The director presents the strategic report for the year ended 31 December 2022.
Payment Card Solutions Group Limited owns 100% of the share capital of Payment Card Solutions (UK) Limited a company authorised by the Financial Conduct Authority, UAB B4B Payments Europe a company authorised by the Central Bank of Lithuania and B4B Payments USA Inc (“B4B Group").
Through its subsidiary companies Payment Card Solutions Group Limited manages, controls and operates the regulated business of issuing Electronic Money products in the UK and Europe in accordance with Electronic Money and other relevant legislation. The B4B Group obtained regulatory permissions in 2020 which enabled B4B Group to commence issuing its establish prepaid cards business under its own licences and migrate from its previous card issuing partner. In addition to growing the prepaid card issuing business, B4B Group expanded its product offering during 2022 to provide Banking as a Service (BaaS) products including payment processing and currency conversion. B4B Group also established procedures enabling Programme Managers to launch their own prepaid products using B4B Group permissions (BIN Sponsorship). A Programme Manager can be registered as an Agent or Distributor of B4B with the Financial Conduct Authority (FCA).
Through its subsidiary B4B Payments USA Inc, Payment Card Solutions Group Limited provides Programme Management for a VISA product in the United States of America.
During the period ended 31 December 2022, revenues increased by 108% to £8,337,989 and Net Revenue after direct costs and partner commissions increased by 88% to £4,724,397. Earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by £1,049,611 due to investment in recruiting employees to prepare B4B Group for the launch of new product offerings and anticipated future growth. The value of card activity processed with MasterCard increased by 108% reflecting the growth in prepaid card issuance and the onboarding of a new Programme Manager.
B4B Group acknowledges that the effective identification and management of risks and opportunities across all its business activities is vital to ensure the delivery of its strategic objectives. B4B Group's approach to risk management is aimed at the early identification of key risks and taking action to remove or reduce the likelihood of those risks occurring and their effects. B4B Group operates a risk based approach regarding its customers and Programme Managers.
Key risks identified by B4B Group are:
– Ensuring adequate processes and controls
– Retaining appropriately skilled employees
– Global financial instability leading to customer and/or Programme Manager failure.
– Financial crime increasing the potential for material losses
– Achieving business growth objectives or incurring significant unanticipated costs
– Regulatory compliance
– Outbreak of a future corona pandemic
– Exposure to a number of financial risks including currency exchange, interest rates, and risks due to
default of credit institutions
B4B Group addresses the impact and likelihood of the above mentioned business risks mainly through:
– Systems and processes to perform an exact and accurate reconciliation of daily Electronic
Monies safeguarded and related liabilities.
– Control mechanisms for processors and Programme Managers
– Right to perform yearly compliance audits for all Programme Managers
– Regular financial reviews of all Programme Managers
– Annual assessment of credit institutions
– Financial prefunding, i.e. pipeline prefunding
– Monitoring and setting policies and procedures to be followed
– Staff workshops and continuous training
– IT security
All the above controls are embedded into a comprehensive risk management framework, which is designed to identify, measure, manage and mitigate significant risks that could adversely affect B4B Group’s future performance.
B4B Group’s risk exposure is aggregated at Director level within each subsidiary and reported to the Management Board on a case-by-case basis.
Following the departure of the UK from the European Union on 31st January 2020, B4B Group novated its existing European customers to UAB B4B Payment Europe which was a newly established regulated entity in Lithuania. B4B Group continues to see strong growth in the UK and Europe following Brexit and the economic recovery from the COVID pandemic.
Following the agreement in November 2021 to sell Payment Card Solutions Group Limited and its wholly owned subsidiaries to BC Midco Pte Ltd (BC), B4B Group invested heavily throughout 2022 to develop additional Banking as a Service (BaaS) functionality utilising the payment rails available from the soon to be sister company Banking Circle S.A. The launch in late 2022 allowed B4B Group to offer an extension to our existing prepaid card product allowing customers to utilise electronic money deposited with B4B Group to perform favourable FX conversions and outbound payments in the 24 currencies offered by Banking Circle S.A. and introduced the competitive banking services our major clients have been discussing with B4B Group for many years.
BaaS is also available to potential clients independent of our prepaid card product providing cost effective local and cross boarder payment functionality in the UK, Europe and the USA.
The sale of Payment Card Solutions Group Limited and its subsidiaries to BC completed on 29th December 2022 after approval of change of control was received from the Regulators in the UK and Lithuania. As part of the Banking Circle Group, B4B Group now has the opportunity to develop relationships with other sister companies to extend the product offering to include direct debit collection of loading funds and outbound direct debit payments functionality in the future.
During 2022 B4B Group focused on the following main activities:
– Obtaining regulatory approval for change of ownership from the FCA and Central Bank of Lithuania
– Development of the BaaS product utilising the payment rails functionality of the Banking Circle Group
– Gearing up for a wider launch of BIN Sponsorship service offering.
– Applying to be a Principle Member of Visa in the UK and Europe and developing related
settlement services
– Developing the relationship with Mastercard and the settlement currencies offered to customers.
– Maintaining relationships with existing Electronic Money customers encouraging organic growth
– New processor integrations
– On-going development of core B4B systems
The future strategy and longer term vision of B4B Group are:
– Continue to grow the business organically in the UK and European markets
– Develop the opportunities for Prepaid cards and BaaS in the US Market by migrating to a new
processing platform provided by an established processing partner in the UK and Europe
– Build strength and depth across the product portfolio, through cross-selling Banking Circle Group
products and services to existing customers and adding new customers.
– Retain and grow long-standing relationships with industry players and stakeholders and develop
new relationships as the market continues to evolve.
– Maintain reputation as a leading European EMI through strong regulatory practices and a culture
of compliance.
– Introduce VISA prepaid cards into the UK and European markets.
– Integrate with other Banking Circle Group companies to drive efficiencies, embed relationships, and
grow the business.
– On-going development of core B4B Group systems
Business performance is judged against 4 main performance indicators:
2022
Revenue +108%
Net Revenue +88%
EBITDA -849%
Settlement Volume +108%
The Directors are highly satisfied with B4B Group’s performance during the year and its preparation for acquisition by BC Midco Pte Ltd. B4B Group achieved its strategic objectives of obtaining authorisation for change of control from the FCA and Central Bank of Lithuania, implementing solutions to support existing customers and onboarding new Programme Managers, grow settlement volumes with Mastercard and preparations to join Visa.
B4B Group is well positioned to continue to service and grow its portfolio of products, customers and Programme Managers.
On behalf of the board
The director presents his annual report and financial statements for the year ended 31 December 2022.
The results for the year are set out on the statement of comprehensive income.
Ordinary dividends were paid amounting to £233,918. The director does not recommend payment of a further dividend.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Peter Barnes was granted 433 EMI share options for Payment Card Solutions Group Limited, the parent of Payment Card Solutions (UK) Limited on 11 February 2021. These options were exercised on 29 December 2022 on the completion of the sale of Payment Card Solutions Group Limited to BC Midco PTE Limited.
We have audited the financial statements of Payment Card Solutions Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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).
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 group and parent 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 group's and parent 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:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their 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:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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.
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 parent 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 parent company or to cease operations, or has no realistic alternative but to do so.
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our audit approach was developed by obtaining an understanding of the company’s activities, the key functions undertaken on behalf of the Board by management and by service organisations, and the overall control environment. Based on this understanding we assessed those aspects of the company’s transactions and balances which were most likely to give rise to a material misstatement and were most susceptible to irregularities including fraud or error. Specifically, we identified what we considered to be key audit risks and planned our audit approach accordingly.
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the company which were contrary to applicable laws and regulations, including fraud. These included but were not limited to compliance with Companies Act 2006, IFRS, and regulations which affect the company’s products.
We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion.
We focused on laws and regulations that could give rise to a material misstatement in the company financial statements. Our tests included, but were not limited to:
- Agreement of the financial statements disclosures to underlying supporting documentation;
- Enquiries of management;
- Considering the effectiveness of control environment in monitoring compliance with laws and regulations.
There are inherent limitations in the audit procedures described above and 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. As in all of our audits we also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them 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 members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £207,341 (2021 - £256,902 profit).
Payment Card Solutions Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 21-24 Millbank, London, England, SW1P 4QP.
The group consists of Payment Card Solutions Group Limited and all of its subsidiaries.
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 sterling, which is the functional currency of the company. 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 consolidated group financial statements consist of the financial statements of the parent company Payment Card Solutions Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the director has a reasonable expectation that the group has access to adequate resources within its subsidiary operations and through the comfort letter provided by BC Midco Pte Limited confirming immediate financial support that the Company will 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.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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.
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 recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. 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 group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, 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, 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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its 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.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes pricing model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
The expense in relation to options over the parent company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
The company participates in a share-based payment arrangement granted to its employees and employees of its subsidiaries. The company has elected to recognise and measure its share-based payment expense on the basis of a reasonable allocation of the expense for the group recognised in its consolidated accounts. The directors consider the number of unvested options granted to the company’s employees compared to the total unvested options granted under the group plan to be a reasonable basis for allocating the expense.
The expense in relation to options over the company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.
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 leased asset are consumed.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
In the application of the group’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.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual (credit)/charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 December 2022 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Included within cash at bank are client funds held in client accounts. At the end of the year, these client funds totalled £52,954,545 (2021: £13,806,278) in Payment Card Solutions UK Limited and £22,951,961 (2021: £3,908,519) in UAB B4B Payments Europe.
Cash and bank balances from client funds held in client accounts include £217,272 (€243,299) of spent E-Money cleared by the card scheme and receivable from Payment Card Solutions UK Limited to UAB B4B Payments Europe on the next day banks are open for business.
The liability of £217,272 (€243,299) is reported in other creditors and deducted from balances owed to clients as they are no longer relevant funds available to e-money accounts holders.
Included within other creditors are amounts received from clients in advance of the issue of payment cards. These funds are held in client accounts. At the end of the year, the balance owed to clients in respect of these advances was £52,737,273 (2021: £13,806,278) for Payment Cards Solutions UK Limited and £22,951,961 (2021: £3,908,519) for UAB B4B Payments Europe and all are repayable on demand.
The HSBC loan was secured by fixed and floating charges over the company's assets. The guarantee ceased upon repayment of the loan.
The original HSBC Loan was repayable by instalments of £20,833 commencing 12 months from the date of initial drawdown of the loan (03/07/2020). A variation of these terms was signed with HSBC on the 9 September 2021. These terms detailed that from the 3 April 2022, the repayment of the loan must be made in 51 monthly instalments of £18,429 (excluding interest), with a final repayment of £18,429. Interest is charged at 3.99% over the Bank of England's base rate per annum with the first 12 months funded by way of a government grant. The loan has been guaranteed from the UK government, P J Swinton and R W Anderson. The loan was fully repaid on the 29 December 2022.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period. The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The weighted average share price at the date of exercise for share options exercised during the year was £4.05 (2021 - £0).
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The weighted average share price at the date of exercise for share options exercised during the year was £4.05 (2021 - £0).
The total intrinsic value at 31 December 2022 amounted to £Nil for the group and £Nil for the company.
The company operates an Enterprise Management Incentive scheme for employees, which were granted on October 2016 and will be exercised by the grantee lodging with the Company Secretary of the company a completed notice of exercise. This will generate 2,576 shares in the parent company, Payment Card Solutions Group Ltd, @ £2.90, if all the options are exercised. The shares can be exercised for a period of ten years commencing six months after the date they were granted. The exit events listed in the share option scheme agreement are winding up or share sale. Since the granting of the share options, two employees have left the group and their total of 1,896 options have not been exercised. The remaining shares were exercised on the 29th December 2022 upon conclusion of the sale of the group to BC Midco PTE Ltd.
On 3 January 2020 further options were issued to qualifying staff members and will be exercised by the grantee lodging with the Company Secretary of the company a completed notice of exercise. These will generate 514 shares in the parent company, @ £5.18 if all of the options are exercised. The shares can be exercised for a period of ten years commencing six months after the date they were granted. The exit events listed in the share option scheme agreement are the Sale of more than 50% of the issued share capital, the admission of the company to the Stock Exchange listing or the Alternative Investment Market or the sale of the company’s principal trade followed by a members voluntary liquidation. Since the granting of the share options, one employee has left the group and their total of 73 options have not been exercised. The remaining shares were exercised on the 29th December 2022 upon conclusion of the sale of the group to BC Midco PTE Ltd.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The company's parent company is BC MidCo PTE Ltd, incorporated in Singapore. The company's principal place of business is 12 Marina View, #11-01, Asia Square Tower 2, Singapore 018961.