Registered number: 06035209
NVAYO LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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NVAYO LIMITED
COMPANY INFORMATION
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D Harper (appointed 30 June 2022, resigned 6 February 2023)
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W Wellinghoff (resigned 1 March 2023)
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A Vicente (appointed 1 March 2023)
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P Goodfellow (resigned 25 January 2022)
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R M Plant (appointed 2 October 2023)
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Chartered Accountants & Statutory Auditors
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NVAYO LIMITED
CONTENTS
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Independent Auditors' Report
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Statement of Comprehensive Income
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Statement of Financial Position
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Statement of Changes in Equity
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Notes to the Financial Statements
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NVAYO LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The principal activity of Nvayo Limited (‘Nvayo' or ‘the Company’) is to issue electronic money in multiple currencies via the issuing of electronic wallets and prepaid cards to its customers. In order to carry out that activity, the Company is authorised and regulated by the Financial Conduct Authority (‘FCA') under the Electronic Money Regulations 2011 to issue electronic money and conduct payment services.
The Company specialises in making financial services quick and easy for its customers through a wide range of innovative financial services including issuing electronic money, payment processing, foreign exchange dealing and issuance of prepaid payment cards.
During 2023, the FCA imposed restrictions on Nvayo Limited, the requirement currently restricts all regulated activity and applies an asset restriction. Despite an appeal, the restrictions remain in place, leading the directors to prepare these financial statements on a basis other than going concern. The Company is now going through a series of remediations with the appointed Skilled Person and FCA in order to facilitate the voluntary return of customers' safeguarded funds. Additional details can be found in the basis other than going concern Note 2.4 and post balance sheet events Note 24.
During the year, safeguarded funds rose from £6.1 million to £9.4 million. However, capital decreased from £7.4 million to £6.2 million due to a loss of £1.2 million for the year, compared to a profit of £1.8 million in 2021.
As noted above the financial statements have been prepared on a basis other than going concern. Consequently, intangible assets of £2.1m were written off as value-in-use was assessed as Nil.
As detailed in the statement of comprehensive income, turnover decreased from £9.8m in 2021 to £8.0m in 2022 and the Company made loss for the year of £1.2m (2021: £1.8m profit).
Principal risks and uncertainties
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Risk management is an integral part of managing the business. Due to the nature of the financial services offered, Nvayo has identified eight principal risks and uncertainties.
Regulatory risk:
Regulatory risk is the risk that the Company does not meet all its regulatory requirements as the scale and pace of regulatory change continue to increase. As an FCA licensed electronic money institution, Nvayo is required to abide by the Electronic Money Regulations 2011, Payment Service Regulations 2017, FCA Handbook and various regulations covering financial crimes.
During 2023, the FCA suspended all activities in relation to Nvayo’s electronic money authorisation as a result of issues related to compliance procedures. The decision was subsequently appealed, however, the Upper Tribunal has agreed not to suspend the restriction that was placed on the company. The Company is now going through a series of remediations with the appointed Skills Person and FCA in order to facilitate the voluntary return of customers' safeguarded funds.
Currency Risk:
Foreign currency exchange risk is the risk that the value of a financial instrument will vary with respect to foreign currency fluctuations. The Company monitors this risk and reviews policies on a regular basis to minimise this risk.
Financial Crime Risk:
Financial crime risk is the risk that Nvayo may be subject to or cause the facilitation of financial crime through its business operations thereby causing significant risk exposure to financial, reputational, and regulatory controls.
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NVAYO LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The Company is now going through a series of remediations with the appointed Skills Person and FCA in order to facilitate the voluntary return of customers' safeguarded funds.
Operational Risk:
Operational risk is the risk of failure in internal processes affecting employees, business processes, and customers. The business operates operational processes with flexible resourcing across multiple global locations.
Credit Risk:
Credit risk is the risk of financial loss to the Company, as a result of chargebacks or unauthorized transactions, or where a customer will fail to meet their contractual obligations.
Due to the nature of the services offered to customers, the Company can prevent customers from going overdrawn on their wallet or prepaid card and has controls in place to manage chargeback or unauthorised transaction risks.
Capital and Liquidity Risk:
The Company ensures that it maintains sufficient regulatory capital, own funds, and liquid resources to continue to operate with a stable foundation within the regulatory environment, as well as to cover likely future settlement and client safeguarding obligations and meet its ongoing liabilities.
Technology and Data Security risk:
Technology and data security risk is the risk of the inability to cope with unscheduled downtime or maintain adequate systems and services to meet business demands, or data loss due to poor data security infrastructure.
Business Continuity and Disaster Recovery Risk:
There were no material incidents in 2022 that impacted the operation of the business. However, in 2023 the Company faced regulatory restrictions stemming from supervisory notice restricting all operations of the company, and its ability to trade. Consequently, the directors have prepared these financial statements on a basis other than going concern.
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NVAYO LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Financial key performance indicators
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The Board monitors the.progress of the Company by reference to the following KPIs:
2022 2021 % Change
£ £
Revenue 8,003,429 9,846,910 (19%)
Administrative Expenses 7,613,693 6,561,035 16%
Profit/(loss) before tax (1,209,852) 1,806,802 (167%)
Intangible asset additions 871,616 997,309 (13%)
Capital & Reserves 6,216,687 7,426,539 (16%)
Return on Equity (19.46%) 30% (35%)
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NVAYO LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Directors' statement of compliance with duty to promote the success of the Company
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The Directors of the company are aware of the requirement to act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefits of its shareholders, customers, suppliers and other stakeholders. In considering this duty, the Directors consider the following stakeholders:
Employees
The Company employs a dedicated team, and their contributions are highly valued. The Company considers people to be our greatest asset and takes into account the interests of all employees when making decisions. The Directors and Executive team ensure that the business is kept informed about important developments through various channels.
Shareholders
The Directors have regular contact with the shareholders in order to maximise the company's long-term growth prospects.
Customers
The Directors prioritise compliance with regulation and best practice to ensure the funds of relevant customers are protected while ensuring each customer’s best interests are served in accordance with their risk appetite and commercial agreements. The Directors and senior leadership team work closely with customers to build long term relationships.
Regulators
The Directors prioritise compliance with regulations and best practice to ensure the funds of customers are protected. The Directors work closely in partnership with regulators to ensure a strong working relationship and adequate capital controls. During 2023, the FCA suspended all activities in relation to Nvayo’s electronic money authorisation as a result of issues related to compliance procedures. The Company has been working closely with the regulators and external parties to ensure all regulatory matters are being addressed and processes strengthened.
Suppliers
The Company has various key supplier relationships, which work more as a partnership to ensure the smooth running of the business.
The Environment
The Company is committed to minimising the environmental impacts of the business operations. The Board seeks to reduce, where possible, our environmental footprint.
This report was approved by the board and signed on its behalf.
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NVAYO LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
Directors' responsibilities statement
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The directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business as stated in note 2.4, the company accounts have been prepared on a basis other than going concern..
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 to 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 loss for the year, after taxation, amounted to £1,209,852 (2021 - profit £1,826,606).
The directors who served during the year were:
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P Goodfellow (resigned 25 January 2022)
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D Harper (appointed 30 June 2022, resigned 6 February 2023)
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W Wellinghoff (resigned 1 March 2023)
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Research and development activities
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There was capitalised development in the year, the company determined that value-in-use for the asset was nil and recognised impairment loss of £2.1m (See Note 11).
Directors' Indemnity
The Company has made qualifying third party indemnity provisions for the benefit of its directors which were made during the year and remain in force at the date of this report.
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NVAYO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Disclosure of information to auditors
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company's auditors are aware of that information.
∙ This confirmation is given and should be interpreted in accordance with the provisions of s418 of the
Companies Act 2006.
Events after balance sheet date
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In August 2023 FCA suspended all activities in relation to Nvayo’s electronic money authorisation as a result of issues related to compliance procedures. The decision was subsequently appealed in January 2024, however, the Upper Tribunal has agreed not to suspend the restriction that was placed on the Company. As the company is unable to trade, the directors do not consider Nvayo to be a going concern and has prepared these financial statements on a basis other than going concern.
In March 2024, under directive from FCA, the company commenced a Skilled Person Review to further assess the Firm’s end-to-end financial crime framework, to assess the Firm’s compliance with relevant law, regulation, and guidance, and to raise recommendations to support/inform the Firm’s remediation plans. The scope also include an assessment of the remediated controls and the Skilled Person will act as a ‘gate-keeper’ to assess the Firm’s compliance with relevant obligations to enable return of customers' safeguarded funds.
Further details are included in the Basis other than going concern note 2.4.
The auditors, BKL Audit LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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NVAYO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF NVAYO LIMITED
Disclaimer of Opinion
We were engaged to audit the financial statements of Nvayo Limited (the ‘company’) for the year ended 31 December 2022 which comprise the Profit or Loss, the Balance sheet, the Statement of Changes in Equity and the related notes to the financial statements, including a summary of 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).
We do not express an opinion on the accompanying financial statements of the company. Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
Basis for disclaimer of opinion
As of the date of our report, the Financial Conduct Authority (FCA) has issued a directive that prohibits the Company from engaging in new business and restricts the Company's asset dealings until the FCA is satisfied with the concerns regarding the Ultimate Business Owner (UBO) and its Anti-Money Laundering (AML) procedures. The requirements also prevent existing customers from redeeming their investments unless the necessary AML due diligence has been remediated to the satisfaction of an independent third party under s166 Financial Services Markets Act 2000 (FSMA).
In response to the directive, the Company applied for a suspension of the effect of those requirements under Rule 5(5) of The Tribunal Procedure (Upper Tribunal) Rules 2008 ("the UT Rules"). On 5 February 2024, a refusal decision was issued.
The company has now appointed a skilled person, who is working with the FCA under a phased basis to return safeguarded funds to customers.
In addition to the above, the following issues also impacted our audit report:
∙The nature of the company’s operation involves high volume and low value transactions for which the company relies on third party processors to support the recording of transactions. In this environment, substantive procedures alone could not provide us with sufficient and appropriate audit evidence at the assertion level. This was further impacted as relationship with certain processors have now been curtailed. As such, we are unable to satisfy ourselves with the “completeness” and “valuation and allocation” of the safeguarded funds valued at £9,497,125, included in the statement of financial position and Note 17 of the financial statements for the year ended 31 December 2022;
∙We were also unable to obtain reliable evidence to verify the occurrence of revenue recognised of £361,249 that is included in Transaction Based Income, which form part of Turnover in the statement of comprehensive income and included in Note 3 of the financial statements for the year ended 31 December 2022; and
∙Reliable evidence was not available to verify the recoverability of Intercompany receivables of £10,502,035 that is included in Debtors in the statement of financial position and Note 14 of the financial statements.
These circumstances have significantly limited our ability to obtain sufficient appropriate audit evidence. Specifically, we were unable to determine whether any adjustments might have been found necessary in respect of Turnover, Debtors, and the recorded or unrecorded exposures that the company may incur as a result of the ongoing investigation and the effect these might have on the balance sheet, profit or loss, and the statement of changes in equity.
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NVAYO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF NVAYO LIMITED
Emphasis of matter
We draw attention to note 2.4 to the financial statements which explains that the directors do not consider it to be appropriate to adopt the going concern basis of accounting in preparing the financial statements.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The 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
Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have been unable to form an opinion, whether based on the work undertaken in the course of the 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.
Matters on which we are required to report by exception
Notwithstanding our disclaimer of an opinion on the financial statements, in the light of the knowledge and understanding of the company and its environment obtained in the course of the audit performed subject to the pervasive limitation described above, we have not identified material misstatements in the strategic report and the directors’ report.
Arising from the limitation of our work referred to above:
• we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and
• we were unable to determine whether adequate accounting records have been kept.
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:
∙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 directors’ remuneration specified by law are not made.
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NVAYO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF NVAYO LIMITED
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 responsibilities for the audit of the financial statements
Our responsibility is to conduct an audit of the company’s financial statements in accordance with International Standards on Auditing as adopted in the UK (ISAs (UK)) and to issue an auditor’s report. However, because of the matter described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Geeta Morgan FCA (Senior statutory auditor)
for and on behalf of
BKL Audit LLP
Chartered Accountants & Statutory Auditors
35 Ballards Lane
London
N3 1XW
16 August 2024
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NVAYO LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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Interest receivable and similar income
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Interest payable and similar expenses
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(Loss)/profit for the financial year
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Other comprehensive income for the year
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Total comprehensive (Loss)/ Income for the year
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The notes on pages 14 to 29 form part of these financial statements.
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NVAYO LIMITED
REGISTERED NUMBER: 06035209
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
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Debtors: amounts falling due within one year
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Safeguarded relevant funds held
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Creditors: Amounts Falling Due Within One Year
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Safeguarded relevant funds liability
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 14 to 29 form part of these financial statements.
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NVAYO LIMITED
REGISTERED NUMBER: 06035209
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2022
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NVAYO LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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Comprehensive income for the year
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Total comprehensive income for the year
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 14 to 29 form part of these financial statements.
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Nvayo Limited is a private company limited by shares incorporated under the Companies Act 2006 and is registered in England and Wales. The registered office address is 1 King William Street, London, EC4N 7AF.The principal activities of the Company and the nature of its operations are set out in the strategic report on page 1.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared in accordance with Financial Reporting Standard 102 (FRS 102) issued by the Financial Reporting Council.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies.
The following principal accounting policies have been applied:
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Financial Reporting Standard 102 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d); and
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of AU Card Limited as at 31 December 2022 and these financial statements may be obtained from Companies House..
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Exemption from preparing consolidated financial statements
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The Company is a parent company that is also a subsidiary included in the consolidated financial statements of a larger group by a parent undertaking established under the law of any part of the United Kingdom and is therefore exempt from the requirement to prepare consolidated financial statements under section 400 of the Companies Act 2006.
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Basis other than going concern
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The financial statements have not been prepared on a going concern basis. In 2023 the Company faced regulatory restrictions stemming from supervisory notice restricting all operations of the company, and its ability to trade. Consequently, the directors have prepared these financial statements on a basis other than going concern.
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The functional currency of Nvayo Limited is considered to be pounds sterling because that is the currency of the primary economic environment in which the company operates.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:
Transaction Based Income
The Company generates income from cardholder transactions. This revenue includes activity fees, interchange, other foreign exchange and ATM fees. The consideration for transaction based revenue is withdrawn from cardholder balances.
Intercompany Management Fees
The company charges income for usage of its platform. Revenue is recognised based on an agreed fee with the parent company.
The parent company also utilised Nvayo for its e-money activities. For this service, Nvayo charges a fee based an agreed calculation per annum when the service is provided.
Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight-line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
During the year, the company recognised £0.87m as capitalised development (Note 11). At the end of the year, the directors determined that value-in-use of the intangible asset is Nil and subsequently the entire carrying amount of the asset at £2.15m (Note 11) has been recognised as impaired in the Income statement.
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
The tangible assets are stated at their Net Realizable Value (NRV) due to the entity no longer being a going concern. Net Realizable Value represents the estimated amount that can be obtained from selling the assets, less any costs associated with their sale or disposal. Depreciation on computer equipment charged at a rate 33% using the straight line method until status changes from going concern to non-going concern.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. Prior to being assessed as impaired, Intangible asset, Software, was being amortised over 3 years.
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Impairment of non-financial Assets
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At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
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 trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Financial instruments (continued)
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traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Judgments in applying accounting policies and key sources of estimation uncertainty
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Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Directors make estimates and assumptions concerning the future based on theri knowledge of the business and the markets it operates in . The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. Areas considered to be potenially material to the financial statements include the provision for irrecoverable debts.
The following are the critical judgements, apart from those involving estimations that the directors have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Capitalised Development
Development costs have been capitalised in accordance with the requirements of FRS 102. For the year under audit, management has recognised £0.87m of development cost, and an impairment loss of £2.1m, exercising judgment in the cost types and quantum of the amount that are recognised.
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An analysis of turnover by class of business is as follows:
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Intercompany Management fees
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Analysis of turnover by country of destination:
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Europe including United Kingdom
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Government grants receivable
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Profit on disposal of tangible assets
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The operating (loss)/profit is stated after charging:
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Other operating lease rentals
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During the year, the Company obtained the following services from the Company's auditors:
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Fees payable to the Company's auditors in respect of:
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The auditing of accounts of associates of the Company
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Staff costs were as follows:
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Cost of defined contribution scheme
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A proportion of staff costs relating to employees developing intangible assets for the company have been capitalised and are therefore included in software development additions for the year.
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The average monthly number of employees, including the directors, during the year was as follows:
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Other interest receivable
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Interest payable and similar expenses
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Other loan interest payable
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Current tax on profits for the year
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Taxation on profit/(loss) on ordinary activities
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Factors affecting tax charge for the year
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The tax assessed for the year is lower than 2021 ,the standard rate of corporation tax in the UK of 19% (2021 - 19 %). The differences are explained below:
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(Loss)/profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
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Capital allowances for year in excess of depreciation
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Adjustment in research and development tax credit leading to an increase (decrease) in the tax charge
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Unrelieved tax losses carried forward
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Other differences leading to an increase (decrease) in the tax charge
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Total tax charge for the year
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Factors that may affect future tax charges
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Future tax charges may significantly affected by changes in tax rates.
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Charge for the year on owned assets
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Charge for the year on owned assets
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Investments in subsidiary companies
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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The following was a subsidiary undertaking of the Company:
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Nvayo Global Services Private Limited
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Amounts owed by group undertakings
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Prepayments and accrued income
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The Company holds monies on behalf of clients in accordance with the Electronic Money Regulations of its regulator, the Financial Conduct Authority. Included within creditors due within one year is the corresponding liability of monies owed back to clients of the Company.
The difference between safeguarded funds held and safegudarded liability is £840,438 (2021: £2,535,805), and is held in the safeguarded accounts with the parent company AU Card LLC that is included with in debtors note 14.
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Cash and cash equivalents
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Creditors: Amounts falling due within one year
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Safeguarded relevant funds liability
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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The Company holds monies on behalf of clients in accordance with the Electronic Money Regulations of its regulator, the Financial Conduct Authority. Safeguarded funds held is the corresponding cash of monies owed back to clients of the Company.
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Creditors: Amounts falling due after more than one year
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Allotted, called up and fully paid
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7,851,580 (2021 - 7,851,580) Allotted, called up and fully paid shares of £1.00 each
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Other reserves
This represents capital contributions received from shareholders for no additional shares in the company.
Profit and loss account
The profit and loss reserve represents accumulated comprehensive income for the year and prior periods less any dividends paid.
During the year, the Directors determined that it would be more appropriate to separately disclose Safeguarded relevant funds held and Safeguarded relevant funds liability in the statement of financial position. The comparative figures in the primary statements and notes have been restated to reflect the new policy
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Cash and Cash Equivalent (Note 16)
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Safeguarded funds Held (Note 15)
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The Company operates a defined contribution pension scheme. 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 £67,910 (2021 - £63,689). The contributions of £13,653 (2021 - £10,854) were outstanding to the fund at 31 December 2022.
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NVAYO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Related party transactions
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The Company has taken advantage of the exemption from the requirement to disclose transactions with wholly owned group companies.
As at 31 December 2022, the Company owed C Scanlon, the ultimate beneficial owner £1,985,591 (2021- 2,020,000) which is included within other loans. During the period interest was charged on this loan of £88,948 (2021 - £61,094).
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The ultimate parent company is PMA Media Group Inc. a Company incorporated in USA. and the controlling party is Christopher Scanlon.
The Company's immediate holding company during the year is AU Card Limited, a company incorporated in the UK under the same trading address.
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Post balance sheet events
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In August 2023 FCA suspended all activities in relation to Nvayo’s electronic money authorisation as a result of issues related to compliance procedures. The decision was subsequently appealed in January 2024, however, the Upper Tribunal has agreed not to suspend the restriction that was placed on the Company. As the Company is unable to trade, the directors do not consider Nvayo to be a going concern and has prepared these financial statements on a basis other than going concern.
In March 2024, under directive from the FCA, the Company commenced a Skilled Person Review to further assess the Firm’s end-to-end financial crime framework, assess the Firm’s compliance with relevant law, regulation, and guidance, and raise recommendations to support/inform the Firm’s remediation plans. The scope also includes an assessment of the remediated controls and the Skilled Person will act as a ‘gate-keeper’ to assess the Firm’s compliance with relevant obligations to enable return of customers' safeguarded funds.
Further details are included in the Basis other than going concern note 2.4.
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