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Registered number: 11040011









GEMBA FINANCE LTD









ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 OCTOBER 2022

 
GEMBA FINANCE LTD
 
 
COMPANY INFORMATION


Directors
Vladimir Dereviagin 
Ugis Latsons 
Alexander Legoshin 




Registered number
11040011



Registered office
Level 39
One Canada Square

London

E14 5AB




Independent auditors
Zenith Audit Ltd
Statutory Auditors

18 Devonshire Row

London

EC2M 4RH





 
GEMBA FINANCE LTD
 

CONTENTS



Page
Strategic Report
1 - 4
Directors' Report
5 - 6
Independent Auditors' Report
7 - 10
Statement of Comprehensive Income
11
Balance Sheet
12
Statement of Changes in Equity
13 - 14
Statement of Cash Flows
15
Notes to the Financial Statements
16 - 26


 
GEMBA FINANCE LTD
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2022

Introduction
 
The principal activity of the company in the year under review was that of providing electronic payment services.
The company has been authorised and regulated by Financial Conduct Authority ("FCA") under the Payment Services Regulations 2017 for provision of payment services. The Company offers variety of electronic services including payment accounts and online money remittances across the globe through the internet.
The Company safeguards consumers funds in accordance with Payment Services Regulations 2017. It has established safeguarding accounts with its bankers for this purpose.

Business review
 
Gemba is a financial institution built like a bank. Our primary mission is to revolutionize business banking at its core. We understand the challenges many businesses face when it comes to opening accounts, particularly for start-ups which are often considered high risk by conventional banks. Founders invest a significant amount of time in the account opening process and navigating payment facilitation. Additionally, regulatory pressures on banks and payment systems have escalated, impacting the efficiency of international payments. Communicating the essence of business processes and services to compliance departments at banks poses a further challenge, resulting in payment delays, additional expenses, and potential penalties.
As an integral participant in the global payments ecosystem, Gemba is acutely aware of the potential hurdles that may arise from actions taken by correspondent banks involved in transaction processing. We are committed to going above and beyond to simplify the lives of our clients, ensuring a swift and seamless journey through bank compliance procedures. 
Gemba, a prominent Fintech company, has gained significant recognition, including selection as a participant in TechNation Fintech 5.0 and nominated as a Rising Star. Furthermore, Gemba has been honored with an invitation to participate in The Grow London Global Programme 2023 and Barclays Eagle Lab. The senior management at Microsoft expressed high praise for both Gemba’s idea and its execution.

Page 1

 
GEMBA FINANCE LTD
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022

Principal risks and uncertainties
 
Outlined below is a summary of what directors believe to be key risks and uncertainties as well as the key measures in place to mitigate these risks. The aim is to protect the Company's employees, customers and suppliers and to safeguard the interest of the Company and the Shareholders in the long term. Additionally, the objective of the those measures is to maintain high standards of busines conduct and allow the Company to comply with all relevant regulations as an FCA regulated entity.
Financial Risk Management
The Company's operations will expose it to certain financial risks such as currency fluctuation, credit and liquidity issues. 
Currency Fluctuation
Money Remittance business is directly linked to fluctuation of the value of currencies against other currencies. The objective of the Company is to provide competitive rates to its customers, who ultimately are the ones that bear the benefits/losses of the fluctuations.
In order to protect the business and its customers, the Company mitigates this risk by having a dedicated team of foreign exchange specialists and effective hedging tools to secure competitive rates. 
Liquidity Risk
Liquidity risk occurs when an individual investor, business or financial institution cannot meet the short-term debt obligations. 
The objective of the Company is to avoid important liquidity imbalance. The Company has adequate capital resources and continued support from the shareholders.
Credit Risk
Credit risk refers to the degree to which it is likely that a borrower or debtor may not repay a loan or a debt. 
The Company mitigates its credit risk in several ways. The Company does not face a material concentration of risk, as its exposure is spread over many agents and customers.
Part of the Company's policy when onboarding new agents include a comprehensive due diligence on referral agents, classifying referral agents and assigning proper credit limits. Periodical review of due diligence checks on referral agents is performed to re-assess risk.
Regulatory Risk
Regulatory risk refers to the fact that a change in laws and regulations may materially impact a security, business sector or market. A change in laws or regulations made by the government or a regulatory body can increase the costs of operating a business, reduce the attractiveness of investment and/or change the competitive landscape.
The Company's objective is to comply with all relevant legislation and regulations as an FCA regulated entity. For this the Company relies on dedicated compliance teams. These teams montior the regulatory framework and action any necessary adjusments to the operation in order to achieve continuous compliance.
Fraud Risk
Fraud risk in remittances is the risk where someone might intentionally alter a payment transaction to misdirect or misappropriate funds, including embezzlement. Other risks include rogue websites, identity thefts, receiver's fraud (e.g. credit card scams) and many more. However, with adequate AML/CTF (Counter-Terrorist Financing) internal policies, it is possible to reduce fraud risk along with money laundering and terrorism financing. Its internal control systems are strong and effective so as to effectively trace and monitor transactions and issue trigger alerts.
Cyber Risk
Money Remittance business can be directly affected by threat scenarios that can result in the loss of
Page 2

 
GEMBA FINANCE LTD
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022

confidentiality, integrity, and/or availability of information and the information system.
In order to prevent this situation and meet the regulatory and legislative requirements, the Company, mitigates this risk by having, among others, the following factors in place:
- Information is protected against unauthorised access
- Procedures are in place to deal with the threat of invasive viruses, the risk of theft of hardware and software, the unauthorised access of data and maintenance of system security
-Business Continuity plans are produced, maintained and tested
- Information security training is available to all staff 
- All breaches of information security, actual or suspected, are reported to, and investigted by the compliance team
-Strong password settings are enabled on all systems and applications by system/security administrator
-System/security administrator are to work with business application owners and the relevant teams to determine sensitive users and applications.
 

Financial key performance indicators
 
Average monthly revenue growth rate 79%. Gemba’s average gross margin is 94%. Average monthly clients number growth rate 31%.

Page 3

 
GEMBA FINANCE LTD
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022

Directors' statement of compliance with duty to promote the success of the Company
 
This section describes how the directors have had regard to the matters set out in the Companies Act S172(1) (a) to (f) in exercising their duty to promote the sucess of the Company for the benefit of its members as a whole.
Having regard to the likely consequences of any decision in the long term
Within a fast-moving world, our customer's needs for remittances and payment services is changing quickly. Also digital technologies are changing the way our customers use those services and offer new opportunities. While the Company needs to remaine agile to adapt the business to short term demands, the directors remain mindful that their strategic decision can have long term implications for the business and its stakeholders, and these implications are carefully assessed.
Having regard to the interests of the Company's employees
The directors ensure that the suggestions, view and interests of the workforce are captured and considered in their decision making. They have put in place measures like performance and development conversations between managers and teams, appropriate learning and development programs, constructive feedback from individuals, appropriate health, safety and wellbeing risk asessement and initiatives.
The directors strive to maintain diversity in the Company. 
Having regard to the need to foster the Company's business relationship with suppliers, customers and others
Througout the year the directors are briefed by business executives on sales performance figures including details by country of destination of the funds, number of independent agent's location offering our service to the customers.
It reflects very well the customers and agent's sentiment, the market view and allows the directors to take decisions with interests of customers and agents in mind.
The directors are also regularly informed on the relationships that the Company maintains directly or indirectly with our banking partners and referral agents being key in our ability to move the money of our customers to the designated beneficiaries around the word. 
Our money transfer business is regulated by the FCA and as a responsible authorised Company we seek always to cooperate and engage constructively with FCA and meet its standards. 
Having regard to the impact of the Company's operations on the community and the environment
Consumer to consumer money transfer services make a large part of our business and we are able to provide to our customers the facility to send money to 160 countries through affiliation with global leading networks. We are committed as a Company to provide competitive pricing  to our customers. We also continuously expand our network to serve more communities. 
Having regard to the desirability of the Company maintaining a reputation for high standards of business contract
The directors recognise the importance of operating a robust corporate governance framework that will integrate in and support the corporate governance. As a regulated entity in the UK, the Company has put in place different initiatives to ensure that all employees and directors adhere to high standards of ethics in the business conduct. 


This report was approved by the board on 7 November 2023 and signed on its behalf.



Ugis Latsons
Director

Page 4

 
GEMBA FINANCE LTD
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2022

The directors present their report and the financial statements for the year ended 31 October 2022.

Directors' responsibilities statement

The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
 
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

 In preparing these financial statements, the directors are required to:


select suitable accounting policies for the Company's financial statements and then apply them consistently;

make judgments and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Results and dividends

The loss for the year, after taxation, amounted to 194,290 (2021 - loss 306,227).

No dividends will be distributed for the year ended 31 October 2022.

Directors

The directors who served during the year were:

Vladimir Dereviagin 
Ugis Latsons 
Alexander Legoshin 

Page 5

 
GEMBA FINANCE LTD
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022

Future developments

Gemba will continue to transform business banking by creating lightening speed payments, accounting and full stack management. Having an A to Z business management tools embedded into Gemba’s application and based on Gemba’s payment rails allows us to see the whole picture about the client’s business. This enables Gemba to make unbiased and data-driven decisions regarding payment processing, which can be automated in the future with a minimum false-positive red flags. Gemba’s software is based on the open source projects which is more sustainable and secure for both the customer and Gemba. Gemba will be becoming marketplace bank — business management tools and payments are not the only things businesses need to operate. Gemba plans to implement credit lines, insurance and other vital services through integration of relevant partner APIs. Partners will be able to make their decisions fast based on the business management data that Gemba has

Going Concern

The Company's financial statements have been prepared on a going concern basis. Despite incurring a loss of 194,290 EUR for the financial year and holding negative net current assets totaling 230,971 EUR, the directors consider that the adoption of going concern basis, covering a period of at least 12 months from the date of the financial statements, is appropriate. The Company is presently in the pre-series A investment round and has received interest from several investors. Furthermore, the directors have conducted a comprehensive review and analysis of the business's financial projections and the sufficiency of liquidity supporting the financial position. Further, the shareholders have expressed their willngness to continue providing financial support to the Company for atleast 12 months from the date of approval of the financial statements in order for the Company to meet its current liabilities as they fall due. 

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Auditors

The auditorsZenith Audit Ltdwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board on 7 November 2023 and signed on its behalf.
 





Ugis Latsons
Director

Page 6

 
GEMBA FINANCE LTD
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GEMBA FINANCE LTD
 

Opinion


We have audited the financial statements of GEMBA FINANCE LTD (the 'Company') for the year ended 31 October 2022, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 October 2022 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Conclusions relating to going concern


In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.


Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.


Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.


Page 7

 
GEMBA FINANCE LTD
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GEMBA FINANCE LTD (CONTINUED)


Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual ReportOur opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.


We have nothing to report in this regard.


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the audit:


the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.


Page 8

 
GEMBA FINANCE LTD
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GEMBA FINANCE LTD (CONTINUED)


Auditors' responsibilities for the audit of the financial statements
 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We performed risk assessment procedures and obtained an understanding of the Company and its environment, the applicable financial reporting framework, the applicable laws and regulations, the Company's system of internal control and the fraud risk factors relevant to the Company that affect the susceptibility of assertions to material misstatement due to fraud. We made enquiries with management regarding actual or suspected fraud, non-compliance with laws and regulations, potential litigation and claims. The engagement partner led a discussion among the audit team with particular emphasis on how and where the Company's financial statements may be susceptible to material misstatement due to fraud, including how fraud might occur. The engagement partner assessed that the engagement team collectively had the appropriate competence and capability to identify or recognise non-compliance with laws and regulations.
We considered compliance with UK Companies Act 2006, the Financial Conduct Authority regulations and the
applicable tax legislation as the key laws and regulations which non-compliance could directly lead to material
misstatement due to fraud at the financial statement level. We evaluated whether the selection and application of
accounting policies by the Company may be indicative of fraudulent financial reporting. Our audit procedures are
responsive to assessed risks of material misstatement due to fraud at the assertion level included but were not limited to: 
- Testing the appropriateness of manual journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements; 
- Making inquiries of individuals involved in the financial reporting process about inappropriate or unusual activity
relating to the processing of journal entries; 
- Selecting and testing journal entries and other adjustments made at the end of a reporting period and throughout the period;
- Reviewing accounting estimates for biases that could represent a risk of material misstatement due to fraud;
- Reading key correspondence with regulatory authorities such as the Financial Conduct Authority.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial statements due to irregularities, including fraud, may not be detected, even though we have properly planned and performed our audit in accordance with the auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as they may involve collusion, forgery, intentional omissions or override of internal controls.


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.


Page 9

 
GEMBA FINANCE LTD
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GEMBA FINANCE LTD (CONTINUED)


Use of our report
 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.





Filip Lyapov (Senior Statutory Auditor)
  
for and on behalf of
Zenith Audit Ltd
 
Statutory Auditors
  
18 Devonshire Row
London
EC2M 4RH

8 November 2023
Page 10

 
GEMBA FINANCE LTD
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2022

2022
2021
Note

  

Turnover
 4 
424,406
57,921

Cost of sales
  
(6,735)
-

Gross profit
  
417,671
57,921

Administrative expenses
  
(580,826)
(355,661)

Operating loss
 5 
(163,155)
(297,740)

Interest payable and similar expenses
 9 
(31,135)
(8,487)

Loss before tax
  
(194,290)
(306,227)

Loss for the financial year
  
(194,290)
(306,227)

Other comprehensive income for the year
  

Total comprehensive income for the year
  
(194,290)
(306,227)

The notes on pages 16 to 26 form part of these financial statements.

Page 11

 
GEMBA FINANCE LTD
REGISTERED NUMBER: 11040011

BALANCE SHEET
AS AT 31 OCTOBER 2022

2022
2021
Note

Fixed assets
  

Intangible assets
 10 
616,659
602,650

Tangible assets
 11 
8,542
6,330

  
625,201
608,980

Current assets
  

Debtors: amounts falling due within one year
 13 
197,251
178,270

Cash at bank and in hand
 14 
9,185
591

  
206,436
178,861

Creditors: amounts falling due within one year
 15 
(437,407)
(199,321)

Net current liabilities
  
 
 
(230,971)
 
 
(20,460)

Total assets less current liabilities
  
394,230
588,520

  

Net assets
  
394,230
588,520


Capital and reserves
  

Called up share capital 
 16 
1,208,401
1,208,401

Profit and loss account
  
(814,171)
(619,881)

  
394,230
588,520


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 7 November 2023.




Ugis Latsons
Director

The notes on pages 16 to 26 form part of these financial statements.

Page 12

 
GEMBA FINANCE LTD
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2022


Called up share capital
Profit and loss account
Total equity


At 1 November 2021
1,208,401
(619,881)
588,520


Comprehensive income for the year

Loss for the year

-
(194,290)
(194,290)


Other comprehensive income for the year
-
-
-


Total comprehensive income for the year
-
(194,290)
(194,290)


Total transactions with owners
-
-
-


At 31 October 2022
1,208,401
(814,171)
394,230


The notes on pages 16 to 26 form part of these financial statements.

Page 13

 
GEMBA FINANCE LTD
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2021


Called up share capital
Profit and loss account
Total equity


At 1 November 2020
440,280
(313,654)
126,626


Comprehensive income for the year

Loss for the year

-
(306,227)
(306,227)


Other comprehensive income for the year
-
-
-


Total comprehensive income for the year
-
(306,227)
(306,227)


Contributions by and distributions to owners

Shares issued during the year
768,121
-
768,121


Total transactions with owners
768,121
-
768,121


At 31 October 2021
1,208,401
(619,881)
588,520


The notes on pages 16 to 26 form part of these financial statements.

Page 14

 
GEMBA FINANCE LTD
 

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2022

2022
2021

Cash flows from operating activities

Loss for the financial year
(194,290)
(306,227)

Adjustments for:

Amortisation of intangible assets
68,359
46,838

Depreciation of tangible assets
2,495
1,687

Interest paid
6,591
-

(Increase) in debtors
(18,981)
(15,433)

(Decrease)/increase in creditors
(36,805)
75,101

Net cash generated from operating activities

(172,631)
(198,034)


Cash flows from investing activities

Purchase of intangible fixed assets
(82,368)
(565,045)

Purchase of tangible fixed assets
(4,707)
(5,392)

Net cash from investing activities

(87,075)
(570,437)

Cash flows from financing activities

Issue of ordinary shares
-
768,121

New secured loans
296,300
-

Repayment of loans
(28,000)
-

Net cash used in financing activities
268,300
768,121

Net increase/(decrease) in cash and cash equivalents
8,594
(350)

Cash and cash equivalents at beginning of year
591
941

Cash and cash equivalents at the end of year
9,185
591


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
9,185
591

9,185
591


The notes on pages 16 to 26 form part of these financial statements.

Page 15

 
GEMBA FINANCE LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022

1.


General information

Gemba Finance Ltd, is a private company, limited by shares reigstered in England & Wales. The Company's registered office and registered number can be found on the Company Information page.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).

The Company's financial statements have been prepared on a going concern basis. Despite incurring a loss of 194,290 EUR for the financial year and holding negative net current assets totaling 230,971 EUR, the directors consider that the adoption of going concern basis, covering a period of at least 12 months from the date of the financial statements, is appropriate. The Company is presently in the pre-series A investment round and has received interest from several investors. Furthermore, the directors have conducted a comprehensive review and analysis of the business's financial projections and the sufficiency of liquidity supporting the financial position. Further, the shareholders have expressed their willngness to continue providing financial support to the Company for atleast 12 months from the date of approval of the financial statements in order for the Company to meet its current liabilities as they fall due. 

The following principal accounting policies have been applied:

  
2.2

Exemption from preparing consolidated financial statements

The Company, and the Group headed by it, qualify as small as set out in section 383 of the
Companies Act 2006 and the parent and Group are considered eligible for the exemption to prepare
consolidated accounts under section 399.2(A).

 
2.3

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is Euros.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Page 16

 
GEMBA FINANCE LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022

2.Accounting policies (continued)

  
2.4

Turnover

The Company is involved in transaction processing services where the Company's main performance obligation is to stand ready to provide electronic payment services as the timing and quantity of transactions to be processed is not determinable at the inception of the contract. The payment services comprise a series of distinct services that are substantially the same and have the same pattern of transfer to the customer over time. As the Company's obligation to its customers is to perform processing variable quantity of electronic payments, the consideration received is contingent on customer's use. As such, the price of total transactions under a contract is variable. The Company allocates the variable fees charged to the period in which it has contractual right to bill under the
contract, which is typically at the point of transaction.
The directors assessed whether the Company has a promise under the contract with its customers to provide the payment services itself as a principal or to arrange the services to be provided by the third party by acting as an agent. In this assessment, the Company evaluated indicators including whether the Company or the third party is primarily responsible for fulfilment of the contract and the extent to which company have discretion over determining the pricing of the goods or services, as well as other considerations.The directors concluded that the Company is the principal and should present the revenue on a gross basis mainly due to the fact that the Company has the control over the services before it is transferred to the customer.

 
2.5

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

 
2.6

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.7

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.

Page 17

 
GEMBA FINANCE LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022

2.Accounting policies (continued)

 
2.8

Taxation

Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

 
2.9

Intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

Intangible Assets comprise of internally developed core banking app: Ge.mba and Canopus E-pay suite and initial set up fees to the payment processor partners which enable the company to provide its payment services that qualify for recognition as an intangible asset. 
 
- Ge.mba is a web application clients portal primarily for internet banking and; 
- Canopus Epay suite is the core banking platform – Macrobank used by the Company for keeping client records, managing payments, AML checks.
The Company is constantly developing new features to the system.
They are subject to impairment testing in accordance with the process described above and the management has concluded that no impairment is required. 
Estimated useful lives of intangible assets are reviewed on annual basis by the directors. The estimated useful lives range is as follows:
Ge.mba                    -   5 years
Canopus Epay suite - 10 years
Before deciding to capitalise the development costs, the management assessed the development costs against the following recognition criteria:
- Future economic benefits from the assets are probable;
- Cost can be measured reliably;
- Management intends to complete and use the asset;
- The Company has adequate and available resources to complete and use the asset;
- The management has ability to use the asset;
- The software is technically feasible to complete.

Page 18

 
GEMBA FINANCE LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022

2.Accounting policies (continued)

 
2.10

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on a reducing balance basis.

Depreciation is provided on the following basis:

Plant and machinery
-
25%

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.11

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

Investments in unlisted Company shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Statement of Comprehensive Income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.

 
2.12

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.13

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Company's cash management.

Page 19

 
GEMBA FINANCE LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022

2.Accounting policies (continued)

 
2.14

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

  
2.15

Financial Instruments

Financial instruments are recognised on the Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. Financial instruments are initially measured at transaction price unless the arrangement constitutes a financing transaction which includes transaction costs for financial instruments not subsequently measured at fair value. Subsequent to initial recognition, they are measured as set out below. A financing transaction is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Financial assets and financial liabilities are offset and the net amount reported in the Statement of Financial Position only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

  
2.16

Segregated account funds

Segregated account funds represents amount held in segregated bank accounts, which represent funds held on behalf of consumers and merchants. These segregated bank accounts are segregated from operating funds. In compliance with the safeguarding provisions within the Financial Conduct Authority ("FCA") and Payment Services Regulations 2017, the company is required to safeguard funds which are received from consumers and merchants which have not yet been disbursed to the intended recipient. The Company has chosen to present the segregated funds as off-balance sheet items. Please refer to Note 14.


3.


Judgments in applying accounting policies and key sources of estimation uncertainty

In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Page 20

 
GEMBA FINANCE LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022

4.


Turnover

An analysis of turnover by class of business is as follows:


2022
2021

Commission and fee income
424,406
57,921

424,406
57,921


2022
2021

United Kingdom
424,406
57,921

424,406
57,921



5.


Operating loss

The operating loss is stated after charging:

2022
2021



Amortisation & Depreciation charges
70,854
48,525

Exchange differences
19,909
18,704

Other operating lease rentals
86,463
57,873


6.


Auditors' remuneration

During the year, the Company obtained the following services from the Company's auditors and their associates:


2022
2021

Fees payable to the Company's auditors and their associates for the audit of the Company's financial statements
7,910
7,147

Fees payable to the Company's auditors and their associates in respect of:

All non-audit services not included above
4,746
5,003

Page 21

 
GEMBA FINANCE LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022

7.


Employees

Staff costs, including directors' remuneration, were as follows:


2022
2021

Wages and salaries
244,795
138,543

Social security costs
41,236
22,103

Cost of defined contribution scheme
784
-

286,815
160,646


The average monthly number of employees, including the directors, during the year was as follows:


        2022
        2021
            No.
            No.







Administration
11
7


8.


Directors' remuneration

2022
2021

Directors' emoluments
34,056
17,873

34,056
17,873



9.


Interest payable and similar expenses

2022
2021


Bank interest payable
24,544
8,098

Other loan interest payable
6,591
389

31,135
8,487

Page 22

 
GEMBA FINANCE LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022

10.


Intangible assets




Patents




Cost


At 1 November 2021
656,045


Additions
82,368



At 31 October 2022

738,413



Amortisation


At 1 November 2021
53,395


Charge for the year on owned assets
68,359



At 31 October 2022

121,754



Net book value



At 31 October 2022
616,659



At 31 October 2021
602,650



Page 23

 
GEMBA FINANCE LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022

11.


Tangible fixed assets





Plant and machinery




Cost or valuation


At 1 November 2021
10,653


Additions
4,707



At 31 October 2022

15,360



Depreciation


At 1 November 2021
4,323


Charge for the year on owned assets
2,495



At 31 October 2022

6,818



Net book value



At 31 October 2022
8,542



At 31 October 2021
6,330


12.


Fixed asset investments













13.


Debtors

2022
2021


Other debtors
31,712
12,731

Called up share capital not paid
165,539
165,539

197,251
178,270


Page 24

 
GEMBA FINANCE LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022

14.


Cash and cash equivalents

2022
2021

Cash at bank and in hand
9,185
591

9,185
591



15.


Creditors: Amounts falling due within one year

2022
2021

Trade creditors
13,826
37,348

Other taxation and social security
22,901
32,159

Other creditors
386,795
113,812

Accruals and deferred income
13,885
16,002

437,407
199,321


Other creditors comprise of €344,757 (2021: €69,867) owed to directors in respect of loans provided to the Company.


16.


Share capital

2022
2021
Allotted, called up and fully paid



1,049,597 (2021 - 1,049,597) Ordinary shares of £1.00 each
1,208,401
1,208,401



17.


Commitments under operating leases

At 31 October 2022 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2022
2021


Later than 1 year and not later than 5 years
16,474
16,278

16,474
16,278

Page 25

 
GEMBA FINANCE LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022

18.


Related party transactions

Included in other creditors, is €344,058  (2021: €53,867) owed to A Legoshin, the director and ultimate beneficiary owner of the Company in respect of loans advanced to the Company. Also included in other creditors is €699 (2021: €16,000) owed to V Dereviagin, director of the Company in respect of loans advanced to the Company.
The loans were advanced to finance capital expenditure and for operational purposes. They are unsecured, repayable on demand and carry an interest rate of 3%. Interest of €6,591 (2021: €307) has been charged during the year.


19.


Controlling party

The ultimate controlling party is Alexander Legoshin. 


20.


Auditor's limitation liability agreement

An auditors' limitation of liability agreement has been approved by the members for the financial period ended 31 October 2022. The principal terms and conditions are as below: 
- The agreement limit's the amount of any liability owed to the Company by the auditors in respect of any negligence default, breach of duty or breach of trust, occurring in the course of audit of the Company's accounts and pursuant to this agreement the auditor may be guilty in relation to the Company. 
- The agreement also stipulates the maximum aggregated amount payable in event of any of the circumstances stated above.


21.


Client Monies

Client monies of €1,581,642 (2021:€313,721) is segregated from the Company's own monies and is excluded from cash at bank and in hand during the year.
 


22.


Subsidiary undertakings

Details of subsidiary undertakings are as below:
-Gemba Tech Ltd, a wholly-owend subsidiary was incorporated in UAE on 30 September 2022. The registered office of the subsidiary is Unit GA-00-SZ-L1-RT-201, Level 1, Gate Avenue - South Zone, Dubai International Financial Centre, Dubai, United Arab Emirates. The principal activity of the subsidiary is software development.
Post year end, the Company acquired  Gemba Inc, a wholly-owned subsidiary registered in New York, USA. Gemba Inc. has already received an MCB license. It's principal actiity is to facilitate payment services in the USA. 

 
Page 26