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What’s in this report?
Strategic report 3
Who we are and why we’re here 4
Our history and highlights 5
Our team 7
Chair’s review 9
Chief Executive’s review 10
Business model and strategy 12
A review of our performance 13
Our approach to people 17
Our community 22
Governance at Monzo 23
Strong risk management is at the heart of everything we do 26
Group Directors’ report 31
Statement of Directors’ responsibilities 35
Independent auditors’ report 37
Statement of comprehensive income 47
Statement of financial position 49
Statement of changes in equity 51
Statement of cash flows 53
Notes to the financial statements 55
We’re Monzo, a bank that lives on your phone. For Already, more than two million people have our hot
too long, banking has been harder than it needs to coral cards to manage their money and spend around
be. By solving your problems, treating you fairly and the world. Our goal is to bring Monzo to one billion
being totally transparent, we believe we can make people and beyond. But it’s not just about how many
banking better. people have Monzo, it’s also about who’s using it.
Almost a quarter of the world’s population don’t have
Traditional banking isn’t built for the way we use
access to vital banking services. We want to help the
money as part of our everyday lives with friends and
financially excluded access bank accounts, as well as
family. So we’ve made it our mission to make money
supporting vulnerable customers and developing an
work for everyone. Managing your money should be
empathetic approach to debt management. Through
effortless, not complicated or stressful.
clear communications and educational content we’ll
We want to make sure you get the most out of do our part to improve financial literacy and help
your money, whether that’s switching to a better everyone better understand their money.
energy deal, earning cashback or rewards, or finding
affordable ways to borrow. And with the help of our
amazing community who suggest features, give
feedback and help us test the app, we can build the
kind of bank you want to use, together.
2015
Our CEO Tom sets out our mission in a blog post on
01 June 2015:
“Mondo is a new challenger bank in the UK,
2016
focused on making your financial life easier, rather
than trying to catch you out with penalty fees and
charges. We’re building a current account that
lives on your smartphone and gives you control of We released the Mondo public beta app.
your money” We ran the fastest crowdfund in history: people
We started out with a prepaid account and around pledged £1 million in just 96 seconds.
5,000 Alpha cards. We changed our name! Around 10,000 Mondo
customers suggested new names, with the only
criteria being it needed to start with M… and we
became Monzo.
2017
2018
The big one: we got our full UK banking license.
Another crowdfund, aiming for £2.5 million… In the
end, 41,267 people pledged more than £12 million. We finished upgrading everyone from prepaid
We started rolling out our very first full current to full UK current accounts, and 94% of active
accounts to early testers. accounts moved.
2019
We launched a small test of business accounts to
100 sole traders and limited companies.
Two million people have Monzo to spend and
manage their money!
We launched our first TV ads.
We announced our latest investment round of
£113 million.
We announced our plans to launch a prepaid
card product in the US, in collaboration with a
partner bank.
£ £
Feb 2018 Feb 2019 Feb 2018 Feb 2019
590k 1.6m £71.3m £461.8m
Susan Adams
Company Secretary
We are currently recruiting for the permanent Chief Risk Officer position
Here’s where we’re focused heading into FY2020. We launch fast, get feedback, and improve
We believe the most effective way to create something
Good governance has to be the backbone of Monzo
successful is to launch it, get feedback and iterate fast.
Our mission is to make money work for everyone, and This is how we started with our prepaid card, getting
we recognise that to achieve this we must invest in lots of knowledge and feedback, which we’ve applied
strong governance that will let us sustainably grow to our current account. This lets us quickly react where
into the future. We’ve evolved our senior management we need to make improvements and not over-invest in
team to bring in experienced leaders who can lead something that doesn’t work from either a customer,
Monzo to growth, whilst also focusing on developing governance or regulatory perspective.
and embedding our risk assessment and controls.
Organic and paid growth work together The best deals in one place – We also want to be the
centre of our customers’ financial lives. This will be
We’ve enjoyed sustained organic user growth to date a key differentiator for Monzo and a primary example
which has shown the strength of our brand, making up of how we can help money work for everyone. We
the majority of new customers in FY2019. We expect want to bring people offers, products and services
this to continue, but we’re also increasing focus through Monzo that mean managing their money and
on paid marketing to open us up to new potential making the most of it is a breeze. That’s kicked off with
customers as only around 43% of the UK market are energy switching and savings, and there’s plenty more
aware of Monzo. to come.
Also, a growing number of people in the UK have
more than one bank account, meaning people are
increasingly open to banking with Monzo alongside
other banks. We’ve planned carefully internally to make
sure we’re effective at welcoming, onboarding and
managing the inflow of new customers.
590,000
Feb 2018
Feb 2019
Number of customers
+1,010,000 change
126%
£71.3m
£0.2m
£2 +80
-£30
+70
The ratio of our core equity capital (share capital and share premium less our losses to date) to our risk-weighted
[1]
British Banking Awards 2019 1. Scale to meet the needs of our customers
winner of Best Banking App 2. Generate revenue for Monzo
0.97% 73 ENPS
Voluntary Engagement score
leaver’s rate
We saw a 78% aggregated
participant rate – Feb 2019
Gender identity
Ethnicity
Dec 2016 Dec 2017 Dec 2018
Sexual orientation
Dec 2017 Dec 2018
The last year has been a really exciting one for the Our most important piece of work to date might be
Monzo community. We hosted and supported more launching our #NoBarriersToBanking campaign. It’s a
than 40 events in our London office and around the long-term financial inclusion campaign that aims to
country. And we were thrilled to see the community help make financial services accessible to everyone.
response to crowdfunding, raising £20 million from How will we do it? We’ve built an online tool to help the
36,000 people in just over two days. financially excluded access genuinely helpful support
and advice. We’ve already started running a series
This year we’ve been engaging with our community
of events around the country too. The events bring
in more ways than ever. The Making Monzo Twitter
together organisations working in financial inclusion
account we launched last May – to give a behind the
and help them find and share solutions. We’ll also
scenes look at things we’re working on – has over
publish resources on our blog about things like how to
16,600 followers. We’ve also explored new community
write accessible terms and conditions and much more.
opportunities online, with close to 7,000 people liking
our Monzo Money Tips Facebook page, and a growing Our forum is still a key part of our community, with
community of just under 3,400 savers in our Monzo customers giving us great feedback on new features
Saving Squad Facebook group. through Monzo Labs. This year, we’ve launched Joint
Accounts, bill splitting and Shared Tabs all with the
We’ve seen the power of our community in action
help and feedback we’ve had from the forum.
too. Early this year we launched our #YearInMonzo
campaign – to let Monzo customers see and share a
visual breakdown of their spending from the last 12
months. The hashtag #YearInMonzo trended on Twitter
and around 278,000 people took a look at where and
how much they’d spent. And it wasn’t just customers
who got excited about the campaign. The Times,
HuffPost and This is Money covered the campaign, and
even non-Monzo customers said they’d be signing up
to join in the fun next year.
Our Board is in charge of our long term sustainable What we’ve done in the last year
success
Our Board meets every six weeks or so to review
Our board is here to lead Monzo effectively and performance, strategy, risk and governance and
with an entrepreneurial spirit. The Board has overall to oversee the work of the board committees. For
responsibility for good risk management and internal example, this year our Board appointed a new Chair,
control systems. took important decisions such as launching the 2018
crowdfunding to allow our customers the opportunity
Our Board sets our standards and strategy and keeps
to become investors and the 2018 Series E funding
an eye on our culture, values, brand and reputation.
round. From a product perspective, the Board approved
It makes sure that we understand and meet our
the scaling of overdrafts to our customers and the
obligations to customers, Monzonauts, shareholders
launch of Savings Pots. The Board also considered
and all of our other stakeholders.
potential international expansion, including to the US
The Board delegates day-to-day management of the and decided to open a customer service base in the
business to Tom Blomfield, who has an Executive US to give our customers great service around the
Committee, Executive Risk Committee and Asset and clock. The Board also looks at important risks, such as
Liability Committee to help him. reviewing the impact of Brexit on our business.
This year, the Board also did an internal evaluation of
the Board and committees, which they’ll build on to
Our Board is composed of 8 directors improve effectiveness in areas such as Board diversity
and the interaction between board and committees.
Four of our directors (Gary Hoffman, Tim Brooke, Amy
Kirk and Keith Woollard) qualify as independent non- Outside of board and committee meetings, the Board
executives under the Corporate Governance Code 2018 keeps in touch with our workforce by attending and
(“the Code”). We also have two investor non-executive speaking at all-hands meetings as well as ad hoc
directors, Eileen Burbidge and Miles Grimshaw, plus meetings across teams. In the course of this year
Tom Blomfield, our CEO and Alwyn Jones, our CFO. we aim to develop a formal workforce engagement
mechanism in compliance with the Code, to make sure
that people have a formal route for getting their voices
heard at Board level.
We’re adding experience to our Board
In the course of this year we appointed a new Chair,
Gary Hoffman, who brings a wealth of board-level We’re continuing to develop our vision for governance
experience in banking and financial services. We also
appointed Alwyn Jones as our new CFO, who again We measure ourselves against the the Code. It’s
offers the Board deep experience in banking, and designed for listed companies and this means that not
Susan Adams as our first company secretary. In July all of the provisions always work for private companies
2019, we’ll be joined by Phillip Riese as independent at our stage and pace of growth. Our aim is very much
non-executive director. Phillip is a seasoned non- to comply where we can – and where we can’t, to be
executive who brings a wealth of board experience in able to explain why.
banking and fintech.
As we mentioned earlier, we’re committed to having at
least 40% female representation in both our Executive
Committee and our Board by 2020, as part of our
pledge to the Women in Finance Charter and will be
looking to improve diversity at Board level in 2019.
Executive
Committee*
Asset and
Executive Risk Liability
Committee Committee
(ERC)* (ALCO)*
* Day to day running of the business is delegated to the CEO supported by an Executive
Committee (ExCo). Reporting into the ExCo we have an Assets and Liability Committee
(ALCO) for balance sheet matters and a Executive Risk Committee (ERC) for risk issues.
The committee does the “heavy lifting” for the • support the Board’s monitoring of how
board on risk issues and is responsible for: company policies and practices support culture
and strategy
• giving oversight and advice to maintain a
This year the committee, for example, has
supportive risk culture
reviewed the gender pay gap and set and
• reviewing management’s recommendations on benchmarked Chair and officer remuneration.
managing and mitigating current and future risks It’s incredibly important for Monzo to make sure
• overseeing management’s implementation of our that all aspects of its business – including its
risk strategy remuneration framework – support Monzo’s
culture and values.
Our mission is to make money work for everyone, and Our risk management framework
as a regulated bank we recognise the importance of
risk management as a key part of our governance. To Our risk management framework is made up of six risk
sustainably grow into the future, we’re investing in appetite statements, our policies and tools, a three
a strong risk management team to help us develop lines of defence model and reporting and management
and embed our risk framework and controls across information. We use this framework to carry out our risk
the business. management cycle.
We’re exposed to a number of risks through our The Board sets six risk appetites against our principal
business model and strategy. Identifying, assessing, risks to show how much risk we’re willing to seek,
managing and reporting on those risks is central to accept or tolerate. These are:
the way we run our bank and makes sure we put our • Business model – the risk that our business fails or
customers first. Good risk management supports: our model isn’t sustainable. This could happen if:
• The strategic direction of the company – we’ve –– we don’t carry out our strategic plan
developed a business model and strategy which –– senior management makes the wrong decisions
gives a clear understanding of the risks we’re
–– we don’t adapt to changing conditions (for
exposed to
example, when expanding into the US market)
• Good customer outcomes – we’re clear, fair
• Customer outcomes – the risk that our culture,
and transparent in all aspects of our product
behaviours or actions result in harm to our
development, we lend responsibly and keep
customers, for example developing a product that
customers’ money safe, and carry out due diligence
doesn’t meet their needs
on our suppliers and partners
• Credit – the risk that customers borrowing money
• The management of capital and liquidity positions
won’t repay or don’t pay on time, causing financial
– we maintain enough quality and quantity of capital
losses
to meet regulatory and operational requirements.
And we hold enough liquid assets to cover • Operational – the risk that failures in people,
customers moving or withdrawing their money processes or systems could lead to a service
under normal and stressed conditions disruption or financial losses
• High quality operations – we build and maintain a • Financial – any risks that can impact our financial
resilient operational environment to deliver good profile. For example, the risk that we can’t meet our
customer outcomes, great service levels and financial commitments or maintain an adequate
mitigate against unexpected losses capital position
• Lending responsibly – we carefully decide who we • Compliance – the risk of not meeting relevant
lend to, to make sure customers can afford it, whilst legislation, rules and regulations which could cause
making money to make our business sustainable customer harm, financial losses or reputational
damage. There’s also a risk that regulatory changes
• A strong culture – we’re creating a culture where
could negatively affect our business model
people are encouraged to be open and transparent
about risk management
They own and They oversee and challenge They validate and
manage risk the business give assurance
Promote a strong risk culture Maintain risk appetite statements Reassure management and the
and sustainable risk/return with input from senior Board on the effectiveness of
decision making management and Board approval the risk management framework
Reporting
Understanding the
company's risk profile so
management and the
board can make decisions
Identifying
Doing risk assessments
to identify and track
new risks
Monitoring
Regular review of our
risk metrics and the risk
profile of the company to
make sure we stay within
risk appetite
Assessing
Evaluating new
and existing risks to
decide on controls and
management actions
Growing a bank in a competitive Business Model Risk: the • Quarterly strategic planning and prudent capital management
landscape business fails or our model isn’t • A culture of fast learning and iterating
sustainable • Hiring experienced people to ExCo and the Board
Growing our lending book Credit Risk: customers borrowing • Credit decisioning rules to calculate the probability of default
(overdrafts and unsecured loans) money won’t repay or don’t pay and affordability risk
on time, causing financial losses • Provisions for credit losses in line with IFRS9 (International
Financial Reporting Standard)
• A Credit Risk committee for members of ExCo to discuss
lending risks
• The Board approves our credit risk appetite which we monitor
actively
• Credit related policies and procedures, including collections,
financial difficulties and vulnerable customers
Offering current accounts, Financial Crime Risk: the risk • Financial crime policies and procedures and regular quality
business banking accounts that Monzo is used to launder assurance
and developing a financial the proceeds of crime, finance • An in-house transaction monitoring system which we
marketplace terrorist activities, commit fraud continually improve
or evade financial sanctions
Running a resilient digital bank Operational Risk: the risk that • Policies and procedures covering our people, systems, data,
and financial marketplace failures in people, processes or security and how we work with third parties
systems could lead to a service • Business continuity and disaster recovery plans and regular
disruption or financial losses exercises to test these
• A robust incident escalation framework
• Penetration testing and simulated phishing campaigns
Capital Adequacy Risk: the risk • A buffer of capital above the minimum regulatory requirements
that Monzo doesn’t have enough • The Board and the ALCO regularly review the capital risk
capital for the level and types of appetite limit
risk that we take, or to absorb • We carry out our ICAAP to assess capital requirements
potential losses • Increased Monzo’s capital runway by closing a funding round in
October 2018 and a further funding round in June 2019
The Directors present their report and audited financial Results and dividends
statements for the year ended 28 February 2019 for
The loss for the year after taxation amounted to
Monzo Bank Limited (“The Bank”) and the Monzo
£47.2m (2018: loss of £30.5m). The directors do not
Group (“The Group”).
recommend a final dividend (2018 – £nil).
Monzo Bank Ltd is a private limited company,
incorporated and domiciled in England and Wales,
having its registered office in England and is
authorised by the Prudential Regulation Authority Directors’ liabilities
(PRA) and regulated by the PRA and Financial Conduct The Group has indemnified all Directors of the Group
Authority (FCA). The registration number of Monzo against liability in respect of proceedings brought
is 09446231. by third parties, subject to the conditions set out in
These financial statements have been prepared under section 234 of the Companies Act 2006. This qualifying
International Financial Reporting Standards as adopted third party indemnity provision was in force during
by the European Union. the year.
The following information, required by the 2008
Regulations, is included in the Strategic Report:
Directors • A fair and balanced review of the business
The Directors who served the Company during the year • A description of the principal risks and
and up to the date these financial statements were uncertainties facing the business
approved were: • A description of the company’s principal objectives,
strategy and business model
T Blomfield
A Jones (Appointed 5 April 2019 ) • An analysis of developments and performance for
G Hoffman (Chairman appointed 1 February 2019) the financial year and the position at the end of
T Brooke (acting Chairman until 31 January 2019) the year
A Kirk • Trends and factors likely to affect the future
K Woollard development, performance and position of
E Burbidge the business
M Grimshaw • Information on our employees and community
G Dolman (resigned 28 February 2019)
• Information about gender diversity
Baroness D Kingsmill (resigned 23 March 2018)
Going Concern We performed the following procedures: We were satisfied that the Bank has
sufficient capital and liquidity to meet
Refer to the Directors’ Report (page 31) • Compared the reported capital ratio
its obligations over the coming year. In
and Accounting policies (page 47). to the Bank’s submitted regulatory
particular, we confirmed:
returns;
The annual report & accounts have
• Compared the revenue and • The Bank’s reported capital reconciled
been prepared on a going concern basis
expenditure assumptions underpinning to the submitted regulatory returns;
which the Board and management have
the Bank’s financial plan and its • The Bank’s approved Core Equity
considered appropriate, having reference
associated capital utilisation rates Tier 1 capital position, combined
to the Bank’s capital and liquidity
against the capital requirements for 12 with the post year end capital raise
requirements for a year from the date of
months from the date of this opinion; was sufficient to support reasonably
this opinion.
• Assessed the reasonableness of the anticipated capital attrition rates over
We have assessed the Bank’s ability to Bank’s capital utilisation projections the forthcoming 12 months;
continue as a going concern over the year by reviewing its historical accuracy of • The Bank’s liquidity position was
horizon from the date of this opinion. achieving its financial plans, making sufficiently robust to support its
adjustments, where necessary, requirements in the Bank’s financial
to reasonably estimate revenue, plan in the forthcoming 12 months.
expenditure and impairment;
• Discussed the Bank’s overall capital
requirements with the Prudential
Regulation Authority;
• Confirmed that a further capital raising
was secured post balance sheet
that supplements existing reported
capital and that this qualified as Core
Equity Tier 1 capital for prudential
reporting purposes;
• Reviewed the Bank’s cashflow
forecasts and the cash resources
required over the forthcoming 12
months from the date of this opinion.
IFRS 9 Financial Instruments – We undertook a substantive audit We noted no unadjusted audit differences
expected credit loss (‘ECL’) provision approach. We performed the with this aspect of our audit. In particular:
following procedures:
Provision of £3,119k, (2018: £12k) • We noted no issues in our testing of
• Reconciled the general ledger to the the completeness of the overdrafts.
Refer to the Accounting policies (page
banking ledger for assurance over the • We noted no unadjusted differences
58); and Note 31 of the Consolidated
completeness of accounts in overdraft. in the completeness or accuracy
Financial Statements (page 84)
• Verified for completeness and of key data inputs into the
IFRS 9 Financial Instruments became accuracy of the data that inputs to provisioning model.
effective for annual periods beginning on the provision calculation model, • We successfully traced a sample
or after 1 January 2018 and the year ended including overdraft information, credit of overdrafts to post year end
28 February 2019 is the first year of full risk scoring by customer, origination settlements in those accounts.
implementation for the Bank. We identified date, forward looking adjustments and • We noted no unadjusted differences
the following heightened areas of focus: arrears classification. arising from our reperformance of the
• Traced a sample of overdrafts to post ECL methodology in the provisioning
• Completeness and accuracy of year end settlement or movement in model, including no unadjusted
capture of data to feed the IFRS 9 the account. differences arising from our testing of
model assessment; • Reperformed the ECL methodology the staging criteria.
• Design of impairment assessment of the IFRS 9 model to validate its • We considered the ECL calculation’s
models under IFRS 9 for overdrafts; appropriate application of IFRS 9 and incorporation of multiple economic
• Application of post model adjustments recomputed its provision calculation, scenarios to be appropriate in
and multiple economic scenarios to including staging, to confirm the based terms of the scenarios and relative
determine the staging provisions; and model output. weightings applied as well as being
• Disclosure of IFRS 9 staging • Used specialists to assess the accurately calculated.
and provisioning in the appropriateness of the multiple • We considered the post model
financial statements. economic scenarios to validate adjustments to be complete and
the underlying ECL assumptions reasonably computed in assessing the
were appropriate. reasonableness of the ECL provision.
• Assessed the reasonable movement • We judged the ECL disclosures to be
and completeness of management’s complete and appropriately reconciled
post model adjustment. to the underlying ECL model data.
• Reviewed the adequacy of disclosure
of IFRS 9 in the financial statements
and reconciled these disclosures to
underlying ECL model data.
Improper revenue recognition – Payment We undertook a substantive audit We are satisfied that the Group has
Network Provider Bonus Income approach. To address the identified risk recorded revenue in line with its
of Payment Network Provider Bonus accounting policies.
Payment Network Provider Bonus
recognition, we performed the following
recognition £0.9m, (2018: £0.3m) We concluded that the revenue
audit procedures:
recognised related to the Payment
Refer to the Accounting policies (page
• Reviewed the contracts and engaged Network Provider Bonus is fairly stated
57); and Note 9 of the Consolidated
with our technical accounting and in accordance with the requirements
Financial Statements (page 63)
specialists to confirm the accounting of IFRS 15.
We reviewed the revenue streams treatment for the significant
earned by the Group, and assessed the transactions is in accordance with
subjectivity of each of these streams and IFRS 15.
which streams could give rise to a material • Vouched the volumes represented
error in the financial statements. as achieved to date by the
company back to Payment Network
We determined that the Payment Network Provider’s confirmation.
Provider Bonus contractual arrangements • We recalculated the bonus earned/
were subjective in nature and we deferred during the current year.
assessed that this could be subject to • We traced the bonus paid by
material error by not complying with the Payment Network Provider to the
requirements of IFRS15. bank statements.
We determined that all other streams
(including Overdraft Income and ATM
interchange fee income) were highly
automated in nature and not subjective
in their application and so we excluded
these from the significant risk.
Risk of management override of controls In respect of each of the areas noted Share based payments
below, we undertook a substantive audit Based on our work performed, we
Refer to the Accounting policies (page
approach. concluded that the Bank has appropriately
57); and Note 12 of the Consolidated
valued the share based payments as
Financial Statements (page 65) In respect of share based payments, we
at the year end date, using reasonable
performed the following procedures:
International Standards on Auditing input assumptions to derive the
(UK) mandate the consideration of • e used valuation specialists to
W share valuations.
management override of internal controls assess the reasonableness of the
We were satisfied that the valuation model
as a fraud risk on all audits. following aspects:
inputs, including employee awards and the
–– key input parameters, namely;
The susceptibility of an accounting other inputs were accurately included.
volatility, risk free rate and term
estimate to management bias increases
into call option pricing model We were comfortable that the valuation
with the subjectivity involved in making
–– completeness of the parameters outputs were accurately posted to the
it. As part of our response to the risks
in the call option pricing model general ledger.
of material misstatement involving
–– methodology design of existing
management, we review significant Significant transactions
valuation model
accounting estimates for evidence of Based on our work performed, we believe
–– recalculation of the fair value for
management bias. We identified the management’s interpretation of significant
all new options granted during the
following significant transactions and contracts for accounting purposes to
year under audit
estimates: be reasonable.
• We agreed the completeness of share
• Judgements applied by management based payments by comparing the Journal entries
in the valuation of share based quantum of share options granted Based on our work performed, we did not
payments; with the quantum of share options identify any unusual journals.
• Judgments applied by management in included in the expense calculation.
assessing accounting treatments for • We compared the reward of share
significant transactions; and based payments to employees and
• Judgements applied by management vouched a sample to underlying
in the entry and authorisation of agreements and communications.
journal entries.
In respect of significant transactions, we
performed the following procedures:
Developing Control Environment Our audit approach included an We highlighted to the Audit Committee
assessment of the quality and that while progress has been made in
The Bank is still at a relatively early stage
effectiveness of the key entity level developing the control environment, we
of development and the governance
controls that management relies on for were not in a position to rely on controls
and control environment has not yet
financial reporting. and so we undertook a substantive
matured fully.
audit approach.
We used IT specialists within our audit
In such circumstances, where we have
team to conduct our IT procedures which We note that we completed our
not relied on financial or IT controls, we
included, amongst others, testing IT procedures and noted no unadjusted audit
are required to undertake additional
general controls relating to system access differences in the financial statements.
substantive audit procedures in
and change management, and testing
order to gain reasonable assurance
controls over specific IT applications
over the balances reported in the
which are required to operate effectively
financial statements.
to mitigate the risk of misstatement within
the financial statements.
An overview of the scope of our audit Of the two components selected, we performed an
audit of the complete financial information of one
component (“full scope components”) which was
selected based on their size or risk characteristics.
Tailoring the scope For the remaining component (“specific scope
Our assessment of audit risk, our evaluation of components”), we performed audit procedures on
materiality and our allocation of performance specific accounts within that component that we
materiality determine our audit scope for each entity considered had the potential for the greatest impact
within the Group. Taken together, this enables us on the significant accounts in the financial statements
to form an opinion on the consolidated financial either because of the size of these accounts or their
statements. We take into account size, risk profile, the risk profile.
organisation of the Group and effectiveness of group- The reporting components where we performed
wide controls, changes in the business environment audit procedures accounted for 100% (2018: 100%)
and other factors such as recent Internal audit results of the Group’s Loss before tax, 100% (2018: 100%)
when assessing the level of work to be performed at of the Group’s Revenue and 100% (2018: 100%) of
each entity. the Group’s Total assets. For the current year, the full
In assessing the risk of material misstatement to scope components contributed 100% (2018: 100%)
the Group financial statements, and to ensure we of the Group’s Loss before tax, 100% (2018: 100%) of
had adequate quantitative coverage of significant the Group’s Revenue and 100% (2018: 100%) of the
accounts in the financial statements of the two Group’s Total assets. The specific scope component
reporting components of the Group, we selected contributed 0% (2018: 0%) of the Group’s Loss before
two components covering entities within the tax, 0% (2018: 0%) of the Group’s Revenue and 0%
United Kingdom and the United States of America, (2018: 0%) of the Group’s Total assets. The audit scope
which represent the principal business units within of these components may not have included testing of
the Group. all significant accounts of the component but will have
contributed to the coverage of significant accounts
tested for the Group.
The results for the current and prior year are derived
entirely from continuing operations.
The Notes 1 to 37 form an integral part of these
financial statements.
The share capital as at 28 February 2019 was £12 (2018: £11) which is shown as £nil (rounded to
£’000) in the above table. See Note 24 for further detail. In the current year, we released £205k
of reserves related to options exercised from other reserves into retained losses (2018: £nil).
Increase in other assets (excluding R&D tax credit) 18 (2,329) (26,406) (2,324) (26,406)
Increase in collateral held with third parties 20 (3,245) (11,071) (3,245) (11,071)
Net increase in cash and cash equivalents 452,904 82,069 452,888 82,069
Cash and cash equivalents at beginning of the period 96,943 14,874 96,943 14,874
Cash and cash equivalents at end of year 16 549,847 96,943 549,831 96,943
(k) Leases
The Company applies IAS 17 Leases to its
operating lease of office premises. We expense
rentals payable under operating leases to the
income statement on a straight line basis over the
period of the lease including any rent free periods.
Partnership commission 85 – 85 –
Partnership commission from trust and
52 – 52 –
other fiduciary activities
Intercompany expenses – – 76 –
15. Taxation
We have not recognised a deferred tax asset in
respect of tax losses carried forward totalling
£68.8m (2017: £29.6m) as there isn’t enough
evidence as to their recoverability.
Group Group Company Company
Current tax
UK corporation tax credit on loss for the period 1,858 2,530 1,858 2,530
Effects of:
Total UK corporate tax credit for the period 3,552 2,530 3,552 2,530
Deferred tax
The deferred tax included in the balance sheet is as follows:
Included in debtors – – – –
– – – –
Losses – 1 – 1
– – – –
Fair value of amounts receivable from customers 16,054 160 16,054 160
Receivables in respect of the prepaid card program 3,313 11,288 3,313 11,288
Receivables in respect of the Faster Payments Service 11,020 2,062 11,020 2,062
Cost:
As at 1 March 2017 1 219 220
Disposals – – –
Depreciation:
As at 1 March 2017 – 42 42
Cost:
As at 1 March 2018 175 931 1,106
Depreciation:
As at 1 March 2018 47 236 283
Cost:
As at 1 March 2017 1 219 220
Disposals – – –
Depreciation:
As at 1 March 2017 – 42 42
Cost:
As at 1 March 2018 175 931 1,106
Depreciation:
As at 1 March 2018 47 236 283
Assets
Right-of-use assets 2,239 2,239
Liabilities
Lease liabilities 2,294 2,294
Equity
Accumulated losses (55) (55)
Taxation – –
Shares issued – –
Cost of issuance – –
Exercise of options – –
Other taxes and social security costs 1,080 431 1,080 431
12 11
Loans – –
Salaries & remuneration 1,415 433 In addition, overdrafts totalling £0.01m were
available to key management personnel at
Social security contributions 68 47
year end.
Share based payments 637 217
Contributions to defined
27 12
contribution plans Transactions with related parties
2,147 709 There were no transactions with related parties
during the year other than those disclosed above.
Unused amounts reversed (2,470) (2,470) Corporation tax credit 3,552 – 3,552
Financial assets
Cash and balances at bank 549,847 – 549,847
Financial liabilities
Customer deposits 461,822 – 461,822
As at 28 February 2018
Financial assets
Cash and balances at bank 96,943 – 96,943
Financial liabilities
Customer deposits 71,276 – 71,276
Total
Level 1 Level 2 Level 3 Total fair value carrying value
As at 28 February 2019 £’000 £’000 £’000 £’000 £’000
Financial assets
Cash and balances at bank – 549,847 – 549,847 549,847
Financial liabilities
Customer deposits – 461,822 – 461,822 461,822
As at 28 February 2018
Financial assets
Cash and balances at bank – 96,943 – 96,943 96,943
Financial liabilities
Customer deposits – 71,276 – 71,276 71,276
Financial assets
Cash and balances at bank 539,847 – – – 10,000 549,847
Financial liabilities
Customer deposits 461,822 – – – – 461,822
As at 28 February 2018
Financial assets
Cash and balances at bank 96,943 – – – – 96,943
Financial liabilities
Customer deposits 71,276 – – – – 71,276
Receivables Total
£’000 £’000
During the year, the Bank also recognised an Opening expect credit loss –
– –
expected credit loss against a receivable balance 1 March 2018
related to the closed prepaid card programme due Additions 773 773
to the ongoing efforts associated with its recovery. Used – –
The Bank applied the simplified approach, as
Unused amounts reversed – –
permitted under IFRS 9 for trade receivables,
meaning that the lifetime ECL was recognised on Unwinding of discount – –
this balance. Closing expected credit loss –
773 773
28 February 2019
Impairment
As at 1 March 2018 12 – – 12