Company registration number 06589361 (England and Wales)
VFX FINANCIAL PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 OCTOBER 2023
VFX FINANCIAL PLC
COMPANY INFORMATION
Directors
Mr N England
Mr H Lisney
Mr J Stuart
Mr R Collis
(Appointed 28 July 2023)
Company number
06589361
Registered office
Dukes House
32-38 Dukes Place
London
EC3A 7LP
Auditor
Fisher, Sassoon & Marks
43-45 Dorset Street
London
W1U 7NA
VFX FINANCIAL PLC
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 22
VFX FINANCIAL PLC
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 1 -
The directors present the strategic report for the Period ended 31 October 2023.
Review of the business
VFX Financial PLC (the "Company") provides technology-led Foreign Exchange (“FX”) and payment services to a client base of Corporates and Financial Institutions. The Company also facilitates FX, payment services and currency card solutions to thousands of private customers across the United Kingdom (“UK”) through its highly regarded consumer product, EasyFX.
The Company is authorised and regulated as an Electronic Money Institution (“EMI”) by the UK’s Financial Conduct Authority ("FCA"), authorised and regulated under MiFID with the FCA, and authorised (via its wholly owned Canadian subsidiary) to provide foreign exchange and payment services to Canadian clients with FINTRAC, the Canadian regulator.
Following the investment and change of control in May 2022, an extended accounting period was adopted to synchronise dates with other group entities, resulting in a 17-month period for the accounts from June 2022 to October 2023. During this period, an additional £1.5m of share capital was invested into the business to support the ambitious growth plans of the new senior management team. This investment, alongside the strong performance of the business in 2023 saw Net Assets grow to £3,908,812 (2022: £2,792,265).
Within the period, substantial investments were focused on the recruitment and incentivisation of people, adoption of market leading systems and processes, developing the infrastructure of our proprietary technology and relocating the London head office. All of these strategic initiatives were focused on embedding a robust and scalable business model, enabling the group to benefit from operational leverage as it continues to expand its customer base and product offering.
Alongside a primary focus on investing in the future, headline revenues increased 133.1% compared to the prior period. When adjusting for the longer accounting period by normalising to a twelve-month comparative, growth was still 76.3% inclusive of interest income over the prior year. This demonstrated within a short period of time the pleasing commercial traction which has been achieved following the change of control.
The loss for the financial period was (£383,453), compared to (£231,322) in the prior year. As part of the strategic initiatives outlined above, significant costs were incurred in relation to restructuring and other one-off expenses. The most notable were in relation to terminating the prior office lease in London and the redundancy or termination of staff. This expenditure totaled £427,249 in the period. After adjusting for these one-off restructuring expenses and interest income, Adjusted EBITDA was £284,473 compared to a loss of (£194,808) in the prior year.
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EBITDA Restructuring Expenses Other Gains and Losses Adjusted EBITDA | | (174,413) 427,249 31,637 284,473 | | |
Principal risks and uncertainties
The Company seeks to minimise its exposure to external financial risks. Concentration risk is minimised by strict controls of portfolio diversification in terms of industries and also major customers served by the Company. To properly mitigate operational risks, VFX has a combination of various controls in place, both internal and external, aimed at the elimination of possible threats to VFX’s operations.
VFX FINANCIAL PLC
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 2 -
Key performance indicators
The board reviews and approves the annual budget. In addition to reviewing performance against budget on a monthly basis, the board has established KPIs indicated below. Such KPIs are used by management to monitor performance on a regular basis.
Key performance indicators are turnover £7,897,300 (17 months to Oct 23) (2022: £3,387,475, (12 months to May 22) and adjusted EBITDA as outlined on page 1.
Directors' statement of compliance with duty to promote the success of the Company
The directors of the company have acted in a way that they consider, in good faith, would most likely promote the success of the company for the benefit of its shareholders, employees and customers as a whole, and in doing so, the directors have considered (amongst other matters):
the likely consequences of any decision in the long term,
the interest of the company's employees,
the need to foster the company's business relationships with customer and others,
the impact of the company's operations on the community and environment,
the desirability of the company maintaining a reputation for high standards of business conduct, and
the need to act fairly among shareholders, employees and customers of the company
This is achieved through a weekly cadence of senior management meetings across the various areas of the business, including but not limited to: Risk, Finance, Compliance, Operations, HR, IT and Sales. All staff in the business have individual objectives and training plans aligned to the considerations above, with regular management oversight to ensure that these remain the core focus of the people within the business. Staff rewards are also aligned to meeting their objectives as well as the wider performance of the business.
The directors are involved in the day-to-to running of the business and as such are directly involved in these activities, in addition to providing more formal oversight through management information reporting and board meetings.
Mr R Collis
Director
21 February 2024
VFX FINANCIAL PLC
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 3 -
The directors present their annual report and financial statements for the Period ended 31 October 2023.
Principal activities
The principal activity of the company is to provide payment services and issue electronic money (e-money).
Results and dividends
The results for the Period are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the Period and up to the date of signature of the financial statements were as follows:
Mr C Shelton
(Resigned 18 April 2023)
Mr N England
Mr S Brawn
(Resigned 5 August 2022)
Mr H Lisney
Mr J Stuart
Mr R Collis
(Appointed 28 July 2023)
Supplier payment policy
The company's current policy concerning the payment of trade creditors is to:
- settle the terms of payment with suppliers when agreeing the terms of each transaction;
- ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
- pay in accordance with the company's contractual and other legal obligations.
Financial instruments
Financial Risk Management Objective and Policies
The Company's activities expose it to limited financial risks, for which the directors deem the use of financial derivatives unnecessary, and the Company does not use derivative financial instruments for speculative purposes. Its main risk is credit risk: the Company's principal financial assets are bank balances and cash, trade and other receivables. There is also no significant concentration of credit risk. Cash is held at banks with high credit ratings and this continues to be monitored.
The Company has limited interest rate risk (relating to cash balances) and foreign currency risk (relating to any foreign currency cash or debtor balances). Such exposures are continually monitored. As the Company does not hold any investments, it is not exposed to market or price risk.
Post reporting date events
There are no matters to report.
Future developments
The company continues to expand its client base and is actively exploring new markets.
Auditor
The auditor, Fisher, Sassoon & Marks, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Energy and carbon report
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.
VFX FINANCIAL PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 4 -
Statement of directors' responsibilities
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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and 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.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr R Collis
Director
21 February 2024
VFX FINANCIAL PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF VFX FINANCIAL PLC
- 5 -
Opinion
We have audited the financial statements of VFX Financial PLC (the 'company') for the Period ended 31 October 2023 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 October 2023 and of its loss for the Period then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the 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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's 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, 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 directors' report for the financial Period 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.
VFX FINANCIAL PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF VFX FINANCIAL PLC
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, 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 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 the audit was considered capable of detecting irregularities including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
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, and anti-money-laundering 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.
VFX FINANCIAL PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF VFX FINANCIAL PLC
- 7 -
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.
This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.
Jonathan Marks
Senior Statutory Auditor
For and on behalf of Fisher, Sassoon & Marks
21 February 2024
2024-02-21
Chartered Accountants
Statutory Auditor
43-45 Dorset Street
London
W1U 7NA
VFX FINANCIAL PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 8 -
Period
Year
ended
ended
31 October
31 May
2023
2022
Notes
£
£
Turnover
3
7,897,300
3,387,475
Cost of sales
(3,781,445)
(2,169,457)
Gross profit
4,115,855
1,218,018
Administrative expenses
(5,063,473)
(1,450,304)
Operating loss
4
(947,618)
(232,286)
Interest receivable and similar income
7
564,176
964
Interest payable and similar expenses
8
(5,781)
Amounts written off investments
9
(31,637)
-
Loss before taxation
(420,860)
(231,322)
Tax on loss
10
37,407
Loss for the financial Period
(383,453)
(231,322)
The income statement has been prepared on the basis that all operations are continuing operations.
VFX FINANCIAL PLC
STATEMENT OF FINANCIAL POSITION
AS AT
31 OCTOBER 2023
31 October 2023
- 9 -
31 October 2023
31 May 2022
Notes
£
£
£
£
Fixed assets
Goodwill
12
509,194
710,503
Tangible assets
13
101,598
7,469
Investments
14
86
31,733
610,878
749,705
Current assets
Debtors
17
760,575
402,886
Cash at bank and in hand
3,187,016
4,288,682
3,947,591
4,691,568
Creditors: amounts falling due within one year
18
(649,657)
(2,649,008)
Net current assets
3,297,934
2,042,560
Net assets
3,908,812
2,792,265
Capital and reserves
Called up share capital
20
4,250,000
2,750,000
Other reserves
157,000
157,000
Profit and loss reserves
(498,188)
(114,735)
Total equity
3,908,812
2,792,265
The financial statements were approved by the board of directors and authorised for issue on 21 February 2024 and are signed on its behalf by:
Mr R Collis
Director
Company registration number 06589361 (England and Wales)
VFX FINANCIAL PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 10 -
Share capital
Other reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 June 2021
750,000
-
116,587
866,587
Year ended 31 May 2022:
Loss and total comprehensive income
-
-
(231,322)
(231,322)
Issue of share capital
20
2,000,000
-
-
2,000,000
Other movements
-
157,000
-
157,000
Balance at 31 May 2022
2,750,000
157,000
(114,735)
2,792,265
Period ended 31 October 2023:
Loss and total comprehensive income
-
-
(383,453)
(383,453)
Issue of share capital
20
1,500,000
-
-
1,500,000
Balance at 31 October 2023
4,250,000
157,000
(498,188)
3,908,812
VFX FINANCIAL PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 11 -
1
Accounting policies
Company information
VFX Financial PLC is a private company limited by shares incorporated in England and Wales. The registered office is Dukes House, 32-38 Dukes Place, London, EC3A 7LP.
1.1
Reporting period
During the year the Company extended its accounting period from 31 May to 31 October 2023 for operational reasons, accordingly, that comparative amounts presented in the financial statements (including the related notes) are not entirely comparable.
1.2
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in 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, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the Company are consolidated in the financial statements of Nuova Capital Ltd. These consolidated financial statements are available from its registered office,32-38 Duke Place (3rd Floor), London, EC3A 7LP.
1.3
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
VFX FINANCIAL PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 12 -
1.4
Turnover
Turnover represents commission income from issuance of electronic money (e-money), derivatives and the provision of payment services.
Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and recognised when performance obligation for each transaction is satisfied.
1.5
Intangible fixed assets - goodwill
Goodwill, being the amount paid in connection with the acquisition of a Company's trade and assets at the end of May 2022. Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 5 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
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:
Leasehold improvements
Over the lease term
Fixtures, fittings & equipment
20% Straight Line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.7
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
VFX FINANCIAL PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 13 -
1.8
Impairment of fixed assets
At each reporting period end date, the company 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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
VFX FINANCIAL PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 14 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
VFX FINANCIAL PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Derivatives
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
1.13
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
1.14
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.16
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.17
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.
VFX FINANCIAL PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 16 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Payment services, E-money and derivatives
7,897,300
3,387,475
2023
2022
£
£
Other revenue
Interest income
564,176
964
4
Operating loss
2023
2022
Operating loss for the period is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(263)
35
Fees payable to the company's auditor for the audit of the company's financial statements
24,000
18,000
Depreciation of owned tangible fixed assets
39,357
36,514
Amortisation of intangible assets
201,309
-
Operating lease charges
198,876
59,304
5
Employees
The average monthly number of persons (including directors) employed by the company during the Period was:
2023
2022
Number
Number
FX Sales
16
13
Back Office/Admin
14
9
Management
3
2
Total
33
24
VFX FINANCIAL PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
5
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,370,994
1,270,150
Social security costs
343,830
140,243
Pension costs
33,523
21,658
3,748,347
1,432,051
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
329,368
174,779
Company pension contributions to defined contribution schemes
2,707
2,642
332,075
177,421
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
119,167
95,100
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
564,176
964
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
564,176
964
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
5,781
-
VFX FINANCIAL PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 18 -
9
Amounts written off investments
2023
2022
£
£
Other gains and losses
(31,637)
-
10
Taxation
2023
2022
£
£
Current tax
Adjustments in respect of prior periods
(37,407)
The actual (credit)/charge for the Period can be reconciled to the expected credit for the Period based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Loss before taxation
(420,860)
(231,322)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 0% (2022: 19.00%)
(43,951)
Tax effect of expenses that are not deductible in determining taxable profit
184
Tax effect of utilisation of tax losses not previously recognised
26,655
Effect of change in corporation tax rate
1,993
Permanent capital allowances in excess of depreciation
(855)
Depreciation on assets not qualifying for tax allowances
1,012
Research and development tax credit
(37,407)
14,962
Taxation credit for the period
(37,407)
-
11
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2023
2022
Notes
£
£
In respect of:
Fixed asset investments
14
31,637
-
Recognised in:
Amounts written off investments
31,637
-
The impairment losses in respect of financial assets are recognised in other gains and losses in the income statement.
VFX FINANCIAL PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 19 -
12
Intangible fixed assets
Goodwill
£
Cost
At 1 June 2022 and 31 October 2023
710,503
Amortisation and impairment
At 1 June 2022
Amortisation charged for the Period
201,309
At 31 October 2023
201,309
Carrying amount
At 31 October 2023
509,194
At 31 May 2022
710,503
13
Tangible fixed assets
Leasehold improvements
Fixtures, fittings & equipment
Total
£
£
£
Cost
At 1 June 2022
31,188
29,135
60,323
Additions
38,248
95,238
133,486
Disposals
(31,188)
(31,188)
At 31 October 2023
38,248
124,373
162,621
Depreciation and impairment
At 1 June 2022
31,188
21,666
52,854
Depreciation charged in the Period
14,281
25,076
39,357
Eliminated in respect of disposals
(31,188)
(31,188)
At 31 October 2023
14,281
46,742
61,023
Carrying amount
At 31 October 2023
23,967
77,631
101,598
At 31 May 2022
7,469
7,469
14
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
15
86
31,723
Unlisted investments
10
86
31,733
VFX FINANCIAL PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
14
Fixed asset investments
(Continued)
- 20 -
Movements in fixed asset investments
Shares in subsidiaries
Other investments
Total
£
£
£
Cost or valuation
At 1 June 2022
31,723
10
31,733
Disposals
-
(10)
(10)
At 31 October 2023
31,723
-
31,723
Impairment
At 1 June 2022
-
-
-
Impairment losses
31,637
-
31,637
At 31 October 2023
31,637
-
31,637
Carrying amount
At 31 October 2023
86
-
86
At 31 May 2022
31,723
10
31,733
15
Subsidiaries
Details of the company's subsidiaries at 31 October 2023 are as follows:
Name of undertaking
Registered
Nature of business
Class of
% Held
office key
shares held
Direct
Indirect
VFX Global Payment Inc
1
Payment Service
Ordinary
100.00
0
VFXPT Sociedade LDA
2
Business Services/IT Development
Ordinary
100.00
0
Registered Office addresses:
1
140 Yonge street, Toronto, Ontario M5C 1X6, Canada
2
Avenida Afonso Henriques, Bloco C, Loja L-Edificio Oceanario Residence, 8500-502, Portimao, Portugal
16
Financial instruments
2023
2022
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
627,889
401,899
Equity instruments measured at cost less impairment
-
10
Carrying amount of financial liabilities
Measured at amortised cost
550,880
2,587,677
VFX FINANCIAL PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 21 -
17
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
630
Amounts owed by group undertakings
386,786
97,373
Other debtors
240,473
304,526
Prepayments and accrued income
132,686
987
760,575
402,886
The Royal Bank of Scotland and Barclays Bank PLC both have a charge of deposit over funds held by them in respect of foreign exchange transactions.
18
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
70,812
149,282
Amounts owed to group undertakings
1,612,473
Taxation and social security
98,777
61,331
Other creditors
347,567
288,606
Accruals and deferred income
132,501
537,316
649,657
2,649,008
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
33,523
21,658
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.
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
4,250,000
2,750,000
4,250,000
2,750,000
During the period, 1,500,000 ordinary shares were issued at par to provide additional working capital.
VFX FINANCIAL PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 22 -
21
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
76,681
92,625
Between two and five years
223,654
300,335
92,625
The Company entered into a lease agreement on the 26 August 2022 for a term of five years and has break clause in September 2024.
22
Events after the reporting date
There are no matters to report.
23
Related party transactions
Transactions with related parties
During the Period the company entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
As at 31 October 2023, the period end, the parent company, Nuova Capital Ltd owed VFX Financial PLC (the Company) £61,223. This amount is repayable on demand.
As at the period end, the subsidiary VFX PT LDA owed the Company £4,113. This amount is repayable on demand.
As at the period end, the subsidiary VFX Global Payment Inc owed the Company £175,053. This amount is repayable on demand.
24
Directors' transactions
During the period, the Company repaid the total balance of £288,484 to director Mr. N England of his unsecured loan to the Company. There are no outstanding directors' balances as at 31 October 2023.
25
Ultimate controlling party
The immediate parent undertaking of the Company is Nuova Capital Ltd, a company incorporated and registered in England and Wales and with the register office address 32-38 Dukes place.
There is no ultimate controlling party of the Company.
The smallest and largest group in which the results of VFX Financial PLC are consolidated is headed by Nuova Capital Ltd. These are available for inspection at The Registrar, Companies House, Crown Way, Cardiff, CF14 3UZ.
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