The directors present the strategic report for the year ended 31 December 2022.
The Company is regulated in the UK by the Financial Conduct Authority ("FCA") as a limited scope investment firm. The Company is regulated to hold client money as a matched principal agency broker for the trading of Foreign Exchange ("FX") and Contract for Differences ("CFD") to its retail and institutional clients.
As an agency broker, the Company’s business model is predicated on driving client volumes which has a direct correlation to Company revenues. The Company derives its revenue from three sources:
Spread mark-up
Commissions
Swap premiums
As our results show 2022 was a year where the business returned minimal revenue, but investment levels remained high. The business sees a long terms future in the UK and as such has invested in people and infrastructure to support future growth.
During the year, the Company issued 3,685,017 (2021 - 2,917,630) new £1 ordinary shares at par in order to provide additional working capital for the Company.
Zenfinex Limited is UK based, the Firm’s business model maximises the use of the specialist skills and experience within the Group, and sophisticated technology provide by its system vendors. Risk Management appetite is controlled via strong governance and oversight, within defined risk parameters approved by the Board.
The main risks identified by the Directors are dealt with individually below:
PRICE RISK
All client positions are simultaneously matched with liquidity providers and hence price or market risk is mitigated.
CREDIT RISK
The Company provides services to investors and carefully considers credit risk prior to agreeing individual contracts. All liquidity providers are carefully selected by the Directors to ensure they meet strict credit rating requirements. The Company also ensures diversification of counterparties to ensure any risk is spread.
CURRENCY RISK
The Company does not hedge against variations in exchange rates between currencies.
INTEREST RATE RISK
The Company has no significant interest bearing debts.
LIQUIDITY RISK
The Company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable demands. It has done this by providing adequate working capital on a regular basis. The Company is particularly conscious of the global effects the current COVID-19 Pandemic is having on many businesses. Whilst not immune to the adverse effects, the Directors are of the opinion that sufficient working capital will be made available to allow the Company to continue trading in spite of the current challenging market conditions.
REGULATORY RISK
The Company have made it clear that it is a high priority to satisfy all FCA rules and meet all regulatory requirements.
Financial key performance indicators
The Company does not rely on any specific KPI's instead relying on good general financial management with regards to debtors' control, working capital.
The board of directors of the Firm consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of the stakeholders and matters set out in s172(1) (a-f) of the Act in the decisions taken during the year ended 31 December 2022
Our mid-term plan for the period 2023-2024 was designed to have a long-term beneficial impact on the company and to contribute to its success in delivering a good quality service for clients. We will continue to operate our business within tight budget controls and in line with our regulatory targets
We have considered and acted upon the interests of the company’s employees as detailed in the engagement with employees section of this report.
We have considered and acted upon the need to foster the company’s business relationships with suppliers, customers and others as detailed in the engagement with suppliers, customers and others section of this report.
As a member of financial market, one of our key objectives is to establish a resilient and fair financial market by active commitment to regulatory rule and supervises? Given that the current climate change requires every possible action, to the highest extent possible, the Firm’s office and client communications operate under a “paper free environment” principle. This policy has already been in place over a long period of time, minimizing the Firm’s impact on the environment and providing the greatest extent of client data protection.
As the Board of Directors, our intention is to behave responsibly and ensure that management operate the business in a responsible manner, operating within the high standards of business conduct and good governance expected for a business such as ours.
As the Board of Directors, our intention is to behave responsibly toward our stakeholders and treat them fairly and equally
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2022.
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The business has seen significant investment over 2022 and this will continue in 2023 with the business looking to change its regulatory licence to become a full scope dealing as principal broker in Q2/3 of 2023. This will see the business investing more capital but will allow the business to be more versatile in onboarding both institutional clients and retail clients and driving revenue. Further to this the board has allocated a marketing budget which will allow the business to grow its footprint in the UK further.
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Our engagement with responsible suppliers supports creating sustainable values on our service. By having a stable relationship, we work together to develop innovative new technologies to make our services better in the future. We support our suppliers to be motivated to deliver high quality work, which will deliver the best service to client in the long term.
Clients are at the heart of our business. We will strive for excellence in our client support services ensuring that we continually and consistently deliver fair outcomes to our clients. The cost of trading is one of the most important elements to our clients. The Firm aims to provide pricing which benefits clients while keeping operation costs low, in order to bring about overall benefits to all stakeholders involved. We recognize that client trust is a key factor in maintaining a loyal client base and that this will contribute towards long-term value for our business and stakeholders.
Engagement with employees
We believe that employees are fundamental to the delivery of our plan. We strive to offer a nurturing and motivating environment where each employee can develop their skills to the fullest. We encourage our employees to put forward innovative ideas and work with us for the improvement of our products and services.
The Firm is committed to promoting equal opportunities in employment. Our employees and any job applicants receive equal treatment regardless of age, disability, gender reassignment, marital or civil partner status, pregnancy or maternity, race, colour, nationality, ethnic or national origin, religion or belief, sex or sexual orientation. The Firm will not tolerate any form of discrimination, nor bullying or harassment. Our Equal Opportunities Policy, and our Bullying, and Harassment Policy form part of our Staff Handbook which is available to staff at all times.
Basis for opinion
Material uncertainty related to going concern
We draw attention to note 1.2 in the financial statements, which indicates that the company incurred a net loss of £1,866,878 during the year ended 31 December 2022. This condition, along with other matters as set forth in note 1.2 indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Other information
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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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.
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 engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the financial services sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Financial Conduct Authority (FCA), Companies Act 2006, taxation legislation, data protection, anti-bribery, anti-money-laundering, employment, environmental and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
understanding the design of the company’s remuneration policies.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates as set out in note 2 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC, relevant regulators including the FCA and reviewing the company’s compliance monitoring procedures and findings.
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 through 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.
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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Zenfinex Limited is a private company limited by shares incorporated in England and Wales. The registered office is 4th Floor 4 Eastcheap, London, England, EC3M 1AE.
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 company incurred a net loss of £1,866,878 (2021: £1,777,828) during the year ended 31st December 2022. The accounts have been prepared on a going concern basis, as ultimately controlling party has given the assurance that he will continue to support the operational existence for the foreseeable future. Thus, the directors continued to adopt the going concern basis of accounting in preparing the financial statements.
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.
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.
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 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.
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, 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 company’s contractual obligations expire or are discharged or cancelled.
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.
Prior year adjustment
In the prior period, Debtors:- amount of £262,674 owed by associate undertakings and other debtors £1,159,342 were incorrectly classified. Creditors:- amount of £203,036 owed by group undertaking, net equity balances of £723,609, amount owed to associate undertakings £73,220 accruals £66,265 were incorrectly classified in period ended 31st December 2021 As a result, the prior period's financial statements have been restated to reflect the correct classification of these amounts.
The restatement has the following impact on the prior period's financial statements:
As previously stated As restated
2021 2021
£ £
Debtors:
Trade debtors - 1,106,817
Amount owed by associate undertakings 262,674 -
Other debtors 1,159,342 465,710
Prepayments and accrued income - 52,525
Creditors: Amount falling due within one year:
Trade creditors - 789,873
Amount owed to associate undertakings 73,220 -
Other creditors 521,560 74,206
Accruals 100,314 34,049
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The actual 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:
The company has tax losses carried forward as at 31st December 2022 of £4,199,019 (2021: £2.296.575). A deferred tax asset has not been recognised in respect of the losses due to the uncertainty as to the timing of future taxable profits.
Investments were held in unlisted companies.
Other debtors include amount due from related companies £2,299,485 (2022: £465,709).
Trade creditors includes net equity balances of £485,828 (2021: £723,609). The corresponding amounts are included in the trade debtors. Other creditors include the amount due to related companies £nil (2021: £73,219).
The company operates a pension contribution scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
During the year the Company issued 3,685,017 (2021: 2,917,630) new £1 ordinary shares at par to provide additional working capital for the Company.
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:
The firm received approval from FCA for the Variation of Permission from a Matched Principal Broker to become a full scope MIFIDPRU 750k firm on 9th November 2023 allowing the firm to take exposure on its books. Zenfinex Limited has also added a new trading name and now will dedicate Taurex to the retail business and Zenfinex to institutional clients.
Other loan includes a fixed term loan of £nil (2021:£210,000) was provided to the Company by a connected person of the parent Zenfinex Technologies Limited. During the year the balance due to the connected person was repaid by O H Tatum IV personally.
Summary of transactions with other related parties
ZFN Europe Ltd
During the year, the company paid expenses of £184,941 (2021: £144,223) on behalf of ZFN Europe Ltd. At the balance sheet date ZFN Europe Ltd owed £184,941(2021: £144,223) to Zenfinex Limited.
Zenfinex Financial Services (DIFC) Limited
During the year, the company paid expenses of £164,102 (2021: £111,967) on behalf of Zenfinex Financial Services (DIFC) Limited. At the balance sheet date ZFN Europe Ltd owed £164,102 (2021: £111,967) to Zenfinex Limited.
Zenfinex Global Limited
During the year, the company provided services to Zenfinex Global Limited of £450,480 (2021: £203,035). The company paid expenses of £222,061 (2021: £nil) on behalf of Zenfinex Global Limited. At the balance sheet date Zenfinex Global Limited owed £521,111 (2021: £209,519) to Zenfinex Limited.
Finex Solutions SDN. BHD.
During the year, the company paid expenses of £87,248 (2021: £nil) on behalf of Finex Solutions SDN. BHD. At the balance sheet date Finex Solutions SDN. BHD. owed £87,248 to Zenfinex Limited.
Foch Consulting S.A.R.L
During the year, the company paid expenses of £144,742 (2021: £nil) on behalf of Foch Consulting S.A.R.L. At the balance sheet date Foch Consulting S.A.R.L owed £144,742 to Zenfinex Limited.
ZFN Global LLC
During the year, the company paid expenses of £10,123 (2021: £nil) on behalf of ZFN Global LLC. At the balance sheet date ZFN Global LLC owed £10,123 to Zenfinex Limited.
Everything Trading Group Limited
During the year, the company paid expenses of £449,622 (2021: £nil) on behalf of Everything Trading Group Limited. At the balance sheet date Everything Trading Group Limited owed £449,622 to Zenfinex Limited.
Zenfinex Global LLC
During the year, the company paid expenses of £755,594 (2021: £nil) on behalf of Zenfinex Global LLC. At the balance sheet date Zenfinex Global LLC, owed £755,594 to Zenfinex Limited.
The above companies are related due to common ownership of the shareholders.
In the opinion of the directors, Zenfinex Technologies Limited is the immediate parent undertaking by virtue of owning the majority of the issued share capital. The ultimate controlling party is O H Tatum IV.