Company registration number SC533961 (Scotland)
PAYBIS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
PAYBIS LIMITED
COMPANY INFORMATION
Director
I Isers
Company number
SC533961
Registered office
1 West Regent Street
Glasgow
G2 1RW
Auditor
Alliotts LLP
Manfield House
1 Southampton Street
London
WC2R 0LR
PAYBIS LIMITED
CONTENTS
Page
Strategic report
1 - 3
Director's report
4 - 5
Independent auditor's report
6 - 9
Profit and loss account
10
Statement of comprehensive income
11
Balance sheet
12
Statement of changes in equity
13
Statement of cash flows
14
Notes to the financial statements
15 - 27
PAYBIS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2022
- 1 -

The director presents the strategic report for the year ended 31 October 2022.

Review of the business

 

About

Paybis LTD is the parent company of Paybis group (hereinafter referred to as "Paybis" or "we" or "the company").

 

Our business

The company offers a range of products all of which serve the goal of giving consumers in over 100 countries an easy & fast way to buy, sell and store cryptocurrencies online.

 

Over 100 employees from across the globe contribute to the project's development and success.

 

Industry

The cryptocurrency industry is notorious for its volatility and instability, hence the company acknowledges significant risks that could prohibit its growth or be detrimental to its core business. Historical industry events have shown that it is very challenging to make accurate predictions about the company's future financial performance. The company undertakes its best efforts to forecast and manage unexpected turbulences with proper contingency planning and preparation for regulatory changes.

Principal risks and uncertainties

 

Regulatory compliance

Over the past few years, governments across the world began recognising that the cryptocurrency industry is becoming more mainstream and mature. Significant market valuations will lead to the introduction of new laws, regulations and guidelines. Paybis anticipates increasing scrutiny of the cryptocurrency industry in the coming years and welcome all such efforts where regulation strikes the right balance of customer protection and business opportunities. Operating an international business has its challenges as there are a large volume of new laws and regulations coming into play quite often.

 

Paybis adheres to maintaining the highest standards of compliance. The company has a 24/7 risk and compliance department which consists of skilled and experienced professionals, who go through regular trainings and follow strict compliance procedures as set by the company's Risk Management.

 

The company has taken several measures to ensure compliance with regulatory requirements worldwide:

 

PAYBIS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 2 -
Development and performance

 

Financial performance

In this fiscal year, the company generated 18.5m EUR turnover. The operating loss for the period was ~370k EUR. Gross margin remained approximately the same level at 47%.

 

The company's financial performance has been unsatisfactory but, to a large extent, expected; the cryptocurrency industry witnessed one of the worst bear markets to date, with major cryptocurrency prices plummeting further than most other risk assets, industry players going bankrupt and major scandals creating shockwaves throughout crypto markets. Customers scepticism towards crypto has steadily risen throughout this period.

 

Despite the above, the company did not downsize its headcount and continued its focus on improving the existing and creating new products. The management of the company was committed to incur these expenses as an investment into strengthening its core product ad preparing for the next bull market.

 

Consumers

The company aims to serve customers worldwide, but its largest customer base is in North America (62%), followed by Europe (14%), Africa (13%). and the Rest of the World (11%).

 

The company is putting effort into diversifying the somewhat concentrated user base in North America by introducing new payment methods in the rest of the world, and by strengthening its marketing and search engine optimisation efforts in Europe and other markets.

 

Competition

The cryptocurrency industry is a the forefront of the modern economy, therefore attracting a lot of talent and developing competitiveness. Additionally, companies that are primarily operated in the 'traditional' economy are making efforts to start offering crypto products and services.

 

Paybis is conscious of the competition advantage in certain areas due to its extensive experience and expertise. Paybis promotes a learning culture within the company to keep innovating and utilising the latest technologies.

 

Human Capital

The company recognises that certain critical functions of the business rely on specific individuals. Should one of these key individuals leave the organisation, the company may face challenges in finding a timely replacement. Theoretically, this could result in stagnation or a decline in performance in certain areas.

 

To mitigate such scenarios, the company places significant emphasis on employee retention. As part of this strategy, the company offers above-average salaries for essential roles, provides non-cash benefits such as paid lunches and additional vacation days, covers tuition and training fees, and grants stock options.

 

 

PAYBIS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 3 -
Events after the reporting period

 

On the 8th of October 2023, the UK's regulator, the FCA, introduced a financial promotions regime for cryptoassets. The purpose of this regime is to ensure firms adopt a holistic approach when promoting their services to UK consumers. At every stage of the product lifecycle, firms should contemplate how they can present their offerings to customers in a manner that is fair, transparent, and non-deceptive. In addition to this, the regulation dictates that cryptoasset firms have only four legal avenues for communicating cryptoasset promotions:

 

1.    An authorised individual communicates the promotion.

2.    An authorised individual approves the promotion.

3.    A crypto firm registered under the Money Laundering Regulations (MLR) communicates the promotion.

4.    The promotion complies with the conditions of an exemption in the Financial Promotion Order.

 

Since Paybis is neither authorised nor registered and does not qualify for the UK exemption, the sole legal avenue for the company to serve UK customers is to collaborate with another authorised firm to sign off Paybis' financial promotions (which include the website itself). We have entered an agreement with Gateway21, a Section 21 approver. On November 8th, the company resumed its services in the UK following receipt of approval. The suspension of services in the UK, which lasted for 30 days, did not have a material impact on the company's financial performance.

 

In preparation for the EU's MiCA regulation, set to take effect in December 2024, Paybis is proactively conducting research and making necessary preparations for the impending changes. Among the key requirements starting December 2024, companies seeking to operate within or from the EU must acquire the appropriate cryptoasset registration. Paybis has taken decisive action by establishing a subsidiary company in Poland and successfully obtaining the required cryptoasset registration well in advance.

On behalf of the board

I Isers
Director
15 November 2023
PAYBIS LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 OCTOBER 2022
- 4 -

The director presents his annual report and financial statements for the year ended 31 October 2022.

Principal activities

The principal activity of the company continued to be that of crypto asset trading services.

Results and dividends

The results for the year are set out on page 10.

Ordinary dividends were paid amounting to €399,982. The director does not recommend payment of a further dividend.

Director

The director who held office during the year and up to the date of signature of the financial statements was as follows:

I Isers
Statement of director's responsibilities

The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is 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 director is required to:

 

 

The director is 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 enable them to ensure that the financial statements comply with the Companies Act 2006. He is 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.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

PAYBIS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 5 -
On behalf of the board
I Isers
Director
15 November 2023
PAYBIS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF PAYBIS LIMITED
- 6 -
Opinion

We have audited the financial statements of Paybis Limited (the 'company') for the year ended 31 October 2022 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the 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 UK, including the FRC’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 director's 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 director with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our 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.

Opinions on other matters prescribed by the Companies Act 2006

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

PAYBIS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF PAYBIS LIMITED
- 7 -
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 director's 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:

Responsibilities of director

As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

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

 

PAYBIS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF PAYBIS LIMITED
- 8 -
Extent to which the audit was considered capable of detecting irregularities, including fraud

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

 

 

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

 

Audit response to risks identified

To address the risk of fraud through management bias and override of controls, we:

 

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

 

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

 

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

 

 

 

 

 

 

PAYBIS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF PAYBIS LIMITED
- 9 -

Use of our report

This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's 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 member, for our audit work, for this report, or for the opinions we have formed.

Christopher Mantel
Senior Statutory Auditor
For and on behalf of Alliotts LLP
15 November 2023
Chartered Accountants
Statutory Auditor
Manfield House
1 Southampton Street
London
WC2R 0LR
PAYBIS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 OCTOBER 2022
- 10 -
2022
2021
as restated
Notes
Turnover
3
18,583,035
6,528,617
Cost of sales
(9,829,635)
(3,346,542)
Gross profit
8,753,400
3,182,075
Administrative expenses
(9,123,079)
(2,013,957)
Operating (loss)/profit
4
(369,679)
1,168,118
Interest payable and similar expenses
7
(261)
(131)
(Loss)/profit before taxation
(369,940)
1,167,987
Tax on (loss)/profit
8
-
0
(223,886)
(Loss)/profit for the financial year
(369,940)
944,101

The profit and loss account has been prepared on the basis that all operations are continuing operations.

PAYBIS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2022
- 11 -
2022
2021
as restated
(Loss)/profit for the year
(369,940)
944,101
Other comprehensive income
Currency translation gain taken to retained earnings
-
0
65,493
Total comprehensive income for the year
(369,940)
1,009,594
PAYBIS LIMITED
BALANCE SHEET
AS AT
31 OCTOBER 2022
31 October 2022
- 12 -
2022
2021
as restated
Notes
Fixed assets
Tangible assets
10
57,551
40,716
Investments
11
3,819
1,019
61,370
41,735
Current assets
Stocks
13
1,307,819
605,573
Debtors
14
5,008,840
14,997,358
Cash at bank and in hand
945,752
902,923
7,262,411
16,505,854
Creditors: amounts falling due within one year
15
(1,605,284)
(10,059,170)
Net current assets
5,657,127
6,446,684
Net assets
5,718,497
6,488,419
Capital and reserves
Called up share capital
17
117
117
Profit and loss reserves
5,718,380
6,488,302
Total equity
5,718,497
6,488,419

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true

The financial statements were approved and signed by the director and authorised for issue on 15 November 2023
I Isers
Director
Company registration number SC533961 (Scotland)
PAYBIS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2022
- 13 -
Share capital
Profit and loss reserves
Total
Notes
As restated for the period ended 31 October 2021:
Balance at 1 August 2021
117
5,777,727
5,777,844
Year ended 31 October 2021:
Profit
-
944,101
944,101
Other comprehensive income:
Currency translation differences
-
65,493
65,493
Total comprehensive income
-
1,009,594
1,009,594
Dividends
9
-
(299,019)
(299,019)
Balance at 31 October 2021
117
6,488,302
6,488,419
Year ended 31 October 2022:
Loss and total comprehensive income
-
(369,940)
(369,940)
Dividends
9
-
(399,982)
(399,982)
Balance at 31 October 2022
117
5,718,380
5,718,497
PAYBIS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2022
- 14 -
2022
2021
as restated
Notes
Cash flows from operating activities
Cash generated from/(absorbed by) operations
22
1,758,461
(821,378)
Interest paid
(261)
(131)
Income taxes (paid)/refunded
(1,272,367)
1,260,147
Net cash inflow from operating activities
485,833
438,638
Investing activities
Purchase of tangible fixed assets
(40,222)
(10,956)
Purchase of subsidiaries
(2,800)
-
0
Net cash used in investing activities
(43,022)
(10,956)
Financing activities
Dividends paid
(399,982)
(299,019)
Net cash used in financing activities
(399,982)
(299,019)
Net increase in cash and cash equivalents
42,829
128,663
Cash and cash equivalents at beginning of year
902,923
709,075
Effect of foreign exchange rates
-
0
65,185
Cash and cash equivalents at end of year
945,752
902,923
PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
- 15 -
1
Accounting policies
Company information

Paybis Limited is a private company limited by shares incorporated in Scotland. The registered office is 1 West Regent Street, Glasgow, G2 1RW.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in euro, which is the presentational currency of the company. The function currency has been determined to be united states dollars (USD) in line with applicable accounting standards. Monetary amounts in these financial statements are rounded to the nearest €.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The company has taken advantage of the exemption under section 402 of the Companies Act 2006 not to prepare consolidated accounts due to the fact that the inclusion of any or all of its subsidiaries is not material for the purposes of giving a true and fair view. The financial statements present information about the company as an individual entity and not about its group.

1.2
Going concern

As noted in the strategic report, as a result of FCA regulations coming into effect in October 2023, Paybis voluntarily suspended its services to UK customers for 30 days whilst compliance issues were resolved. UK services resumed on November 8th and services to other markets were unaffected. As revenues generated within the UK market are not considered a significant part of the overall business the impact to the financial position and cashflow are considered minimal. true

 

Therefore, based on reasonable expectations of future projected revenues, at the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover represents the invoiced value of goods and services supplied by the company, net of value added tax and other sales related taxes.

 

Turnover is recognised on a net basis as the company acts as an agent to facilitate the execution of crypto asset trade transactions by its customers.

 

Net revenue earned on crypto assets trade transactions is recognised at the point of delivery of crypto assets to the crypto asset wallets.

1.4
Research and development expenditure

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

1.5
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 16 -

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Computers
33% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.6
Fixed asset investments

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

1.7
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible assets 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 it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. 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 at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.8
Stocks

Crypto assets held at reporting period end are translated at the market rates of exchange prevailing and published by crypto trading exchanges on the reporting period end date.

PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 17 -
1.9
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.10
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 18 -
Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.11
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.12
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 19 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company 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.

1.13
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.14
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.15
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the director is 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.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Chargebacks received

In determining the amounts receivable from payment providers relating to chargebacks withheld, management has determined the amounts that have yet to be received based on the total number of open chargebacks as notified by the provider and managements estimate of those that have already been received.

PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 20 -
3
Turnover
2022
2021
Turnover analysed by class of business
Commission on cryptocurrency transactions
18,516,224
6,528,617
Intercompany sales
66,811
-
18,583,035
6,528,617
2022
2021
Turnover analysed by geographical market
Africa
2,427,012
457,852
Antarctic
30
-
Asia
1,041,636
410,689
Australia & Oceania
575,800
299,325
Europe
2,648,469
1,170,001
North America
11,557,216
4,118,131
South America
332,872
72,619
18,583,035
6,528,617
4
Operating (loss)/profit
2022
2021
Operating (loss)/profit for the year is stated after charging:
Exchange losses
264,350
344,137
Research and development costs
-
447,315
Fees payable to the company's auditor for the audit of the company's financial statements
58,890
35,783
Depreciation of owned tangible fixed assets
23,387
3,462
Operating lease charges
82,031
18,081
5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2022
2021
Number
Number
53
46
PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
5
Employees
(Continued)
- 21 -

Their aggregate remuneration comprised:

2022
2021
Wages and salaries
2,439,492
442,038
Social security costs
548,750
104,028
Pension costs
39,968
-
0
3,028,210
546,066
6
Director's remuneration
2022
2021
Remuneration for qualifying services
150,087
20,247
7
Interest payable and similar expenses
2022
2021
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
261
131
8
Taxation
2022
2021
Current tax
UK corporation tax on profits for the current period
-
0
223,886

The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

2022
2021
(Loss)/profit before taxation
(369,940)
1,167,987
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(70,289)
221,918
Tax effect of expenses that are not deductible in determining taxable profit
1,518
3,373
Unutilised tax losses carried forward
71,970
-
0
Change in unrecognised deferred tax assets
(3,199)
(1,405)
Taxation charge for the year
-
223,886
PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
8
Taxation
(Continued)
- 22 -

At year end total unutilised tax trading losses of €378,783 have been carried forward.

9
Dividends
2022
2021
Final paid
399,982
299,019
10
Tangible fixed assets
Computers
Cost
At 1 November 2021
48,587
Additions
40,222
At 31 October 2022
88,809
Depreciation and impairment
At 1 November 2021
7,871
Depreciation charged in the year
23,387
At 31 October 2022
31,258
Carrying amount
At 31 October 2022
57,551
At 31 October 2021
40,716
11
Fixed asset investments
2022
2021
Notes
Investments in subsidiaries
12
3,819
1,019
PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
11
Fixed asset investments
(Continued)
- 23 -
Movements in fixed asset investments
Shares in subsidiaries
Cost or valuation
At 1 November 2021
1,019
Additions
2,800
At 31 October 2022
3,819
Carrying amount
At 31 October 2022
3,819
At 31 October 2021
1,019
12
Subsidiaries

Details of the company's subsidiaries at 31 October 2022 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Paybis USA Ltd
3511 Silverside Road, Suite 105, City of Wilmington, County of New Castle, 19810, Delaware, USA
Ordinary
100.00
Paybis Ukraine LLC
Office 1, Building 63, Zvirinetska St, Kyiv, Ukraine
Ordinary
100.00
Paybis Latvia SIA
Strelnieku iela 8?82, Riga, LV-1010, Latvia
Ordinary
100.00
13
Stocks
2022
2021
Finished goods and goods for resale
1,307,819
605,573
14
Debtors
2022
2021
Amounts falling due within one year:
Trade debtors
2,988,125
14,874,729
Amounts owed by group undertakings
1,930,634
3,872
Other debtors
50,384
107,086
Prepayments and accrued income
39,697
11,671
5,008,840
14,997,358
PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 24 -
15
Creditors: amounts falling due within one year
2022
2021
Trade creditors
821,233
298,530
Amounts owed to group undertakings
1,019
1,019
Corporation tax
211,666
1,484,033
Other taxation and social security
151,008
241,693
Other creditors
128,152
7,222,882
Accruals and deferred income
292,206
811,013
1,605,284
10,059,170
16
Retirement benefit schemes
2022
2021
Defined contribution schemes
Charge to profit or loss in respect of defined contribution schemes
39,968
-

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

17
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
Issued and fully paid
Ordinary shares of £1 each
100
100
117
117
18
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2022
2021
Within one year
-
0
30,331
19
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2022
2021
Aggregate compensation
559,927
81,923
PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
19
Related party transactions
(Continued)
- 25 -
2022
2021
Amounts due to related parties
Entities over which the entity has control, joint control or significant influence
1,019
1,019

The following amounts were outstanding at the reporting end date:

2022
2021
Amounts due from related parties
Entities over which the entity has control, joint control or significant influence
1,930,634
3,872

The following amounts were recognised as an expense in the period in respect of bad and doubtful debts due from related parties:

2022
2021
Entities over which the entity has control, joint control or significant influence
93,250
-
20
Directors' transactions

Dividends totalling €399,982 (2021 - €299,019) were paid in the year in respect of shares held by the company's directors.

 

The company repaid the outstanding amount owed to the director as at 31 October 2021 during the current year. The current amount owing is €nil.

Description
% Rate
Opening balance
Amounts repaid
Closing balance
Loan from director
-
50,151
(50,151)
-
50,151
(50,151)
-
21
Ultimate controlling party

The ultimate controlling party is Inokentijs Isers, by virtue of his majority shareholding in the company.

PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 26 -
22
Cash generated from/(absorbed by) operations
2022
2021
(Loss)/profit for the year after tax
(369,940)
944,101
Adjustments for:
Taxation charged
-
0
223,886
Finance costs
261
131
Depreciation and impairment of tangible fixed assets
23,387
3,462
Movements in working capital:
(Increase)/decrease in stocks
(702,246)
646,787
Decrease/(increase) in debtors
9,988,518
(9,236,220)
(Decrease)/increase in creditors
(7,181,519)
6,596,475
Cash generated from/(absorbed by) operations
1,758,461
(821,378)
23
Analysis of changes in net funds
1 November 2021
Cash flows
31 October 2022
Cash at bank and in hand
902,923
42,829
945,752
24
Prior period adjustment
Changes to the balance sheet
As previously reported
Adjustment
As restated at 31 Oct 2021
Net assets
6,488,419
-
6,488,419
Capital and reserves
Total equity
6,488,419
-
6,488,419
Changes to the profit and loss account
As previously reported
Adjustment
As restated
Period ended 31 October 2021
Turnover
4,206,851
2,321,766
6,528,617
Cost of sales
(1,024,776)
(2,321,766)
(3,346,542)
Profit for the financial period
944,101
-
944,101

An adjustment has been recognised to show gross the fees charged by partners on the sourcing of cryptocurrency on behalf of customers which was previously incorrectly net off against revenue.

PAYBIS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
24
Prior period adjustment
(Continued)
- 27 -
Reconciliation of changes in equity
The prior period adjustments do not give rise to any effect upon equity.
Reconciliation of changes in profit for the previous financial period
2021
Total adjustments
-
Profit as previously reported
944,101
Profit as adjusted
944,101
2022-10-312021-11-01falseCCH SoftwareCCH Accounts Production 2023.200I IsersSC5339612021-11-012022-10-31SC533961bus:Director12021-11-012022-10-31SC533961bus:RegisteredOffice2021-11-012022-10-31SC5339612022-10-31SC5339612021-08-012021-10-31SC533961core:ContinuingOperations2021-08-012021-10-31SC533961core:RetainedEarningsAccumulatedLosses2021-08-012021-10-31SC533961core:RetainedEarningsAccumulatedLosses2021-11-012022-10-31SC5339612021-10-31SC533961core:ComputerEquipment2022-10-31SC533961core:ComputerEquipment2021-10-31SC533961core:CurrentFinancialInstrumentscore:WithinOneYear2022-10-31SC533961core:CurrentFinancialInstrumentscore:WithinOneYear2021-10-31SC533961core:CurrentFinancialInstruments2022-10-31SC533961core:CurrentFinancialInstruments2021-10-31SC533961core:ShareCapital2022-10-31SC533961core:ShareCapital2021-10-31SC533961core:RetainedEarningsAccumulatedLosses2022-10-31SC533961core:RetainedEarningsAccumulatedLosses2021-10-31SC533961core:ShareCapital2021-07-31SC533961core:RetainedEarningsAccumulatedLosses2021-07-31SC5339612021-10-31SC5339612021-07-31SC533961core:ComputerEquipment2021-11-012022-10-31SC533961core:UKTax2021-11-012022-10-31SC533961core:UKTax2021-08-012021-10-31SC533961core:ComputerEquipment2021-10-31SC533961core:Non-currentFinancialInstruments2022-10-31SC533961core:Non-currentFinancialInstruments2021-10-31SC533961core:Subsidiary12021-11-012022-10-31SC533961core:Subsidiary22021-11-012022-10-31SC533961core:Subsidiary32021-11-012022-10-31SC533961core:Subsidiary112021-11-012022-10-31SC533961core:Subsidiary222021-11-012022-10-31SC533961core:Subsidiary332021-11-012022-10-31SC533961core:WithinOneYear2022-10-31SC533961core:WithinOneYear2021-10-31SC533961bus:PrivateLimitedCompanyLtd2021-11-012022-10-31SC533961bus:FRS1022021-11-012022-10-31SC533961bus:Audited2021-11-012022-10-31SC533961bus:FullAccounts2021-11-012022-10-31xbrli:purexbrli:sharesiso4217:GBP