Fido Finance Limited
Annual Report and Financial Statements
For the period ended 31 December 2021
Company Registration No. 09385075 (England and Wales)
Fido Finance Limited
Company Information
Directors
J F Parker-Bowles
A Gatt
(Appointed 26 January 2022)
Company number
09385075
Registered office
IT Centre Innovation Way
Heslington
York
United Kingdom
YO10 5NP
Auditor
Moore Kingston Smith LLP
6th Floor
9 Appold Street
London
EC2A 2AP
Fido Finance Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 9
Profit and loss account
10
Statement of comprehensive income
11
Balance sheet
12
Statement of changes in equity
13
Statement of cash flows
14
Notes to the financial statements
15 - 28
Fido Finance Limited
Strategic Report
For the period ended 31 December 2021
Page 1
The directors present the strategic report for the period ended 31 December 2021.
Fair review of the business
As planned, we are pleased to report that 2021 was a remarkable year for Fido Finance Ltd. Operational processes were implemented to enhance our platform and to expand the business with the company acquiring a growing number of profitable customers in a crowded financial services sector:
• The number of clients grew from 380 to a healthy number of 2129 at the end of 2021.
• On the revenue split side, our client base is trading significantly internationally, which resulted in about 45% of revenues coming from FX services, with the remaining from accounts and payment fees.
• IT investments and costs were only at 8% of revenues, but major investments are continued to 2022 and beyond, to scale up and further automate for growth.
• Debtors and collections were at a controlled level of less than 2% of revenues and will receive constant monitoring going forward.
• Funding of the international business expansion started modestly in 2021 at about 3.3% of revenues, including establishing a company in Belgium for EU coverage.
To assure full compliance with stringent rules and regulations, the company has defined and continues to work on detailed processes and procedures for compliance, AML and fraud detection management. In addition, with a major part of revenues from FX services, currency evolutions and fluctuations need continuous monitoring to preserve FX margins in healthy ranges.
In terms of the promotion of the success of the business for its members, the directors have implemented the below changes. In doing so they have considered such things as the long-term impact of the change, how the change impacts its employees, customers, stakeholders and the environment, and how it contributes to the company's high standards of conduct and reputation.
Principal risks and uncertainties
In making these key changes, the business is also seeking to mitigate key risks to its model, namely regulatory and service bandwidth.
• Brexit would have restricted the company for further growth, but with the opening of an office in Belgium for EU coverage and the planned opening of an office in USA, the international presence has been managed proactively for growth and to ensure optimal coverage for our clients.
• As an FCA licensed small EMI, the company seeks to partner with financial institutions to complete the service offerings for its clients; this liaison and work with external partners in the various regions requires continuous monitoring and management to facilitate the businesses for continued grow. To manage this risk for the company and reduce the dependency on a UK license, the company has started an EU license application process through its Belgian subsidiary.
• During 2021 the company also started to invest in developing the client systems and operational tools to function as a thru-financial institution. A thorough selection process was run to contract a novel core banking platform Mambu, that will lay the foundation for the company to grow and evolve its product offering. This major investment prepares 2022 for a SaaS core banking implementation project that will require the set-up of an extended professional IT team and operational competence centre.
• During 2022 industry has sown the importance in AML and Monitoring so we have expended on investment for AML and Monitoring by growing the team and also in new technology to mitigate issues with AML and Financial Crime .
Exiting from COVID-19, our international workforce has learned to operate remotely through the use of Teams and other communication tools. Going forward in 2022 and now 2023 the company will commit to investing further in employee welfare whilst maintaining high work ethics to grow the team and the business.
Fido Finance Limited
Strategic Report (Continued)
For the period ended 31 December 2021
Page 2
J F Parker-Bowles
Director
7 March 2023
Fido Finance Limited
Directors' Report
For the period ended 31 December 2021
Page 3
The directors present their annual report and financial statements for the period ended 31 December 2021.
Principal activities
The principal activity of the company continued to be that
of data processing and financial intermediation.
Results and dividends
The results for the period are set out on page 10.
Ordinary dividends were paid amounting to £2,000,005. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
J F Parker-Bowles
A Gatt
(Appointed 26 January 2022)
Auditor
Moore Kingston
Smith LLP
were appointed as auditor to the company 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.
Energy and carbon report
As the company 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.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
On behalf of the board
J F Parker-Bowles
Director
7 March 2023
Fido Finance Limited
Directors' Responsibilities Statement
For the period ended 31 December 2021
Page 4
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Fido Finance Limited
Independent Auditor's Report
To the Members of Fido Finance Limited
Page 5
Opinion
We have audited the financial statements of Fido Finance Limited (the 'company') for the period ended 31 December 2021 which comprise the Profit and Loss Account, the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, the 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).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 December 2021 and of its profit for the period then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
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
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 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.
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.
Fido Finance Limited
Independent Auditor's Report (Continued)
To the Members of Fido Finance Limited
Page 6
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 period for which the financial statements are prepared is consistent with the financial statements
; and
-
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the Strategic Report and the Directors'
R
eport
.
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, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors'
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.
Fido Finance Limited
Independent Auditor's Report (Continued)
To the Members of Fido Finance Limited
Page 7
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
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 company’s internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
-
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our 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 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.
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.
Fido Finance Limited
Independent Auditor's Report (Continued)
To the Members of Fido Finance Limited
Page 8
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
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.
Other matters which we are required to address
The comparative figures in the financial statements of
Fido Finance
Limited were not audited as the Company did not require a statutory audit under Companies Act 2006 in the prior year.
Fido Finance Limited
Independent Auditor's Report (Continued)
To the Members of Fido Finance Limited
Page 9
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.
Ryan Day (Senior Statutory Auditor)
for and on behalf of Moore Kingston Smith LLP
7 March 2023
Chartered Accountants
Statutory Auditor
6th Floor
9 Appold Street
London
EC2A 2AP
Fido Finance Limited
Profit and Loss Account
For the period ended 31 December 2021
Page 10
Period
Year
ended
ended
31 December
31 January
2021
2021
Notes
£
£
Turnover
3
5,791,239
786,915
Cost of sales
(661,625)
(775,770)
Gross profit
5,129,614
11,145
Administrative expenses
(2,236,323)
(272,466)
Other operating income
18,414
Operating profit/(loss)
4
2,911,705
(261,321)
Interest receivable and similar income
7
910
1
Profit/(loss) before taxation
2,912,615
(261,320)
Tax on profit/(loss)
8
(573,967)
53,262
Profit/(loss) for the financial period
2,338,648
(208,058)
The Profit and Loss Account has been prepared on the basis that all operations are continuing operations.
Fido Finance Limited
Statement of Comprehensive Income
For the period ended 31 December 2021
Page 11
Period
Year
ended
ended
31 December
31 January
2021
2021
£
£
Profit/(loss) for the period
2,338,648
(208,058)
Other comprehensive income
-
-
Total comprehensive income for the period
2,338,648
(208,058)
Fido Finance Limited
Balance Sheet
As at 31 December 2021
Page 12
2021
2021
Notes
£
£
£
£
Fixed assets
Intangible assets
10
391,849
65,863
Investments
11
21,008
412,857
65,863
Current assets
Debtors
13
253,997
62,330
Cash at bank and in hand
11,753,626
278,968
12,007,623
341,298
Creditors: amounts falling due within one year
15
(10,880,707)
(441,387)
Net current assets/(liabilities)
1,126,916
(100,089)
Total assets less current liabilities
1,539,773
(34,226)
Creditors: amounts falling due after more than one year
16
(582,485)
(21,844)
Provisions for liabilities
Deferred tax liability
18
(97,226)
53,262
(97,226)
53,262
Net assets/(liabilities)
860,062
(2,808)
Capital and reserves
Called up share capital
20
313,956
224,255
Capital redemption reserve
434,526
Profit and loss reserves
111,580
(227,063)
Total equity
860,062
(2,808)
The financial statements were approved by the board of directors and authorised for issue on 7 March 2023 and are signed on its behalf by:
J F Parker-Bowles
Director
Company Registration No. 09385075
Fido Finance Limited
Statement of Changes in Equity
For the period ended 31 December 2021
Page 13
Share capital
Capital contribution reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 February 2020
10,100
(19,005)
(8,905)
Year ended 31 January 2021:
Loss and total comprehensive income for the year
-
-
(208,058)
(208,058)
Issue of share capital
20
214,155
-
-
214,155
Balance at 31 January 2021
224,255
(227,063)
(2,808)
Period ended 31 December 2021:
Profit and total comprehensive income for the period
-
-
2,338,648
2,338,648
Issue of share capital
20
89,701
-
-
89,701
Dividends
9
-
-
(2,000,005)
(2,000,005)
Loan discount
20
434,526
434,526
Balance at 31 December 2021
313,956
434,526
111,580
860,062
Fido Finance Limited
Statement of Cash Flows
For the period ended 31 December 2021
Page 14
2021
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
25
13,364,651
(121,143)
Interest paid
1
Net cash inflow/(outflow) from operating activities
13,364,652
(121,143)
Investing activities
Purchase of intangible assets
(521,911)
(65,863)
Purchase of subsidiaries
(21,008)
25,000
Interest received
909
-
Net cash used in investing activities
(542,010)
(40,863)
Financing activities
Proceeds from issue of shares
89,701
214,155
Loan receipt
565,474
Repayment of bank loans
(3,154)
-
Dividends paid
(2,000,005)
Net cash (used in)/generated from financing activities
(1,347,984)
214,155
Net increase in cash and cash equivalents
11,474,658
52,149
Cash and cash equivalents at beginning of period
278,968
226,819
Cash and cash equivalents at end of period
11,753,626
278,968
Fido Finance Limited
Notes to the Financial Statements
For the period ended 31 December 2021
Page 15
1
Accounting policies
Company information
Fido Finance Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
IT Centre Innovation Way, Heslington, York, United Kingdom, YO10 5NP.
1.1
Accounting convention
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 a
mounts
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.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Reporting period
The entity shortened it's reporting period to a 11 month period ending 31 December 2021 to align with Adrian Kreter International Holdings Ltd, who held a 50% ownership of the entity at the period end. The comparative period relates to the results of the 12 month period ending 31 January 2021.
1.4
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Turnover represents fees and charges receivable from transactions made by customers in relation to payment and foreign exchange services. There are also set up fees for new customers. Fee income is recognised on an accruals basis.
1.5
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated
.
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
1
Accounting policies
(Continued)
Page 16
1.6
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date
where
it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the
fair
value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Development costs
3 years
1.7
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities 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 company
. 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 company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities
.
1.8
Impairment of fixed assets
At each reporting
period
end date, the
company
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.
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.
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
1
Accounting policies
(Continued)
Page 17
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.
1.9
Cash and cash equivalents
Cash and cash equivalents include cash in hand,
customer balances in segregated bank accounts,
deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
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
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
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.
Impairment of financial assets
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.
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
1
Accounting policies
(Continued)
Page 18
Derecognition of financial assets
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.
Classification of financial liabilities
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
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
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.
Other financial liabilities
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
s
ubsequently 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 th
r
ough 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.11
Equity instruments
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.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
1
Accounting policies
(Continued)
Page 19
Current 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
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
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 when the
company
has 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.
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
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 lease
s
asset are consumed.
1.16
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
1
Accounting policies
(Continued)
Page 20
1.17
Foreign exchange
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.
2
Judgements and key sources of estimation uncertainty
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant
effect on amounts recognised in the financial statements.
Useful economic life of intangibles
The annual amortisation charge for intangible assets is sensitive to changes in the estimated lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. Goodwill impairment reviews are also performed annually. These reviews require an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise for the cash generating unit and a suitable discount rate to calculate present value. See note 10 for the carrying amount of the intangible assets.
3
Turnover and other revenue
2021
2021
£
£
Turnover analysed by class of business
Transaction fees
4,670,247
733,717
FX services
1,102,012
-
Other
18,980
53,198
5,791,239
786,915
2021
2021
£
£
Other revenue
Interest income
910
1
Grants received
18,414
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
Page 21
4
Operating profit/(loss)
2021
2021
Operating profit/(loss) for the period is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
242,882
(7,084)
Government grants
(18,414)
Fees payable to the company's auditor for the audit of the company's financial statements
26,900
8,750
Amortisation of intangible assets
195,925
Operating lease charges
66,820
12,466
5
Employees
The average monthly number of persons (including directors) employed by the company during the period was:
2021
2021
Number
Number
12
2
Their aggregate remuneration comprised:
2021
2021
£
£
Wages and salaries
340,818
76,478
Social security costs
33,154
3,632
Pension costs
7,099
2,392
381,071
82,502
6
Directors' remuneration
2021
2021
£
£
Remuneration for qualifying services
39,067
28,800
Company pension contributions to defined contribution schemes
1,000
1,126
40,067
29,926
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
Page 22
7
Interest receivable and similar income
2021
2021
£
£
Interest income
Interest on bank deposits
910
1
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
910
1
8
Taxation
2021
2021
£
£
Current tax
UK corporation tax on profits for the current period
423,479
Deferred tax
Origination and reversal of timing differences
150,488
(53,262)
Total tax charge/(credit)
573,967
(53,262)
The actual charge/(credit) for the period can be reconciled to the expected charge/(credit) for the period based on the profit or loss and the standard rate of tax as follows:
2021
2021
£
£
Profit/(loss) before taxation
2,912,615
(261,320)
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 0%)
553,397
Tax effect of expenses that are not deductible in determining taxable profit
109
Change in unrecognised deferred tax assets
23,236
(53,262)
Fixed asset differences
(2,775)
Taxation charge/(credit) for the period
573,967
(53,262)
9
Dividends
2021
2021
£
£
Final paid
2,000,005
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
Page 23
10
Intangible fixed assets
Development costs
£
Cost
At 1 February 2021
65,863
Additions
521,911
At 31 December 2021
587,774
Amortisation and impairment
At 1 February 2021
Amortisation charged for the period
195,925
At 31 December 2021
195,925
Carrying amount
At 31 December 2021
391,849
At 31 January 2021
65,863
11
Fixed asset investments
2021
2021
Notes
£
£
Investments in subsidiaries
12
21,008
Movements in fixed asset investments
Shares in subsidiaries
£
Cost or valuation
At 1 February 2021
-
Additions
21,008
At 31 December 2021
21,008
Carrying amount
At 31 December 2021
21,008
At 31 January 2021
-
12
Subsidiaries
Details of the company's subsidiaries at 31 December 2021 are as follows:
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
12
Subsidiaries
(Continued)
Page 24
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Fido Money Belgium
Belgium
Ordinary shares
100.00
FIdo Money USA
USA
Ordinary shares
100.00
Fido Money Ireland
Ireland
Ordinary shares
100.00
13
Debtors
2021
2021
Amounts falling due within one year:
£
£
Trade debtors
6,092
30,132
Other debtors
247,905
25,000
Prepayments and accrued income
7,198
253,997
62,330
14
Cash at bank
Cash at bank and in hand of £11,974,924 (2020 - £278,968) includes £11,308,334 (2020 - £nil) held in respect of customer balances in segregated bank accounts, the corresponding liability for which is held within trade creditors.
15
Creditors: amounts falling due within one year
2021
2021
Notes
£
£
Bank loans
17
4,835
3,156
Trade creditors
173,066
149,550
Corporation tax
423,479
Other taxation and social security
27,795
16,948
Other creditors
10,225,532
267,233
Accruals and deferred income
26,000
4,500
10,880,707
441,387
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
Page 25
16
Creditors: amounts falling due after more than one year
2021
2021
Notes
£
£
Bank loans and overdrafts
17
17,011
21,844
Other borrowings
17
565,474
582,485
21,844
17
Loans and overdrafts
2021
2021
£
£
Bank loans
21,846
25,000
Other loans
565,474
587,320
25,000
Payable within one year
4,835
3,156
Payable after one year
582,485
21,844
In the prior year, the company took advantage of a Covid-19 loan of £25k which was interest free until for the first twelve months of the loan. The company started making monthly interest and capital repayments from May 2021. Interest is charged at a fixed rate of 2.5%. No capital is secured against the loan. The loan is repayable in full in May 2026.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2021
2021
Balances:
£
£
Accelerated capital allowances
97,226
(53,262)
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
18
Deferred taxation
(Continued)
Page 26
2021
Movements in the period:
£
Asset at 1 February 2021
(53,262)
Charge to profit or loss
150,488
Liability at 31 December 2021
97,226
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
19
Retirement benefit schemes
2021
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
7,099
2,392
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
20
Share capital
2021
2021
2021
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
313,956
224,255
313,956
224,255
21
Operating lease commitments
Lessee
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:
2021
2021
£
£
Within one year
20,966
22
Events after the reporting date
Subsequent to the year end the company issued an additional 9,710 £1 ordinary shares at par. Adrian Kreter International Holdings Ltd is now the majority shareholder of the entity.
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
Page 27
23
Related party transactions
Transactions with related parties
During the period the company
incurred expenditure for IT services of £4,300 (2021: £nil) with a related company and £617 was paid a family member to reimburse expenses incurred in relation to the business. £26,045 (2021: £nil) was incurred as payroll costs for the family member.
At the end of the period, £2,026 (2021: nil) were owed to the directors of the company in relation to expenses incurred and services provided.
At the end of the period
the company received a loan of
£1,000,000 from
Adrian Kreter International Holdings (AKIHL). AKIHL owns 50 percent of the issued share capital of Fido Finance Limited. The loan
is to be repaid over the next 3 years.
In the prior year the company
also
received a loan of €250,000 (£221,409) from Mr A Kreter of Adrian Kreter International Holdings (AKIHL). AKIHL owns 50 percent of the issued share capital of Fido Finance Limited. Th
is
loan has since been repaid
.
24
Ultimate controlling party
The ultimate controlling parties are Jacob Felix Parker Bowles and Adrian Kreter International Holding Limited who equally own 50% of the shareholding.
25
Cash generated from/(absorbed by) operations
2021
2021
£
£
Profit/(loss) for the period after tax
2,338,648
(208,058)
Adjustments for:
Taxation charged/(credited)
573,967
(53,262)
Investment income
(910)
-
Amortisation and impairment of intangible assets
195,925
Movements in working capital:
Increase in debtors
(191,667)
(62,331)
Increase in creditors
10,448,688
202,508
Cash generated from/(absorbed by) operations
13,364,651
(121,143)
Fido Finance Limited
Notes to the Financial Statements (Continued)
For the period ended 31 December 2021
Page 28
26
Analysis of changes in net funds
1 February 2021
Cash flows
31 December 2021
£
£
£
Cash at bank and in hand
278,968
11,474,658
11,753,626
Borrowings excluding overdrafts
(25,000)
(562,320)
(587,320)
253,968
10,912,338
11,166,306
2021-12-31
2021-02-01
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