Company registration number 12230765 (England and Wales)
MONTIFY LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
MONTIFY LTD
COMPANY INFORMATION
Directors
P D Sawyer
N Timofejev
Company number
12230765
Registered office
New London House
6 London Street
London
ECR 7LP
Auditor
Grunberg & Co Ltd
5 Technology Park
Colindeep Lane
Colindale
London
United Kingdom
NW9 6BX
MONTIFY LTD
CONTENTS
Page
Strategic report
3 - 5
Directors' report
1 - 2
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Statement of financial position
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 22
MONTIFY LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

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

Principal activities

The principal activity is that of an electronic money institution focused on providing payment accounts.

Results and dividends

The results for the year are set out on page 9.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

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

P Bavin
(Resigned 10 February 2023)
P D Sawyer
N Timofejev
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.

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:

 

 

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.

MONTIFY LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
On behalf of the board
N Timofejev
Director
6 August 2024
MONTIFY LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

Introduction

The Executive Management (“ExCo”) of Montify Ltd (herewith known as the “Firm”) present this Strategic report for the period from 1st January 2022 to 31st December 2023 with the goal of providing a balanced and comprehensive analysis of the Firm's development in its initial accounting periods and its future outlook. The review is consistent with the current size, nature, and complexity of the Firm.

Principal activities

The Firm is an Authorised Electronic Money Institution (“AEMI”) with regulatory permissions to issue electronic money (“e-money”) and provide payment services. Payment services include:

  1. Services enabling cash placement on a payment account.

  2. Services enabling cash withdrawals from a payment account.

  3. Execution of payment transactions (not covered by a credit line).

  4. Execution of payment transactions (covered by a credit line).

  5. Issuing payment instruments or acquiring payment transactions.

  6. Money remittance.

 

Fair review of the business

 

The Firm was incorporated in the United Kingdom on 27th September 2019 under UK Companies House number 12230765, with a Registered Office address at New London House, 6, London Street, London, EC3R 7LP.

The Firm was authorised as an AEMI by the Financial Conduct Authority (“FCA”) under Firm Reference Number 901069 on 4th August 2020. The Firm thus commenced trading on the same date. The Firm’s ExCo have taken every opportunity to progress the business in line with its business plan and will continue to do so on an ongoing basis post the reference date of this Strategic Report.

The Firm’s development in the period in question consisted of ensuring organic growth both externally and internally. Essentially, ‘externally’ relates to the growth of the Firm’s client base and therefore focus on generating income whilst ‘internally’ relates to the corresponding increase in resources, both staffing and systems, to ensure the satisfactory management of governance, systems and controls and other major risks e.g., Compliance and Money Laundering Prevention.

During the course of the reporting period, the Firm continued making improvements to its infrastructure including system integration, development of new products and acquisition of new customers and business.

On 29 September 2023, the directors and shareholders entered into a share purchase agreement whereby all ordinary shares are to be purchased third parties. As part of this agreement, the purchaser transferred 200,000 to the company as a working capital loan, which will either convert into Ordinary Shares or a Convertible Loan Note depending on whether approval from The Financial Conduct Authority (FCA) is obtained. Please refer to Note 13 for further details of the conversion. As at the date of this report, no application has been made to the FCA and therefore the agreement has not been concluded. Preparations have begun for this process, however, with the intention to submit the application to the FCA in August or September 2024. Management do not anticipate any issues with approval of the transfer.

MONTIFY LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Principal risks and uncertainties

 

ExCo is responsible for all the Firm’s risk-related management policies and approves the parameters within which all aspects of risks are managed. During its normal course of business, the Firm is exposed to certain financial risks being, Earnings Growth Risk, Operational Risk, Liquidity Risk, Credit and Foreign Exchange Risks.

Earnings Growth Risk

The risk to both regulatory capital and shareholder value if the Firm is unable to grow its key products and services as described in ‘Principal Activities’ above, or are unable to add additional, complimentary products and services to assist in the growth of the Firm’s Balance Sheet.

ExCo has implemented an organic business growth model, where development costs and day-to-day operating expenses are managed in line with revenue growth. This ensures the Firm’s continued compliance with FCA regulatory capital requirements and is aligned with the growth in customer payments revenue.

Operational Risk

The risk of a direct or indirect losses resulting from the failure or ‘not fit for purpose’ information technology systems, governance, processes or controls due to hardware or software failure, staff or ExCo, or external factors. To manage, monitor and control operational risks, the Firm maintains a framework of policies, procedures and controls which are designed to ensure an appropriate and satisfactory environment within which operational risk can be appropriately monitored and controlled.

Liquidity Risk

The Firm does not maintain an elevated level of liquidity risk as the Firm's funds on an operational level and all safeguarded customer funds designated as ‘relevant funds’ are maintained in separate accounts with UK and EU credit institutions for which all required due diligence has been undertaken. The Firm’s shareholders via ExCo, maintain a policy of ensuring the adequate availability of financial resources for the Firm's current and future obligations i.e., on a ‘going concern’ basis.

Credit Risk

The Firm’s credit risk lies with its banking partners. The Firm uses diversification methods and continually monitors the potential for onboarding new credit institutions to diversify and minimise any possible credit risks however, the Firm believes that any credit risk exposure is negligible.

Foreign Exchange Risk

The Firm operates in a number of currencies and manages foreign exchange exposure by carefully matching assets and liabilities in each currency in order to avoid any exposure. All customer foreign exchange transactions are immediately executed at the prevailing foreign exchange market rates and thus the Firm does not maintain open currency positions longer than is necessary.

Key performance indicators

 

ExCo approves the Firm’s annual budget and reviews performance against budget on a monthly basis. Similarly, KPIs such as revenue, net profit and net assets are carefully monitored.

Revenue for the year-ending 31st December 2023 amounted to £193,940 and at the year-end, the Firm had net liabilities of £139,346. Whilst revenue compares favourably year-on-year, there is a significant reduction in equity, however, the Firm has plans in place to increase investment in the company.

ExCo can report an ongoing customer acquisition stream despite the circumstances following Russia’s invasion of Ukraine on 24th February 2022 and are confident of continued sustainable and profitable operations going forward.

MONTIFY LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Promoting the success of the company

 

ExCo hereby confirms compliance with Section 172{1) of the Companies Act 2006 in that they acted in good faith promoting the success of the Firm for the benefit of its stakeholders, and in doing so had regard (amongst other matters) to:

On behalf of the board

N Timofejev
Director
6 August 2024
MONTIFY LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MONTIFY LTD
- 6 -
Opinion

We have audited the financial statements of Montify Ltd (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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.

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

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

MONTIFY LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF MONTIFY LTD
- 7 -
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:

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.

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.

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

 

- the nature of the industry and sector across the UK and whether the financial results of our client differed from the industry trends.

-the legal and regulatory framework that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements.

-the matters discussed among the audit engagement team during the planning process regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

Audit procedures performed included reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements; discussions with the directors on their own assessment of the risks that irregularities may occur either as a result of fraud or error, their assessment of compliance with laws and regulations and whether they were aware of any instances of non-compliance, including any potential litigation or claims; performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; inspection of relevant legal correspondence and board minutes; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

MONTIFY LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF MONTIFY LTD
- 8 -

Based on our understanding of the industry, we identified that the principal risks of non-compliance with laws and regulations related to the Financial Conduct Authority’s (“FCA”) regulations, Anti-Bribery and Corruption legislation, Anti-Money Laundering legislation and UK tax legislation, 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 financial statements such as the Companies Act 2006,Employment Laws, Tax and Pensions legislation and Health & Safety legislation. Audit procedures performed by the engagement team include:

 

- Review of correspondence and reports to the regulators, including the FCA

- Obtaining confirmations from third parties to verify the existence of cash balances

- Identifying and testing journal entries, including those journals posted to unusual account combinations and those posted with unusual descriptions.

No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity's controls, and the nature,timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. There is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with the ISAs (UK).

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's 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.

Gedalia Waldman BA FCA
Senior Statutory Auditor
For and on behalf of Grunberg & Co Ltd
3 September 2024
Chartered Accountants
Statutory Auditor
5 Technology Park
Colindeep Lane
Colindale
London
United Kingdom
NW9 6BX
MONTIFY LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
5
193,940
150,424
Cost of sales
(50,141)
(75,497)
Gross profit
143,799
74,927
Administrative expenses
(271,595)
(268,888)
Loss before taxation
(127,796)
(193,961)
Tax on loss
9
-
0
-
0
Loss for the financial year
(127,796)
(193,961)
MONTIFY LTD
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
280
510
Current assets
Debtors
11
7,584
3,549
Cash at bank and in hand
2,924,289
1,843,045
2,931,873
1,846,594
Creditors: amounts falling due within one year
12
(2,898,008)
(1,858,654)
Net current assets/(liabilities)
33,865
(12,060)
Total assets less current liabilities
34,145
(11,550)
Creditors: amounts falling due after more than one year
13
(173,491)
-
0
Net liabilities
(139,346)
(11,550)
Capital and reserves
Called up share capital
16
319,548
319,548
Profit and loss reserves
(458,894)
(331,098)
Total equity
(139,346)
(11,550)

The notes on pages 13 to 22 form part of these financial statements.

The financial statements were approved by the board of directors and authorised for issue on 6 August 2024 and are signed on its behalf by:
N Timofejev
Director
Company registration number 12230765 (England and Wales)
MONTIFY LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2022
319,548
(137,137)
182,411
Year ended 31 December 2022:
Loss and total comprehensive income
-
(193,961)
(193,961)
Balance at 31 December 2022
319,548
(331,098)
(11,550)
Year ended 31 December 2023:
Loss and total comprehensive income
-
(127,796)
(127,796)
Balance at 31 December 2023
319,548
(458,894)
(139,346)
MONTIFY LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
1
1,081,440
22,219
Investing activities
Purchase of tangible fixed assets
-
0
(580)
Net cash used in investing activities
-
(580)
Net increase in cash and cash equivalents
1,081,440
21,639
Cash and cash equivalents at beginning of year
1,842,730
1,821,091
Effect of foreign exchange rates
119
-
0
Cash and cash equivalents at end of year
2,924,289
1,842,730
Relating to:
Cash at bank and in hand
2,924,289
1,843,045
Bank overdrafts included in creditors payable within one year
-
0
(315)
MONTIFY LTD
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Cash generated from operations
2023
2022
£
£
Loss for the year after tax
(127,796)
(193,961)
Adjustments for:
Depreciation and impairment of tangible fixed assets
111
70
Movements in working capital:
(Increase)/decrease in debtors
(4,035)
942
Increase in creditors
1,213,160
215,168
Cash generated from operations
1,081,440
22,219
2
Analysis of changes in net funds
1 January 2023
Cash flows
Exchange rate movements
31 December 2023
£
£
£
£
Cash at bank and in hand
1,843,045
1,081,125
119
2,924,289
Bank overdrafts
(315)
315
-
-
0
1,842,730
1,081,440
119
2,924,289
3
Accounting policies
Company information

Montify Ltd is a private company limited by shares incorporated in England and Wales. The registered office is New London House, 6 London Street, London, ECR 7LP.

3.1
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 functional currency of the company is Euros as the day-to-day transactions predominantly occur in this currency. The presentational currency of the financial statements is Sterling as the company is incorporated in the UK and has opted to use this currency. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

MONTIFY LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Accounting policies
(Continued)
- 14 -
3.2
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. In particular, and as outlined in the Strategic Report, the company has received 200,000 of working capital funding from a new shareholder during the period. On completion of the share purchase agreement, the company will receive further financing of 350,000 from the lender. The directors have assessed the likelihood of this deal being accepted by the Financial Conduct Authority, and thus the additional funding being obtained, and do not expect any issues. The directors have also assessed performance and continued growth of the company, and have concluded that the company will remain a going concern. As such, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

3.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Account maintenance and average balance income

 

Account maintenance and balance income represents monthly fees for providing payment accounts to account holders and for the average monthly cash balances held within those accounts. This income is recognised in the period for which the service was provided.

 

Transaction income

 

Transaction income represents fees charged for payments and receipts initiated by account holders. Transaction income is recognised at the point the payment has been executed by the company.

 

3.4
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.

Fixtures and fittings
25% on cost
3.5
Cash and cash equivalents

Operational accounts

 

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.

 

Customer deposits

 

Cash and cash equivalents from customer deposits are held in segregated accounts with authorised credit institutions as part of the company's safeguarding policy. The company recognises a liability for customer deposits held in Montify accounts and cash collected from customers for payments that have not been processed.

 

The liability is recognised upon receipt of cash and derecognised when cash is delivered to the beneficiary. Cash that has been paid out but has not been delivered to the beneficiary account is reflected as cash in transit to customers.

MONTIFY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Accounting policies
(Continued)
- 15 -
3.6
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.

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.

MONTIFY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Accounting policies
(Continued)
- 16 -
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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

3.7
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.

3.8
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.

MONTIFY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Accounting policies
(Continued)
- 17 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

3.9
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.

3.10
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.

3.11
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.

4
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.

 

There are no judgements or key estimates other than those disclosed in these accounting policies.

MONTIFY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
5
Turnover
2023
2022
£
£
Turnover analysed by class of business
Fee income
193,940
150,424
2023
2022
£
£
Turnover analysed by geographical market
EU
110,322
89,969
UK
25,738
18,270
Rest of the World
57,880
42,185
193,940
150,424
6
Operating loss
2023
2022
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(36,526)
7,162
Fees payable to the company's auditor for the audit of the company's financial statements
24,600
24,000
Depreciation of owned tangible fixed assets
111
70
Operating lease charges
4,938
4,332
7
Employees

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

2023
2022
Number
Number
6
5
2023
2022
£
£
Wages and salaries
121,089
79,125
Social security costs
39,890
26,624
160,979
105,749
MONTIFY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
33,038
23,556
9
Taxation

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:

2023
2022
£
£
Loss before taxation
(127,796)
(193,961)
Expected tax credit based on the standard rate of corporation tax in the UK of 23.50% (2022: 19.00%)
(30,032)
(36,853)
Unutilised tax losses carried forward
30,032
36,853
Taxation charge for the year
-
-

At the balance sheet date, the company has tax losses of £459,467 (2022: £331,782), resulting in a potential deferred tax asset of £114,867 (2022: £82,945), in respect of unutilised trading losses. As it cannot be foreseen, with any underlying certainty, as to when this asset will be realised in the near future, it has not been recognised in the accounts.

The Finance Act 2021 was substantially enacted in May 2021 and has increased the corporation tax rate from 19% to 25% with effect from 1 April 2023. The deferred taxation balances have been measured using the rates expected to apply in the reporting periods when the timing differences reverse.

MONTIFY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
10
Tangible fixed assets
Fixtures and fittings
£
Cost
At 1 January 2023
580
Exchange adjustments
(135)
At 31 December 2023
445
Depreciation and impairment
At 1 January 2023
70
Depreciation charged in the year
111
Exchange adjustments
(16)
At 31 December 2023
165
Carrying amount
At 31 December 2023
280
At 31 December 2022
510
11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Prepayments and accrued income
7,584
3,549
12
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
14
-
0
315
Trade creditors
2,547,284
1,527,714
Taxation and social security
11,532
7,754
Other creditors
306,310
289,727
Accruals and deferred income
32,882
33,144
2,898,008
1,858,654

Of the £2,547,284 (2022: £1,527,714) trade creditors at year end, £2,494,580 (2022: £1,506,750) relates to customer deposits which are held in Montify accounts.

 

Of the trade creditors as above, £48,033 (2022: £20,964) represents customer payments not yet paid and therefore remains part of customer deposits.

 

Of the £479,801 other creditors at year end, £299,008 relates to directors' loans. Refer to note 17 for more details.

MONTIFY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
13
Creditors: amounts falling due after more than one year
2023
2022
£
£
Other creditors
173,491
-
0

Other creditors consists of a working capital loan of €200,000 from a current shareholder, received as part of the share purchase agreement entered into on 29 September 2023.

 

Under this agreement, the loan will either become a Convertible Loan Note or Ordinary Shares at the final closing of the agreement, depending on whether approval from the Financial Conduct Authority (“FCA”) is obtained.

 

If FCA approval is obtained, any residual unspent balance from the loan will become a Convertible Loan Note at the final closing of the agreement.

 

If FCA approval is not obtained, then the amount spent will become additional Ordinary Shares issued to the lender, and the residual value will be returned to the lender.

14
Loans and overdrafts
2023
2022
£
£
Bank overdrafts
-
0
315
Payable within one year
-
0
315
15
Cash and cash equivalents
2023
2022
£
£
Cash at bank - operational (including overdraft)
372,662
329,631
Cash at bank - safeguarding accounts
2,503,595
1,508,139
Cash in transit
48,033
20,964
2,924,290
1,858,734

Operational accounts represents the company's own operating cash balances for general corporate purposes.

 

Safeguarding accounts represents safeguarded funds related to the company's regulated E-Money services. Client funds are held in segregated accounts with authorised credit institutions as part of the company's safeguarding policy.

 

Of the £2,503,595 (2022: £1,508,139) safeguarding accounts at year end, £9,015 represents operational cash that has not yet been transferred to the company's operational accounts.

 

Cash in transit represents customer payments not yet paid and therefore remains part of customer deposits.

 

Refer to note 12 for more detail.

MONTIFY LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
16
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
'Ordinary €1 shares' of 91.27085714p each
350,000
350,000
319,448
319,448
'Ordinary £1 shares' of £1 each
100
100
100
100
350,100
350,100
319,548
319,548
17
Related party transactions

Future commission income to the value of £7,031 (2022: £7,050), is included within accruals and deferred income (note 10) which has been received from a related party under common control.

18
Directors' transactions

Dividends totalling £0 (2022 - £0) were paid in the year in respect of shares held by the company's directors.

Description
% Rate
Opening balance
Amounts advanced
Closing balance
£
£
£
Directors' current / (liability) account
-
284,510
14,498
299,008
284,510
14,498
299,008
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