The directors present the strategic report for the period ended 31 December 2022.
The principal activity of the Group is the provision of a crowdfunding platform. The company changed its accounting period from 30 September to 31 December to align with the calendar year-end. The current financial period covers a period of 15 months, with comparatives for the previous year covering a 12-month period. The change has been accounted for retrospectively and has not had a material impact on the financial position or performance of the company or its accounting policies. The impact of the change has been disclosed in the notes to the financial statements, in accordance with Section 3.10 of FRS 102.
During the period the Group delivered a £2,802,177 increase in turnover over the 15 months to 31 December 2022.
The Group made an operating loss for the 15 month period of £8,771,083 compared to an operating loss of £802,020 in the prior 12 month period in the face of the challenging conditions posed by the ongoing COVID-19 Pandemic.
At the Balance Sheet date the Group's net cash position was £10,781,781 (2021: £5,316,019), and the net assets were £13,629,633 (2021:£7,975,644).
Competition risk
This Group operates in a competitive market and faces competition from both other crowdfunding platforms and other sources of finance in attracting potential issuers to the platform. The Group continuously monitors publicly available information relating to competitors in order to analyse competitors fees and clients. The Group also ensures transparency in their services and fees as well as ensuring positive promotion of its activities within the marketing to help mitigate this risk.
Regulatory risk
Crowdcube Capital Limited is regulated by the Financial Conduct Authority in the UK and Crowdcube Spain S.L, is regulated by National Securities Markets Commissions in Spain. The withdrawal of regulatory authorisations, or the transfer of regulatory oversight to a new regulatory authority, could require the Group to cease or modify a significant part of its operations. The Group has a dedicated regulatory team to ensure all regulations are compiled with and that the Group can quickly adapt to any changes in the regulator environment if necessary.
Economic risk
The Group is actively managing a shift in focus and value proposition to better support clients who continue to demonstrate resilience to national and international economic changes. The Group continues to monitor the wider economic and inflationary pressures and continues to mitigate against the complex, uncertain and rapidly evolving environment.
The directors and management team receive a wide range of management information including comparative against budget and the previous period. The principal measures that are reviewed are:
Revenue of £14,550,595 (2021: £11,748,418)
Earnings before interest, tax, depreciation and amortisation (EBITDA) loss of £8,867,413 (2021: £848,870)
Net cash flow from operating activities of £6,729,169 outflow (2021: £407,223 outflow) and the cash position of £10,781,781 (2021: £5,316,019)
EBITDA reconciles to loss for the financial year as follows:
Section 172 of the Companies Act 2006 requires a director of a Group to act in the way he or she considers, in good faith, would most likely promote the success of the Group for the benefit of its members as a whole. In doing this section 172 requires a director to have regard, amongst other matters:
to the likely consequences of any decisions in the long-term;
interests of the Group's employees;
need to foster the Group's business relationships with suppliers, customers and others;
impact of the Group's operations on the community and environment;
desirability of the Group maintaining a reputation for high standards of business conduct, and
need to act fairly as between members of the Group.
While the activities of the Group remain limited in scope, the following sections summarise how the Directors fulfil their duties:
Our strategy continues to be focused on building long term, sustainable relationships with both our SME clients and platform investors. We seek to promote repeat business in the form of returning raises and multiple on platform investments. In order to support this ambition we continually seek to optimise both our technology and processes through regular review, development and customer feedback. Due to the structural nature of the Group we have a limited number of suppliers, primarily payment processing, through which we maintain close and collaborative working relationships through exclusive or multi-year contracts.
Specific actions include:
Customer satisfaction surveys are sent to all successful fundraising companies to obtain feedback on quality of service, opportunities for improvement and overall experience
Embedded feedback tools are used to gain insights into all aspects of the investor journey and overall product experience and customer satisfaction
New product features are regularly released including updates to AML to improve the investor onboarding experience, early access options to connect companies and investors earlier in the process and preparation of a seamless customer journey for investors in Europe to name a few
With regulated entities in both the UK and EU serving the Group, particular attention is paid to both regulatory and market risk. All strategic and long term decision making is considered within this wider context as noted within the 'Principal Risks and uncertainties' sections of the Strategic Report.
Specific actions include:
Approximately two weeks before each board meeting (every two months), the Head of Compliance and General Counsel meet to review: the draft risk register, the current breach register and the current complaint register. Existing risks are discussed and revised as necessary, new risks included and any material items from the breach or complaints register noted. Process also includes input from CFO and VP Finance, where required. Risk register circulated with board pack and discussed and noted at each board meeting.
Membership is maintained within two leading industry associations, the UK Crowdfunding Association and the European Crowdfunding Network. These groups provide a forum for outlining best practices, sharing knowledge and promoting greater transparency across the wider market.
Each year an annual review of client asset and fund procedures is reported to the directors along with the completion of the· Internal Capital Adequacy Assessment Process (ICAAP) and associated risk assessments.
A director of a Group must act in the way he considers, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
a. the likely consequence of any decision in the long term:
b. the need to foster the Companies' business relationships with suppliers, customers and others; and
c. the desirability of the Group maintaining a reputation for high standards of business conduct.
Employee engagement and support continues to be a top priority within Crowdcube. This covers all areas from employee benefits, progression, mental wellbeing, diversity & inclusion (D&I) as well as learning and development.
Specific actions include:
Dedicated personal and professional development platform, "Sunlight" and annual £1,000 per employee budget.
In house trained mental well-being first aiders and third party support.
D&I initiatives and regular company updates championed by our CEO.
Monthly team meetings with regular updates on company performance, product development, new hires and deal pipeline.
Weekly team meetings with regular updates on company performance, product development, new hires and deal pipeline
Private medical insurance, company matched pension and participation in the "Cycle to Work Scheme".
On behalf of the board
The directors present their annual report and financial statements for the period ended 31 December 2022.
The results for the period are set out on page 12.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The Group currently operates in a competitive and diverse equity financing market including crowdfunding platforms, angel networks, and traditional institutional investors. While this remains a competitive environment, the Group continues to deliver revenue growth through overall market growth as well as increased market share.
There is little credit risk as the majority of funds due to the Group are collected at source on completion of successful deals. Where credit risk does arise the Group has active credit control procedures in place. With regard to liquidity risk the Group actively manages cash and prepares rolling cash flow forecasts covering the next 12 months which are updated on a monthly basis. The Group maintains an appropriate level of cash to settle all financial obligations as they fall due and to meet planned activities.
The Company and its subsidiaries remains focused on capturing market share in the equity funding market in the UK and EU and is expecting consistent revenue growth in the financial period ended 31 December 2022 trading environment.
On 31 October 2023 the company purchased the entire share capital of Semper SAS, a company registered in France, for €3.1m by way of a share-for-share exchange.
Moore Kingston Smith LLP were reappointed as auditor to the Group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
As the group has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
The Group operates an office in Spain which is regulated by the National Securities Markets Commission, and has subsidiaries in France and Sweden.
We have audited the financial statements of Crowdcube Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 December 2022 which comprise the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company 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 FRS 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 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 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.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.
We have nothing to report in respect of the following matters where 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 group's and 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 group or 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.
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 purposes of expressing an opinion on the effectiveness of the group’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 group’s or the parent 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 auditor’s 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 auditor’s report. However, future events or conditions may cause the group or the parent 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 manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
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.
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.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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 for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party 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 loss for the year was £8,544,493 (2021 - £1,157,518 loss).
Crowdcube Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Zetland House, Clifton Street, London, England, EC2A 4LD.
The group consists of Crowdcube Limited and all of its subsidiaries.
The Principal activity of the Group is the provision of a crowdfunding platform.
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 Crowdcube Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
The Group has £10.8m of cash held at the balance sheet date. Based on the forecast performance, this will enable the Group to meet its liabilities as they fall due for at least 12 months following the date of signing the financial statements as well as allowing continued investment.
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.
The accounting period has been extended to include the 15 months from 1 October 2021 to 31 December 2022, in order to align the financial statements with the calendar year. The comparative amounts are for a period of 12 months.
Turnover is comprised of Commission Fees, Completion Fees, Investment Fees and Secondary Fees. Commission fees, completion fees and secondary fees are payable by the raising company and deduced from funds raised during the closing of the round. Investment fees are paid by the investor and reflect an additional fee on top of the pledged investment sum or the transaction amount. These fees are similarly taken at source during the completions and drawn down process.
In all four cases, turnover 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. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised.
For all four revenue streams, turnover is recognised once the funding requirements of a raise has been achieved, following a seven day cooling off period, in which investors can withdraw. Since the revenue earned is contingent upon a successful raise, turnover is not recognised until there both a successful raise and the seven day cooling off period has ended.
Other revenue of the Group and Company is invoiced in line with the relevant agreements and recognised as revenue on the invoice date.
Turnover policies are consistent across both the Group and the Company
Media rights
Media rights reflect consideration provided to Crowdcube by Channel Four Television Corporation in the form of media credits as part of a fundraising round. These media credits are initially measured at fair value of the equity instruments issued. Crowdcube has elected to amortise the intangible asset when the credits are utilised, as this is point at which the economic benefit is consumed. If those credits expire then the unused credits will be written off.
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.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
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.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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 carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
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.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
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 by reference to the fair value of the equity instruments granted using the Black Scholes model. 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.
The expense in relation to options over the parent company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
Expenses
Cost of sales is comprised of all directly related costs to source, launch, fund and close a fundraising campaign. This includes directly attributable wages and benefits, payment processing costs and limited additional third party service providers.
Administrative expenses consist of all other non directly attributable costs. This includes all other wages and benefits, all other third party service providers, as well as all premise, IT and marketing costs.
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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The Group is unable to directly measure the fair value of employee services received. Instead the fair value of the share options granted is determined using the Black-Scholes model. The model is internationally recognised as being appropriate to value employees share schemes but does require inputs based on best estimates from management and third party professional advisers. Details of these assumptions and estimates are detailed in note 17.
The Group considers whether intangible assets and/or goodwill are impaired. Where an indication of impairment is identified, the estimation of recoverable value requires estimation of the recoverable value of the cash generating units (CGUs). This requires the determination of the fair value of the CGUs based on relevant market comparables less the costs of disposal.
The Group estimates the level of investment withdrawals or amendments that will occur after the year end and adjusts accrued income accordingly. 98% is accrued for commission fees and 97% for investment and completion fees. These estimates are based on historic patterns and subject to judgement.
The directors assess the recoverability of intercompany debtors by considering the cash flows those entities are expected to generate over a period of time from both existing and prospective clients. These forecasts require the directors to make judgements about the probability and timing of revenue coming to fruition, changes to the cost base, and those balances which can be offset across the group.
The average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2021 - 3).
The number of directors who are entitled to receive shares under long term incentive schemes during the year was 2 (2021 - 2).
The highest paid director has exercised share options during the period.
The directors are considered to be key management personnel.
The actual credit for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
The Company has tax losses carried forward of £28,961,213 as at 31 December 2022 (30 September 2021: £22,161,636) and no deferred tax asset has been recognised in respect of those losses.
Details of the company's subsidiaries and related undertakings at 31 December 2022 are as follows:
All of the wholly owed subsidiaries above are included in the consolidation. The Company's investments in all subsidiaries are direct ownership.
Crowdcube Nominee Limited and Crowdcube Nominees (Europe) Limited were dormant entities during the period ended 31 December 2022 and exempt from audit.
Amounts owed by group undertakings are unsecured, interest free and repayable on demand.
Other debtors includes a security deposit of £33,086 (2021: £nil) paid under one of the office leases and recoverable in more than one year.
Unlisted investments represents notional value holdings in clients of the Group. Investments are measured at cost less provision for impairment.
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 Group operates a number of share-based payment schemes. All options are granted with a fixed exercise price, and expire within 10 years of the date of grant. There is no entitlement to dividends attached to the options. Employees are required to remain in employment until the shares are exercised. Vesting conditions of options granted over the period are as follows:
The options outstanding at 31 December 2022 had an exercise price ranging from £0.026 to £0.4577, and a remaining contractual life of up to 4 years.
Equity settled arrangements are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of the grant using a Black-Scholes options pricing model. The fair value is expensed on a straight -line basis over the vesting period. The amount recognised as an expense is adjusted to reflect the actual number of shares or options that will vest.
The Group also includes a share based payment charge depending on the level of staff retention, this has been based on the previous 3 years staff retention average.
On a return of assets on liquidation, reduction of capital of otherwise the assets of the Company remaining after payment of its liabilities are distributed:
first to holders of D Preference shares on a pari passu basis, in priority to all other shareholders an amount equal to their subscription price, any unpaid dividends and in addition to all shareholders their pro rata share of £100; and
second to holders of A Preference shares, B Preference shares and C Preference shares on a pari passu basis, in priority to all other shareholders an amount equal to their subscription price, any unpaid dividends and in addition to all shareholders their pro rata share of £100. Thereafter the balance is distributed to each of the holders of A Ordinary, B Investment and D Preference shares on a pari passu basis.
On 4 November 2021, 62,501 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.073 per share.
Between 23 November 2021 and 13 December 2021, 21,957,612 C Preference shares with a nominal value of £0.001 per share were issued for a consideration of £0.4577 per share, 881,064 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.026 per share, 593,882, A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.045 per share, 491,586 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.073 per share.
Between 13 December 2021 and 15 February 2022, 40,000 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.045 per share, 192,924 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.073 per share, 727,449 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.4577 per share, 4,109,616 B Investment shares with a nominal value of £0.001 per share were issued for a consideration of £0.4577 per share.
Between 13 December 2021 and 29 June 2022, 125,568 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.073 per share, 184,344 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.045 per share.
Between 06 May 2022 and 26 October 2022, 1,470,883 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.073 per share.
Between 26 October 2022 and 14 November 2022, 410,958 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.073 per share.
On 29 November 2022, 56,251,958 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.073 per share.
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:
During the period an amount of £39,098 was written off a loan to one of the directors. At the year end the amount owed to the company was £nil (2021: £39,098).
The company purchased data engineering and analytics services with expenses totaling £106,590 from Big Business Intelligence Limited, a company with a common director. At year end, a balance of £9,690 was owed to the company.
There is no individual controlling party.
On 31 October 2023 the company purchased the entire share capital of Semper SAS, a company registered in France, for €3.1m by way of a share-for-share exchange.
Between 1 March 2023 and 11 May 2023, 810,318 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.073 per share, 53,880 A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.045 per share, 13,541, A Ordinary shares with a nominal value of £0.001 per share were issued for a consideration of £0.115 per share.