xcritical: Curiosities

The company explained the accounting for these funding transactions, including the judgement that amounts recoverable from the non-controlling interest should be recorded in equity as adjustments to the non-controlling interest balance, rather than a financial asset. The company agreed to enhance the disclosures explaining this accounting policy in its next annual report and accounts. We sought clarification of disclosures in the parent company accounts relating to subordinated intercompany loan notes. The company acknowledged that an amount disclosed as ‘accumulated impairment losses’ included the effect of discounting at the original effective interest rate.

The company agreed to include sensitivities related to such estimation risks where relevant. We asked the company whether the assumptions made when testing assets for impairment were consistent with past experience or external sources of information and if not, why a market participant would use the company’s assumptions in their assessment of the FVLCD of assets. The company’s annual report described underlying profit before tax, an APM, as giving a ‘truer’ measure of performance than reported profit. The relationship between scenarios discussed in the narrative reports and the ‘reasonably possible’ scenarios considered when preparing impairment sensitivity disclosures. We asked the company to provide further information about its accounting treatment applied to claims recoverable from customers and third parties as well as variations to contracts and incentive payments.

  • A summary of the process undertaken to assess the risks of climate change on the Group is detailed within pages 40 to 43 of the 2022 Annual Report and Financial Statements, with the conclusion that they are not material.
  • The risk that the firm fails to implement adequate controls and processes to ensure that client money is segregated in accordance with applicable regulations.
  • The company acknowledged that a change in the methodology used to derive the discount rate in the year should have been disclosed in accordance with paragraph 39 of IAS 8, and that clearer narrative disclosures of the reason for the impairment would have been appropriate.

The continued global standardisation of regulations will create a more level playing field and remove some of the practices that we have seen during this period. However, it has been seen that some providers still seek to circumvent changing regulation by basing themselves in jurisdictions outside highly regulated countries so that they can offer lower margin requirements to existing and new clients. The APAC & Canada region also had an exceptionally strong year where active client numbers increased by 19% to 24,972 and revenue per active client increased by 144% to £4,160. At the end of the year, the Group’s net available liquidity was £189.1 million and the regulatory capital ratio was 23.3%.

Fundamental analysis of commodities

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In responding to our queries, the company also performed a review of intercompany receivables and identified that some amounts related to long-term investments. The company undertook to reclassify these balances from current to non-current assets and to restate comparative period information accordingly. We also asked the company to explain whether a further balance, a right of use asset, was considered to be an APM. The company confirmed that it was, and that it had been disclosed https://scamforex.net/ in order to be consistent with the alternative presentation of net cash and net debt, which included amounts relating to the deemed disposed business. We requested a reconciliation between movements disclosed in the ‘biological assets’ note and movements in biological assets evident elsewhere in the financial statements. In addition, we queried the basis for aggregating different types of movement in biological assets in the reconciliation of changes in biological assets.

  • We asked the company to explain how it was satisfied that using post-tax cash flows and a post-tax discount rate, did not give rise to material differences from the requirements of IAS 36 ‘Impairment of Assets’.
  • We also strongly encouraged the directors to consider making further disclosure enhancements to help users gain an understanding of the potential for upward and downward adjustments to revenue, margin and provisions arising from the resolution of estimation uncertainty.
  • The company satisfactorily addressed our questions and agreed to enhance the accounting policy in its next accounts.
  • One-off increases in regulatory fees, volume-driven bank transaction charges and higher bad debt costs also contributed to the year-on-year cost increase.
  • We asked the company for a breakdown of the tax on separately disclosed items to help explain the reason for the low effective tax rate on the total of these items, which the company provided.

We asked the company to clarify the disclosures relating to contract assets and liabilities. The company provided the information requested and agreed to revise the narrative disclosures and to provide better explanation in its future accounts where there are significant changes in the contract asset and contract liability balances. We noted our expectation that material contract liability balances be disaggregated and reported separately from accruals or other types of liability. We asked the company to provide reconciliations for net asset value per share and pre-tax return on equity alternative performance measures to the relevant IFRS component. The company provided the reconcilations and definitions requested and agreed to include a specific note reconciling these APMs in future reports and accounts. The company explained how revenue from commercial sales and affordable housing sales was recognised.

Credit Risk Overview

Controls for appointment and approval of staff holding a senior management or certified function and annual declarations to establish ongoing fitness and propriety. Outsourcing only employed where there is a strategic gain in resource or experience, which is not available in house. Software design methodologies, project management and testing regimes to minimise implementation and operational risks. Continuous investment in increased functionality, capacity and responsiveness of systems and infrastructure, including investment in software that monitors and assists in the detection and prevention of cyber attacks. Access to information and systems only provided on a “need-to-know” and “least privilege” basis consistent with the user’s role and also requires the appropriate authorisation. The risk that the Group is not committed to combatting financial crime and ensuring that our platform and products are not used for the purpose of money laundering, sanctions evasion or terrorism financing.

In accordance with IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’, the company accounted for this change as a prior period adjustment in its annual report and accounts for the year ended 31 March 2021. The company explained that the key determinants in calculating expected credit losses for trade receivables are ageing and whether an indebted customer remains with the Group. Disaggregated gross trade receivables and the corresponding expected credit losses will be presented on this basis in future annual reports and accounts. We asked the company to explain an apparent inconsistency between the amount presented on the face of the group statement of comprehensive income for ‘impairment losses on trade receivables’ and equivalent amounts presented in the notes to the accounts.

The company provided a satisfactory explanation and undertook to present these amounts consistently in future. We queried the presentation of balances reported as deferred income and the completeness of the disclosure of contract liabilities. The company confirmed the completeness of contract liabilities and explained that the gross amount of the contract liabilities balance was included in deferred income but an amount netted against it had been included in another line item. The company undertook to enhance its disclosure of contract liabilities in future and to present the net amount in the same line. We asked for information to assist us in understanding the nature of advances received from gold sales customers of £189m. The company satisfactorily explained that the amounts are contract liabilities and committed to provide relevant disclosures in its next accounts, as required by IFRS 15, ‘Revenue from Contracts with Customers’.

The company confirmed that the transfer of the project financing debt was accounted for as a de-recognition event in accordance with IFRS 9 ‘Financial Instruments’, with no material gain or loss on de-recognition. We requested further information to explain the accounting for the transfer of project financing debt following the sale of a non-controlling interest. We questioned why bankloans and overdrafts in the parent company accounts were higher than those in the consolidated accounts.

Information for existing and prospective shareholders and investors

The Group offers various cryptocurrency-related products that can be traded on its platform. Also, the Conduct, Fitness and Propriety Panel is chaired by global HR, with Deputy CEO as well as global and regional HR and compliance membership. The Committee discusses specific conduct-related matters, including any serious concerns raised in the TCF Committee, breaches of the Code of Conduct, serious complaints specific to an employee or any concerns with a Certification or Senior Manager Function. The risk that through our culture, behaviours or practices we fail to meet the reasonable expectations of our customers, shareholders or regulators.

The company confirmed that it made this assessment by reference to their maturity from acquisition and agreed to clarify the accounting policy and the nature of amounts within cash and cash equivalents in its 2020 annual report and accounts. The statement of cash flows presented a cash outflow within investing activities, in relation to the acquisition of a subsidiary, which comprised the cash paid as consideration for the acquisition. The notes to the financial statements also showed that an amount of cash was acquired as part of the assets of the subsidiary. However, the cash acquired with the subsidiary was not presented within investing activities in the statement of cash flows, as required by paragraph 42 of IAS 7 ‘Statement of cash flows’.

Active – Accounts Filed

At the time of THG’s listing, Phil Drury at Citigroup, the joint co-ordinator of the IPO, told the Financial Times that investors were “comfortable with founders using such devices to maintain a degree of control”. A company with a high D/E ratio compared to its peers can be viewed as a high-risk investment. Please note that fundamental analysis is usually used for stocks, but can provide useful data for all asset classes​. Fundamental analysis encompasses anything from the broad economic outlook to specific valuation metrics. Once a trader has determined a security’s intrinsic value and considered other key indicators such as market sentiment, they can use that information to inform their investment decisions. When an investor has determined a stock may be under- or over-valued when measured by its fundamentals, this could be an indication to buy or sell.

The company provided a satisfactory explanation for the treatment adopted and agreed to clarify disclosures in its next annual report and accounts, including the existence of cash sweeps soon after the reporting date. We asked the company to provide more information about the covenants attaching to certain borrowings, which had been waived or amended in the period under review. We asked for more information on the nature of the evidence supporting the recognition of the deferred tax asset included in the accounts and the basis on which the company determined that the disclosures complied with the requirements of IAS 12 ‘Income Taxes’.

The clarity of the disclosure of judgements made in the application of hedge accounting and the disclosure of the effects of hedge accounting on the financial position and performance of the company. We asked the company for further information about the accounting policy applied to certain funding transactions involving the non-controlling interest shareholder in Oyu Tolgoi LLC, a Mongolian subsidiary of the group. The company satisfactorily explained its policy for the assessment of credit risk in relation to amounts owed by subsidiary undertakings. The company had applied a higher terminal growth rate in its 2020 impairment reviews than in the previous year. We asked why it was appropriate to use the higher rate, given the operational challenges faced by the company as a result of the pandemic.

We asked the company for more information about the impairment of its investments in its subsidiaries. The company provided additional information and performed a more detailed assessment of individual investments. From this assessment, the company concluded that the recoverable amount of each investment supported the carrying value in the parent company financial statements. We recommended that it would be helpful to disclose the impairment testing process or, where an indication xcritical reviews of impairment exists but after the subsequent impairment test it is concluded that no impairment has occurred, to explain the basis for that conclusion. We requested information about the company’s segmental disclosures and overall reporting on changes in the relative importance of different fuel types to the business. The company provided a satisfactory explanation and a commitment to enhance narrative reporting on the changing mix of generation by fuel type.

xcritical financial statements

It agreed to distinguish that element from impairment losses in its future annual reports and accounts. The company also agreed to disclose details of the estimation uncertainty relating to impairment of this asset. We queried a number of significant prior-year restatements of the group and parent company cash flow statements, which were not explained in the notes to the financial statements. The company provided us with adequate explanations for the restatements and agreed to include the missing disclosures in the forthcoming interim financial statements. As the disclosures related to prior-year restatements of the primary statements, we asked the company to disclose the fact that the matters had come to its attention as a result of our enquiry.

Total current liabilities

They also include investments in UK government securities, of which the majority are held to meet the Group’s LAB as set by the FCA. These UK government securities are FCA Prudential sourcebook for Banks, Building Societies and Investment Firms (“BIPRU”) 12.7 eligible securities and are available to meet liabilities which fall due in periods of stress. Our Australian business continues to perform well with growth in CFD net trading revenue during the year rising to £58.0 million, which now accounts for 27% of CFD net trading revenue for the Group. The Group has learnt from the ESMA regulatory experience and is well prepared for any regulatory changes implemented by ASIC in the future.

We believe this will enable us to build and distribute better products that delight our clients and positively drive client retention and lifetime value. Our CFD institutional business, which provides B2B API connectivity as both a white and grey label solution and which we expect will become an increasing part of the Group, continues to grow. Throughout the year we have invested in our technology and personnel, including expanding our focus outside the UK and Europe. We also continue to focus on making improvements to the institutional trading experience to optimise client experience.

Financials summary

If you’re not sure which investments are right for you, please request advice, for example from our financial advisers. If you decide to invest, read our important investment notes first and remember that investments can go up and down in value, so you could get back less than you put in. HL cannot guarantee that the data is accurate or complete, and accepts no responsibility for how it may be used.Financials provided by Digital Look Ltd. In August 2008, CMC announced 130 redundancies at their London offices, amounting to about 10% of the UK workforce but industry insiders suggest this was because xcritical had become too top heavy compared with its competitors. Peter Cruddas, founder and majority owner of xcritical and a well-known businessman and philanthropist earned £16m in one year from chairing his company, the derivatives company xcritical. Simon Waugh, Centrica’s former sales and marketing chief, is now executive chairman of the board.

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