional processes to
increase the speed of payments as well as
working on enhancements to the onboarding
process, which will improve clients’ experience
when working with Finseta.
Actions such as these meant that we were well
prepared for the introduction of the Financial
Conduct Authority's Consumer Duty regulation
in July 2023. Prior to that, we undertook an in-
depth review of our operations to ensure that we
were fully compliant with the new regulation,
which sets higher and clearer standards for
consumer protection across !nancial services.
To be able to support clients with more of their
business needs, during the year we formed
strategic partnerships with specialised and
alternative lenders to o#er a range of funding
solutions. In particular, we launched a lending
platform in partnership with Swoop Finance,
which enables us to seamlessly refer clients to a
lending partner that we have pre-ve'ed to
ensure that they can meet the clients’
requirements. This service increases our value to
clients while also providing commission on
referrals. It also enhances our competitive o#er
to potential clients who want to utilise our FX
services (rather than those of their traditional
bank), but who are hesitant to move away from
their traditional bank where they require their
lending facilities.
Geography
A core pillar of our strategy is geography – that
is, expanding our capabilities to enable clients
to transact to and from anywhere in the world
(subject to regulatory restrictions). As noted,
through establishing further counterparty
relationships during the year, we can now pay
out to over 150 countries. At the same time, we
also seek to expand our geographical footprint
and regulatory capabilities to deliver sustained
growth for the years to come. We achieved a
signi!cant milestone in this regard by
undergoing the authorisation process in
Canada, with the receipt of a Money Services
Business (“MSB”) licence from the Financial
Transactions and Reports Analysis Centre
of Canada (“FINTRAC”) post year-end. This
allows us to operate a payments company
10
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
in Canada and provide payments services to
Canadian businesses and individuals.
Having previously received enquiries
in Canada for our services through our existing
network, the establishment of a regulated
business will enable us to fully pursue such
opportunities and leverage local payment rails
and lower transaction costs. We are now in the
process of opening a full-service o$ce
in Canada, which will allow us to provide
customers with the high-touch service-led
approach that is core to the Finseta o#er.
We are excited to launch our business
in Canada and look forward to continuing our
expansion into further markets.
People
A fundamental contribution to our growth during
the year was the enhancing of our sales team. We
restructured our UK sales team and appointed a
seasoned UK Sales Director. To strengthen our offer
and drive our future growth, we invested in key
personnel to establish our Finseta Solutions offer, as
well appointing an experienced Head of
Compliance and Money Laundering Reporting
Officer and a Card Programme Manager. As a high-
touch, service-led business, the strength of our
people is crucial. While our business is highly
scalable thanks to our platform, as we continue
grow, we will look to expand our headcount further.
In addition, with our client acquisition being
predominantly introducer-led, we are very much a
people business. We continue to expand and
deepen our network of introducers, which also
drives diversification in payment flows meaning we
are not overly reliant on particular currencies. It also
lends itself to our Finseta Solutions offer as we are
able to address the varied requirements of clients
won through different introducers.
Brand identity
In recognition of the substantial strategic
progress that we have made and the
fundamental expansion of our o#er, capabilities
and geographic footprint, we decided to adopt
a new name. We wanted a name that be'er
aligned our brand identity with our mission,
values and the comprehensive range of services
we provide. In particular, we needed a unique
name that re%ected our di#erentiated o#er.
Accordingly, we underwent a renaming process
that culminated in the adoption of ‘Finseta’, and
we began operating under the new name in
April 2024.
Realising value
This year we also continued to realise value from our
non-core assets. The sale of Avila House, for which
we entered the agreement in December 2022,
completed during the year and we entered an
agreement to sell Capital Currencies, which we
expect to complete in the current year. Both of
these non-core subsidiaries held licences that were
more limited than that of Finseta Payment Solutions,
which is an authorised electronic money institution,
and, therefore, surplus to our requirements.
Accordingly, we generated value through their
disposal to non-competing entities, which, in the
case of Avila House, included licencing revenue as
well as the acquisition consideration.
Outlook
The strong trading momentum that was
experienced during 2023 has been sustained
into the current year, which re%ects the
continued increase in the number of active
clients and expansion of our introducer network.
This is being driven, in particular, by the
investment that we are making into the UK sales
team. Consequently, we are on track to report
signi!cant growth for full year 2024, in line with
market expectations.
Looking further ahead, with the excellent
progress made during the year and to date in
executing on our strategic priorities, we have
strengthened our operations and established the
foundations to deliver long-term, sustainable
growth. As a result, the Board continues to look
to the future with great con!dence.
Annual Report and Accounts 2023
11
JAMES HICKMAN
Chief Executive O$cer
7 May 2024
Strategic Report Governance Financial Statements Company Information
Investment Case
Finseta is commi'ed to delivering long-term, sustainable growth and creating value for its
shareholders by providing a high level of service coupled with an excellent online platform experience
to solve currency and payment challenges for businesses and individuals.
Fast-growing with track record of delivery
Two-year revenue growth of 105% CAGR
combined with pro!tability and positive
operating cash%ow generation. Continued
strategic execution includes expanding
currencies, countries and payment methods and
transitioning to direct sales.
Targeting large, high-growth market
Operating in the substantial global market for
cross-border payments, with an expanding
addressable market for payment specialists
such as Finseta, through the structural shi& away
from traditional banks with legacy systems or FX
brokers that lack the resources to keep pace
with increasing compliance requirements.
Low risk operations
Finseta does not engage in speculative trades or
trade from its own balance sheet – thereby
operating as a Riskless Principal. It has invested
signi!cantly in its regulatory and compliance
capabilities, which is maintained as a key
priority. Finseta’s diversi!ed business is not
reliant on particular currency pairs or payment
corridors.
Highly cash generative model
Payments are primarily facilitated through
counterparty relationships requiring limited use
of Finseta’s balance sheet, with low working
capital intensity enabling high cash conversion.
In addition, the highly scalable technology
platform will be able to drive further operating
leverage as Finseta grows.
Differentiated commercial strategy
Focused on facilitating corporate customers and
HNWIs with high-value, compliance-intensive
transactions, including market niches, with a
high-touch service and bespoke solutions
o#ering. Finseta does not compete in the high-
volume-low-value retail market
Foundations for long-term, sustainable
growth
Finseta’s high-touch, customer centric culture
establishes long-term relationships. The
proprietary, scalable platform facilitates future
growth and product/service innovation.
Investing in expanding internationally and into
new markets, along with employee development,
positions Finseta to deliver sustainable, long-
term growth.
12
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
.
Annual Report and Accounts 2023
13
As discussed in the Chief Executive O$cer’s
Review, we delivered an excellent trading
performance in 2023. This, and enhanced by
other actions taken, as discussed below,
translated into a very strong !nancial
performance. In particular, we achieved
substantial growth in revenue and pro!t –
including generating our !rst annual pro!t
before tax and positive adjusted EBITDA – as
well as being cash%ow positive for the !rst time.
Revenue for the 12 months to 31 December 2023
increased by 100% to £9.6m compared with
£4.8m for the previous year. This growth re%ects
the strategic and operational changes that
were implemented during the second half of
2022 and in the current year that are focused
on driving direct sales and fully
commercialising the platform.
Gross margin improved to 63.4% (2022: 60.9%),
which re%ects a lower proportion of revenue
derived from white label partners following our
strategic decision to manage down almost all
of our historic white label business. We also
bene!ted from a change in commission
arrangements agreed with Robert O’Brien,
General Manager APAC and Middle East, in the
!rst half of the year, as announced on 8 March
2023.
The improvement in gross margin combined
with the increased revenue resulted in a
substantial growth in gross pro!t to £6.1m (2022:
£2.9m).
Operating expenses were reduced to £5.1m in
2023 compared with £8.6m for the previous
year. This primarily re%ects movements of:
• £4.0m reduction in share-based (non-cash)
compensation to £0.3m (2022: £4.3m), which
predominantly relates to a variation to the
terms of the incentivisation agreement with
Mr. O’Brien and the Asia team, which was
agreed in H2 2022;
• £0.2m pro!t recognised from the disposal of
Avila House Ltd, a subsidiary (2022: £nil);
• £0.5m increase in other administrative
expenses to £4.4m (2022: £3.8m); and
• £0.2m increase in depreciation and
amortisation to £0.6m (2022: £0.4m).
We maintained tight control over operating
costs and the increase in other administrative
expenses primarily relates to additional sales
team hires and increased performance-related
bonuses commensurate with the Group’s
performance. Amortisation was higher due the
cumulative impact of internally developed
so&ware additions that have been capitalised
since 2020 with an amortisation period of three
years, combined with the amortisation of a
right-of-use asset related to the Group’s move
to new corporate premises in Q4 2023 (with the
previous premises being operating leases that
did not a'ract amortisation).
Chief Financial O!cer’s Review
JUDY HAPPE
Chief Financial O$cer
WE ACHIEVED SUBSTANTIAL GROWTH IN REVENUE AND
PROFIT – INCLUDING GENERATING OUR FIRST ANNUAL
PROFIT BEFORE TAX AND POSITIVE ADJUSTED EBITDA.”
“
Strategic Report Governance Financial Statements Company Information
On an adjusted basis, to exclude share-based
compensation, pro!t from the disposal of a
subsidiary, depreciation & amortisation charges
and a&er the add-back of the rental cost of the
Group’s corporate premises, operating expenses
were £4.4m compared with £3.8m for 2022. This
re%ects the increase in other administrative
expenses as described above. However,
adjusted operating expenses as a proportion of
revenue signi!cantly improved to 46% for 2023
compared with 79% for 2022.
Thanks to our strong operating performance, we
delivered a substantial improvement in adjusted
EBITDA to £1.7m compared with a loss of £0.9m
for 2022 (see the Group Statement of
Comprehensive Income for further detail on the
adjustments).
We generated other operating income
of £0.4m (2022: £0.03m) based on interest on
client cash balances (see note 3 to the !nancial
statements).
As a result of the increased gross pro!t and
other operating income and reduced operating
expenses, we generated a pro!t from operations
of £1.4m compared with a loss from operations
of £5.6m for 2022.
Net !nance costs were £69k (2022: £164k). This
primarily re%ects a £165k year-on-year change in
the unwinding of discount charges – being a
£56k credit in 2023 compared with a £108k cost
in 2022 – owing to the remeasurement of the
deferred consideration payable in respect of the
acquisition of Capital Currencies Ltd in 2022.
As a result of the increased pro!t from
operations and reduced !nance costs, we
achieved substantial growth in pro!t before tax
to £1.3m in 2023 compared with a loss before tax
of £5.8m for 2022.
A tax credit of £843k was recognised in 2023
(2022: £175k), principally re%ecting the
recognition of a £818k deferred tax asset relating
to tax losses, following our transition to
pro!tability during 2023 and therefore visibility in
consumption of the carried-forward tax losses as
at 31 December 2023 of £3.3m (31 December
2022 carried forward tax losses were £5.0m, with
no associated deferred tax asset recognised).
Basic earnings per share were 3.77 pence (2022:
loss of 17.26 pence per share), which was
achieved despite an increase in the weighted
average number of ordinary shares in issue to
56,613,145 (2022: 32,506,335). On a fully diluted
basis, earnings per share were 3.76 pence (2022:
loss of 17.26 pence).
We were cash%ow positive for 2023 compared
with a cash out%ow for the previous year. Cash
generated from operations was £2.0m (2022:
£1.0m used in operations) based on the improved
trading performance. Cash used in investment
activities was £0.2m (2022: £1.0m used in
investment activities), re%ecting purchases of
intangible assets, property, plant and
equipment, principally associated with the
continued investment in developing our
proprietary platform, partly o#set by the
proceeds from the disposal of Avila House. Cash
used in !nancing activities was £0.1m compared
with £2.2m generated from !nancing activities in
2022, with the di#erence primarily re%ecting a
fundraising undertaken in 2022.
As a result, as of 31 December 2023, cash and
cash equivalents had signi!cantly increased to
£2.3m (31 December 2022: £682k).
Key Performance Indicators
We measure our 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 2023: £9.6m (2022: £4.8m)
14
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
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 2023: 63.4% (2022: 60.9%)
Active Clients*
-
Why it is a KPI: It represents the size of our
client base – the expansion of which is
core to our current strategy – and drives
revenue growth.
-
Performance 2023: 906 (2022: 803)
* The number of clients that traded with Finseta during the
years to 31 December 2023 and 2022 respectively
Adjusted EBITDA**
-
Why it is a KPI: Adjusted EBITDA is a lead
indicator of underlying !nancial
performance.
-
Performance 2023: £1.7m (2022: £0.9m
loss)
**Adjusted to 1) add back share-based compensation and
one-o# acquisition-related legal costs and 2) deduct pro!t
from the disposal of a subsidiary, other operating income
related to interest on client balances, and the rental cost of
the Group’s corporate premises
We review our 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.
Annual Report and Accounts 2023
15
JUDY HAPPE
Chief Financial O$cer
7 May 2024
Strategic Report Governance Financial Statements Company Information
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, Finseta
Payment Solutions Limited, is
authorised and regulated by the FCA
as an Authorised E-money Institution.
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 continues to increase its
activity, having declared that they are
paying closer attention to firms’
compliance with specific areas of
regulation such as consumer duty,
wind down planning, operational
resilience and more.
The Group employs an experienced
Compliance and Money Laundering
Reporting Officer 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. The
Group retains the services of Cosegic, a
specialist regulatory and compliance
advisory service, to support the
Compliance and Money Laundering
Officer. In addition, John Burns, a Non-
executive Director, has significant
experience regarding regulation in the
payments industry.
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, 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’s strategy is to increase the
number of currencies and countries in
which it can transact, including niche
markets. This diversification reduces the
risk of the Group being impacted by a
slowdown in a particular market.
-
Counetrparty
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 primary liquidity
services provider, and has been trading on
agreed terms for over ten years. The Group
has 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.
-
16
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
Competition
There is a risk that competitors with
greater financial resources may
develop software 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 attract the
Group’s key employees or prospective
employees, which could impact the
level of service that the Group can give
to its clients or the ability to expand its
service offering.
The Group has chosen to focus on
facilitating corporate clients and HNWIs: it
does not compete in the volume-driven
retail market, which requires substantial
investment in direct-to-consumer
marketing and where purchase decisions
are primarily based on price. It has also
differentiated its offer by focusing on high-
value, compliance-intensive transactions,
including market niches – which are less
competitive markets – with a high-touch
service and bespoke solutions offering.
This leverages the experience of its
management team and its payments
network.
The Group has established a management
team with extensive experience in the
foreign exchange payments market,
including of designing, building and
running IT systems and departments in the
financial services sector. It has also
significantly invested in enhancing its
compliance function, which is a point of
differentiation.
The Group has an employee share
incentive scheme and the majority of its
senior management are significant
shareholders or option holders, aligning
their interests with those of the Group. The
Group has measures in place to engage
employees and be a responsible employer.
-
Cyber
There is a risk that the Group’s
technology platform may be
compromised or breached by cyber-
attacks and that it is unable to
prevent or detect unauthorised
access to, or disclosure of, clients’
confidential personal and financial
information or payment fraud. 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 financial
performance.
The Group’s platform is entirely deployed
on Amazon Web Services (AWS), which is
trusted by numerous major organisations
that require robust, scalable, secure and
cost-effective services. AWS has a number
of internationally recognised certifications
and accreditations demonstrating
compliance with third-party assurance
frameworks.
All systems operate a role-based policy of
least privilege to ensure that users do not
have access to data not directly required
for their day-to-day role. Further, all staff
undergo regular training in Information
Security, Anti-Money Laundering and
Fraud Awareness.
Additionally, the Group enforces two factor
authentication utilising standard OAuth2
protocol for both client and employee
login and periodically commissions
penetration testing of its systems.
-
Annual Report and Accounts 2023
17
Strategic Report Governance Financial Statements Company Information
Partners
A key element of the Group’s strategy is
to expand its partner network to
increase its offering to clients. 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.
-
Liquidity
There is a risk that the Group will not
have sufficient capital to meet the
regulatory capital requirement for an
authorised financial services business
and that it is unable to meet its
financial obligations when due.
The Group has an experienced finance
team that provides effective management
of the Group’s operational financial
exposures. This includes ensuring sufficient
ring fencing of capital to meet its
regulatory obligations. In 2023, the Group
generated a net cash inflow, and maintains
its strong focus on cash control.
-
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 finance team that provides
effective management of the Group’s
operational financial exposures, with a
strong focus on cash control.
-
18
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
Board of Directors
Annual Report and Accounts 2023
19
Gareth Maitland Edwards
Non-Executive Chairman
James Hickman
Chief Executive Officer
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. Judy joined
Finseta in 2020 from XenZone (now AIM-listed Kooth plc),
where she was CFO. 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 $1.3bn sale of AVG to Avast. Judy commenced her career
as a chartered accountant with Sa#ery Champness.
James has over 25 years’ experience in !nancial services,
primarily in the FX and payments industries. Prior to joining
Finseta, James was Chief Revenue O$cer at Dublin-based
!ntech business, Fire Financial Services Ltd. Other roles have
included Chief Commercial O$cer at AIM-quoted Equals
Group plc and Managing Director at Caxton Payments Ltd
(formerly Caxton FX Ltd), a provider of foreign exchange,
international payments and prepaid cards. In each role,
James was responsible for growing sales, operations and
managing key relationships. At Equals, his role also included
investor relations, fundraising and strategic acquisitions.
Gareth is Chairman of Nightcap plc and a non-executive
director on the Board of Various Eateries plc, both of which
are quoted on the London Stock Exchange. He is also a
strategic consultant and an Executive Director of London
Bridge Capital Ltd, an FCA authorised corporate !nance
boutique. He has signi!cant public markets experience
gained from many years in non-executive roles and during his
time as a quali!ed solicitor and a partner at law !rm Pinsent
Masons LLP, where he held both the positions of Global Head
of Corporate and International Development Partner.
Committee Membership
Audit Commi'ee, Remuneration Commi'ee
Strategic Report Governance Financial Statements Company Information
20
Annual Report and Accounts 2023
John Burns
Non-Executive Director
Simon Bullock, ACMA
Non-Executive Director
William (“Bill”) has extensive operational experience within
!nancial trading companies having worked in the industry for
over 30 years. He co-founded ITI Capital Ltd (formerly ODL
Securities Ltd), a derivatives, equities and FX brokerage,
where he held a number of senior management roles
including IT Director. There, he designed various real-time risk
and regulatory reporting systems and was responsible for all
back-o$ce development. He was subsequently appointed
CIO for London Capital Group Ltd and managed a
reorganisation of its core systems and infrastructure. Bill co-
founded Finseta Payment Solutions Limited, which was
acquired by Finseta in September 2020 when trading as
‘FXPress’.
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 Senior Advisor, Payment Services at
Cosegic Ltd.
Committee Membership
Remuneration Commi'ee (Chair), Audit Commi'ee
Simon has over 30 years’ experience in !nance positions at a
managerial level 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, including at Caxton FX Ltd, a provider of
foreign exchange, international payments and prepaid cards.
He has signi!cant experience with AIM-quoted businesses,
including Aurasian Minerals plc (now Adriatic Metal Services
(UK) Ltd), Merit Group plc, Bonhill Group plc and
OnTheMarket plc. Simon is a Chartered Management
Accountant.
Committee Membership
Audit Commi'ee (Chair), Remuneration Commi'ee
William Newton
Chief Information Officer
Strategic Report Governance Financial Statements Company Information
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 the Company’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 23.
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 19-20.
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 23.
The Remuneration Commi'ee comprises John
Burns as Chairman, Gareth Edwards and Simon
Bullock. 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.
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
Annual Report and Accounts 2023
21
Strategic Report Governance Financial Statements Company Information
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 27-29.
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 24-25.
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 2024 at the
o$ce of Gracechurch Group, 48 Gracechurch
Street, London, EC3V 0EJ.
22
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
Meeting Attendance
The table below details Director a'endance at the Board and commi'ee meetings held during the
year.
* Absence due to ill health, with the Board meeting being chaired by Simon Bullock.
** A'ended by invitation.
Director
Board
Audit Commi'ee
Rem. Commi'ee
Gareth Edwards, Chairman
18/19*
1/2*
4/4
James Hickman, CEO
18/19
2**
2**
Judy Happe, CFO
18/19
2**
2**
William Newton, CIO
18/19
-
-
Simon Bullock, Non-Executive Director
19/19
2/2
4/4
John Burns, Non-Executive Director
19/19
2/2
4/4
Annual Report and Accounts 2023
23
Strategic Report Governance Financial Statements Company Information
ESG
Finseta has an established environmental, social
and governance (“ESG”) policy, which is
published on the Group’s website, and the Chief
Operating O$cer is responsible for overseeing
its implementation while the Chief Executive
O$cer has overall responsibility for its e#ective
operation. As described further below, a number
of initiatives have been introduced to improve
the Group’s ESG credentials and the Board and
management are commi'ed to continuing to
enhance these activities.
The Group’s governance is reported on in the
Corporate Governance Report on pages 21-23.
This ESG section focuses on environmental and
social aspects.
Environmental
The Group’s operations have inherently low
emissions with its environmental impact being
largely limited to its o$ces. The Group is in the
process of introducing a corporate card
scheme, supported by Mastercard, and has
chosen for the physical cards to be
manufactured from recycled plastic. The Group
expects two-thirds of its card users will elect to
use virtual cards, which will eliminate the need
for physical card creation and further enhance
the sustainable credentials of its card scheme.
The Group believes in 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$ce.
Social
With regards to social responsibility, the Group’s
focus is to deepen its relationships with its key
stakeholders – namely, its employees,
customers, communities, investors and partners.
Employees
Engagement During the year, the Group
introduced company values and has taken steps
to support company culture and instil the new
values through holding events and workshops for
the workforce. The Group takes care to maintain
and encourage communication with, and
amongst, its employees, including the continued
use of internal communications platforms as a
tool for increasing engagement and facilitating
ad hoc, open dialogue – both professional and
social. The Group holds monthly gatherings to
exchange ideas and insight into areas of interest
and is now introducing a rewards system for
employees embodying the Group’s values.
Development The Group seeks to support
professional development and encourages
career development programmes. Currently, a
member of the !nance team is receiving paid
leave to study for an Association of Chartered
Certi!ed Accountants quali!cation and two
employees in the Group’s compliance function
are undertaking intensive courses to further their
knowledge with one becoming an accredited
!nancial crime specialist. The courses are being
paid for by Group and the employees receive
paid leave to study.
Wellbeing The Group supports employee
wellbeing, such as through o#ering hybrid
working. The Group now provides all employees
with health insurance, which is a premium
package and includes features such as
discounts for gym membership and a year’s
subscription to the Headspace mental wellness
support app. The Group also provides a healthy
snack bar in its London o$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
24
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
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.
Inclusion As a modern, forward-looking
company, Finseta 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 clients and
employees. As at 31 December 2023, the
percentage of the Group’s workforce that was
female was 34% and the percentage that was
people from ethnic minorities was 34% while the
percentages for senior management were 22%
and 11% respectively.
The Group has an established Equality, Diversity
and Inclusion policy, which is integrated into its
recruitment process. As noted above, during the
year, the Group’s adopted 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.
In re%ection of its corporate values and focus on
advancing female representation and
leadership, the Group became a partner of the
Ladies European Tour, operated as a joint
venture collaboration between the Ladies
European Tour and the Ladies Professional Golf
Association.
Clients
The Group regularly engages with clients to
ensure that the Group’s quality, e$ciency and
service levels meet both the standard expected
by the client and the very high standards the
Group sets for itself. As part of its commitment to
continuously improving the service that it
provides to its clients, during the year, the Group
made enhancements to the user interface and
user experience of its platform. Development
work was undertaken to increase the automation
in transactional processes to increase the speed
of payments as well as enhance the onboarding
process. Actions such as these, which stem from
one of the Group's core values of always pu'ing
clients !rst, meant that it was well prepared for
the introduction of the Financial Conduct
Authority's Consumer Duty regulation in July
2023. During the year, the Group undertook a
review of its operations to ensure that it was fully
compliant with the new regulation, which sets
higher and clearer standards for consumer
protection across !nancial services.
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.
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; interactive online presentations to
retail shareholders and direct meetings with
institutional shareholders; and the investor
relations section of the Finseta 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.
Annual Report and Accounts 2023
25
Strategic Report Governance Financial Statements Company Information
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, clients 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 24-25.
Clients
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, the Annual General Meeting and online
webinars.
26
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
Audit Commi"ee Report
Dear shareholder,
I am pleased to present the Audit Commi'ee’s
report for 2023. 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 Commi'ee
- Gareth Edwards, Non-Executive Chairman
- John Burns, Non-Executive Director
The Audit Commi'ee members, which includes
our two Independent Non-Executive Directors
(namely, myself and John Burns), 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-quoted businesses.
Further biographical details can be found on
pages 19-20.
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$cer and external audit lead partner
are invited to a'end on a regular basis and
other non-members may be invited to a'end as
and when appropriate and necessary. During
the year, the Audit Commi'ee met on two
occasions, with all members present except for
the absence of Gareth Edwards from one
meeting due to ill health.
The Company Secretary is secretary to the Audit
Commi'ee.
Governance and effectiveness
Outside of the formal meeting programme, the
Chairman of the Audit Commi'ee and, as
appropriate, the other commi'ee members,
maintain a dialogue with key individuals involved
in the Group’s governance, including the
Chairman of the Board (who is a member of the
commi'ee), the Chief Executive, the Chief
Financial O$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
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:
Annual Report and Accounts 2023
27
Strategic Report Governance Financial Statements Company Information
- Examining the Annual Report and !nancial
statements for the year to 31 December
2022 and the half-year report for the six
months to 30 June 2023 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
signi!cant risks and judgement and the
level of disclosure.
- Monitoring auditor e#ectiveness and
independence.
- Reviewing the e#ectiveness 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
effective internal control environment, the Audit
Committee keeps under review the Group’s
internal financial 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 significant emerging risks; reviews the
adequacy and security of the Group’s
arrangements for its employees and contractors
to raise concerns, in confidence, about possible
wrongdoing in financial reporting or other
matters; 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 Officer and risk management
policies, including anti-bribery, corruption, anti-
money laundering and financial crime, financial
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. The Group is also
required to submit regular reports to the FCA on
a range of subject ma'ers in this regard. In
addition, in February 2024, a safeguarding audit
was conducted by third party experts, which
assessed the Group as having the highest level
of compliance.
Further details of the Group’s !nancial risk
management are set out under note 21 to the
!nancial statements.
Internal audit
At present, the Group does not have an internal
audit function. The Audit Committee believes that,
owing to the Group’s size, management is able to
derive assurance as to the adequacy and
effectiveness of internal controls and risk
management procedures without an internal audit
function. However, the Audit Committee will keep
under review the need for an internal audit
function as the business develops.
28
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
External auditor and independence
Haysmacintyre LLP were appointed as external
auditor in April 2021 following a competitive tender
process. The auditor confirmed its independence as
auditor of the Group through written confirmation to
the Group, and the Audit Committee monitors the
relationship to ensure that auditor effectiveness,
independence and objectivity are maintained. A
resolution to reappoint haysmacintyre as the
Group’s auditor is being proposed at the
forthcoming annual general meeting.
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
7 May 2024
Annual Report and Accounts 2023
29
Strategic Report Governance Financial Statements Company Information
Directors’ Remuneration Report
The Remuneration Commi'ee presents its report
on Directors’ remuneration for the year ended 31
December 2023. 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
- Gareth Edwards, Non-Executive Chairman
- Simon Bullock, Non-Executive Director
The Remuneration Commi'ee met on four
occasions during 2023. 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$cer. Their service agreements
include standard summary termination
provisions and post termination restrictive
covenants that apply for six months.
For the year under review, the Chief Executive
O$cer and Chief Financial O$cer were entitled
to receive an annual salary of £170,000 and
£140,000 respectively, with an entitlement to a
pension contribution and discretionary bonus.
During the year, the Remuneration Commi'ee
resolved, which was approved by the Board, to
increase the salaries of the Chief Executive
O$cer and Chief Financial O$cer to £220,000
and £165,000, respectively, with e#ect from 1
January 2024. The Chief Information O$cer is
entitled to receive an annual salary of £131,950,
with an entitlement to a pension contribution
and discretionary bonus.
Letters of Appointment
Non-Executive Directors are appointed under
le'ers of appointment with the Company. Non-
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.
30
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
Directors’ Remuneration
The following table details the Directors’ remuneration for the years ended 31 December 2023 and
2022:
1.
Includes commission payment
2.
Appointment e#ective 12 September 2022
3.
Appointment as an Executive Director e#ective 22 February 2022
4.
Appointment as Non-Executive Chairman e#ective 31 August 2022, having previously been a Non-Executive Director
5.
Appointment e#ective 11 October 2022
6.
Appointment e#ective 1 December 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.
Resigned e#ective 25 July 2022
9.
Resigned e#ective 31 August 2022
10.
Resigned e#ective 30 November 2022
11.
Resigned e#ective 1 November 2022
12.
Resigned e#ective 3 May 2022
As at 31 December 2023, a total of £148,850 was owed to Directors with respect to their service in 2023
(31 December 2022: £80,044 with respect to 2022 service and £47,968 with respect to 2021 service).
Share-based payment
On 13 January 2023, Gareth Edwards, Non-executive Chairman, 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. This was in accordance with his previous le'er of appointment, which included an element of his
annual fee being payable through the allotment of shares.
Salary/
Fees
£
Bonus
£
Pension
£
Bene"ts
£
Total 2023
£
Total 2022
£
Executive Directors
James Hickman, CEO
170,360(1)
119,981
11,117
1,263
302,720
64,292(2)
Judy Happe, CFO
140,000
56,000
7,000
905
203,905
178,406
William Newton, CIO
131,950
-
2,309
-
134,259
117,154(3)
Non-Executive Directors
Gareth Edwards, Chairman
52,000
-
-
-
52,000
40,667(4)
Simon Bullock
32,500
-
-
-
32,500
7,292(5)
John Burns
32,500
-
-
-
32,500
2,708(6)
Former Directors
Julian Wheatland, CEO(7)
-
-
-
-
-
234,318
Stephen Flynn, CTO(8)
-
-
-
-
-
70,033
EllioQ Mannis, Chairman(9)
-
-
-
-
-
52,000
Philip Barry(10)
-
-
-
-
-
50,417
Daniel Mackinnon(11)
-
-
-
-
-
29,167
Glyn Barker(12)
-
-
-
-
-
11,666
Annual Report and Accounts 2023
31
Strategic Report Governance Financial Statements Company Information
Payment to Former Directors
On 13 January 2023, four former directors received a combined total of £39,085 (equating to 601,220
ordinary shares) in share-based payments relating to their service in 2021. In addition, two former
directors received a combined total of £37,000 relating to their service prior to their resignations in
2022.
Grant of Options to Directors
During the year, the Company granted options to Directors as follows:
The options noted above expire !ve years a&er the date of grant.
Cancellation of Options held by Directors
On 16 November 2023, the Company cancelled, for nil consideration, 404,660 options over ordinary
shares held by Judy Happe, Chief Financial O$cer and an Executive Director.
Date of grant
Number of opDons
VesDng condiDons
Exercise price
James Hickman, CEO
13 January 2023
1,000,000
Vest in full on 26
September 2023
10.0 pence
1,000,000
Vest in full on 26
September 2024
20.0 pence
Judy Happe, CFO
13 January 2023
276,803
One third vest on each
of 31 March 2023, 30
June 2023 and 1
December 2023
10.0 pence
127,857
One third vest on each
of 7 March 2023, 7
March 2024 and 7
March 2025
10.0 pence
145,340
One third vest on each
of the first three
anniversaries of the
date of grant
10.0 pence
William Newton, CIO
16 November 2023
240,000
One third vest on each
of the first three
anniversaries of the
date of grant
12.0 pence
32
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
Directors’ Interests
1 William Newton’s holding includes 81,967 ordinary shares held in the name of his wife
Number of
ordinary shares as
at 31/12/23
Number of
ordinary shares as
at 31/12/22
OpDons unvested
as at 31/12/23
OpDons vested but not
exercised as at 31/12/23
Executive Directors
James Hickman, CEO
144,059
-
1,000,000
1,000,000
Judy Happe, CFO
25,516
19,516
230,578
319,422
William Newton, CIO(1)
2,530,787
2,530,787
240,000
-
Non-Executive Directors
Gareth Edwards, Chairman
725,846
532,705
-
-
Simon Bullock
100,000
-
-
-
John Burns
6,000
-
-
-
Annual Report and Accounts 2023
33
Strategic Report Governance Financial Statements Company Information
Directors’ Report
The Directors present their annual report and audited consolidated !nancial statements for the year
ended 31 December 2023.
Principal Activities
The Group provides international payment, currency 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”) and the Financial Transactions and Reports Analysis Centre
of Canada (“FINTRAC”) as follows:
During the year under review, Capital Currencies Ltd was a subsidiary of the Group, which is an
Authorised Payment Institution under the Payment Services Regulations. In September 2023, the Group
entered a share purchase agreement to sell Capital Currencies, with the transaction expected to
complete during 2024. In addition, in April 2023, the Group completed the sale of its Avila House Ltd
subsidiary, a Registered Small Electronic Money Institution under the Electronic Money Regulations.
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 4-18. The consolidated !nancial statements for the year ended
31 December 2023 are set out on pages 46-51. The Group’s pro!t a&er tax for the year was £2.1 million.
Dividends
The Directors do not recommend the payment of a dividend for 2023.
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
-
Judy Happe, CFO
Place of
Incorporation &
Company Number
Company Name
Regulatory Permissions
United Kingdom –
15301177
Finseta Payment Solu`ons Limited
Authorised Electronic Money Ins`tu`on
under the Electronic Money Regula`ons of
the FCA
Bri`sh Colombia, Canada
– BC1454722
Finseta Payment Corp
Money Services Business authorised by
FINTRAC
34
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
-
William Newton, CIO
-
Simon Bullock
-
John Burns
Biographies of the Directors, including their Board commi'ee memberships, are set out on pages 19-20.
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 30-33.
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$cers.
Share Capital
The Company is a public limited company incorporated in England and Wales and its shares are
quoted on the AIM market of the London Stock Exchange. As at the date of approval of this Directors’
Report, the outstanding issued share capital of the Group comprised 57,417,101 ordinary shares of £0.01
each. There are no shares held in treasury. Further detail on the Group’s share capital can be found in
note 19 to the !nancial statements.
Significant Shareholders
As at the date of approval of this Directors’ Report, to the best of the Group’s knowledge, the following
shareholders had a signi!cant interest in the Group’s issued share capital:
* David Ryan’s holding includes 1,000,000 ordinary shares registered in the name of his wife
** William Newton’s holding includes 81,967 ordinary shares registered in the name of his wife
Name
Number of shares
% of issued share capital
Robert O’Brien
9,400,000
16.37
Mark Horrocks
5,712,307
9.95
Atlan`c Partners Asia Holdings (SG) PTE Ltd
4,375,000
7.62
David Ryan*
4,000,000
6.97
Philip Barry
3,403,407
5.93
William Newton**
2,530,787
4.41
Stephen Flynn
2,435,442
4.24
Annual Report and Accounts 2023
35
Strategic Report Governance Financial Statements Company Information
Subsequent Events
The material post balance sheet events can be
found in note 23 to the !nancial statements,
which references the grant of options to
employees.
Financial Instruments
Disclosures regarding !nancial instruments are
provided in note 21 to the !nancial statements.
Donations
The Group did not make any political or
charitable donations during the year.
Corporate Governance
A review of the Group’s corporate governance is
provided in the Corporate Governance Report
on pages 21-23.
Stakeholder Engagement
Details of the Group’s engagement with
stakeholders can be found in the Section 172
Statement on page 26 and in the ESG section on
pages 24-25.
Auditor
Haysmacintyre LLP have expressed their
willingness to continue in o$ce as auditor. A
resolution to reappoint haysmacintyre as the
Group’s auditor will be proposed at the Annual
General Meeting on 20 June 2024.
Disclosure of Information to Auditor
The Directors who held o$ce at the date of
approval of this Directors’ Report con!rm that,
so far as they are each aware, there is no
relevant audit information of which the Group’s
auditors are unaware; and each Director has
taken all the steps they might reasonably be
expected to have taken as a Director to make
themselves aware of any relevant audit
information and to establish that the Group’s
auditor is aware of that information.
Going Concern
The Directors have prepared various scenario
planning forecasts alongside their best-estimate
forecast assumptions, including a scenario in
which sales growth falls below management
expectations and various cash mitigation
measures are implemented, which all indicate
su$cient cash resources to continue to !nance
the Group’s working capital requirements over
the forecast period to 31 December 2026. 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 pages 53-54.
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
are references to their achieving a fair
presentation.
36
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
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
7 May 2024
Annual Report and Accounts 2023
37
Strategic Report Governance Financial Statements Company Information
38
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
Independent Auditor’s Report
TO THE MEMBERS OF CORNERSTONE FS PLC (TRADING AS FINSETA)
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 2023 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 International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
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 2023 and of the
Group’s pro!t 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$cient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the !nancial statements, we have
concluded that the directors’ use of the going
concern basis of accounting in the preparation
of the !nancial statements is appropriate.
Our audit procedures to evaluate the directors’
assessment of the Group and the Parent
Company’s ability to continue to adopt the
going concern basis of accounting included, but
were not limited to:
- Undertaking an initial assessment at the
planning stage of the audit to identify events
or conditions that may cast signi!cant doubt
on the Group and the Parent Company’s
ability to continue as a going concern;
- Evaluating the methodology used by the
directors to assess the Group and the Parent
Company’s ability to continue as a going
concern;
- Reviewing the directors’ going concern
assessment and evaluating the key
assumptions used and judgements applied;
- Reviewing the liquidity headroom and
applying a number of sensitivities to the base
forecast assessment of the directors to ensure
there was su$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
Annual Report and Accounts 2023
39
Strategic Report Governance Financial Statements Company Information
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
Revenue recognition
For the year ended 31 December 2023, Revenue
increased from £4.8m in 2022 to £9.6m in 2023.
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.
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
clients where the performance obligations have
not been fully satis!ed.
There is a risk that Revenue has not been
recognised in accordance with IFRS 15 during the
year.
Our audit work consisted of, but was not limited
to:
- A cash to revenue reconciliation, testing the
occurrence of revenue in total for the year;
- A review of income processes and testing of
the detailed controls in place;
- A review of the monthly reconciliations from
the trading so&ware to the !nance system
and performed testing on the information
provided by the entity;
- Substantive testing on a sample of
transactions;
- Cut o# testing to ensure that revenue has
been recognised in the correct period to
which it relates.
Our work performed on revenue highlighted no
material errors or departures from IFRS 15.
40
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
Carrying value of intangible assets and
goodwill in the Group "nancial statements.
The Group’s Statement of Financial Position as
at 31 December 2023 includes total intangible
assets of £1.51m.
This includes £0.42m of Goodwill, £0.40m of
Customer relationships, £0.65m of Internally
developed so&ware and £0.04m of other
intangible assets.
The carrying value of Goodwill had been
reduced following a measurement period
adjustment of £0.67m in the year in respect of a
downwards revaluation of contingent deferred
consideration due on the acquisition of Capital
Currencies in 2022.
This was an indicator that a further impairment
charge may be required to Goodwill (£0.38m)
and Customer relationships (£0.26m) in respect
of Capital Currencies.
There was also a risk that other intangible assets
might be impaired.
The Board concluded that there is no
impairment required to the carrying value of
those intangible assets, including those in
respect of Capital Currencies 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 Impairment assessment
memorandum prepared by the Board in respect
of the carrying value of the intangibles 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.
As noted, impairment indicators existed in respect of
the remaining carrying value of Goodwill and
Customer for Capital Currencies.
We challenged Management on the carrying value
Specifically in respect of Capital Currencies, our
audit work was as follows:
- A review of the Impairment assessment
memorandum prepared by the Board in respect
of the carrying value of the intangible assets
arising from the acquisition of Capital Currencies
in accordance with the forecast performance of
the Capital Currencies’ business with the overall
Cash Generating Unit (“CGU”) of the business in
the scenarios considered.
- Review and challenge of the key estimates,
assumptions and judgements included in that
assessment.
- Sensitivity analysis of the forecasts supporting the
Impairment assessment to identify headroom.
In respect of intangible assets overall, our audit work
was as follows:
- A review of the Impairment assessment
memorandum prepared by the Board in respect
of the carrying value of the intangible assets in
accordance with the forecast performance of the
CGU for the overall business in the scenarios
considered.
Annual Report and Accounts 2023
41
Strategic Report Governance Financial Statements Company Information
Carrying value of investments in the Parent
Company’s "nancial statements
The Parent Company’s Statement of Financial
Position as at 31 December 2023 includes a total
investment of £7.35m in 100% of the ordinary
share capital of Finseta Payment Solutions
Limited, Capital Currencies Limited and Pangea
FX Limited.
There is a risk that this investment might be
impaired.
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.
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
- Sensitivity analysis of the forecasts
supporting the Impairment assessment
- A review of post year-end activity of the
business
As noted above, Impairment indicators existed
in respect of the investment in Capital
Currencies Limited. We challenged
Management on the carrying value.
Speci!cally in respect of the investment in
Capital Currencies, our audit work was as
follows:
- A review of the Impairment assessment
memorandum prepared by the Board in
respect of the carrying value of the
investment in Capital Currencies 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
Our work performed on the carrying value of
investments, including Capital Currencies, in
the parent company highlighted no material
errors.
42
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
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 £171,000. This
was determined with reference to 10% of the
adjusted EBITDA for the Group. The goal of the
Group is pro!t maximisation and Management
use adjusted EBITDA as a 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
£128,000.
The reporting threshold to the Audit and Risk
Commi'ee was set as 5% of materiality, being
£8,560. 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 £139,000. This was based on 1.5%
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.
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 £104,000 and the reporting
threshold was £6,940.
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.
Based on our assessment of the accounting
processes, the industry in which the Group
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.
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,
Annual Report and Accounts 2023
43
Strategic Report Governance Financial Statements Company 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
- 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.
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, income tax, payroll tax and sales tax.
44
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
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.
Audit procedures performed by the engagement
team included:
- Inspecting correspondence with the Financial
Conduct Authority and HM Revenue and
Customs;
- Discussions with Management including
consideration of known or suspected
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
Date: 7 May 2024
WILKS
10 Queen Street Place
London
EC4R 1AG
Annual Report and Accounts 2023
45
Strategic Report Governance Financial Statements Company Information
Group Statement of Comprehensive
Income
For the year ended 31 December 2023
All amounts are derived from continuing operations.
The Notes to the Financial Statements form an integral part of these !nancial statements.
2023
2022
Notes
£
£
REVENUE
1
9,649,233
4,821,996
Cost of sales
(3,533,897)
(1,885,503)
GROSS PROFIT
6,115,336
2,936,493
ADMINISTRATIVE EXPENSES
2
Share-based compensation
19
(333,061)
(4,284,039)
Further adjustments to adjusted EBITDA (see below)
(357,348)
(500,529)
Other administrative expenses
(4,415,113)
(3,805,812)
TOTAL ADMINISTRATIVE EXPENSES
(5,105,522)
(8,590,380)
Other operating income
350,143
30,647
Adjusted EBITDA/(EBITDA loss)
1,700,223
(869,319)
Stated a&er the add back of:
- other operating income (interest earned on client funds)
3
(350,143)
(30,647)
- share-based compensation
19
333,061
4,284,039
- transaction costs
4,500
99,365
- pro!t on disposal of subsidiary
2
(207,480)
-
- amortisation of intangible assets
533,649
386,542
- IAS 17 rent reversal
(61,613)
-
- depreciation of property, plant and equipment
88,292
14,622
PROFIT/(LOSS) from operations
1,359,957
(5,623,240)
Finance and other income
4
21,363
18
Finance costs
4
(90,635)
(163,975)
__________
__________
PROFIT/(LOSS) BEFORE TAX
1,290,685
(5,787,197)
Income tax
7
843,168
175,365
__________
__________
PROFIT/(LOSS) FOR THE YEAR
2,133,853
(5,611,832)
TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR
2,133,853
(5,611,832)
Pro!t/(loss) per ordinary share – basic (pence)
8
3.77
(17.26)
Pro!t/(loss) per ordinary share – diluted (pence)
8
3.76
(17.26)
__________
__________
46
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
Group and Company Statement of
Financial Position
As at 31 December 2023
Group
Group
Company
Company
31 December
2023
31 December
2022
31 December
2023
31 December
2022
Notes
£
£
£
£
ASSETS
NON-CURRENT ASSETS
Intangible assets
9
1,514,519
2,315,637
692,022
611,507
Tangible assets
11
34,356
39,677
-
-
Investments
13
-
-
7,351,660
8,017,622
Right-of-use assets
10
796,498
-
-
-
Deferred tax
12
697,864
-
607,568
-
__________
__________
__________
__________
3,043,237
2,355,314
8,651,250
8,629,129
CURRENT ASSETS
Trade and other receivables
14
1,359,641
1,339,110
902,919
700,720
Cash and cash equivalents
2,343,417
682,346
14,553
495,627
__________
__________
__________
__________
3,703,058
2,021,456
917,472
1,196,347
__________
__________
__________
__________
TOTAL ASSETS
6,746,295
4,376,770
9,568,722
9,825,476
__________
__________
__________
__________
EQUITY AND LIABILITIES
EQUITY
Share capital
19
574,171
480,362
574,171
480,362
Share premium
6,191,748
5,496,829
6,191,748
5,496,829
Share-based payment reserve
780,389
1,489,765
780,389
1,489,765
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
(8,307,787)
(10,924,791)
(8,967,643)
(8,365,764)
__________
__________
__________
__________
TOTAL EQUITY
1,655,535
(89,901)
4,136,310
5,609,757
__________
__________
__________
__________
LIABILITIES
NON-CURRENT LIABILITIES
Loan notes
15
2,000,000
2,172,578
2,000,000
2,172,578
Deferred tax
12
-
99,816
-
-
Obligations under leases
17
543,555
-
-
-
Deferred consideration
18
111,323
-
111,323
-
__________
__________
__________
__________
2,654,878
2,272,394
2,111,323
2,172,578
CURRENT LIABILITIES
Trade and other payables
16
1,882,771
1,969,277
3,031,335
1,818,141
Loan notes
15
172,578
225,000
172,578
225,000
Obligations under leases
17
263,357
-
-
-
Deferred consideration
18
117,176
-
117,176
-
__________
__________
__________
__________
2,435,882
2,194,277
3,321,089
2,043,141
__________
__________
__________
__________
TOTAL EQUITY AND LIABILITIES
6,746,295
4,376,770
9,568,722
9,825,476
__________
__________
__________
__________
Annual Report and Accounts 2023
47
The Notes to the Financial Statements form an integral part of these !nancial statements.
Strategic Report Governance Financial Statements Company Information
A separate pro!t and loss account for the parent company is omi'ed from the Group’s !nancial
statements by virtue of section 408 of the Companies Act 2006. The Company loss for the year ended
31 December 2023 was £1,085,030 (year ended 31 December 2022: loss of £5,973,633).
The !nancial statements were approved by the Board of Directors and authorised for issue on 7 May
2024 and are signed on its behalf by:
JAMES HICKMAN
Chief Executive O$cer
48
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
Group Statement of Changes in Equity
For the year ended 31 December 2023
The Notes to the Financial Statements form an integral part of these !nancial statements.
Share
Capital
Share
Premium
Share-
Based
Payment
Reserve
Deferred
Considerat
ion Reserve
Merger
Relief
Reserve
Reverse
Acquisition
Reserve
Retained
Earnings
Total
£
£
£
£
£
£
£
£
Balance at 1 January 2022
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 19)
-
-
4,284,039
-
-
-
-
4,284,039
Settlement 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)
Issue of shares
35,299
194,143
-
-
-
-
-
229,442
Share-based payments
(note 19)
-
-
333,061
-
-
-
-
333,061
Settlement of equity-based
incentives
58,510
500,776
(1,042,437)
-
-
-
483,151
-
Remeasurement of
deferred consideration on
acquisition
-
-
-
(810,102)
-
-
-
(810,102)
Unwind of discount factor
-
-
-
87,681
-
-
-
87,681
Transfer to deferred
consideration liability
(228,499)
-
-
-
(228,499)
Profit and total
comprehensive income for
the year
-
-
-
-
-
-
2,133,853
2,133,853
_______
_______
_______
_______
_______
_______
_______
_______
Balance at 31 December 2023
574,171
6,191,748
780,389
-
5,557,645
(3,140,631)
(8,307,787)
1,655,535
_______
_______
_______
_______
_______
_______
_______
_______
Annual Report and Accounts 2023
49
Strategic Report Governance Financial Statements Company Information
Company Statement of Changes in Equity
For the year ended 31 December 2023
The Notes to the Financial Statements form an integral part of these !nancial statements.
Share
Capital
Share
Premium
Share-Based
Payment
Reserve
Deferred
Consideration
Reserve
Merger
Relief
Reserve
Retained
Earnings
Total
£
£
£
£
£
£
£
Balance at 1 January
2022
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 19)
-
-
4,284,039
-
-
-
4,284,039
Settlement 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
-
-
-
-
-
(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
Issue of shares
35,299
194,143
-
-
-
-
229,442
Share-based payments
(note 19)
-
-
333,061
-
-
-
333,061
Settlement of equity-
based incentives
58,510
500,776
(1,042,437)
-
-
483,151
-
Remeasurement of
deferred consideration
on acquisition
-
-
-
(810,102)
-
-
(810,102)
Unwind of discount
factor
-
-
-
87,681
-
-
87,681
Transfer to deferred
consideration liability
-
-
-
(228,499)
-
-
(228,499)
Loss and total
comprehensive loss for
the year
-
-
-
-
-
(1,085,030)
(1,085,030)
_______
_______
_______
_______
_______
_______
_______
Balance at 31 December
2023
574,171
6,191,748
780,389
-
5,557,645
(8,967,643)
4,136,310
_______
_______
_______
_______
_______
_______
_______
50
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
Group and Company Cash Flow Statement
For the year ended 31 December 2023
The Notes to the Financial Statements form an integral part of these !nancial statements.
Annual Report and Accounts 2023
51
Group
Group
Company
Company
Year ended 31
December
2023
Year ended
31 December
2022
Year ended
31 December
2023
Year ended
31 December
2022
£
£
£
£
Notes
Profit/(loss) before tax
1,290,685
(5,787,197)
(2,067,319)
(6,131,818)
Adjustments to reconcile profit before tax to
cash generated from operating activities:
Other operating income
(27,167)
-
-
-
Finance income
4
(21,363)
(18)
-
-
Finance costs
4
90,635
163,975
73,847
162,757
Equity-settled share-based payment
-
32,595
-
32,595
Share-based compensation
19
333,061
4,284,039
333,061
4,284,039
Depreciation and amortisation
2
621,941
401,164
410,499
296,133
Profit on disposal of subsidiary
(207,480)
-
-
-
Write-off of property, plant and equipment
519
-
-
-
Decrease/(increase) in accrued income, trade
and other receivables
14
67,344
(845,866)
177,935
(451,724)
(Decrease)/increase in trade and other
payables
16
(194,021)
757,250
1,121,397
896,573
_________
_________
_________
_________
Cash generated from/(used in) operations
1,954,154
(994,058)
49,420
(911,445)
Income tax received
7
-
158,188
-
158,188
_________
_________
_________
_________
Cash generated from/(used in) operating
activities
1,954,154
(835,870)
49,420
(753,257)
Investing activities
Acquisition of property, plant and equipment
11
-
(17,198)
-
-
Purchases of property, plant and equipment
(11,081)
-
-
-
Acquisition of intangible assets
9
-
(422,713)
-
(422,713)
Internally generated software development
(491,013)
-
(491,013)
-
Acquisition of subsidiary, net of cash acquired
-
(552,128)
-
-
Investment in Group companies
13
-
-
-
(631,335)
Proceeds from disposal of subsidiary
300,000
-
-
-
_________
_________
_________
_________
Cash used in investment activities
(202,094)
(992,039)
(491,013)
(1,054,048)
Financing activities
Shares issued (net of costs)
19
-
1,992,694
-
1,992,694
Loans received
-
225,000
-
225,000
Interest and similar income
4
10,587
18
-
-
Interest and similar charges
4
(39,963)
(55,559)
(39,481)
(54,341)
Lease payments
(61,613)
-
-
-
_________
_________
__________
_________
Cash (used in)/generated from financing
activities
(90,989)
2,162,153
(39,481)
2,163,353
Increase/(decrease) in cash and cash
equivalents
1,661,071
334,244
(481,074)
356,048
Opening cash and cash equivalents
682,346
348,102
495,627
139,579
_______
_______
________
________
Closing cash and cash equivalents
2,343,417
682,346
14,553
495,627
=========
=========
=========
=========
Strategic Report Governance Financial Statements Company Information
Notes to the Financial Statements
For the year ended 31 December 2023
BASIS OF PREPARATION
Cornerstone FS plc (trading as Finseta) 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 14-18 Copthall Avenue,
London, EC2R 7DJ. These consolidated !nancial statements comprise the Company and its
subsidiaries (together referred to as the “Group”). The main activities of the Group are set out in the
Strategic Report on pages 4-18.
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 2022 and 31
December 2023, 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 !nancial position includes investments stated at cost in its subsidiary undertakings. The
52
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Strategic Report Governance Financial Statements Company Information
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 AND REVISED STANDARDS AND INTERPRETATIONS IN ISSUE BUT NOT YET ADOPTED
At the date of authorisation of these !nancial statements, the Company has not yet adopted the
following amendments to Standards and Interpretations that have been issued:
- Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2:
Disclosure of Accounting Policies; and
- Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: De!nition
of Accounting Estimates.
The Directors do not expect any material impact as a result of adopting the amendments listed above
in the !nancial statements.
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.
All subsidiary undertakings have an accounting reference date ended 31 December.
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 2023, the Group made an adjusted EBITDA pro!t (excluding non-
cash share-based compensation, depreciation & amortisation costs, non-recurring transaction costs,
pro!t on the disposal of Avila House, operating income related to interest on client balances and IFRS
16 accounting adjustments) of £1,700,223 (2022: loss of £869,319). At 31 December 2023, the Group
balance sheet showed a net asset position of £1,655,535 (2022: net liability of £89,901), including a
negative pro!t and loss reserve of £8,307,787 (2022: £10,924,791), and a cash balance of £2,343,417
(2022: £682,346).
Annual Report and Accounts 2023
53
Strategic Report Governance Financial Statements Company Information
The Directors have prepared cash %ow forecasts covering a period to 31 December 2026. 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.
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 !nancial 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.
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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.
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 %ow statement, cash and cash equivalents consist of cash and cash
equivalents as de!ned above, net of any outstanding bank overdra& that 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
Annual Report and Accounts 2023
55
Strategic Report Governance Financial Statements Company Information
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
So&ware costs
– 3 years
Other intangible assets
– 3 years
Trademarks are recognised as intangible assets and are expected to generate future economic
bene!ts in perpetuity. Trademarks are not amortised. They are allocated to a cash generating unit and
tested for impairment annually.
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.
LEASES
The Group as lessee
The Group assesses whether a contract is, or contains, a lease at inception of the contract. The Group
recognises a right-of-use asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term leases (de!ned as leases with a lease term
of 12 months or less) and leases of low value assets (determined to be those with an initial discounted
total obligation of less than £5,000). For these leases, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term of the lease unless another systematic basis is
more representative of the time pa'ern in which economic bene!ts from the leased assets are
consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at
the commencement date, discounted by using the rate implicit in the lease. If that rate cannot be
readily determined, the Group uses its incremental borrowing rate.
56
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The incremental borrowing rate depends on the term, currency and start date of the lease and is
determined based on a series of inputs including: the risk-free rate based on government bond rates; a
country-speci!c risk adjustment; a credit risk adjustment based on bond yields; and an entity-speci!c
adjustment when the risk pro!le of the entity that enters into the lease is di#erent to that of the Group
and the lease does not bene!t from a guarantee from the Group.
Lease payments included in the measurement of the lease liability comprise:
- Fixed lease payments (including in-substance !xed payments), less any lease incentives receivable
- Variable lease payments that depend on an index or rate, initially measured using the index or rate
at the commencement date
- The amount expected to be payable by the lessee under residual value guarantees
- The exercise price of purchase options, if the lessee is reasonably certain to exercise the options
- Payments of penalties for terminating the lease, if the lease term re%ects the exercise of an option to
terminate the lease
The lease liability is presented as a separate line in the consolidated statement of !nancial position.
The lease liability is subsequently measured by increasing the carrying amount to re%ect interest on the
lease liability (using the e#ective interest method) and by reducing the carrying amount to re%ect the
lease payments made. The Group remeasures the lease liability (and makes a corresponding
adjustment to the related right-of-use asset) whenever:
- The lease term has changed or there is a signi!cant event or change in circumstances resulting in a
change in the assessment of exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a revised discount rate
- The lease payments change due to changes in an index or rate or a change in expected payment
under a guaranteed residual value, in which cases the lease liability is remeasured by discounting
the revised lease payments using an unchanged discount rate (unless the lease payments change is
due to a change in a %oating interest rate, in which case a revised discount rate is used)
- A lease contract is modi!ed and the lease modi!cation is not accounted for as a separate lease, in
which case the lease liability is remeasured based on the lease term of the modi!ed lease by
discounting the revised lease payments using a revised discount rate at the e#ective date of the
modi!cation
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease
payments made at or before the commencement day, less any lease incentives received and any initial
direct costs. They are subsequently measured at cost less accumulated depreciation and impairment
losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the
site on which it is located or restore the underlying asset to the condition required by the terms and
conditions of the lease, a provision is recognised and measured under IAS 37. To the extent that the
costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those
costs are incurred to produce inventories.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the right-of-
use asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset
re%ects that the Group expects to exercise a purchase option, the related right-of-use asset is
Annual Report and Accounts 2023
57
Strategic Report Governance Financial Statements Company Information
depreciated over the useful life of the underlying asset. The depreciation starts at the commencement
date of the lease.
The right-of-use assets are presented as a separate line in the consolidated balance sheet.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any
identi!ed impairment loss as described in the “Impairment of property, plant and equipment and
intangible assets excluding goodwill” policy.
Variable rents that do not depend on an index or rate are not included in the measurement the lease
liability and the right-of-use asset. The related payments are recognised as an expense in the period in
which the event or condition that triggers those payments occurs and are included in the line
“Administrative expenses” in pro!t or loss.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead
account for any lease and associated non-lease components as a single arrangement. The Group has
not used this practical expedient. For contracts that contain a lease component and one or more
additional lease or non-lease components, the Group allocates the consideration in the contract to
each lease component on the basis of the relative stand-alone price of the lease component and the
aggregate stand-alone price of the non-lease components.
Rent free concessions granted during the COVID-19 pandemic have been credited to the income
statement in the year they were granted, with a resulting reduction in the lease obligation.
The Group as lessor
The Group enters into lease agreements as a lessor for some of its property included within its right-of-
use assets.
Leases for which the Group is a lessor are classi!ed as !nance or operating leases. Whenever the terms
of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is
classi!ed as a !nance lease. All other leases are classi!ed as operating leases.
When the Group is an intermediate lessor, it accounts for the head lease and the sub-lease as two
separate contracts. The sub-lease is classi!ed as a !nance or operating lease by reference to the
right-of-use asset arising from the head lease.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant
lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
Amounts due from lessees under !nance leases are recognised as receivables at the amount of the
Group’s net investment in the leases. Finance lease income is allocated to accounting periods to
re%ect a constant periodic rate of return on the Group’s net investment outstanding in respect of the
leases.
Subsequent to initial recognition, the Group regularly reviews the estimated unguaranteed residual
value and applies the impairment requirements of IFRS 9, recognising an allowance for expected credit
losses on the lease receivables.
Finance lease income is calculated with reference to the gross carrying amount of the lease
receivables, except for credit-impaired !nancial assets for which interest income is calculated with
reference to their amortised cost (i.e. a&er a deduction of the loss allowance).
58
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When a contract includes both lease and non-lease components, the Group applies IFRS 15 to allocate
the consideration under the contract to each component.
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.
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.
Annual Report and Accounts 2023
59
Strategic Report Governance Financial Statements Company Information
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 been recognised in respect of the Group’s tax losses carried forward.
Research and Development tax credits are recognised as receivables when they have been submi'ed
to HMRC. The amount recognised is based on the expected value of the credit.
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
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.
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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 19.
ALTERNATIVE PERFORMANCE MEASURES
The Group uses the alternative performance measure of adjusted EBITDA. 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.
Alternative performance measures do not have generally accepted principles for governing
calculations and may vary from company to company. As such, the adjusted EBITDA 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.
ADJUSTED EBITDA
The Group uses adjusted EBITDA, de!ned as pro!t/(loss) from operations, adding back share-based
compensation, transaction costs associated with the Group’s acquisitions, depreciation &
amortisation charge, pro!t on the disposal of Avila House, operating income related to interest on
client balances and IFRS 16 accounting transactions.
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61
Strategic Report Governance Financial Statements Company Information
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. PROFIT/(LOSS) FROM OPERATIONS
Group
Group
Year ended 31
December 2023
Year ended 31
December 2022
£
£
_______
_______
Total revenue
9,649,233
4,821,996
_______
_______
Group
Group
Year ended 31
December 2023
Year ended 31
December 2022
£
£
Pro!t/(loss) from operations is stated a&er charging/
(crediting):
Share-based compensation
333,061
4,284,039
Transaction costs
4,500
99,365
Expensed so&ware development costs
58,792
86,941
Depreciation of property, plant and equipment
15,883
14,622
Depreciation of right-of-use assets
72,409
-
Amortisation of intangible assets
533,649
386,541
Pro!t on disposal of subsidiary
(207,480)
-
Short-term (2018 IAS 17 operating) lease rentals
-
252,308
_______
_______
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Amounts payable to the Group’s auditor in respect of both audit and non-audit services:
3. OTHER OPERATING INCOME
Other operating income represents interest generated from client cash balances. The recent changes
to the interest rate environment have meant that these accounts can be interest bearing, whilst
maintaining the safeguarding requirements. Under the terms of the Group’s Electronic Money Licence,
the Group is not able to pass any of the interest earned back to the clients.
Whilst the increased interest stream is a positive boost for the Group and a natural by-product of its
increasingly diversi!ed product o#ering, the Group is mindful that aspects of its dynamics are driven
by macroeconomics beyond its control. The Group has therefore chosen to recognise interest income
on client balances as ‘other operating income’, and not revenue on the face of the statement of
comprehensive income. For the same reason, interest income has been excluded from the
presentation of adjusted EBITDA.
In 2022, interest on client cash balances was included in interest receivable. The comparatives !gures
have been amended for comparison purposes.
Interest earned on the Group’s own cash is recognised within !nance and other income’ in the
consolidated statement of comprehensive income.
Year ended 31
December 2023
Year ended 31
December 2022
£
£
Audit Services
-
Statutory audit
41,000
40,000
Other Services
The auditing of accounts of associates of the Company
-
Audit of subsidiaries and its associates
45,000
49,450
----------------
----------------
86,000
89,450
===========
===========
Year ended 31
December 2023
Year ended 31
December 2022
£
£
Interest receivable from client cash balances
350,143
30,647
-----------------------
-------------------
Annual Report and Accounts 2023
63
Strategic Report Governance Financial Statements Company Information
4. INTEREST AND SIMILAR ITEMS
5. EMPLOYEES
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 2023
Year ended 31
December 2022
£
£
Total "nance and other income
Bank interest receivable
21,363
18
================ ================
Total "nance costs
(Release)/unwinding of discount
(56,459)
108,416
Loan note interest
130,306
53,500
Other interest payable and charges
483
2,059
Interest on lease liabilities (note 17)
16,305
-
------------------------
-
------------------------
-
90,635
163,975
================ ================
Year ended 31
December 2023
Year ended 31
December 2022
Number
Number
Directors
6
7
Employees
28
27
_______
_______
34
34
_______
_______
EMPLOYMENT COSTS
Year ended 31
December 2023
Year ended 31
December 2022
£
£
Wages and salaries
2,349,642
1,977,588
Social security costs
206,636
251,010
Pension costs
71,408
49,200
Share-based compensation
219,068
4,155,094
_______
_______
2,846,754
6,432,892
_______
_______
64
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
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 30-33.
During the year, no (2022: nil) Directors exercised any (2022: nil) share options.
6. 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 £71,408 (2022: £49,200). At 31 December 2023 contributions of £20,130 remained
outstanding and are included within other payables (2022: £59,054).
Year ended 31
December 2023
Year ended 31
December 2022
£
£
Salaries and fees
559,310
794,712
Bonus
175,981
43,044
Share-based compensation charge/(credit)
152,495
(125,443)
Social security costs
103,472
123,024
_______
_______
991,258
835,337
_______
_______
Number
Number
Number of Directors to whom retirement bene!ts are
accruing under a de!ned contribution scheme
3
3
_______
_______
Year ended 31
December 2023
Year ended 31
December 2022
£
£
The remuneration in respect of the highest paid Director was:
Salaries and fees
170,360
140,000
Bonus
119,981
31,360
Share-based compensation charge
103,629
30,173
Pension and other bene!ts
12,379
7,046
_______
_______
406,349
208,579
_______
_______
Annual Report and Accounts 2023
65
Strategic Report Governance Financial Statements Company Information
7. TAXATION
The tax on the loss on ordinary activities for the period was as follows:
As at 31 December 2023, the Group had tax losses carried forward of £3,272,638 (31 December 2022:
£5,013,429).
The Group has recognised a deferred tax asset of £697,864 in respect of the Group’s tax losses. They
are expected to be utilised within the year ending 31 December 2024 and 31 December 2025.
The standard rate of corporation tax increased from 19% to 25%, with e#ect from 1 April 2023. The
blended rate of corporation tax applicable for the year ended 31 December 2023 was therefore 23.52%
(2022: 19%).
Group
Group
Year ended 31
December 2023
Year ended 31
December 2022
£
£
_______
_______
Current Tax:
Current tax credit
(45,489)
(158,188)
Deferred tax credit
(797,679)
(17,177)
_______
_______
Income tax credit
(843,168)
(175,365)
_______
_______
Group
Group
Year ended 31
December 2023
Year ended 31
December 2022
£
£
Pro!t/(loss) before taxation
1,290,685
(5,787,197)
_______
_______
Pro!t/(loss) multiplied by main rate of corporation tax in the
303,569
(1,099,567)
E#ects of:
Surrender of tax losses for research & development tax
(45,489)
(158,188)
Expenses not deductible for tax purposes
65,575
29,261
Income not taxable
(122,176)
-
Share-based payments
78,335
814,037
Tax rate changes
(17,550)
-
Other adjustments in period
(2,520)
48,648
Unutilised tax losses
-
190,444
Utilisation of tax losses
(377,472)
-
Recognition of deferred tax asset in respect of tax losses
(725,440)
-
_______
_______
Income tax credit
(843,168)
(175,365)
_______
_______
66
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
8. EARNINGS PER SHARE
In the prior year, 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.
Year ended 31
December 2023
Year ended 31
December 2022
£
£
Statutory pro!t/(loss)
2,133,853
(5,611,832)
Weighted average number of shares used in basic EPS
56,613,145
32,506,335
E#ect of dilutive share options
161,510
-
Weighted average number of shares used in diluted EPS
56,774,655
32,506,335
Earnings/(loss) per share (pence)
Statutory total earnings/(loss) per share
Basic
3.77
(17.26)
Diluted
3.76
(17.26)
Annual Report and Accounts 2023
67
Strategic Report Governance Financial Statements Company Information
9. GROUP INTANGIBLE ASSETS
Other intangible assets comprise regulatory licences that are held at cost and are not amortised.
On 18 March 2023, the Group agreed a variation of the deferred consideration payments for its 2022
acquisition of Capital Currencies Ltd. A measurement period adjustment of £665,962 has been
recognised by the Group as a reduction in goodwill with a corresponding reduction in contingent
deferred consideration, which is due to be se'led in cash.
The estimated deferred consideration of £228,499 has been included in liabilities (see note 18).
Goodwill
Customer
relationships
Internally
developed
software
Software
costs
Trademarks
Other
Total
£
£
£
£
£
£
£
COST
At 1 January 2023
1,086,262
615,756
1,070,198
15,611
-
92,520
2,880,347
Additions
-
-
444,899
-
46,114
-
491,013
Measurement
period adjustment
(665,962)
-
-
-
-
-
(665,962)
Disposal
-
-
-
-
-
(92,520)
(92,520)
_______
_______
_______
_______
_______
_______
_______
At 31 December
2023
420,300
615,756
1,515,097
15,611
46,114
-
2,612,878
AMORTISATION
At 1 January 2023
-
90,408
458,691
15,611
-
-
564,710
Charge for the
period
-
123,151
410,498
-
-
-
533,649
_______
_______
_______
_______
_______
_______
_______
At 31 December
2023
-
213,559
869,189
15,611
-
-
1,098,359
NET BOOK VALUE
At 31 December
2023
420,300
402,197
645,908
-
46,114
-
1,514,519
_______
_______
_______
_______
_______
_______
_______
At 31 December
2022
1,086,262
525,348
611,507
-
-
92,520
2,315,637
_______
_______
_______
_______
_______
_______
_______
68
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
COMPANY INTANGIBLE ASSETS
10. RIGHT-OF-USE ASSETS
Internally developed so$ware
Trademarks
Total
£
£
£
COST
At 1 January 2023
1,070,198
-
1,070,198
Additions
444,899
46,114
491,013
_______
_______
_______
At 31 December 2023
1,515,097
46,114
1,561,211
AMORTISATION
At 1 January 2023
458,691
-
458,691
Charge for the period
410,498
-
410,498
_______
_______
_______
At 31 December 2023
869,189
-
869,189
_______
_______
_______
NET BOOK VALUE
At 31 December 2023
645,908
46,114
692,022
At 31 December 2022
611,507
-
611,507
_______
_______
_______
Leasehold Property
2023
£
COST
At 1 January 2023
-
Additions
868,907
_______
At 31 December 2023
868,907
AMORTISATION
At 1 January 2023
-
Charge for the period
72,409
_______
At 31 December 2023
72,409
NET BOOK VALUE
At 31 December 2023
796,498
_______
Annual Report and Accounts 2023
69
Strategic Report Governance Financial Statements Company Information
11. GROUP PROPERTY, PLANT AND EQUIPMENT
12. DEFERRED TAX
The Group recognised the following movements in deferred tax:
Computer
equipment
Leasehold
improvements
Total
£
£
£
COST
At 1 January 2023
51,220
14,583
65,803
Additions
11,081
-
11,081
Disposals
(976)
-
(976)
_______
_______
_______
At 31 December 2023
61,325
14,583
75,908
AMORTISATION
At 1 January 2023
19,779
6,347
26,126
Charge for the period
12,340
3,543
15,883
Disposal
(457)
-
(457)
_______
_______
_______
At 31 December 2023
31,662
9,890
41,552
NET BOOK VALUE
At 31 December 2023
29,663
4,693
34,356
_______
_______
_______
At 31 December 2022
31,441
8,236
39,677
_______
_______
_______
Acquired
intangibles
Fixed asset and other
temporary di!erences
Tax losses
Total
£
£
£
£
At 1 January 2022
-
-
-
-
Charge in the year
(99,816)
-
-
(99,816)
Liability at 31 December 2022
(99,816)
-
-
(99,816)
_______
_______
_______
_______
(Charge)/credit in the year
(733)
(19,748)
818,161
797,680
(Liability)/asset at 31 December 2023
(100,549)
(19,748)
818,161
697,864
_______
_______
_______
_______
Current
302,609
Non-current
395,255
70
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
The Company recognised the following movements in deferred tax:
13. INVESTMENTS
During the year ended 31 December 2023, the Company remeasured the deferred consideration
payable in respect of its 2022 acquisition of Capital Currencies Ltd. The remeasurement followed a
variation to the original terms 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. Accordingly,
the Company has recognised the estimated deferred consideration as a liability payable in cash.
Fixed asset and
other temporary
Tax losses
Total
£
£
£
At 1 January 2022 and 31 December 2022
-
-
-
(Charge)/credit in the year
(17,516)
625,084
607,568
(Liability)/asset at 31 December 2023
(17,516)
625,084
607,568
_______
_______
_______
Current
-
Non-current
607,568
Investments in Subsidiaries
£
Cost or Valuation
At 1 January 2023
8,017,622
Remeasurement of deferred consideration
(665,962)
_______
7,351,660
Net Book Value
At 31 December 2023
7,351,660
_______
At 31 December 2022
8,017,622
_______
Annual Report and Accounts 2023
71
Strategic Report Governance Financial Statements Company Information
Shares in subsidiary and associate undertakings are stated at cost. As at 31 December 2023, the
Company owned the following principal subsidiaries, which are included in the consolidated accounts:
* During the year, the subsidiary was named Cornerstone Payment Solutions Ltd. The change of name
to Finseta Payment Solutions Limited became e#ective 24 April 2024.
On 20 September 2023, the Company entered into a sale and purchase agreement to sell Capital
Currencies Ltd, which is subject to the approval of the FCA. As at the year end, the only asset held in
Capital Currencies Ltd is an API licence with a £nil net book value (2022: £nil).
On 12 December 2023, the Group incorporated a new Canadian entity, Finseta Payments Corp.
Finseta Payment Solutions Limited disposed of its 100% shareholding in Avila House Ltd on 26 April
2023.
Subsidiary
Principal Activity
Country of
Incorporation
Registered Office
Percentage of
Ownership
Finseta Payment
Solutions Limited*
Foreign Exchange
and Payment
Services
Northern Ireland
14-18 Copthall
Avenue, London,
England, EC2R 7DJ
100 per cent.
Cornerstone – Middle
East FZCO
Consultancy
United Arab
Emirates
Dubai Silicon
Oasis, DDP,
Building A2, Dubai,
United Arab
Emirates
100 per cent.
Capital Currencies
Limited
Authorised
Payment
Institution
England and
Wales
14-18 Copthall
Avenue, London,
England, EC2R 7DJ
100 per cent.
Pangea FX Limited
Foreign Exchange
White Label
England and
Wales
14-18 Copthall
Avenue, London,
England, EC2R 7DJ
100 per cent.
Finseta Payments
Corp
Foreign Exchange
and Payment
Services
Canada
5577 153A street,
Suite 207, Surrey
BC, V3S 5K7,
Canada
100 per cent.
72
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
14. CURRENT TRADE AND OTHER RECEIVABLES
For the year ended 31 December 2023, £nil was recorded as a bad debt expense (31 December 2022:
£nil).
15. LOAN NOTES
On 3 February 2023, the current convertible loan note of £225,000, issued pursuant to the Company’s
fundraising on 5 August 2022, was converted to 3,461,538 ordinary shares at a price of £0.065 for Mr.
Horrocks to take his shareholding in the Company above 10%.
The non-convertible loan notes comprise £2,000,000 issued to Robert O’Brien (repayable on 31 July
2026) and £172,578 of deferred consideration in relation to the acquisition of Pangea FX Limited
(repayable on 31 August 2024). Both loan notes have a 6% coupon rate payable quarterly in arrears.
The Pangea FX Limited loan note is payable contingent upon achieving future revenue targets over a
period of two years from the acquisition date. Based on current and forecast performance of Pangea
FX, it has been assumed that the loan note will be paid in full.
Group
Group
Company
Company
31 December
2023
31 December
2022
31 December
2023
31 December
2022
£
£
£
£
Trade receivables
347,491
221,669
-
-
Prepayments and accrued income
152,281
131,010
19,142
39,465
Derivative !nancial assets at fair value
340,241
635,473
-
-
Other receivables
147,536
53,062
53,264
-
Amounts due from Group undertakings
-
-
458,421
363,359
Taxes and social security
372,092
297,896
372,092
297,896
_______
_______
_______
_______
1,359,641
1,339,110
902,919
700,720
_______
_______
_______
_______
Group
Group
Company
Company
31 December
2023
31 December
2022
31 December
2023
31 December
2022
£
£
£
£
CURRENT
Convertible loan notes
-
225,000
-
225,000
Loan notes
172,578
-
172,578
-
_______
_______
_______
_______
NON-CURRENT
Loan notes
2,000,000
2,172,578
2,000,000
2,172,578
_______
_______
_______
_______
Annual Report and Accounts 2023
73
Strategic Report Governance Financial Statements Company Information
16. CURRENT TRADE AND OTHER PAYABLES
17. LEASE LIABILITIES
MATURITY ANALYSIS
Group
Group
Company
Company
31 December
2023
31 December
2022
31 December
2023
31 December
2022
£
£
£
£
Trade payables
248,493
362,035
87,339
162,128
Derivative !nancial liabilities at fair
value
279,097
563,676
-
-
Other tax and social security
480,612
515,750
2,298
50,640
Other payables and accruals
874,569
527,816
298,720
179,818
Amount due to Group undertakings
-
-
2,642,978
1,425,555
_______
_______
_______
_______
1,882,771
1,969,277
3,031,335
1,818,141
_______
_______
_______
_______
Group
Group
Leasehold Property
31 December
2023
31 December
2022
£
£
At 1 January 2023
-
-
Additions
868,907
-
Finance costs
16,305
-
Payments
(61,613)
-
Lease accruals
(16,687)
-
_______
_______
At 31 December 2023
806,912
-
_______
_______
Current
263,357
-
Non-Current
543,555
-
Incremental borrowing rate
7.97%
-
Group
Group
Contractual undiscounted cash %ows
31 December
2023
31 December
2022
£
£
Less than one year
316,332
-
One to !ve years
583,053
-
More than !ve years
-
-
_______
_______
Total undiscounted lease liabilities at 31 December 2023
899,385
-
_______
_______
74
Annual Report and Accounts 2023
Strategic Report Governance Financial Statements Company Information
18. DEFERRED CONSIDERATION
19. SHARE CAPITAL AND RESERVES
At 31 December 2023 share subscriptions of £nil remained unpaid (31 December 2022: £nil).
The following changes in the share capital of the Company have taken place in year ended 31
December 2023:
- On 13 January 2023, 806,182 ordinary shares were issued at a price of £0.06501 se'ling the share-
based remuneration for former non-executive board members and the company secretary in
respect of the year ended 31 December 2021
- On 3 February 2023, 5,113,182 ordinary shares were issued at a price of £0.100 being the !nal equity
se'lement with Robert O’Brien related to his share-based incentivisation agreement and following
receipt of approval from the FCA for Mr. O’Brien to take his shareholding in the Company above 10%
- On 3 February 2023, 3,461,538 ordinary shares were issued at a price of £0.065 upon conversion of a
loan note held by Mark Horrocks and following receipt of approval from the FCA for Mr. Horrocks to
take his shareholding in the Company above 10%
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.
Group
Contractual undiscounted cash %ows
31 December
2023
£
At 1 January 2023
-
Transferred from deferred consideration reserve
228,499
At 31 December 2023
_______
228,499
_______
Current
117,176
Non-current
111,323
_______
Allo%ed, called up and fully paid
Ordinary shares
Share capital
No.
£
Ordinary shares of £0.01 each as at 1 January 2023
48,036,199
480,362
Issue of new shares of £0.01
9,380,902
93,809
_______
_______
Ordinary shares of £0.01 each at 31 December 2023
57,417,101
574,171
_______
_______
Annual Report and Accounts 2023
75
Strategic Report Governance Financial Statements Company Information
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 Finseta Payment Solutions
Limited.
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.
31 December 2023
31 December 2022
Number
Weighted
average
exercise
price
Number
Weighted
average
exercise
price
£
£
Outstanding at the beginning of the year
1,706,331
0.24
1,599,480
0.50
Granted during the year
3,919,180
0.13
1,893,454
0.23
Forfeited/waived during the year
(767,775)
(0.40)
(1,786,603)
(0.46)
_______
_______
_______
_______
Total outstanding
4,857,736
0.13
1,706,331
0.24
_______
_______
_______
_______
Total exercisable
1,357,674
0.11
184,535
0.50
_______
_______
_______
_______
76
Annual Report and Accounts 2023
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 (2022: !ve years).
No options were exercised during the year (2022: nil).
The Group’s share-based compensation charge for the year ended 31 December 2023 of £333,061
(2022: £4,284.039) consists of £113,993 in relation to warrants granted in the Company (2022: £128,943),
£219,065 in respect of options granted in the Company (2022: charge of £222,577), £nil in respect of
equity-se'led share-based payments related to the non-executive Board member’s service
agreements (2022: £36,836) and £nil of other share-based compensation (2022: £4,340,837).
No warrants were granted in the year (2022: none).
20. RELATED PARTY TRANSACTIONS
Details of key management compensation are included in note 5. Key management are considered to
be the Directors of the Group.
Transactions with subsidiaries
During the year, the Company and Finseta Payment Solutions Limited entered into various transactions
with each other including so&ware development charges, licences 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 £2,620,559 (2022: £1,404,408) to
Finseta Payment Solutions Limited.
During the year, the Company also provided working capital support to Cornerstone – Middle East
FZCO and Capital Currencies Ltd. 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, Cornerstone –
Middle East FZCO owed the Company £92,319 (2022: £60,500) and Capital Currencies Ltd owed the
Company £35,899 (2022: £43,242).
GRANT DATE
8 March
2022
8 March
2022
8 March
2022
1 September
2022
13 January
2023
13 January
2023
16 November
2023
16 November
2023
Exercise price
(pence)
36.2
61.0
26.5
10.0
10.0
20.0
12.0
10.0
Share price at
grant date
(pence)
16.5
16.5
16.5
9.0
8.0
8.0
12.0
12.0
Risk free rate
2.1%
2.1%
2.1%
2.7%
2.7%
2.7%
4.2%
4.2%
Expected
volatility
90.1%
90.1%
90.1%
129.5%
129.5%
129.5%
119.8%
119.8%
Contractual life
(years)
5
5
5
5
5
5
5
5
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77
Strategic Report Governance Financial Statements Company Information
Other related parties
On 3 February 2023 the Company issued shares to Robert O’Brien, General Manager APAC and Middle
East and largest shareholder in the Company, as disclosed in notes 15 and 19. On 8 March 2023 the
Company and Mr. O'Brien's agreed to extend the repayment date of his non-convertible interest-
bearing loan note in the sum of £2,000,000, as disclosed in note 15, by one year to 31 July 2026. On the
same date Mr. O'Brien agreed to vary and extend certain elements of his compensation package,
decreasing his commission share on certain established revenue streams and increasing his share of
the pro!tability of the Dubai o$ce.
The transaction with Mark Horrocks, a signi!cant shareholder in the Company, is disclosed in notes 15
and 19.
As at 31 December 2023, an amount of £8,750 was due from Terry Everson, a former director of Finseta
Payment Solutions Limited and a shareholder in the Company (31 December 2022: £8,750).
21. FINANCIAL INSTRUMENTS
FINANCIAL ASSETS
Group
Group
Company
Company
31 December
2023
31 December
2022
31 December
2023
31 December
2022
£
£
£
£
DERIVATIVE FINANCIAL ASSETS
Foreign currency forward contracts with
customers
253,663
504,106
-
-
Foreign currency forward contracts with
institutional counterparty
86,578
131,367
-
-
_______
_______
_______
_______
340,241
635,473
-
-
Cash and cash equivalents
2,343,417
682,346
14,553
495,627
Trade receivables
347,491
221,669
-
-
Other receivables
254,328
184,072
485,338
402,824
_______
_______
_______
_______
3,285,477
1,723,560
499,891
898,451
_______
_______
_______
_______
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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 (2022: £2,172,578).
Derivative financial assets and liabilities
Derivative "nancial assets not designated as hedging instruments
Derivative "nancial liabilities not designated as hedging instruments
Group
Group
Company
Company
31 December
2023
31 December
2022
31 December
2023
31 December
2022
£
£
£
£
DERIVATIVE FINANCIAL LIABILITIES
Foreign currency forward contracts
with customers
61,367
165,156
-
-
Foreign currency forward contracts
with institutional counterparty
217,730
398,520
-
-
_______
_______
_______
_______
279,097
563,676
-
-
Trade payables
248,493
362,035
87,339
162,128
Other payables
874,569
527,816
2,941,698
1,605,373
Loan notes
2,172,578
2,397,578
2,172,578
2,397,578
_______
_______
_______
_______
3,574,737
3,851,105
5,201,615
4,165,079
_______
_______
_______
_______
31 December 2023
31 December 2022
Fair Value
Notional
Principal
Fair Value
Notional
Principal
£
£
£
£
Foreign currency forward contracts with
customers
253,663
8,546,025
504,106
9,042,956
Foreign currency forward contracts with
institutional counterparty
86,578
3,799,202
131,367
3,377,597
_______
_______
_______
_______
340,241
12,345,227
635,473
12,420,553
_______
_______
_______
_______
31 December 2023
31 December 2022
Fair Value
Notional
Principal
Fair Value
Notional
Principal
£
£
£
£
Foreign currency forward contracts with
customers
61,367
2,928,816
165,156
3,337,362
Foreign currency forward contracts with
institutional counterparty
217,730
7,912,698
398,520
8,715,534
_______
_______
_______
_______
279,097
10,841,514
563,676
12,052,896
_______
_______
_______
_______
Annual Report and Accounts 2023
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Strategic Report Governance Financial Statements Company Information
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 loss on !nancial assets at fair value through pro!t or loss for year ended 31 December 2023 was
£58,116 (2022: net gain of £3,300).
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.
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’ section 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
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Strategic Report Governance Financial Statements Company Information
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.
22. 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.
Annual Report and Accounts 2023
81
Strategic Report Governance Financial Statements Company Information
Finseta Payment Solutions Limited , 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 Ltd, 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.
Finseta Payment Solutions Limited and Capital Currencies Ltd complied with the above requirements
for all periods during the year ended 31 December 2023.
23. EVENTS AFTER THE REPORTING DATE
On 22 February 2024, the Company granted 470,000 options to sta# members over ordinary shares of 1
penny each in the capital of the Company. All options are intended to qualify as Enterprise
Management Incentive options pursuant to the Income Tax (Earnings and Pensions) Act 2003.
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Strategic Report Governance Financial Statements Company Information
Company Information
Registered Office
14-18 Copthall Avenue
London
England
EC2R 7DJ
Company Registration Number
08367949
Company Secretary
Judy Happe
Nominated Adviser & Broker
Shore Capital
57 St James's street
London
SW1A 1LD
Auditor
Haysmacintyre LLP
10 Queen Street Place
London
EC4R 1AG
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 2023
83