The Directors of Bilderlings Pay Limited (hereinafter - "the Company", "we" or "Bilderlings") present the strategic report for the year ended 31 December 2021.
The directors provide the information regarding the Company's decisions and strategies during the financial year in the ‘Fair review of the business’ section of this report.
Fair review of the business
Bilderlings’ mission is to help clients achieve sustainable economic growth and better financial well-being, focusing on their actual needs, convenience, variety, and affordable price. Bilderlings provides cross-border money transfer services, debit cards and orchestrates various third-party services for personal and business clients in the UK and internationally. The Company infrastructure comprises multiple products and services, including Bilderlings Account for Business and customers to send money abroad and meet multi-currency banking needs; Bilderlings Platform, which provides a more efficient and easy access to third-party financial and non-financial services, including online currency exchange services, deposits, loans, investments, asset management and start-up incorporation; and Bilderlings for Fintech that allows banks, electronic money and payment institutions, and other digital financial institutions to streamline their customer experience, introduce international banking features by integrating Bilderlings fintech platform features into their online banking and mobile applications.
We believe our tech-enabled solutions will democratise finance and enhance trust, efficiency, speed, and inclusivity of financial services. We envisage Bilderlings' future is not just about alternative value proposition in finance. We are a technology company with the purpose to design a digital ecosystem spanning multiple industries, providing a mix of financial and non-financial products, an excellent and more streamlined consumer experience, promoting new ways to collaborate, connect and innovate for personal benefit and the public good.
During the year, Bilderlings has progressed significantly in implementing its strategic objectives and initiatives and continued to improve its platform infrastructure, product offering and user experience while accelerating the growth of client portfolios in the UK and Europe. Developing further, the Company launched new services and products, such as a 24/7 currency conversion platform, automated online onboarding and Bilderlings for Fintech.
In 2021, Bilderlings continued advancement in developing in-house a full-scale digital payment platform architecture including multi-currency accounts, debit cards, SEPT (single euro payments area)/SEPA Inst and SWIFT (society for worldwide interbank financial telecommunication) channels, Open API (application programming interface), virtual cards, back-office infrastructure, automated online onboarding and AML (anti money laundering) systems, and access to the banking products and services of third-party through integration with ecosystem partners. In particular, the Company worked on automated monitoring of transactions, anti-fraud solutions, automated online onboarding & customer scoring, internal and external 24/7 payments and currency exchange, salary cards for customers’ employees, deposits and investments, and offering other features to our customers. Additionally, Bilderlings also progressed with plans regarding customer support, compliance and risk infrastructure, and expanding into new markets with existing products and services.
Also, during the year, integrations with a leading European bank were made, which immediately transformed the currency conversion service to a real-time automated platform, providing market exchange rates and allowing currency conversions in 19 currency pairs.
The Bilderlings’ app, available in AppStore and GooglePlay, continues to develop by adding new features, allowing users more convenience and direct access to its products and services in one interaction, anytime and anywhere. In addition, the Company continued adding new features to the card product range, in particular, offering virtual cards, pin change, and planning further integration with Apple Pay and Google Pay in 2022.
In 2021, Bilderlings partnered with Mastercard's Priceless Planet CoalitionTM on a mission to fight climate change by restoring trees worldwide. The campaign was carried on together with the global environmental organisations Conservation International and World Resources Institute. As an environmentally responsible company, Bilderlings strives to impact the future of our planet, and this project was the first in the Company's history bringing forward social responsibility on a global scale. In addition, we offered an accessible and engaging way to make a meaningful impact in the world - we helped to plant trees by attracting new clients and increasing card usage of the existing ones.
A new business segment continued to grow in 2021 - Bilderlings for Fintech, allowing EMIs and PIs to have a client account for financial institutions, offering faster, cheaper, and secure payments and advisory services for obtaining safeguarding accounts.
Developing further its payment channels, Bilderlings has implemented SEPA Instant to enable ever more effortless and faster pan-European payments at the beginning of 2021. Moreover, in March 2022, Bilderlings became a member of the SWIFT international payment system and concluded the first agreement with a European correspondent bank. The SWIFT system facilitates more efficient, prompt, and secure execution of payments of customers and correspondent banks. In the second quarter of 2022, the direct SWIFT payments will become available for Bilderlings customers.
Also, during the year, Bilderlings launched, in cooperation with one of the leading European banks, an automated conversion service available 24/7, allowing currency conversion in a real-time automated platform, providing market exchange rates and currency conversions in 19 currency pairs.
Bilderlings' strategic plans for 2022 and future periods include further investment and development of a truly digital, low-cost, convenient, secure, and inclusive global Fintech ecosystem, which consists of the following:
Additional investment in developing the highly adaptive technology infrastructure in-house;
Developing the core product offering to Bilderlings customers and expanding Bilderlings for Fintech services by providing Virtual IBANs;
Developing the digital Fintech platform and, in collaboration with partners, introducing new financial and non-financial products and services such as deposits, loans for business, investments, asset management; and
Further investment in the compliance and risk infrastructure and customer support.
Sustainable and profitable financial growth is the core of Bilderlings' strategy. The Company's capital target ensures that the capital available is sufficient to support its strategic plan initiatives and its capital adequacy meets regulatory requirements. The Company has complied with these requirements, holding a net position of €5,952,662 at the end of 2021 (2020: €2,771,485). Following the capital increase plan, the shareholders completed the first tranche of €600,000 in February 2021, the second tranche of €800,000 in March 2021, and the third of €1,194,592 in September 2021, raising the share capital to €4,544,592 (2020: €1,950,000).
In 2021, revenue increased by 151% year on year to reach €10,570,499 (2020: €7,016,241). The Company has scaled up its European and cross-border payments, with customers transferring € 1,225 million in 2021 (2020: €853 million). Following the release of the Mastercard product in 2020, the portfolio of card users grew up by 254%, increasing the volume of card transactions by 372%.
At the end of the year, the Company held €168,943,311 in client money balances (2020: €76,632,761). The increase was due to the improvement of services, an extended offering of new products, growth in the size of the customer base and enhanced user activity. Total operating expenses for 2021 were €7,462,542 against €5,839,798 in 2020, mainly driven by investments in IT systems and infrastructure and staff hiring costs. As a result, the 2021 financial year profit after tax amounted to €2,581,177 (2020: €934,410), being higher by 276% against 2020. This highlights the sustainable growth and considerable performance achieved by Bilderlings in 2021.
Key performance indicators (KPIs) measure the Company's performance against key business objectives and are reported to shareholders. Bilderlings' major strategic and operational KPIs are presented below, showing the increase in percentage in 2021 against the previous year:
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In addition to the above metrics, Bilderlings periodically reviews specific analytics to have visibility of progress against its mission, focusing on whether user experience has become more streamlined over time. In particular, compared to 2020, the speed of client online onboarding has been improved two-fold.
Bilderlings is exposed to various operational risks in the course of its business. The Company continues to invest in its operational infrastructure, technology, processes and human resources to minimise potential losses due to inadequate or failed internal processes, technology systems, human error and legal and cyber risks. Bilderlings carries out adequate operational risk management and focuses on effective risk assessment, implementing adequate controls, higher corporate accountability, encouraging senior management commitment, and recruiting and retaining the proper personnel to support its successful growth further.
Bilderlings issues electronic money to its clients, which must be controlled following its relevant regulator's safeguarding and regulatory capital requirements. The management team sets precise control over its commitment to the Safeguarding regulations to protect our clients from electronic-money risk. To ensure that all safeguarding processes were in line with regulatory requirements and, as required by its regulators, Bilderlings contracted an external audit company to conduct an audit of our safeguarding arrangements during the second quarter of 2021.
Bilderlings collaborates with a growing number of ecosystem banking partners, outsourcing services providers and other third parties across many lines of business. The Company mitigates this risk by undertaking initial due diligence of partners prior to onboarding them and then on an ongoing basis.
Bilderlings operates in an industry with a rigorous and fast-changing regulatory landscape and therefore is exposed to potential risk of failure to comply with relevant regulations and laws, including corporate governance and anti-money laundering laws. Accordingly, any changes should be promptly incorporated into the Company's operating processes. To meet these challenges and ensure the secure functioning of Bilderlings, to ensure the optimum ratio of the risks Bilderlings accepts and the profitability of the transactions Bilderlings is involved in (the most favourable risk-profitability ratio), the risk management system has been implemented. Builderlings exercises a systemic approach to risk management, having set the unified standards for identifying, assessing and limiting the risks regarding applicable legislation and recommendations and expectations of the chief UK finance and market regulatory authority (FCA).
The Company handles a large number of transactions in clients’ funds and therefore is subject to potentially increased financial crime risk. Consequently, the Company faces the risk of non-compliance with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) and is, in addition, subject to potential losses due to breaches of its Terms & Conditions of business by its clients. To mitigate this risk and make its activities more productive, Bilderlings has dedicated considerable effort and time to eliminating low-value AML/CFT activities, automating more of its processes, implementing more advanced analytics, including detailed reviews of customer activities like screening all clients on a daily basis and ongoing monitoring of transactions.
Cyber security threats that could potentially compromise company business services, infrastructure, customer data, and confidential company data remain the principal risk for Bilderlings. To effectively counter these threats, Bilderlings is focused on developing resilient technologies and processes, improvement of employee training, regular external testing and audit activities. In addition, the management team is focused on identifying critical business activities and their risks, supporting systems and their vulnerabilities, analysing the new cybersecurity threats and implementing robust mitigation controls and countermeasures to reduce the impact on business activities and protect data.
As a digital financial services provider, Bilderlings processes a massive amount of personal, confidential Company and employee data that imposes obligations on the Company to comply with personal data protection and privacy laws. Bilderlings has continued to invest in its technologies to prevent data security breaches and facilitate best practices in handling sensitive data by employees. To ensure we have secure and resilient business services supported by robust data protection framework and systems, Bilderlings periodically involves third parties, specialised in IT Systems Security stress testing. In addition to the above, Bilderlings implemented a centralised Risk Management Framework tool for effective Risk Management. This will make Bilderlings Risk Management agile, proactive, flexible, and less vulnerable to unknown risks or threats, which is crucial for a successful business.
In response to COVID 19 (Coronavirus), Bilderlings has established a cross-functional response team with senior representatives from various business divisions. Despite the move to remote working, the transition has been seamless, and there has been no interruption in the services Bilderlings provides. Bilderlings' business operations have performed as usual during this time and have worked hard to support its customers to enable them to manage business activity across markets efficiently. As a result, Bilderlings has experienced substantial growth in all primary strategic and operational KPIs while managing risks to customers, financial stability and integrity. As a cloud-based company, Bilderlings has a robust digital presence, sufficient financial resources and is prepared to meet coronavirus's challenges to customers and staff even in a long-term slowdown.
Although the UK left the EU at the end of 2020, all provisions that regulate EMI activities and have been implemented under the requirements of the relevant Directives have not undergone any changes. All changes to the FCA rules and requirements are being constantly monitored by the key employees of Bilderlings to keep track and promptly react to any relevant changes in the UK legislation.
The main governance body of the Company is the Board of Directors, which is responsible for the prosperity of Bilderlings, leading the Company and supervising its business direction while seeking to develop a culture of good governance. The Company is a values-driven organisation. From the very beginning, Bilderlings has been committed to maintaining high legal, ethical and moral standards, adhering to the principles of integrity, objectivity and honesty and wishes to be seen as opposed to fraud, bribery and corruption in the way that it conducts its business. The Board is committed to high standards of business conduct and lawful, efficient and fair business practices, encompassing its long-term strategy. This includes how the Company serves its clients and operates and behaves towards shareholders, partners, employees and other stakeholders. In addition, the Board is responsible for developing and maintaining open and fair interaction and a transparent culture between Bilderlings and its stakeholders , considering it the key to the Company’s overall success.
Bilderlings informs its shareholders about its financial performance, holding meetings regularly to demonstrate how the long and short-term strategies of the Company are being met. In addition, Bilderlings' strategic plan and business model have been developed and periodically reviewed to have a long-term positive effect on the Company's success while considering the interests and concerns of its customers, partners, suppliers, employees, and the impact of operations on the environment and communities.
Bilderlings provides e-money, payment processing and digital payment services offering international and domestic bank transfers, debit cards, currency exchange and third-party financial services to corporate and individual clients. The primary purpose of Bilderlings' strategy is to help clients achieve sustainable economic growth, improve their financial well-being, and promote accessibility of financial services globally. To achieve this goal, Bilderlings will continue to build its business with a high emphasis on real customer needs, focusing on a more extraordinary, more streamlined user experience, maintaining robust client relationship and securing an empowering environment for its employees.
As a digital fintech platform, Bilderlings collaborates openly and fairly with many ecosystem partners and suppliers all over the world. The valuable partnership offering is extended to the ecosystem partners' products, services and channels, and the partner and client journey.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2021.
The results for the year are set out on page 11.
There were dividends of €1,994,592 paid out during 2021.
The directors have proposed a dividend of €1,408,070 in 2022 based on 2021 financials.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, CBW Audit Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
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' r eport 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.
As explained more fully in the directors' r esponsibilities s tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements , the directors are responsible for assessing the company ' s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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 ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations. The laws and regulations applicable to the company were identified through discussions with directors and other management, and from our commercial knowledge and experience of an electronic money institution. Of these laws and regulations, we focused on those that we considered may have a direct material effect on the financial statements or the operations of the company, including Payment Services Regulations 2017 (PSR 2017), Electronic Money Regulations 2011 (EMR 2011), Financial Services and Markets Act 2000, Financial Services Act 2012, Companies Act 2006, taxation legislation, data protection, anti-bribery, anti-money-laundering, employment, environmental and health and safety legislation. The extent of compliance with these laws and regulations identified above was assessed through making enquiries of management and inspecting legal correspondence. The identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
understanding the design of the company’s remuneration policies.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC, relevant regulators including the FCA and the company’s legal advisors.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Bilderlings Pay Limited is a private company limited by shares incorporated in England and Wales . The registered office is 16 Hanover Square, London, W1S 1HT. The business address is Daws Lane Business Centre, 33-35 Daws Lane, London, NW7 4SD.
The financial statements are prepared in euros , which is the functional currency of the company. Monetary a mounts in these financial statements are rounded to the nearest €.
Bilderlings Pay Limited is a wholly owned subsidiary of Bilderlings Holdings SIA and the results of Bilderlings Pay Limited are included in the consolidated financial statements of Bilderlings Holdings SIA which are available from Jekaba Street 2, Riga, LV-1050, Latvia.
Investments in government bonds are remeasured at amortised cost through profit or loss at each reporting date until maturity.
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 are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors , 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 paymen ts 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. A m ounts 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.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Intangible fixed assets are amortised based on their useful lives. The actual useful lives are based on judgements made by management.
Investments measured at fair value through profit or loss are revalued at year end using market values for such investments provided by the companies partner bank.
The average monthly number of persons (including directors) employed by the company during the year was:
The aggregate remuneration of employees through the period comprised:
Investment income includes the following:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
The investment in government bonds is measured at amortised cost over the period to maturity.
On 13/12/2021 the company disposed of its 100% holding in Bilderlings Pay, UAB. Included in these financial statements are losses of €22,000 arising from the company's interests in Bilderlings Pay, UAB up to the date of its disposal.
For the year ended 31 December 2020, the amount of client funds held in safeguarding accounts in cash at bank was €76,632,761, which has not been included on the balance sheet on the basis that the company at that point did not carry the risks and rewards to this.
During the period, the company issued the following shares:
600,000 ordinary shares of the nominal value of €1 each in February 2021 for a total consideration of €600,000.
800,000 ordinary shares of the nominal value of €1 each in March 2021 for a total consideration of €800,000.
1,194,592 ordinary shares of the nominal value of €1 each in September 2021 for a total consideration of €1,194,592.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
On 31 March 2022, the company declared dividends of €1,408,070, which was used to purchase 1,408,070 ordinary shares, which were issued at par.
During the year the company entered into the following transactions with related parties:
The ultimate parent company is Bilderlings Holdings SIA, a company registered in Latvia. The registered address is Jekaba Street 2, Riga, LV-1050, Latvia. The results for Bilderlings Pay Limited is consolidated in the parent company accounts.