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Registered number: 11920779









XPATE LIMITED









ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 DECEMBER 2023

 
XPATE LIMITED
 
 
COMPANY INFORMATION


Directors
M Safro 
A Zotova 




Registered number
11920779



Registered office
Level 18 40 Bank Street
Canary Wharf



London

E14 5NR




Independent auditors
BKL Audit LLP
Chartered Accountants & Statutory Auditor

35 Ballards Lane

London

N3 1XW





 
XPATE LIMITED
 

CONTENTS



Page
Strategic report
 
 
1 - 3
Directors' report
 
 
4 - 5
Independent auditors' report
 
 
6 - 9
Statement of comprehensive income
 
 
10
Statement of financial position
 
 
11 - 12
Statement of changes in equity
 
 
13
Statement of cash flows
 
 
14 - 15
Notes to the financial statements
 
 
16 - 29


 
XPATE LIMITED
 
 
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2023

Introduction
 
Xpate ltd ("the Company") is a fintech start-up that employs a design-centric approach to enhance global payment systems, catering to the evolving needs of expanding businesses.

Business review
 
The Company is dedicated to developing a merchant product that exceeds current market standards. Leveraging its extensive experience with e-commerce enterprises and a growing number of online merchants, Xpate is focused on delivering an integrated solution that combines multi-currency online payment methods with comprehensive spending capabilities. This approach enables new online businesses in the UK to commence operations swiftly and reinvest their earnings to drive growth without encountering unnecessary barriers.
The Company provides businesses with a singular, adaptable solution that consolidates all desired payment methods, addressing a broad spectrum of needs that would otherwise require the onboarding and integration of multiple partners. This unified framework encompasses internet acquisition, bank transfers, facilitation of payments through alternative payment methods (APMs), pre-built checkout systems, e-commerce platform plugins, and integration APIs. All funds acquired by merchants are settled immediately into their Xpate accounts, allowing for instant utilization for payments, withdrawals, or other business-related purposes.
Developments in 2023
In 2023, the Company continued to focus its efforts on the development of a new product, which was launched at the end of the year. This product distinguishes itself in the market through the integration of three core features: online card-acquiring functionality, instant settlements within xpate accounts, and enhanced spending capabilities.
To facilitate this development, the Company expanded its IT and product development teams, ensuring a successful product launch. Additionally, Xpate secured strategic partnerships with key financial institutions and technology providers, including The Currency Cloud Group Limited, Banking Circle, Integrated Finance, Silverflow and Mambu which is going to become the main client ledger in the future. These collaborations were established to support the merchant services.
As a Principal Member of both Visa and Mastercard in our capacity as an acquirer, Xpate is uniquely positioned to offer an expanded range of services. This dual membership enables us to provide enhanced security, expedited processing times, and more competitive pricing to our merchants.
The Company is headquartered in London, UK, and is authorized by the Financial Conduct Authority under the Electronic Money Regulations 2011 (firm reference number 901021) for the issuance of electronic money and payment instruments. The Company’s rapidly expanding team is distributed across three offices in London, Riga, and Singapore.

Page 1

 
XPATE LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023

Principal risks and uncertainties
 
Liquidity risk
The Company’s primary objectives are to maintain financial punctuality and to avoid any delays in settling payments with merchants. To mitigate liquidity risk, Xpate Ltd implements continuous monitoring and management of its current assets. Given that the Company’s business model involves interactions with both merchants and service providers, Xpate Ltd conducts thorough evaluations of each service provider to ensure their reliability and adherence to the terms of cooperation. Detailed analyses of financial flows, transactional uploads, and the reconciliation of financial statements are conducted to ensure the accuracy and timeliness of settlements. In collaboration with third parties, xpate seeks to minimize settlement periods, aiming to achieve daily settlements and prevent the prolonged holding of funds by third parties. Additionally, xpate Ltd maintains an excess reserve of its own funds to safeguard against potential liquidity risks.
Market risk
The Company’s employees diligently monitor trends within the fintech market, regulatory developments, and technological innovations, assessing the associated risks. This proactive approach enables Xpate to prepare in advance for any changes, ensuring the continuity of business operations and the provision of relevant solutions. The development of niche products further allows xpate to expand its client base by capturing market share in new sectors.
Business risk
Business risks encompass potential system failures, the impact of market downturns, and the loss of key personnel. xpate Ltd mitigates these risks by carefully selecting service providers that meet stringent Service Level Agreement (SLA) standards, thereby reducing the likelihood of financial and reputational losses. Critical tasks are allocated additional resources, divided among multiple employees, and implemented using principles such as "Need-to-know," "Least privilege," and "Separation of duties." The "four-eye" principle is also employed, significantly reducing the risk of inaccuracies and ensuring task continuity in the event of employee departures. xpate Ltd places a strong emphasis on continuous staff training, ensuring that employees remain informed and competent, which in turn enhances operational efficiency and mitigates business risks.
Operational risk
The Company is committed to ongoing staff training, promoting the development of a broad skill set that extends beyond the narrow confines of individual business units. By sharing company-wide and market-wide information, employees are better equipped to make strategic decisions. Important decisions are made by committees, where representatives from various business lines provide input, thereby reducing the risk of errors that could lead to financial or reputational damage.
Regulatory risk
Employees of Xpate Ltd maintain continuous communication with regulatory authorities to ensure the timely acquisition of relevant information. The Company ensures that its merchants adopt governance practices aligned with industry best practices, understand regulatory expectations and business challenges, and identify opportunities for process improvement. This approach facilitates the effective and consistent management of compliance and regulatory obligations, enabling xpate to adapt efficiently to regulatory changes.. 

Capital management risk
As a company regulated by the Financial Conduct Authority (FCA), xpate Ltd is required to comply with capital adequacy requirements, taking into account the Company’s business portfolio and the distribution of its business verticals. Management regularly reviews the financial position of the Company on a monthly basis,
Page 2

 
XPATE LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023

implementing corrective measures as necessary to mitigate capital management risks.

Financial key performance indicators
 
The Company achieved a turnover of £275,083 (31 December 2022: £2,225,468) and a loss of £1,941,809 (31 December 2022: profit of £101,988). 

Other key performance indicators
 
The Company invests considerable effort in attracting merchants and maintaining high levels of customer satisfaction. 

Directors' statement of compliance with duty to promote the success of the Company
 
The Directors of the Company are fully aware of their duty to act in good faith and in a manner that they believe will most likely promote the success of the Company for the benefit of its members as a whole. In fulfilling this duty, the Director considers the interests of the following stakeholders:
Shareholders
The Director maintains regular communication with shareholders to maximize the Company’s long-term growth prospects and the potential for dividend distributions.
Customers
The Company’s customer base is considered a related party, and the best interests of clients are served in alignment with their risk appetites.
Suppliers
The Company maintains key supplier relationships that function as strategic partnerships, ensuring the smooth operation of the business.
Community and the environment
The Company is committed to reducing its carbon footprint through an entirely online and paperless business model. The Director also encourages active participation in industry-related networking events to foster strong community relationships.


This report was approved by the board and signed on its behalf.


................................................
M Safro
Director

Date: 2 September 2024

Page 3

 
XPATE LIMITED
 
 
 
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2023

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

Directors' responsibilities statement

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 for the Company's financial statements and then apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.

Principal activity

The principal activity of the Company is that of financial intermediation and management consultancy activities.

Results and dividends

The loss for the period, after taxation, amounted to £1,941,808 (2022 - profit £108,182).

No dividend has been declared in the year.

Directors

The directors who served during the period were:

M Safro 
A Zotova 

Page 4

 
XPATE LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023

Future developments

In the coming year, Xpate LTD’s ambitions are poised for significant expansion. The company will strategically shift its focus towards a customer-centric approach, prioritizing a deeper understanding of client needs to deliver enhanced service excellence. This initiative will be underpinned by the integration of embedded finance solutions, enabling Xpate LTD to offer comprehensive financial services directly within its platform, thereby driving greater convenience and customer engagement.
Additionally, Xpate LTD plans to introduce advanced functionalities to further enhance its service offering. Key developments will include support for multi-currency settlements, enabling smoother global transactions, and the implementation of innovative cash flow management strategies designed to provide clients with greater financial flexibility. Alongside these improvements, Xpate LTD will continue to expand its platform capabilities to ensure a seamless and efficient user experience.
These strategic advancements will position Xpate LTD for sustained growth while reinforcing its commitment to delivering exceptional value and service to its customers.

Branches outside the United Kingdom

In addition to trading within the UK, the Company also operates through their overseas branch based in Latvia.

Disclosure of information to auditors

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.

Post balance sheet events

Subsequent to the financial year-end, the company completed the sale of its intangible asset, which comprises the online banking platform, to the related party xpate Links SIA. The transaction was executed at a consideration of £1,758,092.

Auditors

Under section 487(2) of the Companies Act 2006BKL Audit LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.

This report was approved by the board and signed on its behalf.
 





................................................
M Safro
Director

Date: 2 September 2024

Page 5

 
XPATE LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF XPATE LIMITED
 

Opinion


We have audited the financial statements of xpate Limited (the 'Company') for the period ended 31 December 2023, which comprise the Statement of comprehensive income, the Statement of financial position, the Statement of cash flows, the Statement of changes in equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 December 2023 and of its loss for the period then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Conclusions relating to going concern


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


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


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


Page 6

 
XPATE LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF XPATE LIMITED (CONTINUED)


Other information


The other information comprises the information included in the Annual Report other than the financial statements and  our Auditors' report thereon.  The directors are responsible for the other information contained within the Annual Report.  Our opinion on the financial statements does not cover the other information and, 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.


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, 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 period for which the financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' responsibilities statement set out on page 4, 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.


Page 7

 
XPATE LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF XPATE LIMITED (CONTINUED)


Auditors' responsibilities for the audit of the financial statements
 

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


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

Enquiring of management around actual and potential litigation and claims;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias.
Review of minutes of meetings held with management


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


As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:


Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a
Page 8

 
XPATE LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF XPATE LIMITED (CONTINUED)


manner that achieves fair presentation.


We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.


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 2006Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.







Michael Wedge FCA (Senior Statutory Auditor)
  
for and on behalf of
BKL Audit LLP
 
Chartered Accountants
Statutory Auditor
  
London

2 September 2024
Page 9

 
XPATE LIMITED
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2023

2023
2022
Note
£
£

  

Turnover
 4 
275,083
2,225,468

Gross profit
  
275,083
2,225,468

Administrative expenses
  
(2,608,798)
(2,526,903)

Operating loss
 5 
(2,333,715)
(301,435)

Interest receivable and similar income
 9 
427,576
431,935

(Loss)/profit before tax
  
(1,906,139)
130,500

Tax on (loss)/profit
 10 
(35,669)
(22,318)

(Loss)/profit for the financial period
  
(1,941,808)
108,182

Other comprehensive income for the period
  

Total comprehensive income for the period
  
(1,941,808)
108,182

The notes on pages 16 to 29 form part of these financial statements.

Page 10

 
XPATE LIMITED
REGISTERED NUMBER: 11920779

STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Fixed assets
  

Intangible assets
 11 
1,507,229
245,912

Tangible assets
 12 
25,189
15,385

  
1,532,418
261,297

Current assets
  

Debtors: amounts falling due after more than one year
 13 
37,552,136
36,825,763

Debtors: amounts falling due within one year
 13 
2,178,633
6,457,662

Cash at bank and in hand
 14 
897,147
583,680

  
40,627,916
43,867,105

Creditors: amounts falling due within one year
 15 
(181,115)
(243,044)

Net current assets
  
 
 
40,446,801
 
 
43,624,061

Total assets less current liabilities
  
41,979,219
43,885,358

Provisions for liabilities
  

Deferred tax
 16 
(57,907)
(22,238)

  
 
 
(57,907)
 
 
(22,238)

Net assets
  
41,921,312
43,863,120

Page 11

 
XPATE LIMITED
REGISTERED NUMBER: 11920779
    
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Capital and reserves
  

Called up share capital 
 17 
341,000
341,000

Other reserves
 18 
43,222,947
43,222,947

Profit and loss account
 18 
(1,642,635)
299,173

  
41,921,312
43,863,120


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




................................................
M Safro
Director

Date: 2 September 2024

The notes on pages 16 to 29 form part of these financial statements.

Page 12

 
XPATE LIMITED
 

STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2023


Called up share capital
Other reserves
Profit and loss account
Total equity

£
£
£
£


At 1 January 2022
341,000
-
190,991
531,991


Comprehensive income for the year

Profit for the year
-
-
108,182
108,182


Contributions by and distributions to owners

Capital contribution
-
43,222,947
-
43,222,947



At 1 January 2023
341,000
43,222,947
299,173
43,863,120


Comprehensive income for the period

Loss for the period
-
-
(1,941,808)
(1,941,808)
Total comprehensive income for the period
-
-
(1,941,808)
(1,941,808)


At 31 December 2023
341,000
43,222,947
(1,642,635)
41,921,312


The notes on pages 16 to 29 form part of these financial statements.

Page 13

 
XPATE LIMITED
 

STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2023

2023
2022
£
£

Cash flows from operating activities

(Loss)/profit for the financial period
(1,941,808)
108,182

Adjustments for:

Amortisation of intangible assets
24,264
2,095

Depreciation of tangible assets
15,115
10,015

Loss on disposal of tangible assets
-
(542)

Interest received
(427,576)
(431,935)

Taxation charge
35,669
22,318

Decrease/(increase) in debtors
3,552,304
(44,013,973)

(Decrease)/increase in creditors
(61,924)
39,245

Corporation tax received
-
80

Net cash generated from operating activities

1,196,044
(44,264,515)


Cash flows from investing activities

Purchase of intangible fixed assets
(1,285,581)
(182,943)

Purchase of tangible fixed assets
(24,572)
-

Sale of tangible fixed assets
-
542

Interest received
427,576
431,935

Net cash from investing activities

(882,577)
249,534
Page 14

 
XPATE LIMITED
 

STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2023


2023
2022

£
£



Cash flows from financing activities

Capital contribution
-
43,904,789

Net cash used in financing activities
-
43,904,789

Net increase/(decrease) in cash and cash equivalents
313,467
(110,192)

Cash and cash equivalents at beginning of period
583,680
693,872

Cash and cash equivalents at the end of period
897,147
583,680


Cash and cash equivalents at the end of period comprise:

Cash at bank and in hand
897,147
583,680

897,147
583,680


The notes on pages 16 to 29 form part of these financial statements.

Page 15

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

1.


General information

The principal activity of xpate Ltd ("the Company") is that of financial intermediation and management consultancy activities.
The Company is limited by shares and is incorporated in England and Wales.
The registered office is Level 18, 40 Bank Street, Canary Wharf, London, E14 5NR.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Going concern

The financial statements have been prepared on the going concern basis, which assumes that the Company will continue to be able to meet its liabilities as they fall due for a period of at least twelve months from the date of approval of these financial statements.
The Company made a  of loss of £1,941,809 during the year, reporting net current assets of £40,446,801 and an overall net asset position of £41,921,312. The Company, as for any business, relies upon the generation of profits and cash to create working capital to meet its liabilities as they fall due. Based on the results to date and future projections, the Directors are confident that the Company will continue to meet its liabilities as they fall due, looking forward at least twelve months from the date of signing these financial statements.
The Directors have a reasonable expectation that the Company has adequate resources to meet future working capital requirements and to continue in operational existence for the foreseeable future and they consider it appropriate to prepare the financial statements on a going concern basis. As a result, the Directors have prepared the financial statements on a going concern basis.

 
2.3

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue 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 revenue is recognised:

Revenue in respect of intercompany services is recognised over the period the service is supplied.
Revenue in respect of payment processing and transfers made between xpate and third party banks is recognised on the date the relevant transfers are made.

Page 16

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.4

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

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.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.

 
2.5

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

 
2.6

Research and development

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 10 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.

 
2.7

Interest income

Interest income is recognised in profit or loss using the effective interest method.

Page 17

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.8

Pensions

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.

 
2.9

Current and deferred taxation

The tax expense for the period comprises current and deferred tax. 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.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

 
2.10

Intangible assets

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.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years. Intangible assets under construction, will not be amortised until they are available for use.

Page 18

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.11

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

The estimated useful lives range as follows:

Long-term leasehold property
-
3
years
Plant and machinery
-
3
years
Office equipment
-
3
years

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.12

Cash and cash equivalents

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.

In the Statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Company's cash management.

 
2.13

Provisions for liabilities

Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
 
Increases in provisions are generally charged as an expense to profit or loss.

Page 19

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.14

Financial instruments

(i) Financial assets
Basic financial assets, including trade and other debtors, cash and bank balances are initially recognised at transaction price, 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.
Such assets are subsequently carried at amortised cost using the effective interest method.
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. 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 the Statement of Comprehensive Income.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
(ii) Financial liabilities
Basic financial liabilities, including trade and other creditors and accruals, 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 receipts discounted at a market rate of interest.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors 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.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
(iii) Offsetting
Financial assets and liabilities are offset and 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.

Page 20

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

  
2.15

Client money

The Company holds monies on behalf of clients in accordance with the Electronic Money Regulations of its regulator, the Financial Conduct Authority. Client monies held in safeguarded bank and settlement accounts in accordance with the regulations and the corresponding liabilites to these clients are not recognised on the Statement of Financial Position. As at 31 December 2023, amounts held in accordance with the Electronic Money Regulations amounted to £122,626 (2022: £Nil)

Page 21

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

3.


Judgements in applying accounting policies and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following judgments (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made:
Useful economic life of intangible assets
The annual amortisation charge for intangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. See note 11 for the carrying value of the intangible assets and accounting policy note 2.10 for the useful economic life of the intangible assets.


4.


Turnover

All turnover arose within the United Kingdom.


5.


Operating loss

The operating loss is stated after charging:

2023
2022
£
£

Depreciation
15,115
10,194

Exchange differences
7,392
2,890

Other operating lease rentals
161,217
269,574

Defined contribution schemes
1,321
1,368

Amortisation
24,264
3,046


6.


Auditors' remuneration

During the period, the Company obtained the following services from the Company's auditors and their associates:


2023
2022
£
£

Fees payable to the Company's auditors and their associates for the audit of the Company's financial statements
10,500
12,000

Fees payable to the Company's auditors and their associates in respect of:

All other assurance services
15,400
16,000

All other services
1,925
1,750
Page 22

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

7.


Employees

Staff costs, including directors' remuneration, were as follows:


2023
2022
£
£

Wages and salaries
1,208,584
1,073,917

Social security costs
272,278
242,573

Cost of defined contribution scheme
1,321
1,368

1,482,183
1,317,858


The average monthly number of employees, including the directors, during the period was as follows:


        2023
        2022
            No.
            No.







Directors
2
2



Employees
19
43

21
45


8.


Directors' remuneration

2023
2022
£
£

Directors' emoluments
155,127
267,534

Company contributions to defined contribution pension schemes
1,321
1,368

156,448
268,902


During the period retirement benefits were accruing to 2 directors (2022 - 2 in respect of defined contribution pension schemes.


9.


Interest receivable

2023
2022
£
£


Other interest receivable
427,576
431,935

427,576
431,935

Page 23

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

10.


Taxation


2023
2022
£
£


Foreign tax


Foreign tax on income for the year
-
80

-
80

Total current tax
-
80

Deferred tax


Origination and reversal of timing differences
35,669
22,238

Total deferred tax
35,669
22,238


Tax on (loss)/profit
35,669
22,318

Factors affecting tax charge for the period/year

The tax assessed for the period/year is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 25% (2022 - 19%). The differences are explained below:

2023
2022
£
£


(Loss)/profit on ordinary activities before tax
(1,906,139)
130,500


(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2022 - 19%)
(476,535)
24,795

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
17,261
660

Capital allowances for period/year in excess of depreciation
-
(24,866)

Double taxation relief
-
79

Unrelieved tax losses carried forward
494,943
21,650

Total tax charge for the period/year
35,669
22,318


Factors that may affect future tax charges

There were no factors that may affect future tax charges.

Page 24

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

11.


Intangible assets




Patents
Development expenditure
Total

£
£
£



Cost


At 1 January 2023
63,974
184,536
248,510


Additions
-
1,285,581
1,285,581



At 31 December 2023

63,974
1,470,117
1,534,091



Amortisation


At 1 January 2023
1,777
821
2,598


Charge for the period on owned assets
21,325
2,939
24,264



At 31 December 2023

23,102
3,760
26,862



Net book value



At 31 December 2023
40,872
1,466,357
1,507,229



At 31 December 2022
62,197
183,715
245,912



Page 25

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

12.


Tangible fixed assets





Long-term leasehold property
Office equipment
Total

£
£
£



Cost or valuation


At 1 January 2023
2,854
31,007
33,861


Additions
-
24,572
24,572



At 31 December 2023

2,854
55,579
58,433



Depreciation


At 1 January 2023
1,348
17,128
18,476


Charge for the period on owned assets
933
13,835
14,768



At 31 December 2023

2,281
30,963
33,244



Net book value



At 31 December 2023
573
24,616
25,189



At 31 December 2022
1,506
13,879
15,385

Page 26

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

13.


Debtors

2023
2022
£
£

Due after more than one year

Long term debtor
37,552,136
36,825,763

37,552,136
36,825,763


2023
2022
£
£

Due within one year

Trade debtors
169,036
1,837

Other debtors
1,949,297
6,401,074

Prepayments and accrued income
60,300
54,751

2,178,633
6,457,662



14.


Cash and cash equivalents

2023
2022
£
£

Cash at bank and in hand
897,147
583,680



15.


Creditors: Amounts falling due within one year

2023
2022
£
£

Trade creditors
77,432
134,093

Other creditors
1,155
1,916

Accruals and deferred income
102,528
107,035

181,115
243,044


Page 27

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

16.


Deferred taxation




2023


£






At beginning of year
(22,239)


Charged to profit or loss
(35,669)



At end of year
(57,908)

The provision for deferred taxation is made up as follows:

2023
2022
£
£


Accelerated capital allowances
(57,908)
(22,238)

(57,908)
(22,238)


17.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



310,000 (2022 - 310,000) Ordinary shares of £1.10 each
341,000
341,000



18.


Reserves

Other reserves

Comprises of amounts arising from a loan charged with interest at arms length.
These amounts relate to the contribution reserve at an amount of £38,409,173 (31 December 2022 £42,602,117) and the realized reserve of £4,813,774 (31 December 2022 : £620,830).

Profit and loss account

Includes all current period retained profits and losses.

Page 28

 
XPATE LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2023

19.


Pension commitments

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 £1,321 (31 December  2022: £1,368). Contributions totalling £257 (31 December 2022: £1,027) were payable to the fund at the reporting date and are included in creditors.


20.


Commitments under operating leases

At 31 December 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2023
2022
£
£


Not later than 1 year
26,914
59,809

26,914
59,809


21.


Related party transactions

Included within sales is £260,600 (31 December 2022: £8,445) made to a company in which a director has an interest. Included within trade debtors is £148,330 (31 December 2022: £Nil) in relation to the same company. 
The Company was granted loan notes with a related party, amounting to: £39,262,143 (31 December 2022: £43,034,068) included in debtors, £421,020 (31 December 2022: £431,951) within interest income, £38,409,173 (31 December 2022: £42,602,117) included in contribution reserve and £4,813,774 (2022: £620,830) included within realized contribution reserve. The interest accumulates on the loan notes at 4% per annum.


22.


Post balance sheet events

Subsequent to the financial year-end, the company completed the sale of its intangible asset, which comprises the online banking platform, to the related party xpate Links SIA. The transaction was executed at a consideration of £1,758,092.


23.


Controlling party

The controlling party is M Safro.

 
Page 29