The directors present the strategic report for the year ended 30 November 2022.
Strategic Management
The Group operates the social media platform OnlyFans, a web-based platform that has revolutionized the creator economy by committing to build the safest social media platform and providing unparalleled opportunities to content creators and fans.
OnlyFans mission is to empower content creators to own their full potential. The site is only accessible by people who are over 18 years old and who have completed the user onboarding process.The Group’s primary purpose is to provide creators of digital content with a safe platform and secure payment network to share and monetise their content. The Group’s subscription-based business model was founded on the premise that content creators should financially benefit from the content which they produce. OnlyFans is proud to pay 80 percent of all fan payments made on the platform to content creators, which means that content creators make $4 for every $1 retained by OnlyFans.
OnlyFans is committed to building the safest digital media platform in the world. OnlyFans goes above and beyond the legal requirements, and our peers, to provide a safe platform for Creator and Fans while maximizing the freedom of Creators and Fans to control and monetize the lawful content they produce and view. OnlyFans' Safety & Transparency Center (https://onlyfans.com/transparency-center) is designed to give stakeholders visibility into how OnlyFans keeps its community safe and provide an overview of some of OnlyFans key safety and transparency measures. As OnlyFans continues to grow, The Group continues to invest in the scaling and development of the platform and product development to better serve the creator community and to enhance its best in class safety controls. This continued focus on platform development and safety has resulted in over a million new creators and 50 million new fans joining the platform during this reporting period. In addition, the Group continued to develop its market leading payment network to offer new payment methods and open up markets for creators and fans worldwide and now had creators resident in over 100 countries worldwide.
During this reporting period, OnlyFans continued investing in original content with OnlyFans Creators, for OFTV (OF.TV). OFTV is a free on-demand video streaming platform and app from OnlyFans. OFTV hosts safe-for-work videos and content from a wide variety of creators from fitness and cooking, to comedy, music and more, demonstrating the diverse range of creators on the OnlyFans platform. OnlyFans creators can share short and long-form video content for their fans to watch, for free on Android, iOS, Apple TV, Roku, Fire TV, Android TV and Samsung Smart TVs.
OnlyFans has continued to invest in sponsoring both emerging and established Creators across all genres including sports and entertainment. This has included investment in the flagship OnlyFans Creative Fund. This furthers The Group's strategy of being Creator first, supporting creative talent across the world to connect with their fans and monetise their content. These steps have enhanced OnlyFans' brand reputation as a foundational part of the Creator Economy.
The Group anticipates that its commitment to being 'creator first' and providing the safest social media platform will provide a strong foundation to continue to drive revenue growth, profitability, and brand awareness in the coming years.
Business performance and position
In the financial year ending 30 November 2022, OnlyFans recorded sustained growth and profitability. This reflects both the platform growth, in terms of number of content creators and fans, as well as growth in existing content creators earnings.
Gross payments made through the OnlyFans platform increased by $0.8bn during this reporting period from $4.8bn in 2021 to $5.6bn in 2022. Gross payments represent payments made by Fans net of applicable sales taxes, refunds and deferred income.
The Group’s revenue increased by over $158m during this reporting period from $932m in 2021 to $1,090m in 2022.
As a result, The Group’s profit increased during the year, with profit before tax of $525m during this reporting period compared to $433m in 2021.
Taxes
The Group is focussed on regularly reviewing its compliance with applicable global tax legislation, to ensure we maintain high standards of compliance.
The Group furthered its obligations with Sales Taxes globally. As a result at 30 November 2022, 99.82% of OnlyFans revenues were compliant with each relevant jurisdiction's Sales Tax legislation.
Non-financial - Key Performance Indicators
| 2022 | 2021 | Growth % |
Total number of creators | 3,182,000 | 2,161,000 | 47% |
Total number of fans | 238,845,000 | 187,973,000 | 27% |
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Funding and Financing
The performance in the year ended 30 November 2022 has resulted in a strengthening of the Group financial position. The Group has no external financing and ensures sufficient working capital levels to continue the investment in the OnlyFans platform, processes and the strategy of providing the safest social media platform.
Description of Principal Risk Factors
Operational and Business Risk Factors
Competition for content creators and platform users. As the creator economy continues to grow, there is an increased focus from traditional social media platforms on attracting content creators to their platforms. The Group can combat this risk by continuing to take a creator first and safety focussed approach to business decisions earning creator loyalty and trust.
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Operational and Business Risk Factors (continued)
Adoption of subscription model by other platforms. The Group’s subscription model and rapid growth has led to many traditional social media platforms adopting paid features. The Group will continue to maintain its leadership position in the creator economy by virtue of its revenue sharing model and by continuing to develop new features to support our growing user base of Creators and Fans.
Continuous evolution of our best-in-class approach to trust and safety and content moderation. The Group’s commitment to building the safest social media platform demands the continuous evolution of its trust and safety measures. Scaling and innovating in this area is critical and requires significant financial resources. The Group will continue to invest significant time and resources to ensure we can meet this commitment.
Maintaining and promoting our brand outside of traditional verticals. The Group has made significant inroads in promoting its brand globally and is focused on ensuring a better public understanding of the nature of the OnlyFans platform and its diverse creator base while not alienating current creators. The Group will remain focused on dedicating appropriate resources to marketing and brand awareness, particularly in new markets and in the promotion of OFTV content.
Hiring, retaining and motivating highly skilled personnel. As the Group continues to develop its operations and platform, it is imperative to retain key personnel, and to invest in hiring new highly skilled personnel to address the risks and opportunities faced by the Group.
Interoperability of our products and services across third-party services and systems. The Group has developed the majority of its technology stack in house but does rely on certain key third-party service providers and systems. The Group addresses this risk by maintaining close relationships with key third party providers and investing in business partnerships.
Actual or perceived security breaches, incidents or vulnerabilities as well as errors, vulnerabilities or defects in our software and in products of third-party providers. As a leading technology platform, cyber security remains a top priority for the Group. Continuous monitoring of the Group’s environment and developing bespoke solutions to address security issues as they emerge will continue to be necessary.
Media interest in OnlyFans. The Group continues to garner significant media attention due to its novel business model, inclusive content policy and the success of many content creators. The Group will continue to develop its public and government relations strategy to address misconceptions regarding the Group as reported in the media.
Catastrophic events and interruptions by man-made problems. As with all organizations, the Group is subject to the risk of unforeseen catastrophic events.
Intellectual Property and Technology
Developing and scaling our existing technology and infrastructure. As an online business, the Company is reliant on information technology and we have significantly increased our investment in this area. In addition, we have significantly increased our resourcing within customer support, content monitoring, and fraud prevention.
Any failure to protect our intellectual property rights. As the Group continues to grow and scale, it is imperative that we take steps to protect our intellectual property rights. It is our general practice to enter into confidentiality agreements with our employees, contractors, and third parties, in order to limit access to, and disclosure and use of, our confidential information and proprietary technology. The Group also relies on international, federal, state and common law rights and contractual restrictions to help protect our intellectual property.
Regulatory and Legal
Complex and evolving international laws and regulations. The Group operates in an area which is subject to fast paced change and significant regulatory attention. The law in this area is complex and evolving and the Group addresses this risk by building its inhouse capabilities along with external counsel, as well as building strong relationships and partnering with regulators and NGO's such as OFCOM, NCMEC and others.
Regulatory investigations and adverse settlements. The Group is not presently subject to any regulatory investigations. The Group is regulated by OFCOM under the Video Sharing Platform regime and maintains a continuous dialogue with OFCOM to ensure compliance with its obligations under that regime. The Group continues to maintain open and cooperative dialogues with various international regulators and law enforcement.
Lawsuits or liability.The Group is a target for opportunistic litigation claims and in particular class actions in the USA. The Group will continue to treat all litigation claims seriously and to vigorously defend them where appropriate.
Financial
Going Concern. The Group is profitable, cash generative with no external funding. The Directors ensure adequate working capital is retained in the business to enable the delivery of Group Strategy and protect against foreign exchange or credit risk.
Payment Infrastructure Risks. As the Group operates globally it is reliant on key relationships with financial partners to ensure seamless flow of funds, from Fans to Creators. Any interruption to this flow would have a material impact on the business. The Group’s commitment to best-in-class trust and safety and content moderation, mitigates the perceived risks for our financial partners. The Group also maintains a vast financial network to ensure operational continuity and continues to take an innovative approach to 'creator first' payment methods.
International Tax Risk. As an international business the Group continually review regulatory tax regimes associated with online business within individual countries. During the year the Group added to its inhouse tax team to administer the tax filing obligations, in addition the Group has expert external counsel to assist in more complex areas.
Foreign Exchange Risk. The Group’s exposure to Foreign Exchange Risk is limited to the payment of Sales Taxes in foreign currency and a small proportion of administrative costs. The Directors monitor these Foreign Exchange requirements to ensure any risk is mitigated.
Credit Risk. The Group closely monitors the financial health of our Payment processors and Payment service providers all of whom are regulated by their own country regulators. The Group also has effective Anti-Fraud controls to reduce the existence of payment fraud on the Platform.
Further Developments
Voluntary Independent Monitorship. The Group is committed to making OnlyFans the safest digital media platform in the world. In addition to its robust policies and procedures the Group continued to appoint an independent third party "Monitor", to assess and validate the design, implementation, and effectiveness of our compliance program. For more information on this market leading initiative please see https://onlyfans.com/transparency-center/commitment.
Formation of new Subsidiaries. The Group formed a Polish Entity HPS Poland z.o.o. This subsidiary was formed to provide the Group with a corporate presence in the European Union, and to facilitate the employment of key technical staff. The Group also formed a new US subsidiary, Fenix US Inc, to assist in the hiring of key staff.
Market Expansion. The Group continues to invest in OFTV and original OFTV content to give creators an opportunity to share and promote their content to wider audiences. This remains a strategic priority for the Group.
Satety Partnerships. The Group continues to work with a variety of charities, NGO's and external third parties to ensure it maintains its market leading approach to safety. During this reporting period this has included partnering with NCMEC, the Child Rescue Coalition and StopNCII.org.
Under s172 of the Companies Act 2006 directors of UK companies have a duty to promote the success of their company for the benefit of the members as a whole and, in doing so, have regard to:
The likely consequences of any decision in the long term;
The interests of the company's employees;
The need to foster the company's business relationships with suppliers, customers and others;
The impact of the company's operations on the community and the environment; and
The desirability of the company maintaining a reputation for high standards of business conduct.
The Directors of Fenix International Limited consider the following areas to be of key importance in their fulfilment of this duty:
Carrying out detailed planning and forecasting to ensure ongoing financial safety of the business;
Monitoring the business plan in order to control deviation and achieve continued growth;
Seeking opportunities, by finding new locations to grow the business for the benefit of current and future employees, customers and suppliers as well as the wider UK economy.
Supervising the overall strategy of the Company and maintaining the highest standards of integrity and honesty in the Company's dealing with employees, suppliers, the general public and local and national government.
Ensuring that we are vigilant in reducing the environmental impact of our business.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 November 2022.
The results for the year are set out on page 12.
Ordinary dividends were declared amounting to $338,000,000. The directors do not recommend payment of a further dividend.
No preference 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:
The group's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The group's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the company's contractual and other legal obligations.
Trade creditors of the group at the year end were equivalent to 10 day's purchases, based on the average daily amount invoiced by suppliers during the year.
Subsequent to the year end the group has declared dividends for the following year as detailed in note 24.
As the group has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
We have audited the financial statements of Fenix International Limited (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 30 November 2022 which comprise the group statement of comprehensive income, the group and parent company statement of financial position, the group and parent company statement of changes in equity, the group and parent company statement of cash flows and the group and parent company notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We 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 the director and other management, and from our commercial knowledge and experience of the company. 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, The 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 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 relevant regulators 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 director 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.
Fenix International Limited is a private company limited by shares incorporated in England and Wales. The registered office is 4th Floor Imperial House, 8 Kean Street, London, WC2B 4AS. The company's principal activities and nature of its operations are disclosed in the directors' report.
The group consists of Fenix International Limited and all of its subsidiaries.
The financial statements are prepared in US Dollar, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest $000.
Certain new accounting standards and interpretations have been published that are not mandatory for the 30 November 2022 reporting periods and have not been early adopted by the company. These are as follows:
Amendments to IAS 1 'classification of liabilities' (effective for annual reporting periods beginning on or after 1 January 2023.)
Amendments to IAS 16 'Property, Plant and Equipment - Proceeds before Intended Use' (effective for annual reporting periods beginning on or after 1 January 2022.)
Amendments to IAS 37 'Onerous Contracts - Cost of Fulfilling a Contract' (effective for annual reporting periods beginning on or after 1 January 2022.)
Annual Improvements 2018-2020 Cycle (effective for annual reporting periods beginning on or after 1 January 2022.)
Amendments to IFRS 3 'Reference to the Conceptual Framework' (effective for annual reporting periods beginning on or after 1 January 2022.)
There are no standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.
Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.
The consolidated group financial statements consist of the financial statements of the parent company Fenix International Limited together with all entities controlled by the parent company and its subsidiaries.
All financial statements are made up to 30 November 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group statement of financial position at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
The group recognises revenue from the following major sources:
Subscription based revenue
Non-subscription revenue
The group derives its income from the operation of an online platform for content creators to provide monetised content to their fans, from which the group receives a fee. The majority of gross receipts are collected by the group until they are forwarded on to the content creators. The transaction's objective is to facilitate a transaction between content creators and their fans, for which the group earns a fee. Management has determined that this transaction results in a principal-agent relationship. As a result the group is considered the agent, and therefore, the revenue is recorded on a net basis. Consequently. the portion of the gross amount billed to end users that is remitted to content creators is not reflected as revenues. Fan payments can be segregated between subscription and non-subscription payments.
Subscription payments consist of transactions where the group facilitates Creator's providing content to Fans for a period of time. Payments received at the balance sheet date which relate to subscriptions that are ongoing after the year end are deferred and classified as deferred revenue. The revenue related to subscription payments is recognised over time consistent with the duration of the Fans' access to the Creators' content. Payment service providers collect payment from the Fan prior to content access.
In instances where the timing of revenue recognition differs from the timing of invoicing, the group has elected the practical expedient to not adjust revenue for any effects of significant financing components, as the subscriptions are less than one year in duration.
Non-subscription-based payments consist of one-time transactions such as messaging and access to content, that the group facilitates between the Fans and the Creators. Revenue from non-subscription payments are recognised when the transaction occurs. Payment service providers collect payment from the Fan immediately prior to content access
The only variable consideration associated with the performance obligation are refunds and chargebacks, which are recorded net of revenue.
Gross Site Volume
In order to provide the user of the financial statements further understanding of the business market, the gross value of all sales transactions is shown as a memorandum at the top of the statement of comprehensive income.
Gross site volume does not represent statutory turnover in accordance with IFRS 15. The group is acting as an agent in its arrangement between Fans and Creators.
Gross site volume represents the price at which products or services have been transacted through the business platform exclusive of any associated sales taxes. The groups recognised revenue is the agency fee applied on those transactions.
Revenues are recorded net of sales tax, value added tax ("VAT"), and usage-based taxes.
Deferred revenue
Deferred revenue represents amounts received from customers for subscriptions that are ongoing after the fiscal year end. The amounts are deferred and recognised over the term of the agreements (less than one year) on a straight-line basis.
Liability to Users:
Liability to users consist of amounts payable to users of the online platform. Liabilities are attributable to two types of users, content creators and fan wallets.
Content creator amounts represent the element of gross receipts payable to content creators at year-end. Fan wallets give Fans the ability to make payments on the platform from a prepaid wallet. The group reduces the liability for the Fan wallets when Fans make payments from their wallets.
Costs of Sales:
Costs of sales represents payments for hosting, website maintenance, and general upkeep of the content centres.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
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 parent 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 group holds a long-term interest and has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
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.
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.
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the group’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
The group recognises financial debt when the group becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Financial liabilities are derecognised when, and only when, the group’s obligations are discharged, cancelled, or they expire.
Equity instruments issued by the parent company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer payable at the discretion of the company.
The tax expense represents the sum of the tax due on the profits for the financial year and deferred tax.
At inception, the group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the group is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the group's estimate of the amount expected to be payable under a residual value guarantee; or the group's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
The average monthly number of persons (including directors) employed by the group during the year was:
Their aggregate remuneration comprised:
In 2021, the loss relates to the impairment of the investment in Delivery Code Limited, see note 11.
The current year loss relates to the impairment of the cryptocurrency asset, see note 11.
The charge for the year can be reconciled to the loss per the income statement as follows:
Details of the company's subsidiaries at 30 November 2022 are as follows:
Amounts due from Payment Service Providers are shown net of provisions.
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
No significant receivable balances are impaired at the reporting end date.
Other payables includes the liability to users of $361,740,000 (2021:$262,308,000)
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
The fair value of the company's lease obligations is $1,012,000 (2021: $205,000).This is assessed by calculating the Net Present Value of the lease liabilities of the company as at the year end over the term of the lease.
The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period.
Legal:
The Company is subject to various ongoing legal proceedings, claims and tax inquiries and investigations arising in the ordinary course of its business and the company may in the future be subject to additional legal proceedings and disputes. Management believes that these types of proceedings are common within the field that the Company operates and that the ultimate resolutions of these matters will not have a material adverse effect upon the Company's financial position, results or operations.
Sales Tax and VAT:
As of 30th November 2022 and 2021, the total of Company's sales tax, VAT liability and provisions were approximately $107,500,000 and $98,100,000, respectively. This includes sales tax and VAT amounts collected that were not due to be remitted of approximately $57,900,000 and $56,400,000 as of 30th November 2022 and 2021 respectively.
The Company started collecting sales taxes and VAT in the UK and Europe from 1st July 2020 and continued the application globally where required through 2021 and 2022. As part of the process the Company has reviewed its historic obligations for global sales tax and VAT.
The company has during the year entered in to a guarantee with its subsidiary Delivery Code Limited under S479C of the Companies Act meaning that Delivery Code Limited is exempt from audit under S479A of the Companies Act.
Subsequent to the year end the following dividends were declared:
December 2022, $25 per share.
January 2023, $43 per share.
February 2023, $41 per share.
March 2023, $38 per share.
The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
The following amounts were outstanding at the reporting end date:
Cybertania
Amounts charged by related parties includes Platform monthly server storage costs paid to Cybertania. In 2022 the costs were $nil (2021: $13,719,321).
Included in the amounts due to other related entities is an amount of $21,000 (2021: $21,000) due to Cybertania.
Your.Org
Amounts charged by related parties include Media Backup services paid to Your.org. In 2022 the costs were $2,400,000 (2021: $1,400,000).
Included in the amounts due to other related entities is an amount of $200,000 (2021: $200,000) due to Your.Org relating to Payment of Media Backup services for Fenix International Limited.
VM Digital LLC
Included in amounts due to other related entities is an amount of $6,636,000 (2021: $6,636,000).
Legal Services
Amounts charged by related parties include legal fees. In 2022 the costs were $240,000 (2021: $180,000).
Included in the amounts due to related parties entities is an amount of $20,000 (2021:$20,000).
Fenix Marketing Services Ltd
Included in the amounts due to other related entities is an amount of $nil (2021: $3,545).
The following amounts were outstanding at the reporting end date:
VM Digital LLC
Included in the amounts due from other related entities is an amount of $3,396,000 (2021: $3,403,000).
Dividends totalling $338,000,000 (2021:$284,130,000) were declared in respect of shares held by a company director.
Fenix International Limited is a private company limited by shares incorporated in England and Wales. The registered office is 4th Floor, Imperial House, 8 Kean Street, London, WC2B 4AS. The company's principal activities and nature of its operations are disclosed in the directors' report.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.
The financial statements are prepared in US Dollar, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest $000.
The company applies accounting policies consistent with those applied by the group. To the extent that an accounting policy is relevant to both group and parent company financial statements, please refer to the group financial statements for disclosure of the relevant accounting policy.
The directors have at the time of approving the financial statements, a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
Except as detailed below the directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.
In December 2020, The Group purchased the entire share capital of Delivery Code Limited for the purpose of integrating a global premium wish list service for Creators. Since the end of the 2021 financial year, strategic priority has been placed on the enhancement of the OnlyFans Trust and Safety tools, controls and processes to ensure it provides the safest platform for both its Creators and Fans. As the premium wish list has not been integrated, the Directors have taken the prudent decision to fully impair the investment in the financial statements. At present Delivery Code Limited remains an active company.
Details of the company's principal operating subsidiaries are included in note 13.
Amounts due from Payment Service Providers are shown net of provisions.
Other payables includes the liability to users of $361,740,000 (2021:$262,308,000)
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
The fair value of the company's lease obligations is $391,000 (2021 $205,000).This is assessed by calculating the Net Present Value of the lease liabilities of the company as at the year end over the term of the lease.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.