REG - Finseta PLC - Final Results, Annual Report and Notice of AGM
23/04/2025 07:00
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RNS Number : 7520F Finseta PLC 23 April 2025
Certain information contained within this Announcement is deemed by the
Company to constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014 ("MAR") as applied in the United Kingdom. Upon
publication of this Announcement, this information is now considered to be in
the public domain.
23 April 2025
Finseta plc
("Finseta" or the "Company" or the "Group")
Final Results
Notice of AGM and Publication of Annual Report
Finseta (AIM: FIN), a foreign exchange and payments solutions company offering
multi-currency accounts to businesses and individuals through its proprietary
technology platform, is pleased to announce its final results for the year
ended 31 December 2024. In addition, the Group gives notices of its annual
general meeting ("AGM") and the publication of its annual report and accounts.
Financial Highlights
· Underlying(1) revenue grew by 26% to £11.3m (2023: £8.9m) and
reported revenue increased by 19% to £11.4m (2023: £9.6m)
· Gross margin improved to 65.7% (2023: 63.4%)
· Adjusted(2) EBITDA of £2.0m (2023: £1.7m), an increase of 18%
· Profit before tax of £1.4m (2023: £1.3m)
· Cash generated from operations of £2.2m (2023: £2.0m)
· Cash and cash equivalents at 31 December 2024 were £2.6m (31
December 2023: £2.3m); net cash increased to £0.6m (31 December 2023:
£0.2m)
Operational Highlights
· Growth in active customers(3) to 1,059 (2023: 906); and completed
strategic transition to wholly direct sales
· New counterparty partnerships established to broaden the number of
currencies and countries where the Group can transact - now able to pay out to
over 165 countries in 150 currencies
· Received regulatory approval to provide payments services in Canada
and, post year end, the United Arab Emirates ("UAE")
· Signed agreement with Mastercard and, post year end, launched
corporate card scheme
· Implemented multiple platform enhancements, including introduction of
mass payments feature
Current Trading and Outlook
· The Group has made a strong start to trading in the current financial
year, driven by continued growth in active customers
· As 2025 progresses, the Group's new product offerings - in
particular, the corporate card scheme and mass payments - as well as the
Group's operations in Dubai and Canada, are expected to make an increasing
contribution to revenue
· As a result, the Group is on track to report significant revenue
growth for 2025, in line with the Board's expectations
· In the medium term, the Group's key strategic initiatives are set to
substantially accelerate sales growth and increase profitability
James Hickman, CEO of Finseta, said: "2024 has been a landmark year for the
business. We have continued to deliver strong growth while successfully
executing on our strategy. We expanded our product offering - most notably
with the launch of the Finseta Corporate Card and mass payments feature - and
our geographical footprint with the receipt of regulatory approval to provide
payments services in Canada and, post year end, the United Arab Emirates.
These new initiatives have already commenced generating revenue, which we
expect to ramp in the second half of 2025 and beyond. We have made a strong
start to the new financial year, with continued growth in the number of active
customers, and with the foundations of our business having been further
enhanced, the Board remains confident in our ability to deliver sustained
value for our shareholders. We look forward to reporting on our progress."
Enquiries
Finseta +44 (0)203 971 4865
James Hickman, Chief Executive Officer
Judy Happe, Chief Financial Officer
Shore Capital (Nominated Adviser and Broker) +44 (0)207 408 4090
Daniel Bush / Tom Knibbs (Corporate Advisory)
Guy Wiehahn (Corporate Broking)
Gracechurch Group (Financial PR) +44 (0)204 582 3500
Harry Chathli / Claire Norbury
About Finseta
Finseta plc (AIM: FIN) is a foreign exchange and payments company offering
multi-currency accounts and payment solutions to businesses and individuals.
Headquartered in the City of London, Finseta combines a proprietary
technology platform with a high level of personalised service to support
clients with payments in over 165 countries in 150 currencies. With a track
record of over 15 years, Finseta has the expertise, experience and expanding
global partner network to be able to execute complex cross-border payments. It
is fully regulated, through its wholly-owned subsidiaries, by the Financial
Conduct Authority as an Electronic Money Institution; by the Financial
Transactions and Reports Analysis Centre of Canada as a Money Services
Business; and by the Dubai Financial Services Authority under a Category 3D
licence. www.finseta.com
(https://url.avanan.click/v2/___http:/www.finseta.com___.YXAxZTpzaG9yZWNhcDphOm86N2Q4OTk2YzdiYzY2YzZmYmNkZWJkNDlkMTllNjNiM2M6Njo2NWZjOjBhNzg0ZjlmNDA3MDRmMzhhNTgwMmVlYzkxYmU5OWYwMTI4NDIxZDg4MmZlZTY0ZGVjYTVlNDczZTA0Y2JlYzk6cDpU)
Investor Presentation
James Hickman, CEO, and Judy Happe, CFO, will provide a live presentation via
Investor Meet Company at 10.30am BST today. The presentation is open to all
existing and potential shareholders. Investors can sign up to Investor Meet
Company for free and add to meet Finseta via:
https://www.investormeetcompany.com/finseta-plc/register-investor
(https://www.investormeetcompany.com/finseta-plc/register-investor)
Operational Review
This has been a milestone year for Finseta as the Group progressed several
significant strategic initiatives while continuing to deliver strong growth.
The Group has expanded its offering, its sales team and its introducer
network, resulting in an increased number of active customers. This enabled
the Group to achieve growth in all key financial metrics in 2024. At the same
time, the agreement with Mastercard, establishing a presence in Canada and
adopting 'Finseta' as the new company name have strengthened the business and
its ability to deliver value.
Performance
The Group delivered another year of significant growth in revenue in 2024.
Underlying(1) revenue increased by 26% to £11.3m (2023: £8.9m) and
reported revenue grew by 19% to £11.4m (2023: £9.6m). This growth was
driven by an increase in active customers to 1,059 (2023: 906)(3), reflecting
the expansion of the sales team and introducer network and the Group's
sustained focus on providing an exceptional level of service to its corporate
and high net worth individual ("HNWI") clients.
The transition to only serving clients directly was completed, with all
revenue being generated by direct clients during the year (2023: 95%). By
client type, there was an increase in revenue generated by both private
clients (primarily HNWIs) and corporate accounts. The proportion of total
revenue accounted for by private clients was 59% (2023: 64%) with corporate
accounts contributing 40% (2023: 34%). In respect of the majority of private
client revenue, while the underlying transaction is with an individual, the
relationship is via a corporate that provides services to the individual. In
addition, the Group received £100k (2023: £220k) in revenue, accounting
for 1% of total revenue (2023: 2%), as the final income generated under a
licencing agreement with the acquirers of Avila House, a former subsidiary.
Strategic execution
Finseta's growth strategy continues to be founded on the three pillars of
product, geography and people - and the Group made considerable progress on
all three in 2024. This contributed to its growth during the year, but also
strengthens the drivers of growth for the years to come.
Product
A core element of the Group's strategy is to establish a global payments
network that will enable clients to be able 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, a number of
milestones in advancing towards this goal were achieved during the year.
Currencies & countries
The Group continued to expand its global payments network by establishing new
counterparty partnerships. This enabled the Group to broaden the number of
currencies and countries where it can transact, as well as expanding the
business sectors it can serve. The Group can now pay out to over 165 countries
in 150 currencies compared with over 150 countries and 58 currencies this time
last year.
Payment method
The Group made significant progress during the year towards expanding its
payment method offering with the signing of a long-term agreement with
Mastercard to launch a corporate card scheme. The Finseta Corporate Card,
which was launched post year end, is available to businesses as virtual or
physical cards, has multi-currency capability and can be used in over 210
countries. This new offering will provide the Group with an additional,
high-margin, repeatable revenue stream from business customers and will expand
its addressable target market. The Group has commenced generating initial
revenues from the corporate card scheme from existing customers, which it
expects to ramp in the second half of 2025.
The introduction of a corporate card scheme is a key element of the Group's
strategy to diversify its product offering. As a customer-first business,
Finseta aims to remove all barriers to expenditure - enabling customers to
make payments wherever, whenever and however they want. This additional
offering enhances the service that the Group can provide to its existing
customers and expands its target market to corporates where the primary
requirement is a corporate card scheme.
Service
Finseta continued to undertake development work to enhance the functionality
of its platform, which will further improve clients' experience. This included
improving the customer onboarding process, which has decreased onboarding
times. The Group implemented real-time transaction monitoring utilising
artificial intelligence to allow it to scale and create efficiencies, which is
particularly relevant for card payments where the number of transactions are
much higher and more instantaneous than in the regular payments business. In
the second half of the year, the Group introduced a mass payments feature,
which enables clients to make up to 1,000 multi-currency, multi-market
payments in a single transaction. This feature has been well received - making
an initial contribution to 2024 revenue - with the number of clients using it
continuing to increase.
A key differentiator of the Group's offer at Finseta is the high level of
personalised service provided to clients, along with the experience of the
team and the strength of the Group's compliance capabilities. The Group's
Finseta Solutions offering, which was established in 2023 and is specifically
focused on providing solutions to clients with more complex needs and which
require a higher level of service, made good progress during the year. The
Group has added further counterparty capability to this new offering and has
also added further resource as the number of customers and partners has
continued to grow.
Geography
A core pillar of the Group's strategy is geography - that is, expanding the
Group's capabilities to enable clients to transact to and from anywhere in the
world (subject to regulatory restrictions). This includes through establishing
further counterparty relationships, as noted above, as well as expanding
Finseta's own geographical footprint and regulatory capabilities.
A significant milestone was achieved when Finseta was awarded a Money Services
Business ("MSB") licence from the Financial Transactions and Reports Analysis
Centre of Canada, which enables it to operate a payments company
in Canada and provide payments services to Canadian businesses and
individuals. With the Group having previously received enquiries
in Canada for its services through its existing network, the establishment
of a regulated business will allow Finseta to fully pursue such opportunities
while leveraging local payment rails to benefit from faster, more efficient
transaction processing and lowering transaction costs. Following the receipt
of the MSB licence, the Group commenced the process of establishing a
full-service office, which was launched post year end, to provide clients
in Canada with the high-touch service-led approach that is core to the
Finseta offering.
During the year, the Group continued to progress through the approval process
with the Dubai Financial Services Authority and was granted, post year end, a
Category 3D licence that authorises Finseta to provide payment services within
the UAE. This will enable the Group to significantly expand its existing
activities in the UAE by now being able to service corporate and professional
clients as well as to benefit from local payment rails. Dubai is one of the
world's top financial centres and represents a significant opportunity for
Finseta. The Group's introducer-led go-to-market approach is also particularly
well-suited to this business environment with international professional
services and advisory firms having a substantial presence. The potential of
this market is significant and we are investing in our UAE business to take
advantage of this growth opportunity.
The Group also continued to make progress with the regulatory approval process
in other jurisdictions where it can leverage opportunities through its
existing network and thereby maximise the Group's resources.
People
As a high-touch, service-led business, the strength of Finseta's people is
crucial. The Group continued to invest in its workforce with a fundamental
contribution to its growth during the year being the enhancement of the sales
team. The Group also expanded the Finseta Solutions team and appointed a
Country Manager for Canada. Finseta understands that the strength of its
business is also the strength of its people and, as such, remains committed to
continuing to foster excellence in its workforce as it looks to continue to
expand its headcount through 2025.
With client acquisition being predominantly introducer-led, relationships are
key to Finseta's ongoing growth. Accordingly, the Group continued to expand
and deepen its network of introducers in order to continue to increase its
client base and diversify payment flows across a broader range of currencies.
Financial Review
2024 was another year of strong trading performance for Finseta, with growth
achieved across all key financial metrics.
Revenue for the 12 months to 31 December 2024 grew by 19% to £11.4m (2023:
£9.6m). On an underlying basis(1), revenue for FY 2024 increased by 26% to
£11.3m compared with £8.9m for the previous year. This growth was primarily
a result of an increase in active customers, reflecting the expansion of the
Group's sales team and introducer network.
Gross margin improved to 65.7% (2023: 63.4%), which primarily reflects the
strategic decision to offboard the historic white label business in prior
years. The improvement in gross margin combined with the increased revenue
resulted in a 21% increase in gross profit to £7.5m (2023: £6.2m).
Operating expenses were £6.3m in 2024 compared with £5.1m for the previous
year. This primarily relates to additional sales team hires as the business
invests for future growth, increased performance-related bonuses commensurate
with the Group's performance and higher depreciation as a result of the
Group's move to a new leased corporate premises in the second half of 2023.
There was also an increase in marketing expenses to support the Group's
rebrand to 'Finseta'; travel expenses in support of the Group's strategic
geographic expansion; and licensing costs to support further enhancements to
the Group's onboarding and transaction monitoring capabilities.
The Group recognised other operating income of £0.3m (2023: £0.4m). This
comprised £0.2m (2023: £0.4m) of interest based on client cash balances (see
note 3 to the financial statements) and £0.1m (2023: £nil) from the reversal
of a provision for the final earn-out payment related to the acquisition of
Capital Currencies.
Thanks to the strong operating performance, there was an increase in adjusted
EBITDA to £2.0m (2023: £1.7m) and in profit from operations to £1.7m
(2023: £1.4m). Adjusted EBITDA is stated after the add-back of other
operating income, share-based compensation, profit from the disposal of a
subsidiary, transaction costs and non-cash based accounting adjustments in
respect of the Group's corporate premises (see the statement of comprehensive
income for further detail).
Profit before tax was £1.4m in 2024 compared with £1.3m for 2023. Tax
expense for the year was £395k compared with a tax credit of £843k in the
prior year which primarily arose due to the recognition of an £818k deferred
tax asset in 2023 relating to tax losses following the Group's transition to
profitability. As a result, net profit was £1.1m (2023: £2.1m).
Basic earnings per share were 1.74 pence (2023: 3.77 pence). On a fully
diluted basis, earnings per share were 1.66 pence (2023: 3.76 pence). This
reflects an increase in the weighted average number of ordinary shares (due to
an issuance of shares during 2023) and in outstanding share options combined
with the lower net profit as described above.
Cash generated from operations was £2.2m (2023: £2.0m) based on the strong
trading performance. Cash used in investment activities was £1.3m (2023:
£0.2m), which primarily consists of the continued investment in developing
the Group's proprietary platform, including development of supporting
infrastructure for the corporate card scheme. Cash used in financing
activities was £0.6m compared with £0.1m in 2023, reflecting lease payments
associated with the move to the new corporate premises as well as the
settlement of loan notes and deferred consideration.
As at 31 December 2024, cash and cash equivalents were £2.6m (31 December
2023: £2.3m), with net cash of £0.6m(4) (31 December 2023: £0.2m).
Outlook
The Group has made a strong start to trading in the new financial year, driven
by continued growth in active customers. As Finseta progresses through 2025,
the new product offerings - in particular, the corporate card scheme and mass
payments - as well as the Group's operations in Dubai and Canada, are expected
to make an increasing contribution to revenue. As a result, the Group is on
track to report significant revenue growth for 2025, in line with the Board's
expectations.
Looking further ahead, the Group's key strategic initiatives are set to
substantially accelerate sales growth and increase profitability in the medium
term. While the priority is to scale up these operations, the Group is also
continuing to pursue its strategy to further expand its regulatory
capabilities and enhance the service offering. With the strong foundations
that have already been established, the Board is confident that these actions
will deliver sustainable growth and generate value for shareholders.
Notice of AGM and Publication of Annual Report
The Company gives notice that its AGM will be held at 11.00am BST on 12 June
2025 at the office of Gracechurch Group, 48 Gracechurch Street, London, EC3V
OEJ.
The Notice of AGM, along with the Company's annual report and accounts for the
year ended 31 December 2024 (together, the "Documents"), have been published
on the Company's website at: https://investors.finseta.com/document-centre/
(https://investors.finseta.com/document-centre/) . The Documents, along with a
form of proxy, will be posted to those shareholders who have elected to
receive physical copies over the coming week.
( )
Notes
(1) Defined as total revenue excluding revenue generated by the Group's
historic white label business in 2023 and licencing revenue under an
exceptional agreement in 2023 and 2024
(2) Adjusted to exclude other operating income, share-based compensation,
profit from the disposal of a subsidiary and transaction costs, and the rental
cost of the Group's corporate premises (see the Financial Review for further
detail)
(3) Defined as customers who traded through Finseta during the 12-month
periods to 31 December 2024 and 31 December 2023 respectively
(4) Defined as cash and cash equivalents less loan notes
Group Statement of Comprehensive Income
For the year ended 31 December 2024
2024 2023
Notes £ £
REVENUE 1 11,354,451 9,649,233
Cost of sales (3,895,145) (3,533,897)
GROSS PROFIT 7,459,306 6,115,336
ADMINISTRATIVE EXPENSES 2
Share-based compensation 19 (263,395) (333,061)
Further adjustments to adjusted EBITDA (see below) (554,131) (357,348)
Other administrative expenses (5,444,467) (4,415,113)
TOTAL ADMINISTRATIVE EXPENSES (6,261,993) (5,105,522)
Other operating income 315,861 350,143
Adjusted EBITDA 2,014,839 1,700,223
Stated after the add back of:
- other operating income (interest earned on client funds) 3 (176,221) (350,143)
- other operating income (release of deferred consideration liability) (139,640) -
- share-based compensation 19 263,395 333,061
- transaction costs - 4,500
- profit on disposal of subsidiary 2 (150,000) (207,480)
- amortisation of intangible assets 571,090 533,649
- impairment of goodwill 139,640 -
- IAS 17 rent reversal (317,244) (61,613)
- depreciation of property, plant and equipment and right-of-use assets 310,645 88,292
PROFIT from operations 1,513,174 1,359,957
Finance and other income 4 75,316 21,363
Finance costs 4 (196,460) (90,635)
PROFIT BEFORE TAX 1,392,030 1,290,685
Income tax (charge)/credit 7 (395,483) 843,168
PROFIT FOR THE YEAR 996,547 2,133,853
TOTAL COMPREHENSIVE PROFIT FOR THE YEAR
996,547 2,133,853
Profit per ordinary share - basic (pence) 8 1.74 3.77
Profit per ordinary share - diluted (pence) 8 1.66 3.76
All amounts are derived from continuing operations.
The notes to the financial statements form an integral part of these financial
statements.
Group and Company Statement of Financial Position
Group Group Company Company
31 December 2024 31 December 2023 31 December 31 December
2024 2023
Notes £ £ £ £
assets
NON-CURRENT ASSETS
Intangible assets 9 2,287,816 1,514,519 1,431,606 692,022
Tangible assets 11 63,916 34,356 - -
Investments 13 - - 6,719,646 7,351,660
Right-of-use assets 10 506,862 796,498 - -
Deferred tax 12 302,381 697,864 393,872 607,568
__________ __________ __________ __________
3,160,975 3,043,237 8,545,124 8,651,250
CURRENT ASSETS
Trade and other receivables 14 1,654,424 1,359,641 133,928 902,919
Cash and cash equivalents 2,580,609 2,343,417 28,128 14,553
__________ __________ __________ __________
4,235,033 3,703,058 162,056 917,472
__________ __________ __________ __________
total assets 7,396,008 6,746,295 8,707,180 9,568,722
_______ _______ _______ _______
equity and liabilities
equity
Share capital 19 574,171 574,171 574,171 574,171
Share premium 6,191,748 6,191,748 6,191,748 6,191,748
Share-based payment reserve 1,043,784 780,389 1,043,784 780,389
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 (7,311,240) (8,307,787) (11,869,403) (8,967,643)
__________ __________ __________ __________
TOTAL EQUITY 2,915,477 1,655,535 1,497,945 4,136,310
_______ _______ _______ _______
LIABILITIES
NON-CURRENT LIABILITIES
Loan notes 15 2,000,000 2,000,000 2,000,000 2,000,000
Obligations under leases 17 246,117 543,555 - -
Deferred consideration 18 - 111,323 - 111,323
__________ __________ __________ __________
2,246,117 2,654,878 2,000,000 2,111,323
CURRENT LIABILITIES
Trade and other payables 16 1,936,975 1,882,771 5,209,235 3,031,335
Loan notes 15 - 172,578 - 172,578
Obligations under leases 17 297,439 263,357 - -
Deferred consideration 18 - 117,176 - 117,176
__________ __________ __________ __________
2,234,414 2,435,882 5,209,235 3,321,089
__________ __________ __________ __________
TOTAL EQUITY AND LIABILITIES 7,396,008 6,746,295 8,707,180 9,568,722
_______ _______ _______ _______
As at 31 December 2024
A separate profit and loss account for the parent Company is omitted from the
Group's financial statements by virtue of section 408 of the Companies Act
2006. The Company loss for the year ended 31 December 2024 was £2,901,760
(year ended 31 December 2023: loss of £1,085,030). The financial statements
were approved by the Board of Directors and authorised for issue on 22 April
2025 and are signed on its behalf by:
James Hickman
Chief Executive Officer
The notes to the financial statements form an integral part of these financial
statements.
Group Statement of Changes in Equity
For the year ended 31 December 2024
Share capital Share premium Share-based payment reserve Deferred consideration reserve Merger relief reserve Reverse acquisition reserve Retained earnings Total
£ £ £ £ £ £ £ £
Balance at 1 January 2023 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
Share-based payments (note 19) - - 263,395 - - - - 263,395
Profit and total comprehensive income for the year - - - - - - 996,547 996,547
_______ _______ _______ _______ _______ _______ _______ _______
Balance at 31 December 2024 574,171 6,191,748 1,043,784 - 5,557,645 (3,140,631) (7,311,240) 2,915,477
_______ _______ _______ _______ _______ _______ _______ _______
The notes to the financial statements form an integral part of these financial
statements.
Company Statement of Changes in Equity
For the year ended 31 December 2024
Share capital Share premium Share-based payment reserve Deferred consideration reserve Merger relief reserve Retained earnings Total
£ £ £ £ £ £ £
Balance at 1 January 2023 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
Share-based payments (note 19) - - 263,395 - - - 263,395
Loss and total comprehensive loss for the year - - - - - (2,901,760) (2,901,760)
_______ _______ _______ _______ _______ _______ _______
Balance at 31 December 2024 574,171 6,191,748 1,043,784 - 5,557,645 (11,869,403) 1,497,945
_______ _______ _______ _______ _______ _______ _______
The notes to the financial statements form an integral part of these financial
statements.
Group and Company Cash Flow Statement
For the year ended 31 December 2024
Group Group Company Company
Year ended Year ended Year ended Year ended
31 December 2024 31 December 2023 31 December 2024 31 December
2023
£ £ £ £
Notes
Profit/(loss) before 1,392,030 1,290,685 (3,372,559) (2,067,319)
tax
Adjustments to reconcile profit before tax to cash generated from operating
activities:
Other operating income (12,478) (27,167) - -
Finance income 4 (75,316) (21,363) - -
Finance costs 4 196,460 90,635 143,475 73,847
Share-based compensation 19 263,395 333,061 263,395 333,061
Depreciation and amortisation 2 881,735 621,941 447,939 410,499
Profit on disposal of subsidiary (150,000) (207,480) - -
Loss on disposal of PPE 1,180 - - -
Write-off of property, plant and equipment - 519 - -
Impairment of investment in Group entity - - 729,132 -
Release of deferred consideration liability 18 (139,640) - (139,640) -
Impairment of goodwill 9 139,640 - - -
(Increase)/decrease in accrued income, trade and other receivables (250,281) 768,989 177,935
14 67,344
(Decrease)/increase in trade and other payables 16 (54,741) (194,021) 2,540,273 1,121,397
_______ _______ _________ _________
Cash generated from operations 2,191,984 1,954,154 1,381,004 49,420
Income tax 7 - - - -
_______ _______ _________ _________
Cash generated from operating activities 2,191,984 1,954,154 1,381,004 49,420
Investing activities
Purchases of property, plant and equipment (55,150) (11,081) - -
Internally generated intangible expenditure (1,439,020) (491,013) (1,142,517) (491,013)
Proceeds from disposal of subsidiary 150,000 300,000 150,000 -
Proceeds from disposal of property, plant and equipment
1,900 - - -
_______ _______ _________ _________
Cash used in investment activities (1,342,270) (202,094) (992,517) (491,013)
Financing activities
Interest and similar income 4 78,732 10,587 - -
Interest and similar charges 4 (96,903) (39,963) (96,903) (39,481)
Lease payments (316,342) (61,613) - -
Settlement of loan note (172,578) - (172,578) -
Settlement of deferred consideration (105,431) - (105,431) -
_______ _______ __________ __________
Cash used in financing activities (612,522) (90,989) (374,912) (39,481)
Increase/(decrease) in cash and cash equivalents 237,192 1,661,071 13,575 (481,074)
Opening cash and cash equivalents 2,343,417 682,346 14,553 495,627
________ _______ ________ ________
Closing cash and cash equivalents 2,580,609 2,343,417 28,128 14,553
===================== ===================== ===================== =====================
The notes to the financial statements form an integral part of these financial
statements.
Notes to the Financial Statements
For the year ended 31 December 2024
BAsis of preparation
Finseta is a public limited company, incorporated and domiciled in England.
The Company was admitted to AIM, London Stock Exchange's market for small and
medium size growth companies, on 6 April 2021. The registered office of the
Company is 14-18 Copthall Avenue, London, EC2R 7DJ. These consolidated
financial 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 of the Group's annual report and accounts for the year
ended 31 December 2024 (the "2024 Annual Report").
These financial statements have been prepared in accordance with International
Financial Reporting Standards as adopted by the United Kingdom ("IFRS") for
the years ended 31 December 2023 and 31 December 2024, and with those parts of
the Companies Act 2006 applicable to companies reporting under IFRS. The
financial 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 financial 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 financial statements are rounded to the nearest
pound.
The preparation of financial statements in conformity with IFRS requires the
use of estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial 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 differ 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 reflecting discounted future cash flows from the acquired
customers and incorporating an estimated rate of attrition 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 cashflow methodology,
to derive a fair value of the deferred consideration payable.
Intangible assets: The Group recognises intangible assets in respect of
software development costs as well as development costs related to its new
debit card product offering. 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 financial statements only):
The Company's statement of financial position includes investments stated at
cost in its subsidiary undertakings. The continuing recognition at cost
requires judgements and estimates including an assessment of whether the
carrying value of such investments is impaired at each year end.
NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS ADOPTED FROM 1 JANUARY 2024
The following amendments are effective for the period beginning 1 January
2024:
· Amendments to IAS 1 - Classification of Liabilities as Current or
Non-current; and
· Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements.
The amendments had no impact on the Company's financial statements.
NEW AND REVISED IFRS STANDARDS IN ISSUE BUT NOT YET EFFECTIVE
At the date of authorisation of these financial statements, the Company has
not applied the following new and revised IFRS Standards that have been issued
but are not yet effective:
· Amendments to IAS 21 The Effects of Changes in Foreign Exchange
Rates; and
· IFRS 18 Presentation and Disclosure in Financial Statements.
Basis of consolidation
The consolidated financial statements incorporate the financial 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
affect those returns through its power over the entity.
All subsidiary undertakings have an accounting reference date ended 31
December.
BUSINESS COMBINATIONS
The Group financial 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
identifiable net assets acquired. Any goodwill that arises is tested annually
for impairment. Any gain on a bargain purchase is recognised in profit 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 settlement of pre-existing relationships. Such
amounts are generally recognised in profit 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
definition of a financial instrument is classified as equity, then it is not
re-measured and settlement 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 profit or loss.
GOING CONCERN
At 31 December 2024, the Group balance sheet showed a cash balance of
£2,580,609 (31 December 2023: £2,343,417). The Group balance sheet also
showed a liability of £2,000,000 (31 December 2023: £2,172,578) related to a
loan note held by Robert O'Brien, the Company's largest shareholder, that is
due for repayment on 31 July 2026.
The Directors have prepared cash flow forecasts covering a medium term time
horizon through to 31 December 2027, due to the significant loan note balance
that is due for repayment beyond the usual 12-month review period. 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, operationalisation of the new overseas regulated
entities, the commercial launch of the card programme, as well as the
continued investment in the development of the software platform, organic
sales, marketing efforts and the repayment of the £2,000,000 loan note
payable on 31 July 2026 to Robert O'Brien, the Company's largest shareholder.
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, which all indicate sufficient cash
resources to continue to finance 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 financial 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 affects the
timing and recognition of revenue items, but not generally the overall amount
recognised.
The performance obligations of the Group's revenue streams are satisfied 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 satisfied.
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 fixed and determined. Revenue represents the
difference between the rate offered 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 financial liabilities are recognised on the Group
statement of financial position when the Group has become a party to the
contractual provisions of the instrument.
Derivative financial instruments
Derivative financial 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 financial assets and liabilities at fair value through
profit or loss comprise solely of forward foreign exchange contracts.
Trade, loan and other receivables
Trade and loan receivables are initially measured at their transaction price.
Trade and loan receivables are held to collect the contractual cash flows
which are solely payments of principal and interest. Therefore, these
receivables are subsequently measured at amortised cost using the effective
interest rate method. The Directors have considered the impact of discounting
trade and loan receivables whose settlement 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 settle an instrument's contractual cash flows 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
profit or loss.
Trade payables
Trade payables are initially recognised at fair value and subsequently at
amortised cost using the effective 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 classified according to the substance of the
contractual arrangements entered into. An instrument will be classified as a
financial liability when there is a contractual obligation to deliver cash or
another financial asset to another enterprise.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits held at call with
banks and other short-term highly liquid investments with original maturities
of three months or less.
For the purposes of the cash flow statement, cash and cash equivalents consist
of cash and cash equivalents as defined above, net of any outstanding bank
overdraft 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 identifiable
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
profit or loss and is not subsequently reversed.
other INTANGIBLE aSSETS
An intangible asset, which is an identifiable non-monetary asset without
physical substance, is recognised to the extent that it is probable that the
expected future economic benefits attributable to the asset will flow to the
Group and that its cost can be measured reliably. The asset is deemed to be
identifiable when it is separable or when it arises from contractual or other
legal rights.
Amortisation is charged on a straight-line basis through the profit 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 software - 3 years
Cards
- 3 years
Software costs
- 3
years
Other intangible assets - 3 years
Trademarks are recognised as intangible assets and are expected to generate
future economic benefits 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 profit or loss within
administrative expenses, is provided at rates calculated to write off 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 difference between the sales proceeds and the carrying
amount of the asset and is recognised in profit 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 (defined 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 pattern in which economic benefits 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.
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-specific risk
adjustment; a credit risk adjustment based on bond yields; and an
entity-specific adjustment when the risk profile of the entity that enters
into the lease is different to that of the Group and the lease does not
benefit from a guarantee from the Group.
Lease payments included in the measurement of the lease liability comprise:
· Fixed lease payments (including in-substance fixed 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 reflects the exercise of an option to terminate the lease
The lease liability is presented as a separate line in the consolidated
statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount
to reflect interest on the lease liability (using the effective interest
method) and by reducing the carrying amount to reflect 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 significant 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 floating interest rate, in which case a revised discount rate is
used)
· A lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease liability is
remeasured based on the lease term of the modified lease by discounting the
revised lease payments using a revised discount rate at the effective date of
the modification
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 reflects that the Group
expects to exercise a purchase option, the related right-of-use asset is
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 identified 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 profit 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 classified as finance or operating
leases. Whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee, the contract is classified as a
finance lease. All other leases are classified 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 classified as a
finance 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 finance 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 reflect 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 financial assets for
which interest income is calculated with reference to their amortised cost
(i.e. after a deduction of the loss allowance).
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 outflow of economic
benefits that can be reliably estimated.
SHARE CAPITAL
Ordinary shares are classified as equity. Incremental costs directly
attributable 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 satisfied, a charge is made
irrespective of whether the market vesting conditions are satisfied. The
cumulative expense is not adjusted for failure to achieve a market vesting
condition.
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, 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 settled 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 attributable 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 defined contribution pension scheme. The pension costs
charged in the financial statements represent the contribution payable by the
Group during the year.
The costs of short-term employee benefits are recognised as a liability and an
expense in the period the related service is rendered at the undiscounted
amount of the benefits expected to be paid in exchange for that service.
TAXATION
Current income tax assets and liabilities are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and
tax laws used to compute the amount are those that are enacted or
substantively enacted at the reporting date. Current income tax relating to
items recognised directly in equity or other comprehensive income is
recognised in equity and not in the consolidated statement of comprehensive
income.
Deferred income tax is provided on all temporary differences at the reporting
date arising between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes. Deferred tax assets and
liabilities are offset when the Group has a legally enforceable right to
offset 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 submitted 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 definition, seldom equal the related actual
results. The estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within
the next financial 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 suffered 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 flows 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 indefinite 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 flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows 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 profit 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 profit or loss,
unless the relevant asset is carried in at a revalued amount, in which case
the reversal of the impairment loss is treated as a revaluation increase.
DEFERRED CONSIDERATION
Total compensation for acquisitions includes an element of deferred
consideration payable, subject to the revenue performance post-acquisition.
Management use historical information and management forecasts to estimate a
liability, using the discounted cashflow 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 significant 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 defined under IFRS, nor is it a measure of financial
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 profit/(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, defined as profit/(loss) from operations,
adding back share-based compensation, transaction costs associated with the
Group's acquisitions, impairment, depreciation & amortisation charges,
profit on the disposal of Capital Currencies Limited, operating income related
to interest on client balances, deferred consideration income and IFRS 16
accounting transactions.
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:
Group Group
Year ended 31 December 2024 Year ended 31 December 2023
£ £
_______ _______
Total revenue 11,354,451 9,649,233
_______ _______
2 PROFIT/(LOSS) FROM OPERATIONS
Group Group
Year ended 31 December 2024 Year ended 31 December 2023
£ £
Profit from operations is stated after charging/(crediting):
Share-based compensation 263,395 333,061
Transaction costs - 4,500
Expensed software development costs 92,594 58,792
Release of deferred consideration liability (139,640) -
Depreciation of property, plant and equipment 21,009 15,883
Depreciation of right-of-use assets 289,636 72,409
Amortisation of intangible assets 571,090 533,649
Profit on disposal of subsidiary (150,000) (207,480)
Impairment of goodwill (note 9) 139,640 -
_______ _______
Amounts payable to the Group's auditor in respect of both audit and non-audit
services:
Year ended 31 December 2024 Year ended 31 December 2023
£ £
Audit Services
- Statutory audit 46,250 41,000
Other Services
The auditing of accounts of associates of the Company pursuant to legislation:
- Audit of subsidiaries and its associates 52,750 45,000
------------------------- -------------------------
99,000 86,000
========================= =========================
3 OTHER OPERATING INCOME
Year ended 31 December 2024 Year ended 31 December 2023
£ £
Interest receivable from client cash balances 176,221 350,143
Release of deferred consideration liability 139,640 -
_______ _______
315,861 350,143
_______ _______
Interest receivable from client cash balances relates to interest earned on
client funds held in approved safeguarding accounts which are interest
bearing. Under the terms of the Group's Electronic Money Licence, the Group is
not able to pass any of the interest earned back to its clients.
Whilst the interest stream is a positive inflow for the Group, 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.
Interest earned on the Group's own cash is recognised within 'finance and
other income' in the consolidated statement of comprehensive income.
The Group has recognised other operating income of £139,640 in respect of the
release of the deferred consideration liability related to the acquisition of
Capital Currencies Limited due to the performance conditions attached to the
final earn-out payment not being met.
4 INTEREST AND SIMILAR ITEMS
Year ended 31 December 2024 Year ended 31 December 2023
£ £
Total finance and other income
Bank interest receivable 75,316 21,363
========================= =========================
Total finance costs
(Release)/unwinding of discount 16,572 (56,459)
Loan note interest 126,903 130,306
Other interest payable and charges 9 483
Interest on lease liabilities (note 17) 52,976 16,305
------------------------- -------------------------
196,460 90,635
========================= =========================
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 2024 Year ended 31 December 2023
Number Number
Directors 6 6
Employees 37 28
_______ _______
43 34
_______ _______
Employment costs Year ended 31 December 2024 Year ended 31 December 2023
£ £
Wages and salaries 2,796,846 2,349,642
Social security costs 264,486 206,636
Pension costs 93,813 71,408
Share-based compensation 134,345 219,068
_______ _______
3,289,490 2,846,754
_______ _______
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 in the 2024 Annual Report.
Year ended 31 December 2024 Year ended 31 December 2023
£ £
Salaries and fees 648,150 559,310
Bonus 128,480 175,981
Share-based compensation charge/(credit) 59,236 152,495
Social security costs 101,467 103,472
_______ _______
937,333 991,258
_______ _______
Number Number
Number of Directors to whom retirement benefits are accruing under a defined 3 3
contribution scheme
_______ _______
Year ended 31 December 2024 Year ended 31 December 2023
£ £
The remuneration in respect of the highest paid Director was:
Salaries and fees 220,338 170,360
Bonus 74,360 119,981
Share-based compensation charge 26,977 103,629
Pension and other benefits 12,550 12,379
_______ _______
334,225 406,349
_______ _______
During the year, no (2023: nil) Directors exercised any (2023: nil) share
options.
6 Pension costs
The Group operates a defined 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 £93,813 (2023: £71,408). At
31 December 2024 contributions of £32,641 remained outstanding and are
included within other payables (2023: £20,130).
7 taxation
The tax on the profit on ordinary activities for the period was as follows:
Group Group
Year ended 31 December 2024 Year ended 31 December 2023
£ £
Current Tax:
Current tax charge/(credit) - (45,489)
Deferred tax charge/(credit) 395,483 (797,679)
_______ _______
Income tax charge/(credit) 395,483 (843,168)
_______ _______
Group Group
Year ended 31 December 2024 Year ended 31 December 2023
£ £
Profit before taxation 1,392,030 1,290,685
_______ _______
Profit multiplied by main rate of corporation tax in the UK of 25% (2023: 348,007 303,569
23.52%)
Effects of:
Surrender of tax losses for research & development tax credit refund - (45,489)
Expenses not deductible for tax purposes 122,391 65,575
Income not taxable (84,287) (122,176)
Share-based payments - 78,335
Tax rate changes - (17,550)
Other adjustments in period - (2,520)
Disposal of subsidiary 9,372 -
Utilisation of tax losses previously not recognised as a deferred tax asset - (377,472)
Recognition of deferred tax asset in respect of tax losses - (725,440)
_______ _______
Income tax expense/(credit) 395,483 (843,168)
_______ _______
FACTORS AFFECTING FUTURE CHARGES
As at 31 December 2024, the Group had tax losses carried forward of
£1,588,998 (31 December 2023: £3,272,638) in respect of which it had
recognised a deferred tax asset of £397,250 was carried forward (31 December
2023: £818,161). The total net deferred tax asset as at 31 December 2024 was
£302,381 (31 December 2023: £697,864) (see note 12).
The tax rate applicable for the year ended 31 December 2024 was 25%.
8 earnings PER SHARE
Year ended 31 December 2024 Year ended 31 December 2023
£ £
Statutory profit 996,547 2,133,853
Weighted average number of shares used in basic EPS 57,417,101 56,613,145
Effect of dilutive share options 2,779,343 161,510
Weighted average number of shares used in diluted EPS 60,196,444 56,774,655
Earnings per share (pence)
Statutory total earnings per share
Basic 1.74 3.77
Diluted 1.66 3.76
9 GROUP INTANGIBLE ASSETS
Goodwill Customer relationships Internally developed software Software costs Total
Trademarks Cards
COST £ £ £ £ £ £ £
At 1 January 2024 420,300 615,756 1,515,097 15,611 46,114 - 2,612,878
Additions - - 1,117,047 - 70,476 296,503 1,484,026
_______ _______ _______ _______ _______ _______ _______
At 31 December 2024 420,300 615,756 2,632,144 15,611 116,590 296,503 4,096,904
AMORTISATION
At 1 January 2024 - 213,559 869,189 15,611 - - 1,098,359
Impairment 139,640 - - - - - 139,640
Charge for the year - 123,151 447,939 - - - 571,090
_______ _______ _______ _______ _______ _______ _______
At 31 December 2024 139,640 336,710 1,317,128 15,611 - - 1,809,089
NET BOOK VALUE
At 31 December 2024 280,660 279,046 1,315,016 - 296,503 2,287,815
116,590
_______ _______ _______ _______ _______ _______ _______
At 31 December 2023 420,300 402,197 645,908 - 46,114 - 1,514,519
_______ _______ _______ _______ _______ _______ _______
The Group has recognised an intangible asset of £296,503 for costs incurred
in the development of its new debit card product. No amortisation has been
recognised as the product was still undergoing final testing and was not fully
ready for use as at 31 December 2024.
For the year ended 31 December 2024, the Group recognised an impairment charge
of £139,640 (2023: £nil) against the goodwill recognised on the acquisition
of Capital Currencies business in light of the performance conditions attached
to the final tranche of the earn-out in respect of Capital Currencies not
being met.
Company INTANGIBLE ASSETS
Internally developed software Total
Trademarks
£ £ £
COST
At 1 January 2024 1,515,097 46,114 1,561,211
Additions 1,117,047 70,476 1,187,523
At 31 December 2024 2,632,144 116,590 2,748,734
AMORTISATION
At 1 January 2024 869,189 - 869,189
Charge for the period 447,939 - 447,939
_______ _______ _______
At 31 December 2024 1,317,128 - 1,317,128
NET BOOK VALUE
At 31 December 2024 1,315,016 116,590 1,431,606
At 31 December 2023 645,908 46,114 692,022
_______ _______ _______
10 RIGHT-OF-USE ASSETS
Leasehold
Property
£
COST
At 1 January 2024 868,907
Additions -
_______
At 31 December 2024 868,907
AMORTISATION
At 1 January 2024 72,409
Charge for the period 289,636
_______
At 31 December 2024 362,045
NET BOOK VALUE
At 31 December 2024 506,862
_______
At 31 December 2023 796,498
_______
11 GROUP property, plant and equipment
Computer equipment Leasehold improvements Equipment Total
£ £ £ £
COST
At 1 January 2024 61,325 14,583 - 75,908
Additions 48,156 - 6,994 55,150
Disposals (7,536) - - (7,536)
_______ _______ _______ _______
At 31 December 2024 101,945 14,583 6,994 123,522
AMORTISATION
At 1 January 2024 31,662 9,890 - 41,552
Charge for the period 16,909 3,954 146 21,009
Disposal (2,955) - - (2,955)
_______ _______ _______ _______
At 31 December 2024 45,616 13,844 146 59,606
NET BOOK VALUE
At 31 December 2024 56,329 739 6,848 63,916
_______ _______ _______ _______
At 31 December 2023 29,663 4,693 - 34,356
_______ _______ _______ _______
12 deferred tax
The Group recognised the following movements in deferred tax:
Acquired intangibles Fixed asset and other temporary differences Tax losses
Total
£ £ £
£
At 1 January 2023 - - - -
(Charge)/credit in the year (100,549) (19,748) 818,161 697,864
_______ _______ _______ _______
(Liability)/asset at 31 December 2023 (100,549) (19,748) 818,161 697,864
(Charge)/credit in the year 30,789 (5,361) (420,911) (395,483)
(Liability)/asset at 31 December 2024 (69,760) (25,109) 397,250 302,381
_______ _______ _______ _______
Current 302,381
Non-current -
The Company recognised the following movements in deferred tax:
Fixed asset and other temporary differences Tax losses
Total
£ £
£
At 1 January 2023 - - -
(Charge)/credit in the year (17,516) 625,084 607,568
_______ _______ _______
(Liability)/asset at 31 December 2023 (17,516) 625,084 607,568
(Charge)/credit in the year 14,136 (227,832) (213,696)
(Liability)/asset at 31 December 2024 (3,380) 397,252 393,872
_______ _______ _______
Current 393,872
Non-current -
13 investments
Investments in
Subsidiaries
£
Cost or Valuation
At 1 January 2024 7,351,660
Additions 247,117
Disposal (762,876)
6,835,901
Accumulated Impairment
At 1 January 2024 -
Impairment 729,132
Disposal (612,877)
116,255
Net Book Value 2024 6,719,646
Net Book Value 2023 7,351,660
Finseta Payments (DIFC) Limited was incorporated on 2 September 2024 and holds
regulatory capital of £247,117. The entity is 100% owned by the Company.
In advance of its disposal on 4 June 2024, the Company recognised an
impairment to its investment in Capital Currencies Limited of £612,877.
The Company also recognised an impairment to its investment in Pangea FX
Limited of £116,255.
Shares in subsidiary and associate undertakings are stated at cost. As at 31
December 2024, the Company owned the following principal subsidiaries, which
are included in the consolidated accounts:
Subsidiary Principal Activity Country of Incorporation Registered Office Percentage of Ownership
Finseta Payment Solutions Limited Foreign Exchange Northern Ireland 14-18 Copthall Avenue, London, England, EC2R 7DJ 100 per cent.
and Payment Services
Cornerstone - Middle East FZCO Consultancy United Arab Emirates Dubai Silicon Oasis, DDP, Building A2, Dubai, United Arab Emirates 100 per cent.
Finseta Payments (DIFC) Limited Foreign Exchange United Arab Emirates Unit S301 Level 3 100 per cent.
and Payment Services
Emirates Financial Towers
Dubai International Financial Centre
United Arab Emirates
Pangea FX Limited Foreign Exchange White Label England and 14-18 Copthall Avenue, London, England, EC2R 7DJ 100 per cent.
Wales
Foreign Exchange Canada 5577 153A street, Suite 207, Surrey BC, V3S 5K7, Canada 100 per cent.
and Payment Services
Finseta Payments Corp
On 4 June 2024, the Company disposed of its 100% shareholding in Capital
Currencies Limited for £150,000.
Finseta Payments (DIFC) Limited was incorporated on 2 September 2024 as a
financial services provider operating within the Dubai International Financial
Centre (DIFC). As at 31 December 2024, the entity's Category 3D Payment
Services license was pending approval from the Dubai Financial Services
Authority (DFSA).
Cornerstone - Middle East FZCO ceased trading in October 2024 and was in
liquidation as at 31 December 2024 following the strategic move of the Group's
UAE operations to the Dubai International Financial Centre (DIFC).
14 current trade and other receivables
Group Group Company Company
31 December 2024 31 December 2023 31 December 2024 31 December 2023
£ £ £ £
Trade receivables 271,481 347,491 - -
Prepayments and accrued income 295,715 152,281 69,017 19,142
Derivative financial assets at fair value 733,887 340,241 - -
Other receivables 288,469 147,536 - 53,264
Amounts due from Group undertakings - - - 458,421
Taxes and social security 64,872 372,092 64,911 372,092
_______ _______ _______ _______
1,654,424 1,359,641 133,928 902,919
_______ _______ _______ _______
For the year ended 31 December 2024, £13,744 was recorded as a bad debt
expense (2023: £nil).
15 loan
notes
Group Group Company Company
31 December 2024 31 December 2023 31 December 2024 31 December 2023
£ £ £ £
CURRENT
Loan notes - 172,578 - 172,578
_______ _______ _______ _______
NON-CURRENT
Loan notes 2,000,000 2,000,000 2,000,000 2,000,000
_______ _______ _______ _______
The non-convertible loan note of £2,000,000 issued to Robert O'Brien is
repayable on 31 July 2026. The loan note has a 6% coupon rate payable
quarterly in arrears. On 31 August 2024, the Company made a payment of
£172,578 in full and final settlement of the deferred consideration in
relation to the acquisition of Pangea FX Limited.
16 current trade and other payables
Group Group Company Company
31 December 2024 31 December 2023 31 December 2024 31 December 2023
£ £ £ £
248,493 88,185 87,339
Trade payables 293,680
Derivative financial liabilities at fair value 750,049 279,097 - -
Other tax and social security 205,491 480,612 21,035 2,298
Other payables and accruals 687,755 874,569 198,009 298,720
Amount due to Group undertakings - - 4,902,006 2,642,978
_______ _______ _______ _______
1,936,975 1,882,771 5,209,235 3,031,335
_______ _______ _______ _______
17 lEASE LIABILITIES
Group Group
Leasehold Property 31 December 31 December
2024 2023
£ £
At 1 January 806,912 -
Additions - 868,907
Finance costs 52,976 16,305
Payments (316,332) (61,613)
Lease accruals - (16,687)
_______ _______
At 31 December 543,556 806,912
_______ _______
Current 297,439 263,357
Non-Current 246,117 543,555
Incremental borrowing rate 7.97% 7.97%
Maturity analysis
Group Group
Contractual undiscounted cash flows 31 December 31 December
2024 2023
£ £
Less than one year 328,988 316,332
One to five years 254,068 583,053
More than five years - -
_______ _______
Total undiscounted lease liabilities at 31 December 583,056 899,385
_______ _______
18 deferred consideration
Group Group
31 December 31 December
2024 2024
£ £
At 1 January 228,499 -
Finance cost 16,572 -
Settlement (105,431) -
Release of liability (139,640) -
Transferred from deferred consideration reserve - 228,499
_______ _______
At 31 December - 228,499
_______ _______
Current - 117,176
Non-current - 111,323
_______ _______
On 30 April 2024, the Group paid £105,431 in settlement of the first tranche
of the earn-out consideration in respect of its 2022 acquisition of Capital
Currencies Limited. The performance conditions for the final tranche payment
of the earn-out agreement were not met as at 31 December 2024. The Group has
recognised other operating income of £139,640 in respect of the release of
the deferred consideration liability.
19 Share capital AND Reserves
Allotted, called up and fully paid
Ordinary shares Share capital
No. £
Ordinary shares of £0.01 each as at 1 January 2024 57,417,101 574,171
_______ _______
Ordinary shares of £0.01 each at 31 December 2024 57,417,101 574,171
_______ _______
At 31 December 2024 share subscriptions of £nil remained unpaid (31 December
2023: £nil).
All ordinary shares are equally eligible to receive dividends and the
repayment of capital and represent equal votes at meetings of shareholders.
The following describes the nature and purpose of each reserve within owner's
equity:
Share capital: Amount subscribed for shares at nominal value.
Share premium: Amount subscribed for share capital in excess of nominal value,
less costs of share issue.
Share-based payment reserve: The share-based payment reserve comprises the
cumulative expense representing the extent to which the vesting period of
warrants and share options has passed and management's best estimate of the
achievement or otherwise of non-market conditions and the number of equity
instruments that will ultimately vest.
Deferred consideration reserve: Reflects equity-based contingent consideration
on the acquisition of subsidiaries.
Merger relief reserve: Effect on equity of the consideration shares issued
over their nominal value.
Reverse acquisition reserve: Effect on equity of the reverse acquisition of
Finseta Payment Solutions Limited.
Retained losses: Cumulative realised profits less cumulative realised losses
and distributions made, attributable to the equity shareholders of the
Company.
Options
The Company operates an Enterprise Management Incentive ("EMI") Scheme
equity-settled 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
five years after 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 2024 31 December 2023
Number Weighted average exercise price Number Weighted average exercise price
£ £
Outstanding at the beginning of the year 4,857,736 0.13 1,706,331 0.24
Granted during the year 730,000 0.34 3,919,180 0.13
Forfeited/waived during the year (790,000) (0.10) (767,775) (0.40)
_______ _______ _______ _______
Total outstanding 4,797,736 0.17 4,857,736 0.13
_______ _______ _______ _______
Total exercisable 3,346,470 0.13 1,357,674 0.11
_______ _______ _______ _______
The Black-Scholes model was used for calculating the cost of options. The
model inputs for each of the options issued were:
GRANT DATE 13 January 2023 13 January 2023 16 November 2023 16 November 2023 22 February 2024 24 October 2024
Exercise price (pence) 10.0 20.0 12.0 10.0 31.8 37.0
Share price at grant date (pence) 8.0 8.0 12.0 12.0 31.0 37.0
Risk free rate 2.7% 2.7% 4.2% 4.2% 4.2% 4.3%
Expected volatility 129.5% 129.5% 119.8% 119.8% 117.5% 124.0%
Contractual life (years) 5 5 5 5 5 5
The expected volatility reflects 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 five years (2023: five
years).
No options were exercised during the year (2023: nil).
The Group's share-based compensation charge for the year ended 31 December
2024 of £263,395 (2023: £333,061) consists of £129,049 in relation to
warrants granted in the Company (2023: £113,993) and £134,346 in respect of
options granted in the Company (2023: £219,065).
No warrants were granted in the year (2023:
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 software development
charges, licences fees and working capital support. 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, the Company owed
£4,881,588 (2023: £2,620,559) to Finseta Payment Solutions Limited and
£20,418 (2023: £20,418) to Pangea FX Limited.
During the year ended 31 December 2024, the Company waived intra-Group debts
owed to it in the amounts of £58,130 due from Cornerstone - Middle East FZCO
and £34,927 due from Capital Currencies Limited, relating to working capital
support provided by the Company under interest-free intra-Group loans. As at
31 December 2023, the respective amounts owed to the Company were £92,319
from Cornerstone - Middle East FZCO and £35,899 from Capital Currencies
Limited.
Other related parties
At the year end the Company owed Robert O'Brien £2,000,000. This
interest-bearing, non-convertible loan note is repayable on 31 July 2026.
Robert O'Brien is the largest shareholder in the Company and is the Chief
Commercial Officer of the Group.
During the year, a loan of £8,750 owed by Terry Everson to the Company was
written off. Terry Everson resigned as director of Finseta Payment Solutions
Limited on 3 February 2023.
21 FINANCIAL INSTRUMENTS
FINANCIAL ASSETS
Group Group Company Company
31 December 2024 31 December 2023 31 December 2024 31 December 2023
£ £ £ £
DERIVATIVE FINANCIAL ASSETS
Foreign currency forward contracts with customers 272,736 253,663 - -
Foreign currency forward contracts with institutional counterparty 461,151 86,578 - -
_______ _______ _______ _______
733,887 340,241 - -
Cash and cash equivalents 2,580,609 2,343,417 28,128 14,553
Trade receivables 271,481 347,491 - -
Other receivables 584,184 254,328 69,017 485,338
_______ _______ _______ _______
4,170,161 3,285,477 97,145 499,891
_______ _______ _______ _______
FINANCIAL LIABILITIES
Group Group Company Company
31 December 2024 31 December 2023 31 December 2024 31 December 2023
£ £ £ £
DERIVATIVE FINANCIAL LIABILITIES
Foreign currency forward contracts with customers 301,590 61,367 - -
Foreign currency forward contracts with institutional counterparty 448,459 217,730 - -
_______ _______ _______ _______
750,049 279,097 - -
Trade payables 293,680 248,493 88,188 87,339
Other payables 687,755 874,569 5,784,512 2,941,698
Loan notes 2,000,000 2,172,578 2,000,000 2,172,578
_______ _______ _______ _______
3,731,484 3,574,737 7,872,700 5,201,615
_______ _______ _______ _______
All financial assets and liabilities have contractual maturity of less than
one year with the exception of loan notes of £2,000,000 (2023: £2,172,578).
Derivative financial assets and liabilities
Derivative financial assets not designated as
hedging instruments
31 December 2024 31 December 2023
Fair Value Notional Principal Fair Value Notional Principal
£ £ £ £
Foreign currency forward contracts with customers 272,736 15,256,180 253,663 8,546,025
Foreign currency forward contracts with institutional counterparty 461,151 18,418,375 3,799,202
86,578
_______ _______ _______ _______
733,887 33,674,555 340,241 12,345,227
_______ _______ _______ _______
Derivative financial liabilities not designated as hedging instruments
31 December 2024 31 December 2023
Fair Value Notional Principal Fair Value Notional Principal
£ £ £ £
Foreign currency forward contracts with customers 301,590 17,603,836 61,367 2,928,816
Foreign currency forward contracts with institutional counterparty 448,459 15,120,493 217,730 7,912,698
_______ _______ _______ _______
750,049 32,724,330 279,097 10,841,514
_______ _______ _______ _______
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 financial 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 significant to the fair value measurement is directly or indirectly
observable.
· Level 3 - valuation techniques for which the lowest level input
that is significant to the fair value measurement is unobservable.
Foreign currency forward contracts with customers generally require immediate
settlement on the maturity date of the individual contract and fall into level
2 of the fair value hierarchy above. Level 2 comprises those financial
instruments which can be valued using inputs other than quoted prices that are
observable for the asset or liability either directly (i.e. prices) or
indirectly (i.e. derived from prices). The fair value of forward foreign
exchange contracts is measured using observable forward exchange rates for
contracts with a similar maturity at the reporting date.
The net gain on financial assets at fair value through profit or loss for year
ended 31 December 2024 was £175,379 (2023: net loss £58,116).
Financial instruments - risk management
Financial assets primarily comprise trade and other receivables, cash and cash
equivalents and derivative financial assets. Financial liabilities comprise
trade and other payables, shareholder loans and derivative financial
liabilities. The main risks arising from financial 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 significant cash balances in foreign currencies.
Interest rate risk affects 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
financial obligations as they fall due. The Group has extensive controls to
ensure that it has sufficient 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
flow forecast taking into account a projected increase in revenues and
continued investment in the development of the Group's platform and organic
sales & marketing efforts and the inherent risks and uncertainties facing
the Group's business to assess the Group's working capital requirements. The
Board reviews cash flow projections on a regular basis and has authority
controls in place so as not to commit to material expenditure without being
satisfied that sufficient 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
financial loss. All customers are subject to credit verification checks.
Approximately 90% of the Group's trades are spot currency contracts, which are
required to be settled 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 significant concentration of exposures
within its client base.
Counterparty risk
Each trade between a client and the Group is matched with an identified trade
with Velocity Trade International ("Velocity"), which is a global foreign
exchange liquidity and trade provider that provides pricing, execution and
settlement 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 settled 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 financial flexibility to preserve its ability
to meet financial 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.
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 Limited, a wholly-owned subsidiary of the Company until 4
June 2024, whereafter it was disposed, is subject to the following capital
requirement under the Payment Service Regulations 2017:
· either 10% of fixed overheads for the preceding year or the
initial capital requirement of €20,000, whichever is the higher.
Finseta Payment Solutions Limited and Capital Currencies Limited complied with
the above requirements for all periods during the year ended 31 December 2024.
23 EVENTS AFTER THE REPORTING DATE
On 20 February 2025, the Company granted 190,000 options to staff 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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