It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality. The first is an HMRC approved Company Share Option scheme (‘CSOP’), where awards can be made to employees subject to conditions. Compliance Risk – risk of failing to meet with the relevant legislation and/or regulations. Details of equity raised are contained in Note 20. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. Delivered 3 times per week. Our goal is to break even on each new customer very soon, then reach overall profitability as a business in the future. Virgin Money, one of the previous crop of “challenger” banks has about the same market valuation at Monzo, but has around £64bn in customer deposits and £1.6bn in revenues. As a result, overdraft limits can be revised when applications are reassessed. © 2020 Sifted EU Ltd. All Rights Reserved. We see that £10 as an investment that lets us provide an effective, delightful service that’s reflected in a Net Promoter Score of almost +80. The balance held at Bank of England includes a cash collateral account as part of the Bank being a direct settling participant of the Faster Payments scheme. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. Read our CEO's Review The Bank doesn’t use any other financial instruments. Our considerations of other laws and regulations that may have a material effect on the financial statements included permissions and supervisory requirements of the Prudential Regulation Authority (‘PRA’) and the Financial Conduct Authority (‘FCA’). Done right, it can become viral. We have nothing to report in this regard. An amount below which identified misstatements are considered as being clearly trivial. Changes in operating assets and liabilities: Net increase in loans and advances to customers, Acquisition of property, plant and equipment, Net proceeds from issuance of ordinary shares, Net increase in cash and cash equivalents, Cash and cash equivalents at beginning of the year. Competition from digital banking entrants is likely to drive up the industry’s cost of customer acquisition. EAD is based on the amounts Monzo expects to be owed at the time of default. On the basis of our risk assessments, together with our assessment of the Company’s overall control environment, we have set performance materiality at 50% (2017 50%) of our planning materiality, equating to £300k (2017 £66k). Startup Europe. But it’s not just about how many people use Monzo, it’s also about who. “It just works” - We believe that money doesn’t need to be complicated or stressful. This was converted to GBP during the year which resulted in a one-off foreign exchange loss of £380k recognised within operating expenses (refer to Note 11). It comprises a Board of Directors supported by 4 Board committees, each of which has membership drawn from the independent non-executives on the Board. In the next few months we’ll keep improving our unit economics: the money we lose or make on each current account. Due to the lack of internal historical data, LGD have been defined using expert judgement and Basel regulatory floors. we’ll do more to help the financially excluded access bank accounts through Monzo. Our key risks currently include different types of operational risk like financial crime, IT resilience, cyber security (including data security). Due to the uncertainty associated with the nature of expenses allowable for reclaim in such tax matters, the final outcome may vary significantly. The key events that have occurred since the balance sheet date are listed below: The prepaid card product was discontinued effective 4 April 2018. Causes of inadequate capital could include a high level of default on overdrafts already made by the Company, or having large unexpected operational losses. In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or directors’ report. Capital risk is the risk that the Company has sub-optimal quantity or quality of capital resources to meet its capital requirements and to absorb unexpected losses if they were to occur. More Resources. The fee charged on overdrafts is recognised within fee and commission income. Our Risk Management Framework comprises 6 key components: risk appetite, policies, a 3 line of defence organisation structure, risk procedures, tools and techniques, risk reporting, and an appropriate governance structure. This is a new risk for the current year audit as this is the first year the Company will have an overdraft product on the balance sheet. They stagnated early whilst the others continued to innovate. 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. Identifying, assessing, managing and reporting on those risks is central to the way we run the Bank. This may impact its efforts to keep acquisition costs low going forward, having already risen year-on-year. Nonetheless, it’s still biding its time, with 98% of its £1.4bn in deposits sitting idle in cash at the last official count. It is deemed that the customer does not show enough “willingness to pay”: Not keeping promise to pay over a period of time, Defaulting in renegotiated repayment plan. The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. But is that likely to be the end of it? The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. This was in sharp contrast to fellow neobank Starling, which on Thursday said it was set to break even by the end of the year after customers started using its cards again, showing that not all of the digital banks were suffering in the same way. Receivables are recognised initially at fair value and subsequently measured at amortised cost. The carrying value of the financial assets and liabilities as outlined in the table above approximates to fair value and are categorised as level 2 within the fair value hierarchy. LGDs have been set at product level due to the limited differentiation in recoveries achieved across different borrowers. G Dolman This includes having the right type and quantity of funds, in the right place, at the right time and in the correct currency. The deferred tax included in the balance sheet is as follows: A deferred tax asset has not been recognised in respect of tax losses carried forward totalling £29.6m (2017 £5m) as there is insufficient evidence as to their recoverability. We, along with our specialists, have reviewed the accounting policy documentation and assessed whether management’s process to identify impairment is sufficiently robust and compliant with the underlying accounting guidance (as prescribed in International Accounting Standard 39). We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion. T Brooke (acting Chairman) Monzo could therefore have a more diversified revenue base this year, leaving it less vulnerable to giant costs. We obtained a general understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the direct laws and regulations related to elements of company law and tax legislation, and the financial reporting framework. The closing deferred tax assets and liabilities have been calculated taking into account that existing temporary differences may unwind in periods subject to the reduced rates. We’ve been working through that list at pace, keeping track of our progress by ticking things off and sharing live updates with our community @MakingMonzo. There are no non-market vesting conditions. The directors present their strategic report for the year ended 28 February 2018 for Monzo Bank Limited (the “Bank”, “Monzo” or the “Company”). Monzo refreshes its Internal Capital Adequacy Assessment Process (ICAAP) on an annual basis, which includes a 3 year forecast of the Bank’s capital position. Monzo Plus Put money in your hands Full financial visibility, with your other bank accounts and credit cards all in one place. M Grimshaw The risk of default of such assets after modification is assessed at the reporting date and compared with the risk under the original terms at initial recognition, when the modification is not substantial and so does not result in derecognition of the original asset. T Blomfield Some of the shares in issue are owned by the board, management and staff and are subject to time based vesting conditions. Note that Monzo calculates its unit-economics based solely on client servicing costs (meaning the cost of operating the accounts), hence excluding technology costs and marketing costs. London E14 5EY, Bankers “Heard Monzo might go under so had to quickly transfer the £6.06 I had there into my main bank account,” said one user Michael on Twitter. If the executive team of Monzo were watching social media on the day the digital bank released its annual results — which showed a painful doubling of losses to £115m — they would have had another reason to be worried. Back in 2015 we were a scrappy startup, offering prepaid cards to a few thousand people. This is generally the period in which the award is granted or notified and the vesting date. That is the currency of the primary economic environment in which the Bank operates. The bookings cannot be soft, it really starts to matter,” says Basta. “Shoutout you guys quietly moving funds from Monzo to your other banks,” said Joey Blacc. We note from our review of post migration activity reports from, and communication with, the Prepaid Third Party that migrated customer balances are no longer managed by the Prepaid Third Party. These amounts represent liabilities for goods and services provided to Monzo before the end of the financial period which are unpaid. Indeed, it’s normal for companies to put a long section about possible risks to the business, and the Institute of Chartered Accountants in England and Wales (ICAEW) recently put out a note urging greater transparency on Covid-19 related risks to being a “going concern”. The Company measures the cost of equity-settled options based on the fair value of the awards granted. Management considers that the accounting estimates relating to fair valuing stock based compensation (Note 10), going concern (see Director’s report), the recognition of a research and development (R&D) credit (Note 15) and the recognition (or not) of deferred tax assets for carried forward tax losses (Note 12) as the most material to the financial statements.
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