Registered number: 09744432 (England and Wales)
EXPENSIFY LIMITED
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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COMPANY INFORMATION
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ZEDRA Corporate Reporting Services (UK) Limited
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CONTENTS
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Statement of Changes in Equity
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Notes to the Financial Statements
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EXPENSIFY LIMITED
REGISTERED NUMBER:09744432
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BALANCE SHEET
AS AT 31 DECEMBER 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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EXPENSIFY LIMITED
REGISTERED NUMBER:09744432
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BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2023
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Capital contribution reserve
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The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 4 to 12 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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Capital contribution reserve
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At 1 January 2022 (as previously stated)
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Prior year adjustment (Note 7)
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At 1 January 2022 (as restated)
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Share based payment charge
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At 1 January 2023 (as previously stated)
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Prior year adjustment (Note 7)
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At 1 January 2023 (as restated)
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Share based payment charge
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The notes on pages 4 to 12 form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The following principal accounting policies have been applied:
The Company is in a net asset position at the end of the financial year. Despite being in a net asset position, the entity remains reliant on continued support from its parent company, Expensify, Inc. The directors have assessed the expected future cash requirements of the Company in conjunction with the forecasts of Expensify, Inc., for at least 12 months from the date of signing these financial statements, and have concluded that the required support remains available to the Company.
The Company has received written confirmation from its parent company that it will continue to provide financial support to the Company for a period of at least 12 months from the date of signing these financial statements. For these reasons, the directors continue to adopt the going concern basis in preparing the financial statements.
Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Rendering of services
Turnover is recognised on a cost plus 6% basis, in line with the intercompany service agreement with the parent company. Intercompany turnover is recognised when all of the following conditions are satisfied:
∙the amount of turnover can be measured reliably;
∙it is probable that the Company will receive the consideration due under the intercompany service agreement;
∙the costs incurred under the intercompany service agreement can be measured reliably.
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1.Accounting policies (continued)
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Tangible fixed assets (continued)
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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.
Depreciation is provided on the following basis:
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Short-term leasehold property
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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.
Short term debtors are measured at transaction price, less any impairment. Amounts owed by group undertakings are intercompany loans measured at cost. These loans are unsecured, interest free and repayable on demand.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions.
Short term creditors are measured at the transaction price. Amounts owed to group undertakings are intercompany loans measured at cost. These loans are unsecured, interest free and repayable on demand.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1.Accounting policies (continued)
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Foreign currency translation
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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.
Certain employees of the Company are entitled to participate in the group-wide share option plan of the ultimate parent company, Expensify Inc. Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. The fair value of the share options granted is determined by the Black-Scholes option pricing model on the date of grant. This valuation model requires assumptions and judgements to be made about the variables used, including the value of the common shares of Expensify Inc., expected life, volatility, risk-free interest rate, dividend yield and estimated future forfeitures of unvested award.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
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 Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1.Accounting policies (continued)
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 balance sheet date in the countries where the Company operates and generates income.
Interest income is recognised in profit or loss using the effective interest method.
The auditors' report on the financial statements for the year ended 31 December 2023 was unqualified.
The audit report was signed on 26 September 2024 by Nick Whitehead FCCA (Senior Statutory Auditor) on behalf of ZEDRA Corporate Reporting Services (UK) Limited.
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The average monthly number of employees, including directors, during the year was 13 (2022 - 12).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Charge for the year on owned assets
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Amounts owed by group undertakings
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Prepayments and accrued income
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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During the year, management have identified an error in the calculation of the capital contribution reserve for the year ended 31 December 2021 and 2022 which resulted in the reserve being overstated. An adjustment has been made for the prior years to correct the capital contribution reserve balance, together with the corresponding cost-plus and tax impact.
The impact in the year ended 31 December 2021 is a decrease in amounts owed by group undertakings of £131,148, decrease in capital contribution reserve of £123,725 and a corresponding decrease in retained earnings of £7,423. The impact in the year ended 31 December 2022 is a decrease in amounts owed by group undertakings of £558,110, decrease in capital contribution reserve of £526,520, decrease in corporation taxation provision of £172,257 and a corresponding increase in retained earnings of £140,666.
The total impact on these financial statements is a decrease in amounts owed by group undertakings of £689,245, decrease in capital contribution reserve of £650,245, decrease in corporation taxation provision of £172,257 and a corresponding increase in retained earnings of £133,243.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Capital contribution reserve
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Certain employees of the Company along with other group employees have been granted options, purchase rights and matching rewards, and Restricted Stock Units ("RSU") over the shares in Expensify Inc., the Company's parent.
The options were granted prior to the parent company's public listing at an independently determined fair value and vest on a monthly basis over four years. The options expire ten years after the date of grant. The Company uses the Black-Scholes option pricing model to estimate the value of the stock options on the date of grant.
The Stock Purchase and Matching Plan (''Matching Plan'') operates using consecutive three month offering periods that commenced on March 15, 2022. Service Providers of the Company can participate in the Matching Plan by electing to contribute compensation through payroll deductions or from fee payments or may be granted discretionary awards under the Matching Plan. On the last day of the offering period the contributions made during the offering period are used to purchase shares of Class A common stock. The price at which Class A common stock is purchased under the Matching Plan equals the average of the high and low trading price of a share of Class A common stock as of the last trading day of the offering period. At the end of each offering period, the Company may provide a discretionary match up to 1/10 of a share of Class A common stock for each share of Class A common stock purchased by or issued to a service provider under the Matching Plan that is retained through the end of the applicable offering period. The Company estimates the fair value of matched shares provided under the Matching Plan using the Black-Scholes option-pricing model on the date of grant. The Company recognizes stock-based compensation expense related to the matched shares pursuant to its Matching Plan on a straight-line basis over the applicable three month offering period.
The RSUs were granted during the year ended 31 December 2021 at the fair value of the underlying common stock on grant date and vest over eight years with 1/8 of the grant having vested on 15 September, 2022 and quarterly vesting of 1/32 of the grant thereafter until fully vested, in each case subject to continued service to the Company.
An expense equivalent to the fair value of the share options, matching rewards and RSUs which have vested during the year is recognised with a corresponding amount recognised in the capital contribution reserve.
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Commitments under operating leases
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At 31 December 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Expensify, Inc., is the parent company of the smallest group for which consolidated financial statements are drawn up of which the Company is a member. The registered office of the parent company is 401 SW 5th Ave, Portland, Oregon 97204.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Post balance sheet events
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In March 2024, the Company declared and paid a dividend to the amount of £8,200,000 to its parent company, Expensify Inc. This is deemed to be a non-adjusting event.
There were no adjusting or other non-adjusting events occurring between the end of the reporting period and the date these financial statements were approved.
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