Company registration number 07227848 (England and Wales)
XTB LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
XTB LIMITED
COMPANY INFORMATION
Directors
Mr S A Patel
Mr J Raymond
Company number
07227848
Registered office
Level 9
One Canada Square
Canary Wharf
London
E14 5AA
Auditor
Hillier Hopkins LLP
Radius House
51 Clarendon Road
Watford
Herts
WD17 1HP
XTB LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Directors' responsibilities statement
6
Independent auditor's report
7 - 9
Statement of comprehensive income
10
Statement of financial position
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 27
Detailed trading and profit and loss account
28
Schedule of administrative expenses
29
XTB LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report and financial statements for the year ended 31 December 2023.

Business Review

In 2023, XTB Limited focused its activities on growing its Retail CFD business and launching new longer term investment products such as cash shares and ETFs as part of its core goal to drive ‘value’ for shareholders.

 

Unlike 2022, 2023 saw a lower than average level of underlying market volatility. The S&P Volatility Index - which typically has a strong correlation with market interest from retail clients - hit its lowest levels since January 2020. This ultimately impacted the level of new client interest as well as product engagement as higher market volatility typically results in a greater number of speculative trading opportunities for clients. Nevertheless, the business attracted a greater number of commodities traders which attract higher spread revenues to Indices and forex, helping to maintain strong revenues despite a lower level of interest from clients in short term trading of Indices - which is our most popular asset class.

 

Thanks to significant product development in Q1 and Q2, the business was able to launch multiple longer term products in Q3 and Q4 as part of a shift in commercial strategy to improve its product competitiveness in the UK. The business launched real shares and ETFs in June as part of a soft launch, followed by a major marketing campaign in October. Moreover, the business also launched Investment Plans in October - a new passive investing product which enables clients to build their own portfolio of ETFs so that they can save money smartly. And finally, as part of our commitment to the Consumer Duty as well as offering clients fair value, the firm began passing on interest rates to clients for their uninvested funds from December.

 

As a result of the above, new retail client growth was significant - especially in Q4 - with business seeing a 93% growth in new clients over the year compared to 2022.

 

During Q1 & Q2 of 2023 the compliance team has focused on implementing XTB Ltd’s Consumer Duty plan. The consumer duty came into effect on the 31st July 2023 and involved enhancing processes throughout the entire business to ensure consumers receive a good outcome. The compliance team has also focused on the regulatory and operational background work for the release of XTB Ltd’s new product offering including fractional shares and ETFs.

 

Throughout 2024 the compliance team will be focused on strengthening the businesses consumer duty framework in addition to obtaining licences to begin offering ISA accounts.

Key Performance Indicators

The directors regularly review a number of financial and non-financial key performance indicators at both board and operational levels. The directors carry out monthly detailed reviews of each operational and support function at which all aspects of each business and key performance indicators are reviewed.

The Company's key performance indicators include the following:

 

 

 

2023

2022

Change

Change

Revenue

£

£

£

£

Institutional sales income

99,066

99,938

-872

-1%

Retail Sales income

4,646,000

3,824,912

+821,088

+21%

Total

4,745,066

3,924,850

+820,216

+21%

 

 

 

 

 

XTB LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Principal Risks and Uncertainties

XTB Limited is exposed to a number of risks and uncertainties which could impact long term performance and achievement of strategic goals. As part of the ICARA XTB Limited carries out ongoing identification and assessment of the risks that could potentially pose a detrimental impact on XTB Limited's financial performance.

 

XTB Limited's board determines the risk management strategy and policies for the company, as well as assigning the monitoring and management of such risks as and where appropriate. The main areas of risk that arise out of XTB Limited's business activities are considered by the directors to be market risk, foreign currency risk, interest rate risk, credit risk, liquidity risk, regulatory risk and operational risk. The management of these risks is explained below.

 

Market Risk

Market risk is the risk of losses in positions arising from movements in market prices. For all client trades held with XTB Limited, a second trade for the same value is held with XTB Limited's parent company thereby mitigating the risk of movements in market prices.

 

Foreign Currency Risk

Foreign currency risk is a financial risk that exists when a financial transaction is denominated in a currency other than that of the base currency of XTB Limited. Foreign currency risk is managed by the finance department to minimise any potential losses arising from exposure.

 

Interest Rate Risk

Interest rate risk is the risk of losses in on- and off-statement of financial position positions, arising from adverse movements in interest rates. XTB Limited does not currently hedge its interest rate exposure and consequently, its net income or loss is directly affected by changes in interest rates.

 

Credit Risk

Credit risk is the risk that a counterparty of XTB Limited fails to meet its financial obligations to XTB Limited. The most significant credit risk that XTB Limited is exposed to relates to its exposure to the banks with which XTB Limited holds money. XTB Limited mitigates this risk by spreading any money held across various banking counterparties, and regularly reviewing the strength and reliability of such counterparties.

 

Liquidity Risk

Liquidity risk is the risk that XTB Limited will not have sufficient funds to meet its liabilities. XTB Limited manages its liquidity needs through forecasts which are reviewed regularly to ensure sufficient funds exist to finance XTB Limited's current operational and investment cash flow requirements.

 

Regulatory Risk

This is the risk associated with a breach of FCA and other regulatory rules. This can result in a financial fine, damage to reputation and restrictions on new or existing business. The FCA is particularly focused on ensuring that firms are adhering to the consumer duty.

 

Operational Risk

Operational risk is the risk of losses stemming from inadequate or failed internal processes, people and systems or from external events. XTB Limited manages operational risk through the proper documentation of processes, segregation of duties and a regular and comprehensive review of XTB Limited's internal controls.

 

Under FCA regulations, XTB Ltd. is required to update its ICARA on an ongoing basis and assess any new risks that could impact financial resources.

 

XTB LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Promoting the success of the company

The Board of Directors confirm that they have acted in the best interests of the company’s members as a whole (as identified in s 172 (1)(a-f)) in relation to the decisions taken during the year ended 31 December 2023.

 

The company’s goal is to continue providing the highest level of service to its customers while also providing a competitive product. All the decisions that were taken by the Board during the year, particularly in adjusting our marketing strategy, continuing to increase our overall customer base whilst abiding to all financial laws and regulation, are aimed at increasing the company’s market share for the longer term.

 

The Board of Directors would like to thank the company’s highly skilled and well-trained employees who play an integral part in the company’s success. Where required, the Board is committed to continue recruiting high calibre employees who share the same values as that of the company’s.

On behalf of the board

Mr J Raymond
Director
5 March 2024
XTB LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

XTB Limited is a FX and CFD brokerage based in London, Canary Wharf and is part of the XTB Group, which has offices located globally and are listed on the Warsaw stock exchange.

 

XTB Limited. is authorised and regulated by the Financial Conduct Authority. XTB Limited. offers CFDs to the retail market across a variety of products including, indices, fx, equities and commodities through its proprietary platform X-Station. XTB also offers technological and liquidity solutions to institutional clients globally.

Dividends

No dividend will be distributed for the year ended 31 December 2023.

Directors

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

Mr S A Patel
Mr J Raymond

Going concern

 

Going Concern disclosures in the annual financial statements explain the key assumptions and judgements taken in determining whether a company is able to operate as a going concern.

 

The company has adequate financial resources for the size of its business and has no borrowings. The company has the continuing support of its shareholders, as well as measurable progress in the retail brokers' solution effort, providing comfort for the UK business’s future. Following the annual business review together with the parents board, the directors are confident that the company and the group have the required resources to continue operational existence for the foreseeable future. Accordingly, continue to adopt the going concern basis in preparing the annual report and accounts.

Directors' insurance

The company maintains insurance policies on behalf of all the directors against liability arising from negligence, breach of duty and breach of trust in relation to the company.

Supplier payment policy

The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).

 

The company's current policy concerning the payment of trade creditors is to:

 

Trade creditors of the company at the year end were equivalent to 2 day's purchases, based on the average daily amount invoiced by suppliers during the year.

Auditor

Hillier Hopkins LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

XTB LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Statement of disclosure to auditor

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

On behalf of the board
Mr J Raymond
Director
5 March 2024
XTB LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) in conformity with Companies Act 2006. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, International Accounting Standard 1 requires that directors:

 

 

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

 

The directors are responsible for the maintenance and integrity of the company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Directors' report may differ from legislation in other jurisdictions.

XTB LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF XTB LIMITED
- 7 -
Opinion

We have audited the financial statements of XTB Limited (the 'company') for the year ended 31 December 2023, which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the United Kingdom.

 

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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

 

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

 

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

Other information

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

 

We have nothing to report in this regard.

Opinion on other matters prescribed by the Companies Act 2006

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

XTB LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF XTB LIMITED
- 8 -
Matters on which we are required to report by exception

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 directors

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.

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

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

XTB LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF XTB LIMITED
- 9 -

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override, including testing journals and evaluating whether there was evidence of bias by the management that represented a risk of material misstatement due to fraud.

 

We also obtained an understanding of the legal and regulatory frameworks that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. We focused on laws and regulations that could give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006, Financial Conduct Authority regulations and relevant tax legislation.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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

Use of our report

This report is made solely to the company's members 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 Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members for our audit work, for this report, or for the opinions we have formed.

Simon Speller (Senior Statutory Auditor)
For and on behalf of Hillier Hopkins LLP
8 March 2024
Statutory Auditor
Radius House
51 Clarendon Road
Watford
Herts
WD17 1HP
XTB LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
Notes
£
£
Revenue
4
4,745,066
3,924,850
Cost of sales
(601)
(1,157)
Gross profit
4,744,465
3,923,693
Administrative expenses
(4,565,938)
(3,782,839)
Operating profit
5
178,527
140,854
Finance costs
8
(5,320)
-
0
Profit before taxation
173,207
140,854
Income tax (income)/expense
9
63,904
(26,762)
Profit and total comprehensive income for the year
237,111
114,092

The income statement has been prepared on the basis that all operations are continuing operations.

XTB LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
31 December 2023
- 11 -
2023
2022
Notes
£
£
Non-current assets
Property, plant and equipment
10
153,496
17,651
Deferred tax asset
15
408,489
314,759
561,985
332,410
Current assets
Trade and other receivables
11
1,601,588
1,557,035
Cash and cash equivalents
6,874,601
6,540,356
8,476,189
8,097,391
Total assets
9,038,174
8,429,801
Current liabilities
Trade and other payables
13
5,985,494
5,798,558
Current tax liabilities
29,826
-
0
Lease liabilities
14
154,500
-
0
6,169,820
5,798,558
Total liabilities
6,169,820
5,798,558
Net assets
2,868,354
2,631,243
Equity
Called up share capital
4,003,493
4,003,493
Retained earnings
(1,135,139)
(1,372,250)
Total equity
2,868,354
2,631,243
The financial statements were approved by the board of directors and authorised for issue on 5 March 2024 and are signed on its behalf by:
Mr J Raymond
Director
Company Registration No. 07227848
XTB LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 January 2022
4,003,493
(1,486,342)
2,517,151
Year ended 31 December 2022:
Profit and total comprehensive income
-
114,092
114,092
Balance at 31 December 2022
4,003,493
(1,372,250)
2,631,243
Year ended 31 December 2023:
Profit and total comprehensive income
-
237,111
237,111
Balance at 31 December 2023
4,003,493
(1,135,139)
2,868,354
XTB LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
22
427,598
3,515,162
Interest paid
(5,320)
-
0
Net cash inflow from operating activities
422,278
3,515,162
Investing activities
Purchase of property, plant and equipment
(269,961)
(11,358)
Net cash used in investing activities
(269,961)
(11,358)
Financing activities
Payment of lease liabilities
154,500
-
0
Net cash generated from/(used in) financing activities
154,500
-
Net increase in cash and cash equivalents
306,817
3,503,804
Cash and cash equivalents at beginning of year
6,540,356
3,076,693
Effect of foreign exchange rates
27,428
(40,141)
Cash and cash equivalents at end of year
6,874,601
6,540,356
XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
1
Accounting policies
Company information

XTB Limited is a private company limited by shares incorporated in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

1.1
Accounting convention

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) in conformity with 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 on the historical costs basis and the principal accounting policies adopted are set out below.

1.2
Going concern

The company has adequate financial resources for the size of its business and has no borrowings. Thetrue company has the continuing support of its shareholders, as well as measurable progress in the retail brokers' solution effort, providing comfort for the UK business’s future. Following the annual business review together with the parents board, the directors are confident that the company and the group have the required resources to continue operational existence for the foreseeable future. Accordingly, continue to adopt the going concern basis in preparing the annual report and accounts.

1.3
Revenue

The turnover shown in the income statement represents amounts arising from performance obligations during the year. Revenue has been split between Retail and Institutional. Retail revenue comprising £4,646,000 (2022: £3,824,912) has been calculated on a cost plus basis using a 3.9-5.25% uplift and is recognised in the same period of time as the corresponding expenses. Institutional Revenue comprising £99,066 (2022: £99,938) has been based on fees charged to clients for both Liquidity and Technology services provided. This is recognised over the period of time to which performance obligations are met in the terms of the relevant client agreement.

 

1.4
Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

 

The assets' residual values, useful lives and methods of depreciation are reviewed and adjusted prospectively, if appropriate, at each financial year end.

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:

Improvements to property
Period of lease
Office furniture
30% Straight line
Office equipment
30% Straight line
Information equipment
20% and 30% Straight line
Right of use office
Period of lease

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 income statement.

XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.5
Impairment of tangible assets

At each reporting 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.

1.6
Fair value measurement

IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The resulting calculations under IFRS 13 affected the principles that the company uses to assess the fair value, but the assessment of fair value under IFRS 13 has not materially changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the company. It requires specific disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure requirements in other standards.

1.7
Financial assets

Financial assets are recognised when the company becomes party to the contracts that give rise to them and are classified as loans or borrowings, receivables, financial instruments fair valued through profit and loss or available for sale financial assets as appropriate. The company determines the classification of its financial assets and liabilities at initial recognition and, where allowed and appropriate, re-evaluate this designation at each financial year end.

 

When financial assets are recognised initially, they are measured at fair value, being the transaction price plus, in the case of financial assets not at fair value through profit or loss and borrowings, directly attributable transaction costs.

1.8
Financial liabilities

Financial liabilities are recognised when the company becomes party to the contracts that give rise to them and are classified as loans or borrowings, payables, financial instruments fair valued through profit and loss or available for sale financial assets as appropriate. The company determines the classification of its financial assets and liabilities at initial recognition and, where allowed and appropriate, re-evaluate this designation at each financial year end.

 

When financial liabilities are recognised initially, they are measured at fair value, being the transaction price plus, in the case of financial assets not at fair value through profit or loss and borrowings, directly attributable transaction costs.

 

Included within Trade and Other Receivables (Other debtors) and Trade and Other Payables (Amounts owed to group undertakings) are the fair values of the clients' positions and the Company's matching hedged positions.

1.9
Equity instruments

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

 

Ordinary shares are classified as equity. Any excess above the par value of shares received upon issuance of those shares is classified as share premium.

1.10
Taxation

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

XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Current tax

The charge for current tax is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using rates that have been enacted or substantively enacted by the year end date.

Deferred tax

Deferred tax is accounted for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be recognised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.

 

Deferred tax is calculated at the rates that are expected to apply when the asset or liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.

1.11
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 inventories or non-current assets.

1.12
Retirement benefits

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

1.13
Leases

At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

 

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

1.14
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

1.15

Client money

The Company holds money on behalf of clients in line with the regulatory body, the Financial Conduct Authority (FCA). Segregated client money bank accounts hold statutory trust status restricting the Company's access to these funds. These are not included within cash and cash equivalents on the Statement of Financial Position.

2
Critical accounting estimates and judgements

When preparing the financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. Significant management judgements are as follows:

 

Recognition of deferred tax assets

The extent to which deferred tax assets can be recognised is based on an assessment that future taxable income will be available against which deductible temporary timing differences and tax loss carry-forwards can be utilised.

3
Adoption of new and revised standards and changes in accounting policies

Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 31 December 2023 reporting periods and have not been early adopted by the company. These standards, amendments or interpretations are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

4
Revenue
2023
2022
£
£
Revenue analysed by class of business
Retail revenue
4,646,000
3,824,912
Institutional revenue
99,066
99,938
4,745,066
3,924,850
XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
5
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange losses/(gains)
27,428
(40,141)
Fees payable to the company's auditor for the audit of the company's financial statements
21,900
19,000
Fees for other services to the group
30,000
17,000
Depreciation of property, plant and equipment
134,116
9,473
(Profit)/loss on disposal of property, plant and equipment
-
91
6
Employees

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

2023
2022
Number
Number
CEO
1
1
Finance
2
2
Marketing
7
5
Sales
24
24
Compliance
2
2
Total
36
34

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
2,567,524
2,244,047
Social security costs
299,538
285,608
Pension costs
109,101
81,677
2,976,163
2,611,332
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
480,774
449,141
Company pension contributions to defined contribution schemes
17,162
15,922
497,936
465,063
XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
7
Directors' remuneration
(Continued)
- 19 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
323,319
298,842
Company pension contributions to defined contribution schemes
5,115
12,400
8
Finance costs
2023
2022
£
£
Interest on lease liabilities
5,320
-
9
Income tax expense
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
29,826
-
0
Deferred tax
Origination and reversal of temporary differences
(93,730)
26,762
Total tax charge/(credit)
(63,904)
26,762

The charge for the year can be reconciled to the profit per the income statement as follows:

2023
2022
£
£
Profit before taxation
173,207
140,854
Expected tax charge based on a corporation tax rate of 25.00%
43,302
26,762
Effect of expenses not deductible in determining taxable profit
-
0
871
Change in unrecognised deferred tax assets
(93,730)
-
0
Permanent capital allowances in excess of depreciation
-
0
(174)
Utilisation of tax losses
(13,476)
(697)
Taxation (credit)/charge for the year
(63,904)
26,762
XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
10
Property, plant and equipment
Improvements to property
Office equipment
Office furniture
Information equipment
Right of use office
Total
£
£
£
£
£
£
Cost
At 1 January 2022
31,019
13,962
33,797
79,168
-
0
157,946
Additions
-
0
499
250
10,609
-
0
11,358
Disposals
(29,903)
(12,146)
(33,798)
(39,093)
-
0
(114,940)
At 31 December 2022
1,116
2,315
249
50,684
-
0
54,364
Additions
-
0
3,636
891
15,815
249,619
269,961
At 31 December 2023
1,116
5,951
1,140
66,499
249,619
324,325
Accumulated depreciation and impairment
At 1 January 2022
31,019
13,962
33,797
63,311
-
0
142,089
Charge for the year
-
0
25
250
9,198
-
0
9,473
Eliminated on disposal
(29,903)
(12,146)
(33,798)
(39,002)
-
0
(114,849)
At 31 December 2022
1,116
1,841
249
33,507
-
0
36,713
Charge for the year
-
0
1,165
158
7,984
124,809
134,116
At 31 December 2023
1,116
3,006
407
41,491
124,809
170,829
Carrying amount
At 31 December 2023
-
2,945
733
25,008
124,810
153,496
At 31 December 2022
-
474
-
17,177
-
17,651
11
Trade and other receivables
2023
2022
£
£
Trade receivables
41,326
83,677
Other receivables
1,489,278
1,401,907
Prepayments
70,984
71,451
1,601,588
1,557,035

Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.

12
Trade receivables - credit risk
Fair value of trade receivables

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

No significant receivable balances are impaired at the reporting end date.

XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
13
Trade and other payables
2023
2022
£
£
Trade payables
98,252
27,344
Amounts owed to fellow group undertakings
2,730,963
2,983,564
Accruals
625,303
723,134
Social security and other taxation
74,122
74,351
Other payables
2,456,854
1,990,165
5,985,494
5,798,558

The directors believe that the carrying value of the financial instruments approximates their fair value at the balance sheet date.

14
Lease liabilities
2023
2022
Maturity analysis
£
£
Within one year
154,500
-

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

2023
2022
£
£
Current liabilities
154,500
-
0
2023
2022
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
5,320
-
Other leasing information is included in note 17.
XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
15
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.

2022
£
Deferred tax asset at 1 January 2022
341,521
Deferred tax movements in prior year
(Charge)/credit to profit or loss
(26,762)
Deferred tax asset at 1 January 2023
314,759
Deferred tax movements in current year
(Charge)/credit to profit or loss
93,730
Deferred tax asset at 31 December 2023
408,489

Deferred tax assets and liabilities are offset in the financial statements only where the company has a legally enforceable right to do so.

Deferred tax asset arises from taxable losses carried forward and these taxable losses are projected to be fully utilised from future taxable profits of the company. Further details on the company's business development are provided in the strategic report and the report of the directors.

 

Taxable losses carried forward in the current year are £1,633,955 (2022: £1,654,317).

16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
109,101
81,677

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.

The pension cost charge represents contributions payable by the Company to the fund and amounted to £109,101 (2022: £81,677). Contributions totalling £7,440 (2022: £7,063) were payable to the fund at the reporting date.

XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
17
Lease commitments

Set out below are the future cash outflows to which the lessee is potentially exposed that are not reflected in the measurement of lease liabilities:

2023
2022
Land and buildings
£
£
Within one year
83,700
82,500
Information relating to lease liabilities is included in note 14.
18
Subsequent events

There have been no post balance sheet events that require disclosure or adjustments to the financial statements.

19
Related party transactions

The company's clients trade on a platform which promotes business for the parent company. The company earns income from its parent company based on the throughput. During the year this amounted to £4,59,873 (2022: £3,779,209). These revenues were earned in the normal course of business. During the year the company was charged £99,065 (2022: £99,938) for services rendered by the parent company.

 

The balance outstanding at the year end date due to the parent undertaking was £2,730,963 (2022 : £2,983,564). The amount is payable on demand and is interest free.

 

There are no other key management personnel, aside from the directors whose remuneration has been included within note 7 of the financial statements.

20
Controlling party

The largest group in which consolidated accounts are prepared that the company is included in is XXZW Investment Group S.A., and the smallest is XTB S.A., which owns 100% of XTB Limited.

 

The parent company, XTB S.A., is incorporated in Poland. Its registered office is ul. Prosta 67, 00-838 Warszawa.

21
Capital Resources

The Company is regulated by the FCA and is required to manage and monitor its capital resources in accordance with the FCA capital requirement rules as per the Investment Firms Prudential Regime (IFPR). XTB will hold 190k as its base capital requirement as it transitions to a 730k firm as per IFPR rules.

 

The Company's objectives through resource management is to ensure that it has sufficient capital to merit its regulatory obligations and to ensure that the Company will be able to continue as a going concern.

 

The Company's regulatory capital requirement is reported to the FCA on a quarterly basis, and regularly monitored by the Directors. The company has been fully compliant with their capital adequacy requirements throughout the year.

XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
22
Cash generated from operations
2023
2022
£
£
Profit for the year before income tax
173,207
140,854
Adjustments for:
Finance costs
5,320
-
(Gain)/loss on disposal of property, plant and equipment
-
91
Depreciation and impairment of property, plant and equipment
134,116
9,473
Foreign exchange gains on cash equivalents
(27,428)
40,141
Movements in working capital:
(Increase)/decrease in trade and other receivables
(44,553)
746,192
Increase in trade and other payables
186,936
2,578,411
Cash generated from operations
427,598
3,515,162
XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
23
Financial Instruments

Financial assets and liabilities are recognised when the company becomes party to the contracts that give rise to them and are classified as loans or borrowings, receivables, payables or financial instruments fair valued through profit and loss as appropriate. The company determines the classification of its financial assets and liabilities at initial recognition and, where allowed and appropriate, re-evaluate this designation at each financial year end.

 

When financial assets and liabilities are recognised initially, they are measured at fair value, being the transaction price plus, in the case of financial assets not at fair value through profit or loss and borrowings, directly attributable transaction costs.

 

The table below sets out carrying amounts of financial assets and financial liabilities. The company considers the carrying amount of all financial assets and liabilities to be a reasonable approximation of fair value.

 

The company classified its financial assets and liabilities at 31 December 2023 as follows:

 

Financial assets

2023

2022

 

 

 

Loans and receivables

Cash and cash equivalents

115,178

6,874,601

10,523

6,540,356

Fair value through profit or loss

1,486,410

 

1,442,601

 

8,476,189

7,992,940

 

 

 

Financial liabilities

 

 

 

 

 

Financial liabilities at fair value through profit or loss

259,609

1,863,761

Financial liabilities measured at amortised cost

5,880,386

627,087

 

 

6,139,995

2,535,848

 

 

 

Net financial assets

2,336,194

5,457,092

 

 

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market, do not qualify as trading assets and have not been designated as either fair value through profit and loss or available-for-sale.

 

Such assets are carried at amortised cost using the effective interest method if the time value of money is significant. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

 

Impairment of financial assets

The company assesses at each financial year end whether a financial asset or group of financial assets is impaired.

 

Open positions

Open positions are classified as fair value through profit or loss.

XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
24
Financial Risk Management

The Company exposes itself to various financial risks through its activities, including market risk, credit risk and liquidity risk, for which control processes are in place to ensure risk is monitored and controlled.

 

Market Risk

 

Market risk is the risk of losses in positions arising from movements in market prices. For all client trades held with the company, a second trade for the same value is held with the parent company there mitigating the company's risk to movements in market prices. Therefore, the change in market prices would not affect the company net profit before tax.

 

Interest Rate Risk

 

The company does not currently hedge its interest rate exposure and consequently, its net income or loss is directly affected by changes in interest rates. Bank deposits bear interest at nominal rates and changes in these rates do not have any significant impact on the financial results.

 

The structure of financial assets and liabilities where cash flows are exposed to interest rate risk is as follows:

 

 

Financial Assets

2023

2022

 

 

 

Cash and cash equivalents

6,874,601

6,540,356

 

 

 

Total Financial Assets

6,874,601

6,540,356

 

Impact of a change in interest rates by 50 base points (BP) on profit before tax is presented below. The analysis relies on the assumption that other variables, in particular exchange rates, will remain constant. The analysis was carried out based on the position at the year end.

 

Sensitivity Analysis - income/(expenses) of the period

 

 

 

 

 

 

 

 

2023

 

2022

 

 

Income

Decrease

Income

Decrease

Income/(expenses) of the period

34,373

(34,373)

32,702

(32,702)

 

Foreign Currency Risk

 

Foreign currency risk is a financial risk that exists when a financial transaction is denominated in a currency other than that of the base currency of the company. Foreign currency risk is managed by the finance department to minimise any potential losses arising from exposure.

 

A change in exchange rates, in particular, GBP exchange rate, affects the statement of financial position valuation. Sensitivity to exchange rate fluctuations was calculated with the assumption that all foreign currency rates change by ±5 per cent to GBP.

 

The company had the following currency exposure as at 31st December 2023 and 31st December 2022. Presented below is also the sensitivity of the Company's profit before tax to a 5 per cent increase or decrease of the GBP exchange rate.

XTB LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
24
Financial Risk Management (Continued)

2023

Currencies

Exposure

Exchange rate

Exposure in GBP

Sensitivity Analysis - income (expenses) of the period

EUR

917,417

1.15390

795,058

39,753

HUF

(142,826,944)

441.11160

(323,789)

(16,189)

USD

(286,937)

1.27470

(225,101)

(11,255)

CZK

-

28.49815

-

-

PLN

859

5.01170

171

9

TRY

-

37.64777

-

-

Total

 

 

246,339

12,317

 

 

 

 

 

2022

Currencies

Exposure

Exchange rate

Exposure in GBP

Sensitivity Analysis - income (expenses) of the period

EUR

775,454

1.12770

687,642

34,382

HUF

(142,276,442)

451.58650

(315,059)

(15,753)

USD

(522,953)

1.20390

(434,382)

(21,719)

CZK

-

27.22530

-

-

PLN

4,013

5.28270

760

38

TRY

-

22.53440

-

-

Total

 

 

(61,040)

(3,052)

 

Credit Risk

 

Credit risk is defined as the risk of a client or counterparty failing to meet its financial obligations. The Company's only credit risk is with counterparties.

 

As at 31 December 2023, the Company had company and client bank accounts in 6 banks and institutions (2022: 6 banks and institutions) and moreover in the parent company. The exposures are presented in the table below (enumeration of banks and institutions was set individually for each period):

 

Exposures by counterparty

Cash & cash equivalents

Cash & cash equivalents

 

2023

2022

Institution 1

5,387,671

5,578,944

Institution 2

1,244,397

561,175

Institution 3

94,605

92,266

Institution 4

93,445

92,096

Institution 5

533

1,498

Institution 6

171

759

Institution 7

-

-

Institution 8

-

-

Institution 9

-

-

Exchange differences and
cash in transit

53,778

213,616

 

6,874,601

6,540,356

 

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