Registered number: 10388856 (England and Wales)
LUNO MONEY LIMITED
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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COMPANY INFORMATION
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ZEDRA Corporate Reporting Services (UK) Limited
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CONTENTS
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Statement of Changes in Equity
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Notes to the Financial Statements
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LUNO MONEY LIMITED
REGISTERED NUMBER:
10388856
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BALANCE SHEET
AS AT
31 DECEMBER 2021
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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LUNO MONEY LIMITED
REGISTERED NUMBER:
10388856
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BALANCE SHEET
(CONTINUED)
AS AT
31 DECEMBER 2021
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Share based payment reserve
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The
financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 4 to 10 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2021
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Share based payment reserve
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Comprehensive income for the period
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At 1 January 2021 (as previously stated)
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Prior year adjustment (Note 8)
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At 1 January 2021 (as restated)
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Comprehensive income for the year
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The notes on pages 4 to 10 form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1.
Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of
Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
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The prior accounting period was shortened to nine months in order to align the Company's group reporting. As a result, the comparatives may not be entirely comparable.
The following principal accounting policies have been applied:
The Company is in a net asset position of £2,707,606. Despite being in a net asset position, the entity relies on continued support from its parent company, Luno Pte. Ltd in line with the intercompany services agreement. The directors have considered the available support from Luno Pte. Ltd through a review of the parent company financial position and expected future results and determined that support will be available.
Luno Money Limited has received written confirmation from its parent company, Luno Pte. Ltd, that it will continue to provide financial support to the Company for a period of at least 12 months from the date of signing these financial statements. For these reasons, the directors continue to adopt the going concern basis in preparing the financial statements.
Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Rendering of services
Turnover is recognised on a cost plus 10% basis on reasearch and development activities, and 7.4% on marketing activities, in line with the intercompany service agreement with the parent company. Intercompany turnover is recognised when all of the following conditions are satisfied:
∙
the amount of turnover can be measured reliably;
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it is probable that the Company will receive the consideration due under the intercompany service agreement;
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the costs incurred under the intercompany service agreement can be measured reliably.
Alongside the intercompany service agreement, the Company entered into an agency agreement with the parent company, Luno Pte. Ltd, under which the Company provides agency services in relation to the opening and operating of third party broker accounts. The assets and liabilities in relation to this agreement are not recognised in these financial statements and any costs suffered in relation to providing these services are reimbursed in line with the intercompany service agreement. Included within service fee income is either a profit or loss allocation from the parent company for the services provided by Luno Money Limited. This allocation is based on the level of service provided by Luno Money to the group in that year.
Transaction processing income is recognised at the point a customer withdraws fiat currency from their wallet.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1.
Accounting policies (continued)
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Interest income is recognised in profit or loss using the effective interest method.
Certain employees of the Company are entitled to participate in the share based payment programme of the ultimate parent company, Digital Currency Group, Inc. The share based payment incentive is granted to these employees in the form of Share Appreciation Rights ("SARs").
As the SARs are settled by the ultimate parent company and there is no obligation for the Company to settle these shares, the Company recognises these awards as an equity-settled share based payment. The directors have reviewed the requirements of FRS 102 and determined that it does not provide sufficient guidance to apply to this scenario. As a result, they have determined that it is appropriate to refer to International Financial Reporting Standards ("IFRS") for Share Based Payments, which explains that when share based payments are settled by another group entity and there is no obligation for the Company itself, these shall be accounted for as an equity-settled share based payment.
The Company recognises share based payments using the fair value of the award at the date of grant, which is charged to profit or loss evenly over the vesting period. The fair value of the awards is determined using the Black-Scholes-Model, taking into account non-vesting conditions.
The equity reserve is adjusted by the number of awards expected to vest at each Balance Sheet date, so that the cumulative amount recognised over the vesting period is based on the number of awards that eventually vest.
Where the terms and conditions of awards are modified before they vest, the increase in the fair value of the awards, measured immediately before and after the modification, is also charged to profit or loss evenly over the remaining vesting period.
Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1.
Accounting policies (continued)
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.
The estimated useful lives range as follows:
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 profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are intercompany loans. No interest is charged on the loans which are repayable on demand.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions.
Cash and cash equivalents include customer fund cash balances held on deposit for the parent company Luno Pte Limited. The Company holds these balances under an agency agreement and must maintain these balances in accordance with the agreement. Ultimately, the balances are highly liquid and meet the definition of cash in accordance with the requirements of FRS 102.
Cash is stated net of bank overdrafts in the Balance Sheet.
Short-term creditors are measured at the transaction price. Loans paayble are intercompany loans. No interest is charged on the loans which are repayable on demand.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1.
Accounting policies (continued)
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
The auditors' report on the financial statements for the year ended 31 December 2021 was unqualified.
The audit report was signed on
6 June 2022
by
Nick Whitehead FCCA
(Senior Statutory Auditor) on behalf of
ZEDRA Corporate Reporting Services (UK) Limited
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The average monthly number of employees, including directors, during the year was
48
(2020 -
38
)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
In 2020, share appreciation rights were granted to UK employees, as part of the group plan of Digital Currency Group, Inc. A valuation of $13.11 per share was obtained on 31 December 2019 which has been used in assessing the charge to be included in the financial statements in accordance with accounting policy 1.6. This estimation could cause material misstatement as the share appreciation rights were not granted until 1 September 2020. Management have determined that they believe the valuation at 31 December 2019 to be reasonable in the context of the awards as although the next valuation, at 31 December 2020 showed a five times increase in the value of the awards to $65.02 per share, this has been attributed largely to the substantial increase in BitCoin prices from October 2020. Management's judgement in determining an appropriate point estimate is a significant judgement which could cause material misstatement in these financial statements.
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Charge for the year on owned assets
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Due after more than one year
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Debtors due after more than one year relate to rental deposits held by the company which are expected to be realised in 2023.
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Amounts owed by group undertakings
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Prepayments and accrued income
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Customer funds represent cash and cash equivalents held on behalf of customers by the Company. The Company requires permission to control these funds by the customer.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Creditors: Amounts falling due within one year
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Other taxation and social security
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Accruals and deferred income
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The customer funds liability is the corresponding liability for cash and cash equivalents held on behalf of the customers by the Company.
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In the prior period, certain employees were awarded bonuses to be paid out on the anniversary of the acquisition by Digital Currency Group, Inc. During the year, management noted that these bonuses had been accrued in the parent company but no recharge had been made to the Company for its employees subject to the scheme.
As a result, a prior period adjustment has been raised to include these bonuses. The effect has been to increase accruals by £272,765 with the corresponding increase in staff salaries.
Due to the Company's cost plus agreement, a mark up for the adjusted staff salaries has been posted to intercompany revenue. The adjustment has increased prior period sales by £292,949, with a corresponding entry to amounts owed by group undertakings.
The overall effect on the brought forward retained earnings position has been an increase of £20,184.
Luno Pte. Ltd., a company incorporated in Singapore, is the parent company of the smallest group for which consolidated financial statements are drawn up of which the Company is a member. The registered office of the parent company is 1 Coleman Street, #05-05 The Adelphi, Singapore, 179803.
Digital Currency Group, Inc., a Company incorporated in the USA, is considered to be the ultimate controlling party by virtue of its holding in Luno Pte. Ltd.
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Post balance sheet events
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There were no adjusting or non-adjusting events occurring between the end of the reporting period and the date these financial statements were approved.
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