The directors present the strategic report for the year ended 31 December 2023.
Remittance360 was incorporated on 30 August 2019. The activities undertaken during the year ended 31 August 2020 primarily involved setting initial banking arrangements, market research, development of proprietary software, as well as the policies and procedures, ensuring compliance with FCA regulations in preparation to AEMI license application. Three directors having experience in the banking and legal industries, as well as company finance, FinTech, remittance and AML had been appointed to the Board.
The Company had been granted AEMI license by the FCA on 30 October 2020. The share capital of £350,000 was fully paid-up, thus enabling R360 to meet capital requirements for EMI as set out by the FCA. A number of contracts with perspective payment partners were signed.
The share capital increased to £473,500.
The Company registered international payment system R360 with the National Bank of Ukraine, appearing on the regulator’s registry from 28.02.2022, four days after the start of the Russia-Ukraine War. During the year, further work was conducted on set up of systems and processes and testing partner integrations.
By December 2022, the Company finished technical integration of payment systems with its primary partners and registered two agreements with payment system participants from Ukraine. On 29.12.2022, the first successful test transfer was made in the live environment prior to going live in January 2023.
In January 2023, the Company has launched the international money remittance operations, Ukraine being the core pay-out market with sending partners from the UK and the EU.
Future developments
The Company successfully launched its business operations in January, following the reporting period. Since the market launch, the Company has been actively expanding its money remittance operations by acquiring new partners and developing a diverse range of remittance methods. In line with our commitment to convenience and flexibility in money transfers, we plan to introduce electronic money within our service portfolio. This will allow our customers to leverage modern technology and gain convenient access to their funds.
Simultaneously, the Company is dedicated to further improving the performance and security of R360 payment system while ensuring strict compliance with industry regulations. By prioritizing continuous enhancements, the Company aims to provide its customers with a seamless and reliable payment experience while upholding the highest standards of security and data protection.
In anticipation of a competitive business environment, the directors remain proactive in their approach. The Company's agile structure, combined with its low fixed costs and robust liquidity position, allows for flexibility and adaptability to uncertainties common in the startup stage. The directors are confident in the Company's financial position and believe that identified risks are being effectively managed to ensure sustainable growth and success.
Business Model: The risk that the Company's business model is not sustainable due to poor execution of the strategic plan or inability to adapt to changing market conditions.
Financial: Risks that could impact the Company's financial profile, particularly cash flow risk arising from the failure to maintain an adequate working capital position. The Company minimizes financial risk exposure by keeping assets and liabilities in the functional currency and avoiding credit risks whenever possible.
Compliance: The risk of non-compliance with relevant legislations, rules, and regulations, which could result in harm to customers, financial losses, or reputational damage to the Company.
Operational: The risk that failures in people, processes, or internal and third-party systems could cause service disruptions or financial losses.
War in Ukraine: The persistent conflict in Ukraine introduces a risk, primarily the potential disruptions to the Company's business due to its reliance on Ukrainian banks for financial transactions in this market. The changing legislative landscape in the region also poses an ongoing challenge, potentially impacting the Company's ability to operate effectively. However, the Company remains committed to its Ukrainian operations and will adapt as necessary to navigate these risks.
Furthermore, it is important to note that the Company's shareholder and Managing Director have relocated from Ukraine to Germany. This decision was made to ensure the continuity and stability of the organization in light of the war in Ukraine.
During the financial year to 31 December 2023, the directors have considered the needs of the Company's stakeholders as part of their decision-making process. Specifically, the directors consider the likely consequences of its decisions in the long term and the need to act fairly between its stakeholders. The Company’s key stakeholders, why they are important to the Company and how they have been engaged are:
Clients: Clients are central to the business. R360’s business model is targeting under-banked customers, students, millennials, freelancers and migrants who are looking for reliable, stable and easy-to-use money remittance solution. R360 aims to provide a high-quality product in a timely manner tailored to the needs of its clientele in a cost-effective way, while being committed to having healthy controls, policies and procedures in place to mitigate client risk and as defined by its supervision authority (FCA).
In striving to achieve its mission, the Company’s value proposition will include: the vast geography of the payment system participants, low commissions, favourable currency conversion rates, the ability to make transfers online 24/7 and other.
Shareholders: Delivering for the Company's shareholders ensures that the business continues to be successful in the long term and can therefore continue to deliver for all our stakeholders. The current sole shareholder is actively engaged on a full-time basis in the daily management and running of Remittance360 and this allows for complete transparency in operation.
Employees: The Company endeavours to have employees that are inspired and motivated. Regular training, including training in relation to customer due diligence and all aspects of AML, is provided to allow employees to perform their duties.
Partners and suppliers: Building strong relationships with payment partners and other suppliers enables the Company to obtain the best value, service and quality. The directors work hard to understand our supply chain and develop deeper and more strategic relationships with key suppliers. We recognize the importance of partner feedback and prioritize flexibility during the integration process. Partner due diligence is an integral part of the company’s day-to-day activities. In doing this we partner with industry leaders such as Dow Jones and Kroll to carry out checks. Risk based approach is used to tailor the amount of due diligence procedures according to country specific and other risks.
Impact of operations on the community and the environment: The Company's mission is oriented on global financial stability and sustainability, which it extends to the society and environment at large. The company is dedicated to having a positive environmental impact and accomplishes this on a day-to-day basis by adopting remote working, which minimizes the company's operational footprint. The Company hopes to lessen the effect people have on the environment by empowering customers to manage more of their financial lives electronically.
Maintaining a reputation for high standards of business conduct: The Company's most important commitment is to its clients, whose interests are represented by regulatory authorities such as the Financial Conduct Authority (FCA) and other industry organizations. The Company collaborates closely with these organizations to promote a healthy industry, and they keep in touch on a regular basis about issues such as company conduct, compliance, and sustainable business practices.
Acting fairly across stakeholders: The Company is committed to acting fairly and transparently with different stakeholder groups and individuals.
Likely consequences of any decision in the long term: When making decisions, the Board considers all of the interests articulated above. In addition to the immediate impact, these decisions consider the potential long-term impacts on different stakeholders.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
No interim dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
JF Francis Ltd were re-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.
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.
Basis for 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
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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. We designed procedures capable of detecting non-compliance with laws and regulations and irregularities, including fraud, through:
Obtaining an understanding of the Company and its industry through discussions with management, and the application of our cumulative audit knowledge and experience of the industry to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements including tax, pensions, employment, health and safety, data protection and anti-bribery legislation, Electronic Money Regulations 2011(including Capital Adequacy requirements) and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006.
Identifying possible risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, whether there was potential for management bias in the reporting of events and transactions in the financial statements relating to principal accounting estimates and uncertainties.
Our audit procedures were designed to respond to the identified risks relating to non-compliance with laws and regulations and irregularities (including fraud) that are material to the financial statements.
Our audit procedures in relation to non-compliance with laws and regulations included, but were not limited to:
Discussing with the directors and management their policies and procedures regarding compliance with laws and regulations and reviewing correspondence with regulators and with solicitors; and
Communicating identified laws and regulations with the audit team and remaining alert to any indications of non-compliance throughout the audit; and
Considering the risk of non-compliance with laws and regulations;
Reviewing minutes from the board meetings and
Considering whether the financial statement disclosures fairly represent the underlying transactions.
Our audit procedures in relation to irregularities and fraud included, but were not limited to:
Making enquiries of directors and management as to where they considered there was susceptibility to fraud, and whether they had knowledge of actual, suspected or alleged fraud; and
Gaining an understanding of the internal controls established to mitigate risks relating to fraud; and
Discussing the risk of fraud and management bias with the audit team and remaining alert to any indications of fraud and management bias throughout the audit; and
Addressing the risk of management override of controls by testing journal entries, considering the rationale behind significant or unusual transactions, and reviewing accounting estimates
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management.
Because of these inherent limitations, 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. This 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 is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditors responsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.
The income statement has been prepared on the basis that all operations are continuing operations.
Remittance360 Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 85-87 Bayham Street, London, NW1 0AG.
The Company is a UK Authorised Electronic Money Institution ("AEMI"), FRN 901072. The company was set up to provide money remittance services (the core of the business model) and electronic money.
The financial statements are prepared in euros, which is the functional and presentational currency of the company. Monetary amounts in these financial statements are rounded to the nearest €.
Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including trade and other payables, 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 payables 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Subordinated debt. Subordinated debt can only be paid in the event of a liquidation after the claims of other higher priority creditors have been met. Subordinated debt is carried at amortised debt.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
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.
There are no critical judgements or key estimates in this financial period.
An analysis of the company's revenue is as follows:
The audit fee is payable by a related company.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
The company has suffered loss for the period and hence does not have corporation tax expense.
The loss of €180,023 (2022 - €119,773) is carried forward and originates a deferred tax asset of 2023 - €11,448 (2022 - €15,369 ) at the rate of 19%. The management has decided not to recognise the asset in the financial statements as there is no certainty about the timing of future profits and the relevant tax rates.
There are no financial assets or liabilities at fair value through profit or loss.
The financial assets and liabilities at amortised cost are presented in these financial statements.
During the year, the subordinated debt was repaid in full.
The Company met the capital adequacy requirement by increasing the share capital in the year (Note 16) and provision of subordinated by two of the directors (note 12 and 18).
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 company share capital issued and fully paid at the end of the period was €531,169 and was translated into GPB by using the spot rate of 1.121793. The value of share in GPB was £473,500 divided in 9,470 ordinary shares of £50 each. The shares were issued and allotted at par and paid up in Euro.
During the period 1,470 ordinary shares were allotted nominal value £50 each and total nominal value £73,500.
The shareholder's liabilities for capital injection and their settlement were measured using spot rate of EUR/GBP published at investing.com at the date of payment.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the company. All ordinary shares rank equally with regard to the company's residual assets.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The company's key management personnel are considered to be the directors. Two of the directors were remunerated during this period as detailed in Note 7.
Shareholders funds at the beginning of the period was €NIL.
As of the end of the period, the company has outstanding subordinated loans from related parties. The details are as follows:
- Yuri Poluneev (CEO): €NIL (2022 - €10,000)
- Maryna Niemkova (Director and Shareholder): €0 (2022 - €19,500)
No interest is charged on these subordinated loans. Further information is disclosed under Note 11.
In addition, the company has entered into a licensing agreement with its close link Own Bit LLC for the use of a money transfer platform software. The related company is controlled by the company's shareholder. The terms of the agreement permit license fee of 0.01% of turnover limited to remittance operations with a maximum of 10 (ten) partners, to be upgraded to a higher fee level when the number of partners increases.
No dividends were paid in the period in respect of shares held by the company's directors.