REGISTERED NUMBER: 08757996 (England and Wales) |
Group Strategic Report, Report of the Director and |
Consolidated Financial Statements |
for the Period 1 December 2020 to 31 December 2021 |
for |
CEX.IO LTD |
REGISTERED NUMBER: 08757996 (England and Wales) |
Group Strategic Report, Report of the Director and |
Consolidated Financial Statements |
for the Period 1 December 2020 to 31 December 2021 |
for |
CEX.IO LTD |
CEX.IO LTD (Registered number: 08757996) |
Contents of the Consolidated Financial Statements |
for the Period 1 December 2020 to 31 December 2021 |
Page |
Company Information | 1 |
Group Strategic Report | 2 |
Report of the Director | 3 |
Report of the Independent Auditors | 4 |
Consolidated Income Statement | 7 |
Consolidated Other Comprehensive Income | 8 |
Consolidated Balance Sheet | 9 |
Company Balance Sheet | 10 |
Consolidated Statement of Changes in Equity | 11 |
Company Statement of Changes in Equity | 12 |
Consolidated Cash Flow Statement | 13 |
Notes to the Consolidated Cash Flow Statement | 14 |
Notes to the Consolidated Financial Statements | 15 |
CEX.IO LTD |
Company Information |
for the Period 1 December 2020 to 31 December 2021 |
DIRECTOR: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Statutory Auditors |
First floor |
18 Devonshire Row |
London |
EC2M 4RH |
CEX.IO LTD (Registered number: 08757996) |
Group Strategic Report |
for the Period 1 December 2020 to 31 December 2021 |
The director presents his strategic report of the company and the group for the period 1 December 2020 to 31 December 2021. |
REVIEW OF BUSINESS |
The principal activity of the company in the period under review was that of a cryptocurrency exchange. |
CEX.IO LTD acted as digital assets marketplace in 2021 and was registered with FCA until getting a final approval or a license. Registration was prolonged until the end of March 2022 and later on until June 2022. Companies' management considered several strategies in case CEX.IO LTD won't be able to obtain the license in the UK, so finally all the regulated activity was moved out from the UK entity. CEX.IO LTD changed the business model into selling the digital assets platform services to the third parties, keeping the IP rights, infrastructure, core team, contractors and vendors. |
The priod to 31.12.2021, showed a growth in the business with a reported trunover of £28.7m (£14m in 2020), as well as profit before taxation of £11m (£7m in 2020). |
Management concludes COVID-19 had a positive impact on financial performance. |
PRINCIPAL RISKS AND UNCERTAINTIES |
Our principal risks are those that have been identified as having the most impact on our business. CEX.IO Ltd has a strong process in place to manage the mitigation of these risks through robust business continuity capabilities. |
Principe risks underlined by the management are: |
Regulatory risk |
Uncertainties of the governments regarding the digital assets regulatory frameworks makes long terms strategies almost impossible and requires at least 2 scenarios and business strategies; |
Team management and location risk (WFH during and after COVID-19 / war in Ukraine) |
The Group implemented WFH for the teams during the COVID-19, Q1 and Q2 of 2020 shown lower teams performance, however Q3 and Q4 of 2020 came in line with pre-COVID-19 indicators. What was the most shocking for the company is the war in Ukraine in 2022 as almost 70% of contractors were settled there. The company lost the performance in development, support, and analytics. As of April 2023 the risk of the Ukrainian team is still in place and reduced up to 30%. Nevertheless the war in Ukraine brought more consequences, losing of sanctioned markets, inflation and world economy recession. |
Cybersecurity risk |
A crucial part of stability for the digital assets marketplace. Being a centralized exchange service, the platform is responsible for security of assets, kept before any trades or conversions. These risks are managed by proactive approach of CISO team, number of penetration tests, internal procedures and policies. |
Significant decrease in the price of crypto currencies |
Cryptocurrency prices are subject to a multitude of factors, such as global economic conditions, regulatory changes, and investor sentiment, which can be highly unpredictable and volatile. Due to the decline in the price of cryptocurrency in 2022 the value of the company’s crypto assets depreciated. The company has plans to diversify its treasury to mitigate the risk of concentration in the future. |
ON BEHALF OF THE BOARD: |
CEX.IO LTD (Registered number: 08757996) |
Report of the Director |
for the Period 1 December 2020 to 31 December 2021 |
The director presents his report with the financial statements of the company and the group for the period 1 December 2020 to 31 December 2021. |
PRINCIPAL ACTIVITY |
The principal activity of the group in the period under review was that of a cryptocurrency exchange. |
DIVIDENDS |
No dividends are to be distributed for the current financial year. |
EVENTS SINCE THE END OF THE PERIOD |
Information relating to events since the end of the period is given in the notes to the financial statements. |
DIRECTORS |
Other changes in directors holding office are as follows: |
STATEMENT OF DIRECTOR'S RESPONSIBILITIES |
The director is responsible for preparing the Group Strategic Report, the Report of the Director and the financial statements in accordance with applicable law and regulations. |
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | state whether applicable 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 director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information. |
AUDITORS |
The auditors, Zenith Audit Ltd, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
Report of the Independent Auditors to the Members of |
CEX.IO LTD |
Opinion |
We have audited the financial statements of CEX.IO LTD (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 December 2021 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 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 group's and of the parent company affairs as at 31 December 2021 and of the group's 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. |
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
Conclusions relating to going concern |
In auditing the financial statements, we have concluded that the director's 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 the 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 director with respect to going concern are described in the relevant sections of this report. |
Other information |
The director is responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Director, but does not include the financial statements and our Report of the Auditors thereon. |
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. |
In connection with our audit of the financial statements, 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 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 the audit: |
- | the information given in the Group Strategic Report and the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Group Strategic Report and the Report of the Director have been prepared in accordance with applicable legal requirements. |
Report of the Independent Auditors to the Members of |
CEX.IO LTD |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Director. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the parent company financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of director's remuneration specified by law are not made; or |
- | we have not received all the information and explanations we require for our audit. |
Responsibilities of director |
As explained more fully in the Statement of Director's Responsibilities set out on page three, the director is 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 director determines 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 director is responsible for assessing the group's and 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 director either intends to liquidate the group or the parent company or to cease operations, or has no realistic alternative but to do so. |
Auditors' 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 a Report of the Auditors 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 performed risk assessment procedures and obtained an understanding of the Company and its environment, the applicable financial reporting framework, the applicable laws and regulations, the Company's system of internal control and the fraud risk factors relevant to the Company that affect the susceptibility of assertions to material misstatement due to fraud. We made enquiries with management regarding actual or suspected fraud, non-compliance with laws and regulations,potential litigation and claims. The engagement partner led a discussion among the audit team with particular emphasis on how and where the Company's financial statements may be susceptible to material misstatement due to fraud, including how fraud might occur. The engagement partner assessed that the engagement team collectively had the appropriate competence and capability to identify or recognise non-compliance with laws and regulations. |
We considered compliance with UK Companies Act 2006, FCA regulations and the applicable tax legislation as the key laws and regulations which non-compliance could directly lead to material misstatement due to fraud at the financial statement level. We evaluated whether the selection and application of accounting policies by the Company may be indicative of fraudulent financial reporting. Our audit procedures responsive to assessed risks of material misstatement due to fraud at the assertion level included but were not limited to: |
- Testing the appropriateness of manual journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements; |
- Making inquiries of individuals involved in the financial reporting process about inappropriate or unusual activity relating to the processing of journal entries; |
- Selecting and testing journal entries and other adjustments made at the end of a reporting period and throughout the period; |
- Reviewing accounting estimates for biases that could represent a risk of material misstatement due to fraud. |
- Reviewing key correspondence with regulatory authorities such as the Financial Conduct Authority. |
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial statements due to irregularities, including fraud, may not be detected, even though we have properly planned and performed our audit in accordance with the auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as they may involve collusion, forgery, intentional omissions, override of internal controls, or collusion. |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
Report of the Independent Auditors to the Members of |
CEX.IO LTD |
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 a Report of the Auditors 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. |
for and on behalf of |
Statutory Auditors |
First floor |
18 Devonshire Row |
London |
EC2M 4RH |
CEX.IO LTD (Registered number: 08757996) |
Consolidated Income Statement |
for the Period 1 December 2020 to 31 December 2021 |
Period |
1.12.20 |
to | Year Ended |
31.12.21 | 30.11.20 |
Notes | £ | £ |
TURNOVER | 28,724,581 | 14,152,082 |
Cost of sales | (24,364,873 | ) | (8,630,179 | ) |
GROSS PROFIT | 4,359,708 | 5,521,903 |
Administrative expenses | (5,361,689 | ) | (3,749,369 | ) |
(1,001,981 | ) | 1,772,534 |
Other operating income | 12,010,351 | 5,088,750 |
OPERATING PROFIT | 4 | 11,008,370 | 6,861,284 |
Interest receivable and similar income | 10,435 | 8,699 |
11,018,805 | 6,869,983 |
Interest payable and similar expenses | 5 | (28,974 | ) | (44,261 | ) |
PROFIT BEFORE TAXATION | 10,989,831 | 6,825,722 |
Tax on profit | 6 | (1,068,247 | ) | 495,163 |
PROFIT FOR THE FINANCIAL PERIOD |
Profit attributable to: |
Owners of the parent | 9,921,603 | 7,320,030 |
Non-controlling interests | (19 | ) | 855 |
9,921,584 | 7,320,885 |
CEX.IO LTD (Registered number: 08757996) |
Consolidated Other Comprehensive Income |
for the Period 1 December 2020 to 31 December 2021 |
Period |
1.12.20 |
to | Year Ended |
31.12.21 | 30.11.20 |
Notes | £ | £ |
PROFIT FOR THE PERIOD | 9,921,584 | 7,320,885 |
OTHER COMPREHENSIVE INCOME |
Currency translation difference | (7,186 | ) | (9,628 | ) |
Income tax relating to other comprehensive income | - | - |
OTHER COMPREHENSIVE INCOME FOR THE PERIOD, NET OF INCOME TAX |
(7,186 |
) |
(9,628 |
) |
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
9,914,398 |
7,311,257 |
Total comprehensive income attributable to: |
Owners of the parent | 9,914,417 | 7,313,423 |
Non-controlling interests | (19 | ) | (2,166 | ) |
9,914,398 | 7,311,257 |
CEX.IO LTD (Registered number: 08757996) |
Consolidated Balance Sheet |
31 December 2021 |
31.12.21 | 30.11.20 |
Notes | £ | £ |
FIXED ASSETS |
Intangible assets | 10 | 15,302 | 12,122 |
Tangible assets | 11 | 449,843 | 16,976 |
Investments | 12 | - | - |
465,145 | 29,098 |
CURRENT ASSETS |
Stocks | 13 | 1,182 | - |
Debtors | 14 | 7,656,674 | 4,085,630 |
Investments | 15 | 11,454,471 | 7,420,503 |
Cash at bank | 16 | 3,093,699 | 1,657,527 |
22,206,026 | 13,163,660 |
CREDITORS |
Amounts falling due within one year | 17 | (4,031,172 | ) | (4,687,157 | ) |
NET CURRENT ASSETS | 18,174,854 | 8,476,503 |
TOTAL ASSETS LESS CURRENT LIABILITIES |
18,639,999 |
8,505,601 |
CAPITAL AND RESERVES |
Called up share capital | 18 | 500,000 | 280,000 |
Other reserves | 19 | (16,814 | ) | (9,628 | ) |
Retained earnings | 19 | 18,158,998 | 8,237,395 |
SHAREHOLDERS' FUNDS | 18,642,184 | 8,507,767 |
NON-CONTROLLING INTERESTS | (2,185 | ) | (2,166 | ) |
TOTAL EQUITY | 18,639,999 | 8,505,601 |
The financial statements were approved by the director and authorised for issue on 20 April 2023 and were signed by: |
O Lutskevych - Director |
CEX.IO LTD (Registered number: 08757996) |
Company Balance Sheet |
31 December 2021 |
31.12.21 | 30.11.20 |
Notes | £ | £ |
FIXED ASSETS |
Intangible assets | 10 |
Tangible assets | 11 |
Investments | 12 |
CURRENT ASSETS |
Debtors | 14 |
Investments | 15 |
Cash at bank | 16 |
CREDITORS |
Amounts falling due within one year | 17 | ( |
) | ( |
) |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CAPITAL AND RESERVES |
Called up share capital | 18 |
Retained earnings | 19 |
SHAREHOLDERS' FUNDS |
Company's profit for the financial year | 9,919,828 | 7,406,383 |
The financial statements were approved by the director and authorised for issue on |
CEX.IO LTD (Registered number: 08757996) |
Consolidated Statement of Changes in Equity |
for the Period 1 December 2020 to 31 December 2021 |
Called up |
share | Retained | Other |
capital | earnings | reserves |
£ | £ | £ |
Balance at 1 December 2019 | 280,000 | 774,277 | - |
Changes in equity |
Total comprehensive income | - | 7,463,118 | (9,628 | ) |
Balance at 30 November 2020 | 280,000 | 8,237,395 | (9,628 | ) |
Changes in equity |
Issue of share capital | 220,000 | - | - |
Total comprehensive income | - | 9,921,603 | (7,186 | ) |
Balance at 31 December 2021 | 500,000 | 18,158,998 | (16,814 | ) |
Non-controlling | Total |
Total | interests | equity |
£ | £ | £ |
Balance at 1 December 2019 | 1,054,277 | - | 1,054,277 |
Changes in equity |
Total comprehensive income | 7,453,490 | (2,166 | ) | 7,451,324 |
Balance at 30 November 2020 | 8,507,767 | (2,166 | ) | 8,505,601 |
Changes in equity |
Issue of share capital | 220,000 | - | 220,000 |
Total comprehensive income | 9,914,417 | (19 | ) | 9,914,398 |
Balance at 31 December 2021 | 18,642,184 | (2,185 | ) | 18,639,999 |
CEX.IO LTD (Registered number: 08757996) |
Company Statement of Changes in Equity |
for the Period 1 December 2020 to 31 December 2021 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Balance at 1 December 2019 |
Changes in equity |
Total comprehensive income | - |
Balance at 30 November 2020 |
Changes in equity |
Issue of share capital | - |
Total comprehensive income | - |
Balance at 31 December 2021 |
CEX.IO LTD (Registered number: 08757996) |
Consolidated Cash Flow Statement |
for the Period 1 December 2020 to 31 December 2021 |
Period |
1.12.20 |
to | Year Ended |
31.12.21 | 30.11.20 |
Notes | £ | £ |
Cash flows from operating activities |
Cash generated from operations | 1 | 1,364,140 | (549,949 | ) |
Finance costs paid | (28,974 | ) | (44,261 | ) |
Tax paid | 373,575 | 495,163 |
Net cash from operating activities | 1,708,741 | (99,047 | ) |
Cash flows from investing activities |
Purchase of intangible fixed assets | (6,666 | ) | (2,354 | ) |
Purchase of tangible fixed assets | (489,153 | ) | (2,907 | ) |
Sale of tangible fixed assets | - | 8,960 |
Interest received | 10,435 | 8,699 |
Net cash from investing activities | (485,384 | ) | 12,398 |
Cash flows from financing activities |
Share issue | 220,000 | - |
Net cash from financing activities | 220,000 | - |
Increase/(decrease) in cash and cash equivalents | 1,443,357 | (86,649 | ) |
Cash and cash equivalents at beginning of period | 2 | 1,657,527 | 1,667,868 |
Effect of foreign exchange rate changes | (7,185 | ) | 76,308 |
Cash and cash equivalents at end of period | 2 | 3,093,699 | 1,657,527 |
CEX.IO LTD (Registered number: 08757996) |
Notes to the Consolidated Cash Flow Statement |
for the Period 1 December 2020 to 31 December 2021 |
1. | RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS |
Period |
1.12.20 |
to | Year Ended |
31.12.21 | 30.11.20 |
£ | £ |
Profit before taxation | 10,989,831 | 6,825,722 |
Depreciation charges | 59,772 | 38,034 |
Finance costs | 28,974 | 44,261 |
Finance income | (10,435 | ) | (8,699 | ) |
11,068,142 | 6,899,318 |
Increase in stocks | (1,182 | ) | - |
Increase in trade and other debtors | (15,398,700 | ) | (8,304,885 | ) |
Increase in trade and other creditors | 5,695,880 | 855,618 |
Cash generated from operations | 1,364,140 | (549,949 | ) |
2. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts: |
Period ended 31 December 2021 |
31.12.21 | 1.12.20 |
£ | £ |
Cash and cash equivalents | 3,093,699 | 1,657,527 |
Year ended 30 November 2020 |
30.11.20 | 1.12.19 |
£ | £ |
Cash and cash equivalents | 1,657,527 | 1,667,868 |
3. | ANALYSIS OF CHANGES IN NET FUNDS |
At 1.12.20 | Cash flow | At 31.12.21 |
£ | £ | £ |
Net cash |
Cash at bank | 1,657,527 | 1,436,172 | 3,093,699 |
1,657,527 | 1,436,172 | 3,093,699 |
Liquid resources |
Current asset investments | 7,420,503 | 4,033,968 | 11,454,471 |
7,420,503 | 4,033,968 | 11,454,471 |
Total | 9,078,030 | 5,470,140 | 14,548,170 |
CEX.IO LTD (Registered number: 08757996) |
Notes to the Consolidated Financial Statements |
for the Period 1 December 2020 to 31 December 2021 |
1. | STATUTORY INFORMATION |
CEX.IO LTD is a |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
The company has taken advantage of the exemption allowed under section 408 of the Companies |
Act 2006 and has not presented its own statement of comprehensive income in these financial statements. |
Basis of consolidation |
The consolidated financial statements present the results of the company and its own subsidiaries ("the group") as if they form a single entity. lntercompany transactions and balances between group companies are therefore eliminated in full. |
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. |
In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01January 2016. |
In the company's own financial statements, 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 consolidated financial statements incorporate those of CEX.IO LTD and its subsidiaries (i.e. entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). All the financial statements are made up to 31 December 2021. All intra-group transactions, balances and unrealised gains on transaction between groups companies are eliminated on consolidation. |
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. |
The period ended 31.12.2021 was first year of consolidation as the Group has exceeded small group thresholds. Hence, comparatives for the year ended 30.11.2020 are restated. |
Going concern |
The directors consider the going concern basis to be appropriate given the company's net assets of £18,266,675 (2020: £8,477,284) and profit before tax of £10,989,832 (2020: £6,825,722). The shareholder has indicated its willingness to provide working capital to the company where necessary for a period of at least 12 months following the date of approval of these financial statements. |
In 2021, CEX.IO LTD served as a marketplace for digital assets and was registered with FCA, but had not yet received a final approval or license. The registration was extended first until the end of March 2022, and then later until June 2022 and after withdrew its application. Ultimately, all regulated activities were relocated from the UK entity, prompting CEX.IO LTD to shift its business model to selling digital asset platform services to third parties while retaining control of the IP rights, infrastructure, core team, contractors, and vendors. Management believes the change in operations will not have a negative impact on the company's performance and going concern. |
CEX.IO LTD (Registered number: 08757996) |
Notes to the Consolidated Financial Statements - continued |
for the Period 1 December 2020 to 31 December 2021 |
2. | ACCOUNTING POLICIES - continued |
Turnover |
The company derives its turnover as commission and fees for digital asset transactional services, where users can buy and sell digital assets for a service fee. The company recognises turnover when the following criteria have been met: persuasive evidence of an arrangement exists, the fee is fixed or determinable, the service has been rendered and risk of loss has transferred to the customer, and collection is reasonably assured. Service is considered rendered upon purchase and transfer of the digital asset(s) ownership to the customer. |
Intangible assets |
Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. |
Tangible fixed assets |
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. |
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method. |
Depreciation is provided on the following basis: Fixtures and fittings - 33% |
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date. |
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Statement of Comprehensive Income. |
Stocks |
Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. |
Current asset investments comprise of cryptographic assets fair valued through profit and loss. The investments are valued as per the price feed from the Coin Market Cap as at the year end. |
Taxation |
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. |
CEX.IO LTD (Registered number: 08757996) |
Notes to the Consolidated Financial Statements - continued |
for the Period 1 December 2020 to 31 December 2021 |
2. | ACCOUNTING POLICIES - continued |
Research and development |
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research is recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised `development costs are subsequently amortised to ‘administrative expenses’ on a straight line basis over their expected useful economic lives, Amortisation begins when the intangible asset is available for use, ie when it is in the location and condition necessary for it to be usable in the manner intended by management. |
The expected useful economic life of development costs are estimated based on business plans which set out the development plan and time to market for the associated project. |
If it is not possible to distinguish between the research phase and the development phase of an internal the expenditure is treated as if it were all incurred in the research phase only. |
Foreign currencies |
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 are included in the profit and loss account for the period. |
Hire purchase and leasing commitments |
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease. |
Pension costs and other post-retirement benefits |
The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate. |
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. |
Cryptocurrency |
Cryptocurrency assets, classified as current asset investments, are measured at fair value. Changes in fair value are recognised in 'other foreign exchange', within profit or loss. |
Cash and cash equivalents |
Cash and cash equivalents comprise cash on hand, call deposits, other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value and commission and fee income earned but not withdrawn and included in client money accounts. |
Assets held on behalf of clients |
Company holds client monies and assets in separate bank and custodian accounts on behalf of the clients. It also includes any commission and fee income earned but not withdrawn by the Company. The portion of these balances that do not belong to the Company and are restrictive in use is not included in the Company Statement of Financial Position. |
Capital and reserves |
Company's capital reserves comprises of: |
- Called up share capital reserve representing the nominal value of the shares issued and |
- Profit and loss account representing cumulative profits or losses, net of dividends paid and other adjustments. |
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. |
CEX.IO LTD (Registered number: 08757996) |
Notes to the Consolidated Financial Statements - continued |
for the Period 1 December 2020 to 31 December 2021 |
2. | ACCOUNTING POLICIES - continued |
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. |
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, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised. |
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. |
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method. |
3. | EMPLOYEES AND DIRECTORS |
Period |
1.12.20 |
to | Year Ended |
31.12.21 | 30.11.20 |
£ | £ |
Wages and salaries | 483,200 | 148,178 |
Social security costs | 60,157 | 18,844 |
Other pension costs | 5,065 | 1,695 |
548,422 | 168,717 |
The average number of employees during the period was as follows: |
Period |
1.12.20 |
to | Year Ended |
31.12.21 | 30.11.20 |
Sales and support | 10 | 24 |
Administration | 17 | 21 |
CEX.IO LTD (Registered number: 08757996) |
Notes to the Consolidated Financial Statements - continued |
for the Period 1 December 2020 to 31 December 2021 |
3. | EMPLOYEES AND DIRECTORS - continued |
The average number of employees by undertakings that were proportionately consolidated during the period was NIL (2020 - NIL). |
Period |
1.12.20 |
to | Year Ended |
31.12.21 | 30.11.20 |
£ | £ |
Directors' remuneration | 154,123 | 73,974 |
4. | OPERATING PROFIT |
The operating profit is stated after charging/(crediting): |
Period |
1.12.20 |
to | Year Ended |
31.12.21 | 30.11.20 |
£ | £ |
Other operating leases | 563,042 | 468,545 |
Depreciation - owned assets | 56,286 | 34,371 |
Development costs amortisation | 3,486 | 3,663 |
Auditors' remuneration | 41,500 | 34,000 |
Foreign exchange differences | (11,991,586 | ) | (5,019,593 | ) |
5. | INTEREST PAYABLE AND SIMILAR EXPENSES |
Period |
1.12.20 |
to | Year Ended |
31.12.21 | 30.11.20 |
£ | £ |
Interest paid | 28,974 | 44,261 |
6. | TAXATION |
Analysis of the tax charge/(credit) |
The tax charge/(credit) on the profit for the period was as follows: |
Period |
1.12.20 |
to | Year Ended |
31.12.21 | 30.11.20 |
£ | £ |
Current tax: |
UK corporation tax | 1,068,247 | (495,163 | ) |
Tax on profit | 1,068,247 | (495,163 | ) |
CEX.IO LTD (Registered number: 08757996) |
Notes to the Consolidated Financial Statements - continued |
for the Period 1 December 2020 to 31 December 2021 |
6. | TAXATION - continued |
Reconciliation of total tax charge/(credit) included in profit and loss |
The tax assessed for the period is lower than the standard rate of corporation tax in the UK. The difference is explained below: |
Period |
1.12.20 |
to | Year Ended |
31.12.21 | 30.11.20 |
£ | £ |
Profit before tax | 10,989,831 | 6,825,722 |
Profit multiplied by the standard rate of corporation tax in the UK of 19 % (2020 - 19 %) |
2,088,068 |
1,296,887 |
Effects of: |
Expenses not deductible for tax purposes | 9,929 | 6,879 |
Income not taxable for tax purposes | (102,048 | ) | (17,731 | ) |
Utilisation of tax losses | (552,329 | ) | (548,879 | ) |
Adjustments to tax charge in respect of previous periods | - | (174,604 | ) |
R&D tax credit in respect of prior years | (375,700 | ) | (1,074,939 | ) |
Tax effect of loss on which no deferred tax asset recognised | 327 | 17,224 |
Total tax charge/(credit) | 1,068,247 | (495,163 | ) |
Tax effects relating to effects of other comprehensive income |
1.12.20 to 31.12.21 |
Gross | Tax | Net |
£ | £ | £ |
Currency translation difference | (7,186 | ) | - | (7,186 | ) |
30.11.20 |
Gross | Tax | Net |
£ | £ | £ |
Currency translation difference | (9,628 | ) | - | (9,628 | ) |
Reversal of impairment of investment | 143,088 | - | 143,088 |
133,460 | - | 133,460 |
7. | INDIVIDUAL INCOME STATEMENT |
As permitted by Section 408 of the Companies Act 2006, the Income Statement of the parent company is not presented as part of these financial statements. |
8. | ASSETS HELD ON BEHALF OF CLIENTS |
At the year end date, the company held £297,859,541 (2020: £95,668,097) in cryptocurrency and£119,998,531(2020: £24,882,994) in cash on behalf of its clients. As these balances do not relate to the company's assets, they have been excluded from the financial statements. |
CEX.IO LTD (Registered number: 08757996) |
Notes to the Consolidated Financial Statements - continued |
for the Period 1 December 2020 to 31 December 2021 |
9. | COMMITMENTS UNDER OPERATING LEASES |
At 31 December 2021 the Company had future minimum lease payments under non-cancellable |
operating leases as follows: |
2021 | 2020 |
£ | £ |
Not later than 1 year | 1,714,936 | 110,150 |
Later than 1 year and not later than 5 years | 1,008,426 | 65,996 |
2,723,362 | 175,146 |
10. | INTANGIBLE FIXED ASSETS |
Group |
Development |
costs |
£ |
COST |
At 1 December 2020 | 17,598 |
Additions | 6,666 |
At 31 December 2021 | 24,264 |
AMORTISATION |
At 1 December 2020 | 5,476 |
Amortisation for period | 3,486 |
At 31 December 2021 | 8,962 |
NET BOOK VALUE |
At 31 December 2021 | 15,302 |
At 30 November 2020 | 12,122 |
Management considers that net book value of the tangible and intangible assets is similar to carrying value and there is no impairment. |
CEX.IO LTD (Registered number: 08757996) |
Notes to the Consolidated Financial Statements - continued |
for the Period 1 December 2020 to 31 December 2021 |
11. | TANGIBLE FIXED ASSETS |
Group |
Fixtures |
Plant and | and | Computer |
machinery | fittings | equipment | Totals |
£ | £ | £ | £ |
COST |
At 1 December 2020 | 157,470 | 1,099 | - | 158,569 |
Additions | 62,332 | 2,332 | 424,489 | 489,153 |
At 31 December 2021 | 219,802 | 3,431 | 424,489 | 647,722 |
DEPRECIATION |
At 1 December 2020 | 141,043 | 550 | - | 141,593 |
Charge for period | 24,932 | 1,625 | 29,729 | 56,286 |
At 31 December 2021 | 165,975 | 2,175 | 29,729 | 197,879 |
NET BOOK VALUE |
At 31 December 2021 | 53,827 | 1,256 | 394,760 | 449,843 |
At 30 November 2020 | 16,427 | 549 | - | 16,976 |
Company |
Fixtures |
and | Computer |
fittings | equipment | Totals |
£ | £ | £ |
COST |
At 1 December 2020 |
Additions |
At 31 December 2021 |
DEPRECIATION |
At 1 December 2020 |
Charge for period |
At 31 December 2021 |
NET BOOK VALUE |
At 31 December 2021 |
At 30 November 2020 |
CEX.IO LTD (Registered number: 08757996) |
Notes to the Consolidated Financial Statements - continued |
for the Period 1 December 2020 to 31 December 2021 |
12. | FIXED ASSET INVESTMENTS |
Company |
Shares in |
group |
undertakings |
£ |
COST |
At 1 December 2020 |
and 31 December 2021 |
NET BOOK VALUE |
At 31 December 2021 |
At 30 November 2020 |
The Company has 99% investment in CEX.IO Labs Ltd, which is domiciled in Ukraine. |
13. | STOCKS |
Group |
31.12.21 | 30.11.20 |
£ | £ |
Stocks | 1,182 | - |
14. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
31.12.21 | 30.11.20 | 31.12.21 | 30.11.20 |
£ | £ | £ | £ |
Trade debtors | 392,502 | 300,315 |
Amount owed by related parties | 6,595,454 | 2,540,864 |
Other debtors | 441,276 | 46,362 |
Tax | 13,451 | 1,074,939 |
Prepayments and accrued income | 213,991 | 123,150 |
7,656,674 | 4,085,630 |
15. | CURRENT ASSET INVESTMENTS |
Group | Company |
31.12.21 | 30.11.20 | 31.12.21 | 30.11.20 |
£ | £ | £ | £ |
Digital assets | 11,454,471 | 7,420,503 |
During the year, there were additions (net of disposals) of £4,033,968 (2020:£5,087,450). The digital assets have been fair valued as per the price feed from the Coin Market Cap as at the year end. |
CEX.IO LTD (Registered number: 08757996) |
Notes to the Consolidated Financial Statements - continued |
for the Period 1 December 2020 to 31 December 2021 |
16. | CASH AT BANK |
Group | Company |
31.12.21 | 30.11.20 | 31.12.21 | 30.11.20 |
£ | £ | £ | £ |
Own monies held in client |
designated accounts | - | 1,379,034 | - | 1,379,034 |
Corporate bank account | 3,093,699 | 278,493 | 2,963,375 | 181,289 |
3,093,699 | 1,657,527 | 2,963,375 | 1,560,323 |
17. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
31.12.21 | 30.11.20 | 31.12.21 | 30.11.20 |
£ | £ | £ | £ |
Trade creditors | 2,030,856 | 1,550,643 |
Amounts owed to group undertakings | 22,483 | - |
Tax | 1,441,822 | 753,172 |
Social security and other taxes | 29,521 | 42,443 |
Other creditors | 6,894 | 276,815 |
Interest payable | 43,651 | 57,352 | 43,651 | 57,352 |
Short term loans | 455,945 | 2,006,732 | 455,945 | 2,006,732 |
4,031,172 | 4,687,157 |
18. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 31.12.21 | 30.11.20 |
value: | £ | £ |
Ordinary | 1 | 500,000 | 280,000 |
19. | RESERVES |
Group |
Retained | Other |
earnings | reserves | Totals |
£ | £ | £ |
At 1 December 2020 | 8,237,395 | (9,628 | ) | 8,227,767 |
Profit for the period | 9,921,603 | 9,921,603 |
No description | - | (7,186 | ) | (7,186 | ) |
At 31 December 2021 | 18,158,998 | (16,814 | ) | 18,142,184 |
Company |
Retained |
earnings |
£ |
At 1 December 2020 |
Profit for the period |
At 31 December 2021 |
CEX.IO LTD (Registered number: 08757996) |
Notes to the Consolidated Financial Statements - continued |
for the Period 1 December 2020 to 31 December 2021 |
20. | RELATED PARTY DISCLOSURES |
Included within other creditors are loans from Oleksandr Lutskevych amounting to £455,945 (2020:£2,006,731). The loans incur interest at 2% per annum and at year end £43,651 (2020:57,352) of accrued interest is included within creditors. (Note - 15) |
During the year the company paid NIL (2020: £173,192) to Oleksandr Lutskevych for professional services provided to the company. |
During the year, the Group has recharged service charges to CEX IO Limited (GIb), a company under common management of £500,853 (2020: NIL) and balance receivable as at year end was £ 500,853 (2020: NIL). |
During the year, the Group has recharged service charges to CEX Overseas LTD, a company under common management of £3,983,547 (2020: NIL) and balance receivable as at year end was £4,052,303 (2020: NIL). |
During the year, the Group has recharged service charges to CEX IO Corp., a company under common management of £1,863,585 (2020: £3,284,745) and balance receivable as at year end was £2,016,725.30 (2020: £2,243,007). |
The company also has the following balances due from other companies under common control: |
Balance at31/12/2021 | Balance at30/11/2020 |
£ | £ |
CEX. IO Limited (Gibraltar) | - | 254,272 |
CEX.IO PTE. LTD. | 25,573 | 18,610 |
Decent Finance LTD | 133,127 | 21,488 |
KYC LABS LTD | 3,218 | 2,283 |
21. | AUDITOR LIABILITY LIMITATION AGREEMENT |
An auditors' limitation of liability agreement has been approved by the members for the financial period ended 31 December 2021. The principal terms and conditions are as below: |
- The agreement limits the amount of any liability owed to the Company by the auditors in respect of any |
negligence default, breach of duty or breach of trust, occurring in the course of audit of the Company's accounts and pursuant to this agreement the auditor may be guilty in relation to the Company. |
- The agreement also stipulates the maximum aggregated amount payable in event of any of the circumstances stated above. |
22. | POST BALANCE SHEET EVENTS |
The war in Ukraine starting in February 2022 brought losing of sanctioned markets, inflation and world economy recession. The primary impact to turnover was the macroeconomic factors that contributed to monetary policy tightening and the subsequent impact on the financial markets. At the beginning of 2022 almost 70% of contractors were settled in Ukraine. The company's development, support, and analytics performance decreased at the beginning of the war. As of April 2023 the risk of the Ukrainian contractors is still in place but the company took measures and significantly reduced the risks. |
In 2021, CEX.IO LTD served as a marketplace for digital assets and was registered with FCA, but had not yet received a final approval or license. The registration was extended first until the end of March 2022, and then later until June 2022 and after withdrew its application. Ultimately, all regulated activities were relocated from the UK entity, prompting CEX.IO LTD to shift its business model to selling digital asset platform services to third parties while retaining control of the IP rights, infrastructure, core team, contractors, and vendors. |
Cryptocurrency prices are subject to a multitude of factors, such as global economic conditions, regulatory changes, and investor sentiment, which can be highly unpredictable and volatile. Due to the decline in the price of cryptocurrency in 2022 the value of the company’s crypto assets depreciated. The company has plans to diversify its treasury to mitigate the risk of concentration in the future. |
23. | ULTIMATE CONTROLLING PARTY |
The controlling party is O Lutskevych. |
The immediate parent company is CEX.IO Holding Ltd. |