The directors present the strategic report for the year ended 31 December 2020.
The business of the Glint Pay Services Ltd continued unchanged throughout the year under review.
Glint is engaged in issuing electronic money (e-money) and providing payment services with group support.
Glint makes it possible for physical gold bullion to be used in everyday payments by its account holders via its smartphone app and Mastercard. Its proprietary system allows for physical gold bullion to be bought, securely stored as allocated gold at Brinks vaults, converted to e-money in multiple currencies or spent as e-money in payment transactions in any quantity anywhere in the world where Mastercard is accepted at real-time prices, thereby giving gold bullion direct liquidity.
Glint also now allows customers to send money, including gold, directly via Peer-to-Peer (“P2P”) to other Glint Clients. It will, in the near future, also enable clients to transfer monies from their accounts via the Glint smartphone app to designated accounts across the global banking system.
Glint currently enables accounts via its smartphone app in over 200 countries from the UK where it is licensed and regulated by the FCA. It issues its Mastercard in 37 countries including the UK, Single Euro Payments Area (SEPA) (see below for post Brexit arrangements) and the USA; it plans to launch in Japan in the coming year. Further evaluation of geographical expansion requirements will follow.
Since the balance sheet date the company has resumed its growth momentum despite the restrictions arising from the Covid-19 global pandemic. The company had already implemented stress-testing in January 2020 for disaster recovery scenarios; the management implemented a ‘Work from Home’ scenario with continuing operations uninterrupted. In spite of global COVID issues Glint has experienced continued rising momentum during 2020. New functionality including Peer-to-Peer (P2P) transfers have been introduced and the pace of client acquisition has gained speed. Another important advance is that Glint has evolved from an ‘affiliate’ to a ‘principal’ member of the Mastercard franchise which offers card issuing capability throughout the world.
Glint reduces market risk on fees by deriving revenues from fixed rate (0.5%) fees on client transactions. The principal risk factors are listed below.
Business risk
The directors consider the company’s principal business risk to be failing to generate required funding.
Operational risk
The company’s operations are overseen by management with decades of financial markets experience, specifically in running payments, foreign exchange, and gold transactions. The risks to the company in client transactions are minimised by its proprietary Glint Payments Execution System (PES). This, combined with transaction monitoring, ensures accurate completion of all transactions on a 24 hour basis including weekends. In the event of a system failure, the Payments team immediately puts into effect telephone dealing to complete transactions. In relation to infrastructure risks, the Technology team is in place to immediately rectify any system faults.
The company’s operational risks are underpinned by the Electronic Money Regulations ongoing capital (own funds) requirements. Authorised EMIs must hold at least €350,000. The FCA have also stipulated that the company maintains both solvent and insolvent wind down plans.
Card Liquidity risk
To ensure timely execution of client transactions and that client transactions do not fail for reasons of liquidity shortage, the company maintains an appropriate level of liquidity float with Mastercard at all times in the relevant currencies. The company does not foresee that there might be a sudden surge in demand within 24 hours to render the float inadequate; however it maintains at all times a line of credit to avoid such emergencies.
Foreign Exchange risk
The company actively manages its Treasury to ensure that there are at all times available liquidity in Pounds Sterling, US Dollars, and Euros appropriate, to minimise risks to the company from market fluctuations in foreign exchange.
The company reports in Pounds Sterling. Revenues earned in other currencies are translated into Sterling at the prevailing exchange rate.
Gold bullion execution and settlement risk
The company is not exposed to execution and settlement risk for client transactions in physical gold bullion per se . Gold transactions are at spot rate and must be prefunded by the client, Glint does not operate on margin. The gold liquidity provider, an LBMA full member, makes available at all times a float of a physical gold bar within an ombudsman account in the Brinks vault specifically for Glint client transactions. Therefore the logistics of Clients’ purchases and sales of gold take place within the vault. All purchases and sales are at the liquidity providers’ real-time market quote fed through the Glint PES for 24 hour settlement. Client transactions in gold bullion are by definition outside the banking sector.
Market risk
The company has limited treasury risk exposure. However, it could be exposed to risk in times of unusual extreme fluctuations in foreign exchange markets or the physical gold bullion spot market. Most of these risks are mitigated as described above.
The company does not deploy nor have positions in derivative instruments.
Counterparty risk
The company is exposed to failures of its counterparties in foreign exchange and gold bullion. To mitigate the risk of banking counterparty failure, the company maintains its own funds in two separate banks, one of which is short-term A rated or equivalent.
Funds from clients resident in the UK, SEPA region and other countries excluding the USA are held in segregated and safeguarded accounts at Lloyds Bank PLC, and are separate from the bank’s capital and from Glint’s own corporate accounts. US client funds are held in segregated accounts at Sutton Bank, separate from Glint’s own corporate accounts, where they are protected up to $250,000 with Federal Deposit Insurance Corporation (FDIC) insurance.
Brexit risk
The company is subject to changes in the regulatory environment as the UK has left the European Union. In particular, as for all companies in the financial services sector, the company will be affected by any change or end to the passporting regime. The company has established a legal entity in Lithuania under the aegis of Railsbank Technology Ltd in order to continue the service and issue to clients resident in Europe. UK resident clients will not be affected.
Covid-19 risk
There has been negligible impact on the business operations of the company from the lockdown and other measures introduced by the UK government. The prolonged period of lockdown and work from home guidance has impacted the pace of fundraising efforts. The company had put in place measures in readiness for Work from Home and other social contact restrictions. The company may suffer from slower responses from its third party service providers and potential pressures on staff morale in a prolonged period of isolation and lockdown; management is cognisant of potential risks that may arise as the pandemic continues including the effect on vulnerable customers. It has taken precautionary and prudent steps, including terminating the physical office rental while moving to an office service location which provides meeting facilities until normal working conditions return.
Decision Making and Governance
The activities of the company are overseen by the Board of Directors, the majority of whom are independent as defined in the UK corporate governance code. Its philosophy and that of the company is to operate in a transparent culture with positive debate and practical challenge, including those of the Board Observers who represent significant capital commitment to the company.
The Board reviews the culture and manner in which the management operates as well as the company’s performance at its regular meetings. All significant management decisions are discussed by the directors for their likely consequences in the long term for the performance of the company and for their impact on the company’s long term strategic aims. The Board endeavours to ensure that activities of the company stay within the agreed strategy to build the business of the company. The impact that any corporate decision might have on all stakeholders - employees, suppliers and customers - are fully discussed at each meeting.
In addition to the principal risks discussed in the sections above, the Board and the management are very conscious of the risks emanating from increased environmental, social and governance challenges and address any impact that may arise from the company’s operations.
Customers
The company engages with customers through twice-weekly e-mail newsletters and review platforms, providing the forum for suggestions and complaints and customer service is operational six days a week.
Suppliers
The Board seeks to ensure that there is a constructive working relationship with suppliers and service providers and that any contractual arrangements are in line with best practice and that their performance meets the expectation of the Board, the management, the employees and other stakeholders.
Our People
Positive workplace culture attracts talent, drives engagement, impacts happiness and satisfaction, and affects performance. Management is committed to an open culture with bi-weekly staff meetings, while ensuring that a high standard of business conduct is embedded throughout the company. Management has also implemented best practices such as employee surveys and one-on-one meetings in order to measure the pulse of the company culture.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2020.
The results for the year are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
In accordance with the company's articles, a resolution proposing that Moore Kingston Smith LLP be reappointed as auditor of the company will be put at a General Meeting.
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 .
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.
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, Financial Conduct Authority, 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 member 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 member those matters we are required to state to the member 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 member 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.
Glint Pay Services Ltd is a private company limited by shares incorporated in England and Wales . The registered office is Kemp House, 124 City Road, London, EC1V 2NX.
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 £.
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 , 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.
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.
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.
There are no material judgements or estimates used in the preparation of these financial statements.
The average monthly number of persons (including directors) employed by the company during the year was
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Cash at bank and in hand of £2,131,531 (2019 - £1,970,526) includes £1,799,882 (2019 - £1,749,389) held in respect of customer balances in segregated bank accounts; the corresponding liability for which is held within creditors.
Included within other creditors is a Bounce Back Loan of £50,000, repayable over 72 months. Repayments commenced in July 2021. Interest is fixed at 2.5% per annum.
There are no restrictions on the description of dividends and repayment of capital.
During the year 925,000 Ordinary shares of £1 each were issued at par for cash.
The Company has taken advantage of the exemption provided in FRS102 from disclosing transactions with members of the same group that are wholly owned.
The Company is a subsidiary undertaking of Glint Pay Ltd which is also the ultimate controlling party.
The smallest group in which these accounts are consolidated is that headed by Glint Pay Ltd whose registered office address is Kemp House, 152-160 City Road, London, EC1V 2NX. The consolidated financial statements of this group are available to the public on the Companies House website.
The exceptional item consists of fees charged to the company during its period in administration by the administrators, FRP Advisory LLP.
A legal dispute with HMRC is currently underway relating to the VAT rate applicable to supplies of gold. The outcome of the dispute is uncertain at this time and so the potential liability cannot be reasonably estimated.