The directors present the strategic report for the year ended 30 November 2023.
Agreed Investment through advanced subscription agreements (ASAs) of £5,030,435 occurred in 2023, of which £4,639,015 was paid in cash during the accounting period, improving the balance sheet position for FY23 and cash in hand.
The Group ended the year with cash and inventories denominated in cryptocurrency of £50,549,495 compared with £15,248,371 at the end of FY22, including client held funds which increased to £43,949,681 from £14,426,739 from the end of FY22 to end of FY23.
Revenue increased from £8,597,182 in FY22 to £11,374,591 in FY23; an increase of 32%
In FY22 the Group recorded a Net Loss of £1,133,268 but in FY23 it recorded a Net Profit of £579,132, therefore generating a positive swing in profitability year on year.
Two new Licences in Gibraltar for EMI and DLT services were acquired during the FY23 adding two additional operating and revenue generating entities to the Group.
Regulatory: The focus for the coming financial year is to continue to solidify the Group’s licencing position to meet the needs of its current and future clients by fully adapting to global regulatory landscapes by obtaining new licenses in additional jurisdictions.
Commercial: From a commercial perspective the Group intends to drive growth by deepening relationships with existing clients through expanded service offerings and by targeting new client segments in FY24.
Product and Technology: As a Technology based business entrusted with client data the firm is committed to achieving SOC 2 certification, a highly respected compliance framework that reinforces data security and requires a rigorous independent audit.
Regulatory Risk: The cryptocurrency regulatory landscape is evolving, with new frameworks expected soon in key jurisdictions. The EU’s Markets in Crypto-Assets (MiCA) regulation, effective by end of 2024, will enforce standards for crypto-asset service providers (CASPs) on customer protection, capital requirements and market integrity. New MiCA licenses will need to be obtained by CASPs after proving compliance with rigorous requirements. Non-compliance could lead to penalties, higher operational costs or failure to obtain the license.
Economic Conditions: Global economic factors, including inflation, interest rates, and downturns, impact consumer behaviour and cryptocurrency adoption. Market volatility, particularly in cryptocurrencies, poses financial risks, especially in unstable economic periods.
Vendor Relationships and Third-Party Dependence: Our reliance on key third-party vendors, such as blockchain providers and KYC/AML service providers, poses risks if there are disruptions or performance issues. We have formalized onboarding and review processes to manage vendors effectively and ensure continuity.
Cybersecurity: As a prime cybercrime target, any system breach could lead to client fund losses, data compromise, and reputational harm. To mitigate this, we have adopted strict cybersecurity measures that meet the internationally recognized security standards and conduct regular vulnerability assessments and audits.
Data Security and GDPR Compliance: Handling sensitive customer data across jurisdictions brings legal risks. GDPR compliance in the EU is essential, and non-compliance or breaches could result in fines and reputational damage.
Fraud and Financial Crime: Cross-border transactions and cryptocurrency related risks increase our exposure to fraud and financial crime. Despite robust anti-crime measures, potential misuse by criminal networks could lead to financial losses, harmed reputation, regulatory scrutiny or fines. We continued to strengthen our compliance framework and transaction monitoring by adding new vendor tools to enhance fraud and crime detection.
On behalf of the board
The directors present their annual report and consolidated financial statements for the year ended 30 November 2023.
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.
The auditor, Royce Peeling Green Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
In accordance with Companies Act 2006, s.414C(11) the group has chosen to set out in the Strategic Report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the Directors' Report. It has done so in respect of principal risks and uncertainties, financial instruments and future developments.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Pay Perform Holdings Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 November 2023 which comprise the group statement of comprehensive income, the group balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group 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).
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 group and parent 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 group's and parent 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:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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.
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 parent 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 parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We evaluated the directors' and management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates and significant one-off or unusual transactions.
Our audit procedures were designed to respond to those identified risks, including non-compliance with laws and regulations (irregularities) and fraud that are material to the financial statements. Our audit procedures included but were not limited to:
Discussing with the directors and management their policies and procedures regarding compliance with laws and regulations;
Communicating identified laws and regulations throughout our engagement team and remaining alert to any indications of non-compliance throughout our audit; and
Considering the risk of acts by the company which were contrary to applicable laws and regulations, including fraud.
Our audit procedures in relation to fraud included but were not limited to:
Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
Gaining an understanding of the internal controls established to mitigate risks related to fraud;
Discussing amongst the engagement team the risks of fraud; and
Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
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 members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £0 (2022 - £0 profit).
Pay Perform Holdings Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 1-2 Silex Street, London, England, SE1 0DW.
The group consists of Pay Perform Holdings Ltd and all of its subsidiaries.
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 financial statements are prepared in sterling, which is the functional currency of the company. 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.
The consolidated group financial statements consist of the financial statements of the parent company Pay Perform Holdings Ltd together with all entities controlled by the parent company.
All financial statements are made up to 30 November 2023. All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Fees receivable are derived from fees and commissions charged on the principal activity of provision of IT solutions enabling global businesses to trade, transfer and store traditional and crypto currencies. These fees are charged and drawn down in real time when the transaction event occurs.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Interests in subsidiaries, are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
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.
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.
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 group after deducting all of its liabilities.
Basic financial liabilities 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.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 profit and loss account, 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 if, and only if, there is 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
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.
Monetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate ruling on the date of the transaction. Exchange differences are taken into account in arriving at the operating profit.
Liability limitation agreement
The group has entered into a liability limitation agreement with Royce Peeling Green Limited, the statutory auditor for the year ended 30 November 2023. The proportionate liability agreement follows the standard terms in Appendix B to the FRC's June 2008 Guidance on Auditor Liability Agreements, and has been approved by the shareholders.
In the application of the group’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 was no company/ group audit fee in the prior period as group results were unaudited, however certain subsidiaries required an audit for regulatory reasons.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The actual charge/(credit) for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
Profits generated in Estonia are only subject to tax on distributions. Due to capital maintenance requirement relevant to the subsidiary there is no prospect of distributions in the near future and hence no tax charge has been raised.
Details of the company's subsidiaries at 30 November 2023 are as follows:
Various virtual currencies are reflected under inventories. Clients' virtual currencies are stored and accounted for separately.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The subsidiary undertaking, Pay Perform Management Limited operates an unapproved employee share option plan (ESOP).
Share options will vest in line with a contract and are not physically awarded. Share options will be earned over 4 years on a straight line basis with a 2 year 'cliff'. A 'cliff' is the minimum period employees must work before receiving any benefit. Share options can be exercised when there is a significant event such as a partial sale, full sale or IPO. Each option entitles the holder to one ordinary B share in Pay Perform Management Limited at a nominal value of £0.00001.
The number of share options outstanding at the start and end of the year are as follows:
The options outstanding at 30 November 2023 had an average exercise price of £0.01 and an average remaining contractual life of 16 months.
During the year, Pay Perform Management Limited recognised total share-based payment expenses of £61,199 (2022 - £29,966) which related to equity settled share based payment transactions.
During the period, the subsidiary undertaking, Pay Perform Management Limited, raised £4,639,015 in respect of Advanced Share Subscriptions for ordinary shares of 0.001p each, to be allotted on a future date or upon the occurrence of certain specified events.
Of this sum, £625,635 was subsequently used to subscribe for 137,640 Ordinary shares of 0.001p each post year end in Pay Perform Management Limited.
The balance of this sum was subsequently used to subscribe for Ordinary shares of 0.001p each in Pay Perform Holdings Limited post year end.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
On 29 January 2024, the company's share capital of 10,000 ordinary shares of £0.01 was sub-divided into 10,000,000 ordinary shares of £0.00001.
On 31 January 2024, it was proposed by the Directors that the group undergo a restructuring to facilitate future investment in Pay Perform Holdings Limited. Certain investors, referred to as the ASA Holders, had entered into advanced subscription agreements (ASAs) with Pay Perform Management Limited, the subsidiary undertaking valuing each ordinary share at £4.55. As part of this restructuring, ASA Holders provided funds amounting to £5,030,435, which were to convert into 1,106,696 ordinary shares in Pay Perform Management Limited by 31 January 2024. It was proposed that these shares be issued to Pay Perform Holdings Limited and that Pay Perform Holdings Limited would, in turn, grant warrants to the ASA Holders to subscribe for an equivalent number of shares. Additionally, individuals holding options over shares in Pay Perform Management Limited were to be given the opportunity to exchange these for equivalent options in Pay Perform Holdings Limited, under a new option scheme established by Pay Perform Holdings Limited.
Between 8 February 2024, and 8 March 2024, five out of six ASAs were successfully converted into shares of Pay Perform Holdings Limited. However, one investor preferred to convert into shares in Pay Perform Management Limited and this was done on 15 May 2024.
The company has taken advantage of the exemption available in FRS 102 whereby it has not disclosed transactions between itself and/ or any wholly owned subsidiary undertaking.
During the year the group paid Mr C Mason interest charges of £21,944 (2022: £3,952) on a directors loan of £210,000 that has been fully repaid at 30 November 2023.