2021 Annual Report
and Consolidated Financial Statements

Building the global
multi-asset marketplace

LMAX Exchange Group Limited (LMAX Group or the Company)
is the holding company of LMAX Exchange, LMAX Global and LMAX Digital.
50 La Colomberie, St. Helier, Jersey, JE2 4QB, Channel Islands

LMAX Exchange Group Limited, Yellow Building, 1A Nicholas Road, London W11 4AN
www.LMAX.com | info@LMAX.com | +44 20 3192 2555

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Introduction: about LMAX Group

Delivering efficient market
structure and transparent, precise
execution to all participants
LMAX Group is a global financial technology company and the leading independent operatorof multiple institutional execution venues for FX and crypto currency trading.
With offices in 9 countries and a global client base, the Group builds and runs its own highperformance, ultra-low latency exchange infrastructure, which includes matching engines in
London, New York, Tokyo and Singapore.
As one of the fastest growing financial technology companies in the UK, LMAX Group has asolid presence in all the major FX markets around the world, including Europe, North Americaand Asia-Pacific.
Our rapidly expanding global institutional and professional client base is a testament to our
distinctive business model that delivers efficient market structure and transparent, precise,consistent execution to all market participants.
The LMAX Group portfolio includes LMAX Exchange, LMAX Global and LMAX Digital.

The institutional exchange for global FX
LMAX Exchange operates multiple global institutional FX exchanges and an FCA regulated MTF(Multilateral Trading Facility). A central limit order book (CLOB) execution model offers streaming
firm limit order liquidity from top tier banks and non-bank institutions, transparent price discovery,no ‘last look’ rejections and full control over trading strategy and costs.

The regulated brokers for global FX
LMAX Global is a leading regulated broker for FX, metals and commodities worldwide. Servicing
retail brokers and professional traders, LMAX Global offers access to deep institutional FX
liquidity, tight spreads and transparent, precise execution with no ‘last look’ rejections.

The institutional spot crypto currency exchange
LMAX Digital is a leading institutional spot crypto currency exchange. Based on proven, proprietary
technology from LMAX Group, LMAX Digital allows global institutions to acquire, trade and holddigital assets such as BTC, ETH, LTC, BCH and XRP safely and securely. LMAX Digital is regulatedby the Gibraltar Financial Services Commission (GFSC) as a DLT (Distributed Ledger Technology)
provider for execution and custody services.
Introduction

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LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Contents
Highlights ............................................................................................................................................................................8
CEO’s statement ...............................................................................................................................................................9
Risk management .......................................................................................................................................................... 13
Statement of Directors’ responsibilities in respect of the financial statements.................................. 17
Directors’ report ............................................................................................................................................................ 19
Independent auditors’ report to the members of LMAX Exchange Group Limited ........................... 20
Consolidated statement of comprehensive income ....................................................................................... 25
Consolidated statement of financial position .................................................................................................... 26
Consolidated statement of changes in equity ................................................................................................... 27
Consolidated statement of cash flows .................................................................................................................. 28
Notes to consolidated financial statements ....................................................................................................... 29
1. Accounting policies ...................................................................................................................................... 29
2. Proﬁt before tax ............................................................................................................................................ 36
3. Taxation............................................................................................................................................................. 38
4. Investments ..................................................................................................................................................... 40
5. Intangible assets............................................................................................................................................ 40
6. Property, plant and equipment................................................................................................................ 41
7. Trade and other receivables ..................................................................................................................... 42
8. Inventories....................................................................................................................................................... 43
9. Cash and cash equivalents ........................................................................................................................ 43
10. Trade and other payables ........................................................................................................................ 44
11. Related party transactions ..................................................................................................................... 45
12. Reorganisation reserve............................................................................................................................ 45
13. Goodwill ......................................................................................................................................................... 46
14. Post balance sheet event ........................................................................................................................ 46
15. Financial instruments ............................................................................................................................... 47
16. Developments in reporting standards and implementations................................................... 55
17. Registered address and country of domicile ................................................................................... 55

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Contents

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Contents
Company statement of comprehensive income ............................................................................................... 56
Company statement of financial position ............................................................................................................ 57
Company statement of changes in equity ........................................................................................................... 58
Company statement of cash flows.......................................................................................................................... 59
Company notes to the financial statements ...................................................................................................... 60
1. Accounting policies ...................................................................................................................................... 60
2. Investments in subsidiaries....................................................................................................................... 60
3. Investment in associate .............................................................................................................................. 62
4. Property, plant and equipment................................................................................................................ 63
5. Intangibles ....................................................................................................................................................... 64
6. Trade and other payables........................................................................................................................... 64
7. Cash and cash equivalents ........................................................................................................................ 65
8. Trade and other payables........................................................................................................................... 65
9. Share capital.................................................................................................................................................... 65
10. Related parties ............................................................................................................................................ 66
11. Post balance sheet event ........................................................................................................................ 66

Contents

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LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Highlights

2021 financial highlights
VOLUMES

5.4

$tn

4.5

REVENUES

118

$m

3.5

21%

3.1

31%

2.5

’17

’18

’19

’20

GROSS PROFIT

’21

106

’19

’20

40

’17

’18

EBITDA

’21

62

$m

$m
57
35

60

47%

44

Compound Annual GrowthCompound Annual Growth

’17

’18

’19

’20

EBITDA MARGIN

’21

58%

38%

20

’17

’18

’19

’21

772

425

Compound Annual Growth

’19

’20

CLIENT ASSETS

47%
’18

30

13

46% 46%Compound Annual Growth

’17

26

$m

51%

11%

66

Compound Annual GrowthCompound Annual Growth

32%

62
50

’20

’21

226

243

163

’17

’18

’19

’20

’21

› Trading volumes of US$5.4 trillion, 20% annual growth from 2020
› Gross revenues of US$118m, 80% annual growth from 2020
› Gross profit of US$106m, 78% annual growth from 2020
› Statutory EBITDA of US$62m, 103% annual growth from 2020
› EBITDA margin of 58%, 14% improved from 2020
› Profit for the year of US$41m, 130% annual growth from 2020
› Client assets held of US$772m, 82% annual growth from 2020
› Continued growth of exchanges around the world
Highlights

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LMAX Group | 2021 Annual Report and Consolidated Financial Statements

CEO’s statement

Overview

David Mercer, CEO

2021 was a milestone year for LMAX Group as we navigated throughchallenging global macroeconomic conditions to achieve record volumes,
revenues and EBITDA. This performance was the result of years of technology
investment to diversify our product offering, leading to differentiated revenue
streams and a wider geographic reach.
As we look ahead, the Group is well positioned to lead in both the FX and crypto markets, due to ourunique and complementary triangulation of brands, enabling us to overcome industry infrastructure
gaps and cross-sell to our global institutional client base.
During the year, our industry-leading business model and the prominent role we have to play inboth foreign exchange and crypto currency markets was vindicated with a partial private equity
sale, which valued the group at $1 billion. In J.C. Flowers & Co. LLC, we identified a like-minded
partner that understands global capital markets and has strategic know-how and connectivity
that we are able to leverage to accelerate the next phase of our growth and innovation acrossinternational markets, particularly in North America and Asia.
The evolution of LMAX Group has been organic and self-financed since 2011, broadly broken
into two phases of i) proof of concept toward break-even (to 2015/16) and ii) diversification andprofitability (to 2021). The next phase of expansion and growth (to 2027) should be the most
exciting as we execute on our vision to deliver the future multi-asset marketplace.
We are committed to continued investment in product and trading functionality, notably with theaim of gaining further traction with top tier banks and established financial institutions.
A diversified revenue mix ensures the resilience of our financial performance in all market cycles
and has seen us lead the way for growth and profitability metrics within the industry. We remain
nimble, always with a keen eye on the horizon and a vision of where we can set the pace for the restof the market.
In 2021, we grew our share of both the institutional FX and crypto market as we saw a meaningfulincrease in adoption of crypto assets by institutions. We remain confident that with the continued
evolution of the markets in which we operate, combined with our commitment to invest in future
growth, that we are on track to achieve our strategic objective of becoming the pre-eminent venue
for all institutional FX and crypto currency trading.
Our focus remained on providing a best-in-class service to our clients and once again, we recorded
annual growth across all KPIs.
LMAX KPIs (US$)

2017

2018

2019

2020

2021

GrowthVolumes (tn)

2.5

3.1

3.5

4.5

5.4

21%

Client assets (m)

163

226

243

425

772

47%

Revenue (m)

40

50

62

66

118

31%

Gross profit (m)

35

44

57

60

106

79%

EBITDA (m)

13

20

26

30

62

47%

9

CEO’s statement

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

CEO’s statement
Along with the strong results achieved, we also pursued strategic initiatives.
Key business developments in 2021 include;› The sale of a 30% stake in the company to J.C. Flowers & Co. LLC, which validated our›

corporate strategy.
Investment in overseas expansion: The Group has strengthened its distribution capabilities andinfrastructure globally by growing its presence in the EMEA and Asia Pacific regions.

› As the leading institutional spot crypto currency exchange, LMAX Digital has achieved

significant market growth and is at the forefront of institutionalisation of the wider crypto
ecosystem. In addition to substantial contribution to the Group’s revenues, LMAX Digital iscontinuously onboarding new institutions and driving discussions with top banks and non-banks,
looking to enter the digital assets market.

› The skills and technical insights of our people, alongside our institutional-grade technology, give
us an industry edge. Our ongoing technology investment has ensured resilience, security andincreased capacity of our exchanges. A combination of developing our staff alongside strategic
senior appointments have strengthened our global institutional sales coverage and facilitatedthe rapid expansion of LMAX Digital.

› We continue to invest for future growth alongside increasing operational support acrossthe Group. Planned organic investment is focused on the following 3 areas:• Scaling up existing exchange infrastructure as well as investing in delineation/modularisationof existing brands and products.
• Diversification - adding new products and revenue streams through expanding our regional
footprint and establishing new partnerships to leverage opportunities in the institutional
crypto ecosystem.
• Investment in corporate governance and organisational structure to facilitate growth anddrive controlled expansion with the oversight from functional experts.

The Exchange business continues to be of core importance to the Group and, due to the scale of
the attainable market, presents the biggest opportunity for future volume growth. We remain
extremely bullish on the growth prospects, especially in Asia and North America. Total volumes grew
34% year on year, despite the challenges brought on by the global pandemic, whilst other market
participants struggled to maintain prior year volume levels. Clients continue to respond positively
to our offering and clearly value our independent status and distinctive business model.

With its global reach and multi-asset capabilities, LMAX Global continues to offer the benefits of
exchange trading to a large segment of the market that is unable to access this directly andincluding broker-dealers, funds, and professional traders. The business has withstood restrictive
regulatory measures in recent years and the risk-off market conditions that surfaced after volatile
trading conditions as the Covid pandemic surfaced in March 2020. With clients in 100 different
countries, we remain in expansion mode and have built out our multi-hub offering to maximise
growth potential.

Our most recent Exchange offering, which was launched in Q2 of 2018, has already achievedmarket leadership in Institutional spot crypto currency trading. LMAX Digital, has delivered 82%
CEO’s statement

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LMAX Group | 2021 Annual Report and Consolidated Financial Statements

CEO’s statement
quarter-on-quarter volume growth since launch. It is the fastest growing exchange within theGroup, breaking even within the first year and is well placed for further growth as the digital asset
ecosystem institutionalises. We expect this to be driven through a combination of more robust
institutional architecture and greater clarity around regulatory frameworks. LMAX Digital aims
to play a crucial role in helping crypto currencies to become part of mainstream capital markets.
LMAX Digital is the first of our businesses which is fully operational 24 hours a day, 7 days a week;something which we believe is the future of all capital markets. With the technology solution comes
greater business opportunity.

Overview of Corporate Governance
LMAX Group recognises that its overall structure is subject to the direction of its shareholders,
who are responsible for appointing Directors to the Board and authorising the Directors todelegate any of their powers or discretions.
The Board of Directors is responsible for agreeing the Group’s strategy and for monitoring
progress with the execution of the firm’s strategy against agreed targets. The Board has overall
responsibility for promoting the long-term sustainable success of the Group for the benefit of its
members as a whole, providing leadership and direction, including in relation to culture, ethics andvalues, and ensuring effective engagement with and encouraging participation from shareholders
and other stakeholders.
Certain governance responsibilities have been delegated by the Board to Committees of theBoard, to ensure independent oversight over financial reporting, internal controls, risk
management, remuneration and reward.
The Chief Executive Officer has delegated authority for:The development and execution of strategy
Leadership and development of the Company’s executive management teamDay-to-day decision-making relating to, and management of, the affairs of the firm
Delivering financial performance in line with the Company’s agreed budget
Organisational design of the Company’s operations
Client management, marketing and global sales

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The Finance Director has delegated authority including financial management of the Group, thestewardship of Group assets, the safeguarding of client money and assets, financial reporting,capital and liquidity risk management and investor relations.
Below Board level, the Company operates a number of executive management committees.
The CEO is supported by the senior executive management committee, comprising the Chief
Executive Officer (CEO), Finance Director (FD), Chief Operating Officer (COO), Chief Technology
Officer (CTO) and other senior executives.
The senior executive management committee supports the CEO in the proper performance of
his duties, including optimising the execution of the Company’s strategy agreed by the Board, andprovides advice and support to executive management in the day-to-day operation of the Group.
The FD, in the proper performance of his duties, is supported by the Client Money and Assets
Committee relating to oversight arrangements and operations in respect of the holding andsafeguarding of LMAX Global client money and assets. The COO has delegated authority in respectof trading, operations and business change and also leads the Operational Risk Committee which
oversees the work of functional heads in the execution of their responsibilities.
11

CEO’s statement

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

CEO’s statement
Future outlook
LMAX Group demonstrated record financial performance in 2021 with increases across all major
KPIs. The business continued to grow share of the institutional FX market, investing in product aswell as scaling up technology and operational capabilities to build a more diversified, sustainableinstitutional business. As a Group, we are entirely focused on our vision to deliver the future multiasset marketplace.
We notably gained further traction with top tier banks, reflecting the increasing demand from themarket for firm limit-order liquidity and transparent, precise, consistent execution. LMAX Digital
has achieved significant market growth and is at the forefront of institutionalisation of the wholecrypto ecosystem.
Another strategic growth area for us to capitalise on is the potential of our market data offering.
Our ability to gather firm multi-asset limit order liquidity market data from all client segments,
often not accessible through legacy venues, puts us in a differentiated and advantageous position
compared to other players. This will be a key growth story for us over the next few years across ourbusiness lines.
The Group should maintain the flexibility and inter connectivity of the differentiated brands
for as long as possible with the broker/exchange model now appearing prescient rather thanproblematical as larger institutions battle with the immature nature of credit access to crypto
related products.
During the past couple of years, there have been a number of events which have caused anincrease in volatility, from the Covid-19 pandemic to the conflict in Ukraine. These elevated levelsof volatility tend to generate more opportunities in financial markets, which in turn attracts client
trading activity and leads to greater commission revenue. In the wider financial markets, we are
now seeing rising interest rates and increasing levels of inflation. Whilst this should provide further
trading opportunities, it may also impact the level of collateral that our clients place with us for
trading. The conflict in Ukraine has had minimal impact on the commercial operations of the Groupand steps were taken in the early stages to minimise any prospective future exposure to sanctions
on clients and suppliers.
We will continue to monitor industry developments and are mindful of the macroeconomic,
technological and regulatory evolution. An exciting 5 year period lies ahead of LMAX Group as
we invest for scale, diversification, and strategic partnerships built on established brands andcontinuation of a decade long ethos. Our strategy is simple, well defined with a clear route tofurther and continued success.
On behalf of the Board,
David Mercer, Director
31 October, 2022
Yellow Building, 1A Nicholas Road, London, W11 4AN
8. 2021 average rate of GBPUSD has been used within the Highlights and CEO Statement sections.
9. EBITDA of £45m (US$61.5m) is arrived at by adding back depreciation of £1.8m (US$2.5m), amortisation of £4.5m(US$6.1m), foreign exchange losses of £2.1m (US$2.8m), and other non-operational costs of £2.8m (US$3.9m) for theyear to operating profit of £33.6m (US$46.2m).

CEO’s statement

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LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Risk management
Risk profile
Risk management is central to the long-term success of the Group and to the resilience of ouroperations. LMAX Group has well-established processes for identifying and managing risks. The
Board sets the Risk Appetite and monitors how well risks within each business are mitigated andcontrolled. The emphasis of risk management within the Group is to support a sustainable businessmodel with the capacity to manage all the risks it faces, and to be able to continue to offer its
services under sustained financial market volatility and stressed conditions.
The Group operates in a dynamic competitive environment, facing risks relating to market
conditions and its competitive position. The level of revenue in any period is largely driven bycommission, trading revenue and funding income, which is a function of the volume of tradingand position sizes held overnight by the Group’s clients. The revenue mix is determined bytrading conditions, where high market volatility usually results in increased levels of trading andcommissions but reduced position sizes and funding income; conversely low market volatility
usually has the opposite impact.
The Group pro-actively manages its liquidity and capital adequacy risk through ongoing stresstesting and more formally through its regulatory reporting.
The Operational Risk Committee assesses operational risks, including those arising throughtechnology, people, process and external events.
The Group manages its conduct risk to the very high standard through investment in systems,
people and training. This includes ensuring we further embed our client-first culture, while
continuing to work closely with all our regulators to protect the integrity of the financial markets.
LMAX Group operates in a number of geographic regions which affects how it is able to market andprovide its services to clients. The regulations relating to the products and markets in which thebusiness operates are continually evolving. The Group welcomes any movement by regulators to
improve client outcomes, and also recognises some changes adversely impact it or the activities of
its clients as the industry adapts.
Capital management
The Group manages its capital resources with the objectives of facilitating business growth whilst
complying with the regulated entities’ capital resources requirement. Subsidiaries within theGroup manage capital adequacy risk through their regulatory capital policies and ensure they holdsufficient capital to operate successfully and adhere to regulatory requirements.
As of 31 December 2021, LMAX Exchange and LMAX Global were regulated under the Capital
Requirements Directive IV (CRD IV) which stipulates the requirements to hold sufficient regulatory
capital to cover its risk exposures, valued according to applicable rules.
From 1 January 2022, those entities authorised in the UK have been regulated under theInvestment Firm Prudential Regime, a new prudential regulatory framework introduced by the
Financial Conduct Authority specifically for investment firms. LMAX Broker Europe Limited has
been subject to the new EU equivalent rulebook, the Investment Firm Directive and Regulation(IFD/IFR) since it came into force on 26 June 2021.
LMAX Exchange and LMAX Global undertake an annual Internal Capital Adequacy Assessment
Process (ICAAP) through which it assesses its capital requirements, including the application of
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Risk management

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Risk managementa series of stress-testing scenarios, to its base financial projections. The ICAAP document will be
replaced by the Internal Capital Adequacy and Risk Assessment (ICARA) in 2022. LMAX Digital
undertakes an annual Financial and Non-Financial Resources Assessment (FNRA), which also
assess a firm’s capital requirements, including the application of a series of stress-testing scenarios,
to its base financial projections. The assessments are reviewed, challenged and approved by the
Board annually.
Liquidity risk management
Liquidity risk is the risk that a firm is unable to meet its financial obligations as they fall due.
Regulated entities within the Group are required to manage their liquidity risk on a standalone
basis. Liquidity requirements must be met from the firm’s own liquidity resources, as client money
cannot be used for its operations.
LMAX Global manages this through the application of its Liquidity Risk Management Policy. Asof 31 December 2021, LMAX Global was classified as an ILAS (Individual Liquidity AdequacyStandards) BIPRU firm and was held to the liquidity standards contained in BIPRU 12 of the FCA
Handbook. From 1 January 2022, the liquidity requirements contained in the IFPR rules will apply
to the Company.
LMAX Global carries out an Individual Liquidity Adequacy Assessment (ILAA) each year and uses anumber of measures for managing day-to-day liquidity risk, including the level of total liquid assets
of its prime broker margin requirement and of same-day available cash.
The Group also manages its liquidity centrally and ensures that it has sufficient liquidity to meet its
financial liabilities when due, under both normal circumstances and stressed conditions.
Credit risk management
The Group is exposed to the risk that either a client or a financial counterparty fails to meet their
obligations to the firm, resulting in a financial loss. As a result of offering leveraged trading products,
the business accepts that client credit losses can arise as a cost of its business model. Client credit
risk principally arises when a client’s total funds deposited with the Company are insufficient tocover any trading losses incurred. Concentration risk is monitored daily to ensure that pre-defined
thresholds limits are not exceeded, with ongoing action taken to try to reduce concentration.
We ensure that commitment to our customers is embedded in our culture and strategic initiatives,
and we regularly seek and review feedback from our clients. This enables us to develop our
products and services specifically to meet the needs of a global client base.
In addition to dealing directly with clients, LMAX Global services clients introduced through third
parties who do not have their own front-end offering and want to take advantage of our awardwinning technology and expertise. They introduce their clients to us, and we provide execution
services and back-end support. The introducer manages the client relationship. We carefully assess
the risk and potential returns from introducers, and only partner with reputable institutions thatare committed to the same rigorous standards of regulatory compliance as ourselves, and who fit
our risk profile.
Information technology and cyber security
As an online business, the integrity, security, stability and operational robustness of IT systems
are critical for ongoing performance. Technology failures may impact our clients and the orderly
Risk management

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LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Risk management
running of markets on our Exchanges, potentially leading to a loss of trading volumes. Ensuring thatappropriate protections are in place to detect and prevent any intrusion such that all systems are
safeguarded against hackers, email viruses, attacks and other forms of cyber-crime is essential.
Any failure in these measures could significantly impact the Group’s reputation and hence financial
performance. The Group conducts annual third-party security assessments covering the internaland external facing systems and applications and to assess the susceptibility to cyber-crime.
The Group has implemented an information security framework ISO 27001:2013 and is certified
by a UKAS accredited audit body. External auditor assessments take place every 6 months. The
group has introduced an internal security audit team to develop, test and maintain the controls
required to support various compliance activities.
Impact of the economic environment
The economic environment remains a risk to the growth plans of the Group, and whilst
management continue to monitor its effects upon our customer base, management believes that
due to a mature and diversified customer base and product mix the Group is well positioned to
manage any adverse impact.
Financial market volatility, measured by various indexes such as VIX, has been at historically
low levels over the last five years. It is expected that an increase in the general level of financial
market volatility would be beneficial to revenues, which are therefore partly dependent upon
macroeconomic conditions. This was the case in Q1 of 2020 which saw unprecedented levels ofmarket volatility as a result of macroeconomic uncertainty caused by the COVID-19 pandemic.
Crypto assets market downturn
The combination of challenging macroeconomic conditions, coupled with the steady decline invaluation of bitcoin and other major crypto currencies through 2022, has led to a downturn within
the industry. This period of depressed prices has resulted in subdued market volumes, leading tomany organisations having to restructure and reduce headcount.
The market impact was further compounded with the collapse of algorithmic stable coin, TerraUSD(TUSD). This collapse sent shockwaves through the industry, leading to the bankruptcy of one of
the largest market participants and having a significant contagion effect on other providers in thelending and trading space. A knock-on effect of this was the immediate evaporation of the crypto
credit markets, and a further decline in market volumes.
In the context of the overall market, LMAX Digital has maintained relative volume stability andresilience, maintaining a strong emphasis on future growth during this period by investing into newtalent, products and working towards a more diversified offering, which will in turn lead to newrevenue opportunities.
LMAX Digital is confident that the current stressed state of the market and the increasing
regulatory scrutiny of less legitimate business models are likely to lead to a more credible, stable
crypto marketplace that would encourage further institutional participation longer-term, and is well
positioned to capitalise on this opportunity.
COVID-19
The continuity and evolution of COVID-19 pandemic together with its associated economic
uncertainties followed in the year 2021. The Group’s business continuity plan was put to the test at
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LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Risk management
the beginning of 2020, with 95% of employees successfully transitioning to working from home.
Post vaccination program in the U.K. the Group has returned to a hybrid working model which has
continued to serve the business and no disruption to systems uptime and reliability.
The Directors anticipate the future effect of this pandemic to be not material, albeit there are no
guarantees that further COVID-19 mutations would not cause disruption to financial markets inthe future.
Russia - Ukraine situation
The Russian-Ukrainian conflict has had unprecedented impact on the world, loss of human lives,
economic uncertainty and escalated levels in the threat landscape. LMAX Group and subsidiaries
have reacted immediately to all international sanctions and guidance.
There were no instances of sanctioned customers trading on LMAX Group and RUB trading isdelisted from our Exchange venues. The Group holds no residual RUB market risk and exposure topotential Russian credit risk is immaterial.
BrexitThe UK left the European Union on 31 January, 2020. The transition period that was in place- during which nothing changed - ended on 31 December, 2020. The rules governing the new
relationship between the EU and UK took effect on 1 January, 2021. Developments regarding the
UK’s exit were followed closely throughout. The Group has an established a regulated operational
client facing subsidiary in Cyprus, which enabled LMAX Global to continue to offer regulated
financial products in all EU member states following the UK’s exit.

Risk management

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LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Directors’ report
Directors
The directors who held office during the year and at the date of this report are as follows:
David Mercer
Edmond Warner
Edward Wray
Grant Pomeroy
Peter Yordán (appointed 03 March 2022)
Alexander Mills (appointed 03 March 2022 and resigned 07 June 2022)
Gregory Smith (appointed 06 September 2022)

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Employees
The Group is committed to promoting and encouraging equal opportunities for all prospective andcurrent employees, actively promoting good employee relations. Management aims to eliminate any
conditions, procedures and individual behaviour that can lead to discrimination even where there
was no intent to discriminate, with particular regard to race, gender, disability, sexuality, age, religion
and belief.
Management recognises that employees are key to both its present and future success, placing
considerable value on the active involvement of its employees. In order to maximise the potentialof every employee, management support the fundamental belief that there must be considerable
investment in training and development, a supportive and progressive working environment andemployee contribution and involvement in business matters.
Management continued its practice of keeping employees informed on matters affecting them andon various factors affecting the performance of the Group; this was achieved through formal andinformal meetings. Employees are consulted regularly on a wide range of matters affecting theircurrent and future interests.
Clients
Our revolutionary, minimalist technology delivers one global marketplace for FX - through exchange
infrastructure in London, New York, Singapore and Tokyo; ensuring complete transparency,
open access and a level playing field for all market participants. All clients of LMAX Exchange aremembers of the exchange and have signed up to a public rulebook with all members treated equally.
LMAX Exchange clients include some of the world’s largest banks, a number of whom have been
members of the Exchange since 2012.
We ensure that commitment to our customers is embedded in our culture and strategic initiatives
and there is regular dialogue between LMAX Exchange and all of its clients. The Group hasenhanced its relationship support team across the year in London, New York and Singapore.
This enables us to develop our products and services specifically to meet the needs of our global
client base.
Central to our commitment to our customers is the transparency and quality of our order execution.
LMAX Exchange is an advocate of no last look trading and processes 100% of client trades
automatically, never requoting prices. Should a better price become available for customers during
the dealing process, our innovative price-improvement technology enables customers to receivethat better price during trade execution.

17

Directors’ reportLMAX Group | 2021 Annual Report and Consolidated Financial Statements

Directors’ report
LMAX Global has three main categories of clients: institutional, professional and a small number of
direct retail clients. We offer clients the opportunity to be classified as professional traders in the
EU and UK, under MiFID categorisations. However, we require them to demonstrate compliancewith a set of rigorous eligibility criteria to ensure that they are suitably qualified for this designation.
LMAX Global predominantly provides services to institutions, including asset managers, hedge
funds, STP brokers and broker-dealers providing direct access to major hedging counterparties.
Independent auditors
PricewaterhouseCoopers LLP were appointed as the auditors of the Group on 14 May, 2018.
Pursuant to Article 113(1) of the Jersey Companies Act 1991, the auditors will be deemed to bereappointed and therefore will continue in office.
Disclosure of information to auditors
The directors holding office at the date of approval of the financial statements confirm that, so
far as they are aware, there is no relevant audit information of which the Company’s auditors areunaware; and have taken all the steps that ought to have taken as directors to make themselvesaware of any relevant audit information and to establish that the Company’s auditors are aware ofthat information.
Proposed dividend
The directors declared and paid a dividend of £5m (2020: nil) during the year.
On behalf of the Board,
David Mercer, Director
31 October, 2022
Yellow Building, 1A Nicholas Road, London, W11 4AN

Statement of Directors’ responsibilities in respect of the financial statements

18

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Statement of Directors’ responsibilities inrespect of the financial statements
The Directors are responsible for preparing the financial statements in accordance with applicable
Jersey law and International Financial Reporting Standards.
The Directors must not approve the financial statements unless they are satisfied that they give atrue and fair view of the state of affairs of the company and of the profit or loss of the company forthat period. In preparing the financial statements, the directors are responsible for:› selecting suitable accounting policies and then applying them consistently;› stating whether applicable accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements;› making judgements and accounting estimates that are reasonable and prudent; and› preparing the financial statements on the going concern basis unless it is inappropriate topresume that the company will continue in business.
The Directors confirm that they have complied with the above requirements in preparing thefinancial statements.
The Directors are responsible for ensuring that the financial statements comply with The
Companies (Jersey) Law, 1991 safeguarding the assets of the company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities. So far as the
directors are aware, there is no relevant audit information of which the company’s auditors areunaware, and each director has taken all the steps that he or she ought to have taken as a director
in order to make himself or herself aware of any relevant audit information and to establish that thecompany’s auditors are aware of that information.
The Directors are also responsible for keeping adequate accounting records that are sufficient toshow and explain the company’s transactions and disclose with reasonable accuracy at any time thefinancial position of the company.

19

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Independent auditors’ report to the membersof LMAX Exchange Group Limited
Report on the audit of the financial statements
1. Opinion
In our opinion, LMAX Exchange Group Limited’s group financial statements and company financial
statements (the “financial statements”):› give a true and fair view of the state of the group’s and of the company’s affairs as at 31
December 2021 and of the group’s and company’s profit and the group’s and company’s cash
flows for the year then ended;› have been properly prepared in accordance with International Financial Reporting Standards(IFRSs) as issued by the International Accounting Standards Board (IASB); and› have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
We have audited the financial statements, included within the Annual Report, which comprise:
the group and parent company statements of financial position as at 31 December 2021; groupand parent company income statements and statements of comprehensive income, the groupand parent company statements of cash flows, and the group and parent company statements ofchanges in equity for the year then ended; and the notes to the financial statements, which include a
description of the significant accounting policies.

2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”)and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’
responsibilities for the audit of the financial statements section of our report. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence
We remained independent of the group in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, which includes the FRC’s EthicalStandard, and we have fulfilled our other ethical responsibilities in accordance with theserequirements.

3. Conclusions relating to going concern
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 company’s ability to continue as a going concern for a period of at least twelve months fromwhen the financial statements are authorised for issue.

20

Independent auditors’ report to the members of LMAX Exchange Group Limited

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Independent auditors’ report to the membersof LMAX Exchange Group Limited
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not aguarantee as to the group’s and the company’s ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.

4. Reporting on other information
The other information comprises all of the information in the Annual Report other than thefinancial statements and our auditors’ report thereon. The directors are responsible for the otherinformation. Our opinion on the financial statements does not cover the other information and,accordingly, we do not express an audit opinion or any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the otherinformation 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 bematerially misstated. If we identify an apparent material inconsistency or material misstatement, weare required to perform procedures to conclude whether there is a material misstatement of thefinancial statements or a material misstatement of the other information. If, based on the work wehave 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 based on these responsibilities.

5. Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible
for the preparation of the financial statements in accordance with the applicable framework andfor being satisfied that they give a true and fair view. The directors are also responsible for suchinternal control as they determine is necessary to enable the preparation of financial statementsthat are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s andthe company’s ability to continue as a going concern, disclosing, as applicable, matters related togoing concern and using the going concern basis of accounting unless the directors either intend toliquidate the group or the company or to cease operations, or have no realistic alternative but todo so.

Independent auditors’ report to the members of LMAX Exchange Group Limited

21

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Independent auditors’ report to the membersof LMAX Exchange Group Limited
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditors’
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee 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 consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence theeconomic 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 ofdetecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of noncompliance with laws and regulations related to the requirements of the Companies (Jersey) Law
1991, or corporate tax legislation, and we considered the extent to which non-compliance might
have a material effect on the financial statements. We also considered those laws and regulations
that have a direct impact on the financial statements such as corporate tax legislation. We evaluatedmanagement’s incentives and opportunities for fraudulent manipulation of the financial statements(including the risk of override of controls), and determined that the principal risks were related tothe incentive for management to inflate the profitability of the company, through posting manualjournal entries to manipulate financial performance or through showing management bias injudgements and assumptions. Audit procedures performed by the engagement team included:› Performing enquiries with management and those charged with governance regarding any
known or suspected instances of non-compliance with laws and regulation and fraud.

› Challenging assumptions and judgements made by management in estimates, including testing
the useful economic life of intangible asset and the valuation of cryptocurrency inventories.

› Reviewing correspondence with regulatory authorities.
› Using our data analytic tool to identify manual journals with a higher inherent risk of fraud, andobtaining appropriate audit evidence to support these journals.

› Incorporating unpredictability into the nature, timing and/or extent of our testing.
There are inherent limitations in the audit procedures described above. We are less likely to
become aware of instances of non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial statements. Also, the risk of notdetecting a material misstatement due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for example, forgery or intentionalmisrepresentations, or through collusion.
22

Independent auditors’ report to the members of LMAX Exchange Group Limited

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Independent auditors’ report to the membersof LMAX Exchange Group Limited
A further description of our responsibilities for the audit of the financial statements is located on
the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of ourauditors’ report.

Use of this report
This report, including the opinions, has been prepared for and only for the company’s members
as a body in accordance with Article 113A of the Companies (Jersey) Law 1991 and for no otherpurpose. We do not, in giving these opinions, accept or assume responsibility for any other purposeor to any other person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.

Independent auditors’ report to the members of LMAX Exchange Group Limited

23

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Independent auditors’ report to the membersof LMAX Exchange Group Limited
Other required reporting

Companies (Jersey) Law 1991 exception reporting
Under the Companies (Jersey) Law 1991 we are required to report to you if, in our opinion:› we have not obtained all the information and explanations we require for our audit; or› proper accounting records have not been kept by the company, or proper returns adequate forour audit have not been received from branches not visited by us; or› the company financial statements are not in agreement with the accounting records
and returns.

We have no exceptions to report arising from this responsibility.

Mike Wallace
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants
London31 October, 202224

Independent auditors’ report to the members of LMAX Exchange Group Limited

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Consolidated statement of comprehensive income

For the year ended 31 December, 2021

Note

2021

2020

£’000

£’000

Revenue

2.1

85,91150,939

Cost of sales

2.2(8,845)(4,917)77,06646,022(43,514)(30,576)

Operating profit

33,552

15,446

Financial expenses

(832)

(908)

Gross profit
Administrative expenses

2.3

86

Share of profits of associate
Profit before tax
Taxation

3

Profit for the year

32,806

14,538(3,120)(568)

29,686

13,970398(32)

30,084

13,93830,03913,89645

42

Other comprehensive expense
Exchange differences on translation of foreign assets and liabilities
Profit and total comprehensive income for the year

Total comprehensive expense/income attributable to:Equity holders of the parent
Non-controlling interest

The results shown above are derived wholly from continuing operations.
The accompanying notes are an integral part of these financial statements.

Consolidated statement of comprehensive income25LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Consolidated statement of financial position
As at 31 December, 2021

Note

Non-current assets

2021

2020

£’000

£’000

Investments

4

1,946

1,860

Intangible assets

5

11,2806,946

Property, plant and equipment

6

9,910

5,189

Goodwill

13

318

318

Trade and other receivables

7

501

670

Cash and cash equivalents

9228,115

119,925

Inventories

8

315,419

148,661

Current assets

Trade and other receivables

7

62,36542,637

Deferred tax asset

3

283

-

Current tax assets

3

151

647

630,288326,853

Total assets
Non-current liabilities
Trade and other payables

10(25,972)(19,024)Deferred tax liabilities

3.1(1,976)(712)

10(537,940)(281,587)(565,888)(301,323)

64,40025,530Share capital

1,111

1,000

Share premium

74,433-(68,615)(8,615)

(452)

(60)

Current liabilities
Trade and other payables
Total liabilities
Net assets
EquityReorganisation reserve

12

Other equity

108

(290)

Retained earnings

57,81533,051Equity attributable to equity holders of the parent

64,40025,086-444

64,40025,530Foreign currency translation reserve

Non-controlling interest
Total equity

The accompanying notes are an integral part of these financial statements.
These consolidated financial statements on pages 29 - 55 were approved by the Board on
31 October, 2022 and were signed on behalf of the Board by:David Mercer, Director
31 October, 2022

26

Consolidated statement of financial position

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Consolidated statement of changes in equity
For the year ended 31 December, 2021
SharecapitalForeigncurrency Reorgan
Share translation -isation
reservepremium reserve

Other
equityRetainedearnings

Total
Non
parent controlling Total
equityinterest
equity

£’000

£’000

£’000

£’000

£’000

£’000

1,000

-

(290) (8,615)(60) 33,051 25,086

444 25,530

Profit for the year
Other comprehensive income

-

-

398

-

- 29,641 29,641
398

45 29,686
398

Total comprehensive income

-

-

398

-

- 29,641 30,039

45 30,084

111 74,433-- (59,274)
(726)
-

(392)
- 14,878- (726)- (4,877) (4,877)- 14,878(489) (1,215)- (4,877)

Balance at 31 December 2021 1,111 74,433

108 (68,615)(452) 57,815 64,400- 64,400

1,026 19,123 12,276

402 12,678

Balance at 1 January 2021

Issue of shares*
Acquisition of minority interest
Dividends

£’000

£’000

£’000

For the year ended 31 December, 2020
1,000

-

(258) (8,615)

Profit for the year
Other comprehensive expense

-

-

(32)

-

- 13,928 13,928(32)

42 13,970(32)

Total comprehensive income

-

-

(32)

-

- 13,928 13,896

42 13,938

Buyback of shares

-

-

-

1,000

-

Balance at 1 January 2020

Balance at 31 December 2020

- (1,086)(290) (8,615)- (1,086)- (1,086)(60) 33,051 25,086

444 25,530*On 30 December 2021, the Group issued 1,654,322 new shares (nominal value £0.01 per share)
along with an existing shares sale of 9,444,444 shares to J Digital 4 LLC (a Delaware limited liability
company) for a consideration of £11.1m and £ 63.4m respectively.
For further details refer to note 12 - Reorganisation reserve.
The Group also paid a dividend during the year for £4.9m (2020: nil).
The accompanying notes on pages 29 - 55 form an integral part of these financial statements.

Consolidated statement of changes in equity

27

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Consolidated statement of cash flows
2021

2020

£’000

£’000

33,552

15,446

Depreciation

1,804

1,590

Amortisation

4,459

3,796

Decrease / (Increase) in trade and other receivables(20,523)

10,313

Increase in inventories(166,758)(123,534)

Increase in trade and other payables

256,426

150,917(679)(1,004)

108,281

57,524

Acquisition of property, plant and equipment(6,525)(1,008)Acquisition of intangibles and capitalised expenses(8,793)(5,089)-(1,860)(15,318)(7,957)

Borrowings

10,00019,000

Repayment of borrowings(3,125)(14,750)Dividends(4,877)

-

(832)

(908)

Issue of shares / (buyback)

14,878(1,086)

Acquisition of minority interest(1,215)-

Net cash from financing activities

14,8292,256

Net increase in cash and cash equivalents

107,792

51,823

Cash and cash equivalents at beginning of year

119,925

68,134

Effect of exchange rate fluctuations on cash held

398

(32)

228,115

119,925

For the year ended 31 December, 2021
Cash flows from operating activities
Operating profit
Adjustments for:Tax paid
Net cash from operating activities
Cash flows from investing activities

Investment in associate
Net cash used in investing activities
Cash flows from financing activities

Finance expense

Cash and cash equivalents at end of year

The accompanying notes are an integral part of these financial statements.

28

Consolidated statement of cash flows

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
1. Accounting policies
The financial statements have been prepared and approved by the Directors in accordance with
International Financial Reporting Standards (IFRS) and International Financial Reporting Standards
Interpretations Committee (IFRS IC) in conformity with the requirements of the Companies Act
2006.
The following accounting policies have been applied consistently in dealing with items which areconsidered material in relation to the financial statements.
Going concern
The Directors have considered all available information about the future events when considering
the Group’s going concern. The Directors have reviewed profit and cash flow forecasts for atleast 12 months following the date of the signing of these financial statements. These forecasts
take into account future expected revenues, costs, liquidity and statutory capital requirements ofthe subsidiaries. The directors anticipate no significant impact of the novel strain of coronavirus(COVID-19) on the business, considering no material impact on the Group’s results for the year andthe further improving situation post developments in the vaccination program globally.
Despite the challenging conditions we have witnessed so far in 2022 within the crypto currency
industry, the directors are confident that the current stressed state of the market and theincreasing regulatory scrutiny of less legitimate business models will lead to a more credible,
stable crypto marketplace that would encourage further institutional participation longer-term,
and the group well positioned to capitalise on this opportunity. Despite the total crypto market
capitalization falling from over USD 2 trillion at the beginning of 2022 to around USD 1 trillion
currently, institutional investors have not wavered in their trading. Even after the turmoil
surrounding crypto lending platforms and the collapse of the Terra LUNA ecosystem in May,
everyone expected institutions to retract their engagement, but institutional engagement today is
the same, if not better than last year.
The Directors believe the Group has sufficient financial resources together with an increasing andmore diversified number of customers and suppliers across different geographic areas.
As a consequence, the Directors believe that the Group is well placed to manage its businessrisks successfully and has a reasonable expectation that the company has adequate resources tocontinue in operational existence for the foreseeable future.
Basis of preparation
The Group financial statements have been prepared under the historical cost accounting except
where required otherwise by the adopted IFRS.
The preparation of financial statements requires judgements, estimates and assumptions to bemade that affect the application of policies, assets and liabilities, and revenues and expenses.
Estimates and judgements are continually evaluated. They are based on historical experience andother factors, including expectations of future events that may have a financial impact on the entity
and that are believed to be reasonable under the circumstances. Actual results may differ fromthose estimates. Any revision to accounting estimates are recognised in the period in which theestimate is revised if the revision affects only that period or in the period of the revision and future
Notes to consolidated financial statements

29

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
periods if the revision affects both current and future periods. Judgement made by management in
the application of the accounting standards that have significant effect on the financial statements
and major sources of estimation uncertainty are disclosed where applicable. The areas involving
significant estimates or judgement include:› Estimated useful economic life of intangible asset: see accounting policy below and note 5› Valuation of inventories - crypto currencies: see accounting policy on Inventory below
Basis of consolidation
The consolidated financial statements include the financial statements of the Company and its
subsidiary undertakings made up to 31 December, 2021. The accounting policies of the Company
and its subsidiaries are consistent with each other aside from the basis of preparation.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Subsidiaries with reporting currencies different to British Pound are converted using thefollowing rates:› Non-current assets are stated using the transaction rate
› Current assets and all liabilities are translated using the rate of exchange as at the period end date
› Items of income and expense are translated at transaction rate for the accounting period
Gains or losses recognised from translation are included in the Statement of Other Comprehensive
Income are included in the foreign currency translation reserve.
Intangible assets, amortisation, research and development
Intangible assets include software licences, developed software, intellectual property rights andsome crypto assets. Acquired software licences are capitalised on the basis of the costs incurred toacquire and bring it into use. The costs are amortised over their estimated useful economic life or
the life of the software licence contract which is three to five years. Intellectual property acquired
is amortised over the three years on straight line basis.
The Group undertakes continuous development of its MTF exchange and mobile application
software. The development activity involves planning and designing for the production of new andsubstantially improved features for the MTF exchange. Labour and expenses directly attributableto new and improved features are capitalised as an intangible asset, to the extent:› it is technically and commercially feasible and there is an intention to complete and ability touse or sell the asset.

› it can be reliability demonstrated that the software will generate future economic benefits.
› there are adequate technical, financial and other resources to complete the development andto put it in use.

› the expenditure attributable to the development of the intangible asset can be reliably measured.
Other development expenditure and research activities are expensed as incurred. The capitalised
cost of developed software is amortised over a three to five year period.
The Group’s investment in crypto assets (PYTH cryptographic tokens) is recognised as intangibles(IAS 38) where such asset is separately identifiable albeit with no definite useful value and isconsidered to bring probable future economic benefits to the Group. These tokens are not held
30

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
for sale in ordinary course of business and therefore are not considered as inventory. The intangible
asset is initially recorded at cost and subsequently measured at cost less any impairment losses.
Property, plant and equipment and depreciation
Assets are stated at historical cost less accumulated depreciation. Depreciation is provided to write
off the cost less the estimated residual value of assets by equal instalments over their estimateduseful economic lives as follows:› Leasehold: Shorter of the term of the lease or the useful economic life of the asset› Right to use office building: Straight line based on term of lease› Computer equipment and software: 3-5 years straight line
› Fixtures and fittings: 5 years straight line or the term of lease
Impairment of intangible and tangible assets
The carrying amounts of the Group’s assets are reviewed for impairment when events or changes
in circumstances indicate that the carrying amount of the asset may not be recoverable. If any such
indication exists, the asset’s recoverable amount is estimated. In the event that the recoverable
amount is below the carrying amount, an impairment loss is recognised.
The recoverable amount of an asset is the greater of their net realisable value and value in use.
In assessing value in use, the expected future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the rate of return expected onan equally risky investment.
Investment in associate
An associate is an entity over which an investor has significant influence, i.e. being in the power toparticipate in the financial and operating policy decisions of the investee. A holding of 20% or moreof the voting power directly or through subsidiaries indicates a significant influence. The Company
holds 20% shares of the entity “Tools 4 Broker Ltd” and therefore such investment is considered
as investment in associate by the Group. Investments in associate have been accounted for using
equity method in accordance with IAS 28. Under the equity method of accounting, the equity
investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in
the investor’s share of net assets of the associate.
Trade and other receivables
Trade and other receivables are measured initially at fair value and subsequently carried atamortised using the effective interest rate method.
In accordance with IFRS 9, the amortised cost is further adjusted for impairment based on
calculating the expected credit losses (ECL) on trade receivables through the use of a provision
matrix, where a fixed provision rate applies depending on the number of days that a trade receivable
is outstanding.
Trade and other payables
Trade payable represents balances with counterparties and clients where the combination of cash
held on account and the valuation of their trading position results in an amount payable by theGroup and such balances are recognised at fair value through the Statement of Comprehensive
Notes to consolidated financial statements

31

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
Income in accordance with IFRS 9 where the financial liabilities are not measured at amortised costneither are measured at fair value through other comprehensive income, shall be classified andmeasured at fair value through the Statement of Comprehensive Income.
The client liability in relation to client’s crypto assets on the crypto trading platform is also
valued at fair value alongside the inventory and thus the gain/loss is recorded in the statementof comprehensive income as per the guidance under IFRS9 where recognition of financial asset/
liability would eliminate or significantly reduce an ‘accounting mismatch’ that would otherwise arise
from measuring assets or liabilities or recognising the gains and losses on them on different bases.
See inventory note below for further details regarding the Statement of Comprehensive Incomepresentation.
The other trade and other payables with counterparties are recognised initially at fair value.
Subsequent to initial recognition, they are measured at amortised cost using the effective interest
method.
Inventory - crypto currencies
Inventory represents crypto currencies controlled by the Group.
The Group operates a crypto currency exchange which provides a trading venue to its clients.
For any crypto currency assets that the Company handles and controls in custody on behalf of its
clients, the assets and the corresponding client liability are recognised on the Statement of Financial
Position. Any assets held under explicit trust arrangement will remain off the Statement of Financial
Position.
In the absence of guidance on how crypto currency assets should be recognised and disclosed inaccordance with IFRS as adopted by the EU, the Group has recognised the crypto currencies asinventory as the economic nature is deemed to be in line with certain commodities under IAS 2.3(b).
Crypto currencies are initially measured at cost and the fair value in crypto currencies held as
inventories is reflected in the Statement of Comprehensive Income.
The inventories are valued based on the executed exit prices for crypto currencies as presented on
the LMAX Digital trading platform prevalent at the end of the reporting period. The corresponding
client liability for crypto currencies presented under trade and other payables is also measured atfair value at fair value through the Statement of Comprehensive Income. The fair value movementof these assets and liabilities through the Statement of Comprehensive Income is presented ona net basis as the two components are interconnected and their gross presentation would notprovide a meaningful disclosure for the users of the financial statements.
In addition to the fair value movement of inventory, the change in inventory holding on the
Company’s Statement of Financial Position due to client’s trading activity, including deposits
and withdrawals of crypto currencies is recorded on a net basis through the Statement ofComprehensive Income. The presentation on a gross basis would inflate the figures and not provide
a true and fair representation of the Group’s revenue. Thus, net basis presentation is deemed to beappropriate in reflecting the true nature and substance of the transactions.

32

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
Cash and cash equivalents
Cash comprises cash in hand and deposits repayable on demand. The Group holds money on behalfof clients in accordance with the client money rules of the UK Financial Conduct Authority andother regulatory bodies. Such monies are classified as either ‘transfer of title funds’ or ‘segregatedclient funds’ in accordance with the relevant regulatory requirements.
Segregated client funds comprise individual client funds held in segregated client money accounts
which hold statutory trust status, restricting the Group’s ability to control the monies. These monies
are not recognised on the balance sheet. The return received on managing segregated client funds
is included in Finance income.
Title transfer funds are held by the Group under a Title Transfer Collateral Arrangement, by whicha client agrees that full ownership of such monies is unconditionally transferred to the Group.
Title transfers funds are included in cash and cash equivalents and Collateral receivables.
The corresponding liability for title of transfer funds is included in trade and other payables.
Derivatives
The Group enters into derivative contracts for both hedging and trading purposes. The derivatives
are executed over the counter and valued using a combination of external prices and internalvaluation techniques. Financial assets and liabilities are recognised when the Company becomesa contractual party to these instruments. In accordance with IFRS 9 these financial assets andliabilities are measured at Fair Value though Profit and Loss (FVTPL). Any transactional costdirectly attributable to the acquisition of these financial instruments are also recognised in the
profit and loss statement. The valuation techniques and inputs depend on the type of derivative
and the nature of the underlying instrument. The principal technique used in fair valuation of thesederivatives is mark to market valuation based on the relevant closing prices derived from the LMAX
trading platform.
Revenue
Revenue is measured as the consideration received from customers for trading commissions,funding revenue and service fee revenue. Commissions are recognised post trade execution andbilled on contractual basis, funding revenue is recognised on the close of trading day and is basedon the customer’s open positions and service fee revenues are recognised once due from thecustomers’ accounts.
Proprietary trading revenue is recognised on the close of the trading day, and represents realised aswell as the unrealised Profit and loss made on proprietary trading positions.
Interest income comprises of interest receivable on funds held in bank accounts. Finance income isrecognised as it accrues, using the effective interest method.
Cost of sales
Commission and any transaction clearing fees paid relating to the customer trades is recorded
within the cost of sales. Cost relating to introducing broker fees is recorded in the same period as
the underlying trading commission and funding revenue.

Notes to consolidated financial statements

33

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
Employee and other short-term benefits
The Group operates a defined contribution pension plan under which the fixed contributions arepaid to a third party pension provider and there is no legal or constructive obligation to pay further
amounts. Contributions are recognised as an expense in the periods during which services are
rendered by employees.
Short-term employee benefit obligations (i.e., leave pay) are measured on an undiscounted basis andare expensed as the related service is provided.
Foreign currencies
The financial statements are presented in British Pounds (“GBP”, “£”) which is the Group’sfunctional currency.
Transactions in foreign currencies are recorded using the rate of exchange ruling at transaction
date. Monetary assets and liabilities denominated in foreign currencies are translated using the rateof exchange ruling at the balance sheet date. Foreign currency gains and losses are reported on a
net basis and are included in the Consolidated Statement of Comprehensive Income.
LeasesThe Group records its leases in accordance with IFRS16 which eliminates the classification ofleases as either operating leases or finance leases and provides a single lease accounting model torecognise the Right to Use assets and lease liabilities for all applicable leases.
The Group has adopted practical expedients of exempting leases with a short life (less than 12
months) or low value leases (less than US $5,000). As a result, the key leases to which the full
requirement of IFRS 16 have been applied are – Lease of the Office Building, some computerequipment and furniture & fixtures. The lease liability on such leased assets is presented under
Trade and Other payables as the present value of future lease payments for the full term of lease.
The key judgement used in the lease liability calculation is the choice of discount rate which isreflection of the contractual interest rate applicable in case of non-payment or delayed payment oflease rentals, where such rate is unavailable Group uses the incremental borrowing rate. For Right
to Use asset calculation, the Company has elected the transitional option to set “Right to Use asset”
equal to the related lease liability.
Financial expense
Financing expenses comprise interest charges from financial institutions, suppliers and financing
charges on leases. Finance charges are recognised using the effective interest method. There were
no borrowing costs that are directly attributable to the acquisition, construction or production of anasset. Finance expenses also includes interest charges on loan commitments.
TaxationTax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in
the income statement except to the extent that it relates to items recognised directly in othercomprehensive income, in which case it is recognised in the Statement of Other
Comprehensive Income.

34

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
Current tax is the expected tax payable or receivable on the taxable profits or losses for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment totax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: the initial recognition of goodwill; the initialrecognition of assets or liabilities that affect neither accounting nor taxable profit other than in abusiness combination, and differences relating to investments in subsidiaries to the extent that they
will probably not reverse in the foreseeable future. The amount of deferred tax provided is basedon the expected manner of realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits
will be available against which the temporary difference can be utilised.
Related party transactions
The Group has procedures to identify and monitor related party transactions. The Group, where
possible, endeavours to transact with all related parties on an arm’s length basis. The disclosures ofidentified related party transactions are included in note 11.

Notes to consolidated financial statements

35

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
2. Profit before tax
2.1. Revenue
2021

2020

£'000

£'000

Commissions

47,78427,732Net Funding revenue

17,007

10,578Others21,12012,629Total Revenue

85,91150,939Other revenue includes Trading revenue of £15.9m (2020: £8.4m), Service revenue of £4.3m(2020:£2.3m), Interest and other revenue of £1.0m (2020: £1.9m).

2.2. Cost of sales:
2021

2020

£'000

£'000

Clearing and trading fees

1,618

1,824

Introducing broker fees

1,488

988

Expected credit loss

760

(176)

Other variable costs

4,979

2,281

Total cost of sales

8,845

4,917

2021

2019

£'000

£’000

22,432

15,326- of which capitalised as development software(6,755)(4,765)Social security expenses

2,318

1,673

447

339

Depreciation of tangible assets

1,804

1,590

Amortisation of intangible assets

4,459

3,796

Office consumables and maintenance

6,742

5,949

Legal and Professional

868

355

Foreign exchange losses

2,063

1,127

432

297

Other costs

8,704

4,890

Total administrative expenses

43,51430,5762.3. Administrative expenses:
Note

Total salary expenses

2.4

Other Pension costs

Donations36

2.5

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
2.4. The average monthly number of persons employed by the Group (including directors)
analysed by category is as follows:
2021

2020

No.

No.

Corporate and administration

43

37

Product development

64

51

Operations

37

29

Sales and marketing

35

32

Total

179

149

2.5. Donations:
On 01 July, 2021 the Group donated £350k to the Kensington and Chelsea Foundation for
COVID SOS projects to help support the vulnerable people and community during these
unprecedented times. The donation has also supported Harrow Youth Club aiding the institutionthat makes the lives of local children and young people better through a range of activities aimed
at developing valuable life skills and SPEAR employment programme supporting the challenged
young unemployed and providing tailored mentorship for employment transformation. The Groupfurther donated £55k and £27k for similar causes to support the local community projects near
the London office, including sports, employment support programmes and Christmas events.
2.6. The highest paid director received total emoluments for the year of £1.6m (2020: £0.8m)
as a director of Group.
2021

2020

£’000

£’000

2,078

1,082

2021

2020

£’000

£’000

- the audit of the Company’s annual financial statements

550

500

- of financial statements of subsidiaries' pursuant to legislation

368

250

Total

918

750

Total directors’ emoluments included in salary expenses

2.7. Remuneration paid to the auditors is as follows:

Fees payable to the Company's auditors for the audit:

Notes to consolidated financial statements

37

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
3. Taxation
2021

2020

Current tax:

£'000

£’000

Corporation tax charge on profits for the year

3,098

276

UK R&D tax credits

(964)

-

Note

5

(54)

2,139

222

Deferred tax - origination and reversal of timing differences

887

305

Prior year adjustments

(277)

(5)

Prior year adjustments
Total current tax
Deferred tax:

371

46

Total deferred tax

3.1

981

346

Tax per income statement

3.2

3,120

568

Effect of tax rate changes

3.1. The deferred tax charge for the year has been recognised on all timing differences between
the carrying value treatment of assets and liabilities and the associated tax allowances.
Deferred tax was recorded using the substantively enacted rates of 25% which comes into force
from 01 April 2023. The deferred tax charge has been a result of:
2021

2020

£’000

£’000

712

366

Charge to the profit and loss account

1,264

346

Total deferred tax charge

1,976

712

2021

2020

Deferred tax assets:

£’000

£’000

-

-

Charge to the profit and loss account

(283)

-

Total deferred tax credit

(283)

-

Deferred tax liabilities:
Provision at the start of the year

Provision at the start of the year

38

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
3.2. The deferred tax assets and liabilities are based in the UK jurisdiction. The current tax charge
for the year is lower (2020: lower) than the standard corporation tax in the UK of 19% (2020:19%). The differences are explained below:
Factors affecting total tax charge on the current period

2021

2020

£’000

£’000

The charge for the year can be reconciled to the profit per the income statement as follows:
Profit before tax

32,806

14,538

At standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)

6,233

2,762

Non-taxable income(3,252)(1,909)Enhanced R&D Expenditure(1,486)(1,224)299-

Expenses not deductible for tax purposes

1,395

951

Prior year adjustments

(272)

(59)

Super deduction on fixed assets permanent differences

(168)

-

Deferred tax - changes in taxes

371

46

3,120

567

Effects of:

R&D tax credits rate differences

Tax charge for the year

Notes to consolidated financial statements

39

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
4. Investments in associate
On 11 December, 2020 the company acquired 20% shareholding in T4B Holdings Limited(“T4B”) for € 2m. T4B is a business to business (B to B) technology provider focusing on softwaredevelopment for MetaTrader trading platforms. This investment is recorded as investment inassociate under equity method of accounting in accordance with IAS28. Under the equity methodof accounting, the equity investment is initially recorded at cost and adjusted thereafter for the
post-acquisition change in the investor’s share of net assets of the associate.

5. Intangible assets
Digitalassetsinvestment*

Intellectual
property

Purchased
softwareDeveloped
softwareTotal
intangible
assets

£’000

£’000

£’000

£’000

£’000

Balance at 1 January, 2020

-

360

941

19,283

20,584

Additions

-

-

324

4,765

5,089

Balance at 31 December, 2020

-

360

1,265

24,04825,673

Balance at 1 January, 2020

-

(50)

(465)

(14,416)(14,931)

Amortisation for the year

*

(120)

(298)

(3,378)(3,796)

Balance at 31 December, 2020

-

(170)

(763)

(17,794)(18,727)

-

360

1,265

24,04825,673

Additions

1,480

-

558

6,755

8,793

Balance at 31 December, 2021

1,480

360

1,823

30,803

34,466

Balance at 1 January, 2021

-

(170)

(763)

(17,794)(18,727)

Amortisation for the year

-

(120)

(388)

(3,951)(4,459)Balance at 31 December, 2021

-

(290)

(1,151)(21,745)(23,186)

at 31 December, 2020

-

190

502

6,254

6,946

at 31 December, 2021

1,480

70

672

9,058

11,280

Cost

Accumulated amortisation

Cost
Balance at 1 January, 2021

Accumulated amortisation

Carrying value

The Group has conducted sensitivity analysis around the estimated useful economic life of the developed software andassuming no significant change in nature and usage of the asset, if the current useful economic life was reduced or increasedby 1 year, then the amortisation expense would increase by £1.8m (FY2020: £1.7m) or reduce by £1.8m (FY2020: £1.2m)
respectively.
*During 2021, the Group received 250,000,000 PYTH cryptographic tokens issued by the PYTH Network (TMSI SEZC
Limited), in consideration of software development services provided by LMAX Capital Markets Ltd. The transaction has
been recognised for £1.48m. For details on recognition and measurement of these crypto assets refer to accounting policy
for Intangibles.
40

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
6. Property, plant and equipment

Cost

Right touse office
Leaseholdbuilding improvements
£’000
£’000

Balance at 1 January 2020

Fixtures, Total property,
plant, andfurniture
Computerequipment
equipment and fittings
£’000
£’000
£’000

3,942

682

6,202

258

11,084

Additions

78

29

746

155

1,008

Disposals

-

(423)

-

-

(423)

4,020

288

6,948

413

11,669Balance at 1 January 2020

(187)

(427)

(4,523)(176)(5,313)

Depreciation for the year

(581)

(32)

(920)

(57)

(1,590)

-

423

-

-

423

(768)

(36)

(5,443)(233)(6,480)

4,020

288

6,948

413

11,669

166

20

6,310

5

6,501

4,186

308

13,258418

18,170

Balance at 1 January, 2021

(768)

(36)

(5,443)(233)(6,480)Depreciation for the year

(590)

(35)

(1,124)(55)(1,804)

24

-

-

-

24

(1,334)(71)(6,567)(288)(8,260)at 31 December, 2020

3,252

252

1,505

180

5,189

at 31 December, 2021

2,852

237

6,691

130

9,910

Balance at 31 December 2020

Accumulated depreciation

Disposals
Balance at 31 December 2020

Cost
Balance at 1 January, 2021
Additions
Balance at 31 December 2021

Accumulated depreciation

Write off
Balance at 31 December 2021

Carrying value

The computer equipment above for £6.7m includes assets worth £5m held as work in progress andduring the prior year the Group had £0.4m worth IT equipment on financing arrangements whichhave been fully depreciated during the year.

Notes to consolidated financial statements

41

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
7. Trade and other receivables

2021

2020

£’000

£’000

Trade debtors

7.1

2,608

1,679

Other debtors

7.2

1,982

2,424

Collateral requirement for trade clearing

7.3

56,32237,297-236

Prepayments and accrued income

1,954

1,671

Total

62,86643,307501

670

62,36542,63762,86643,307

Derivative contracts

Classification:
Non-current
Current
Total

7.1 The aging of trade receivables at the year-end date is as follows:
1-30 Days 31-60 Days 61-90 Days 90 Days past
past duepast duepast due due or more

31 December, 2021

Current

Expected loss rate

0.05%

0.06%

0.15%

1.02%

14.01%

Gross Carrying amount trade receivables (£’000)

1,520

525

300

65

198

2,608

0

0

0

1

28

29

1-30 Days 31-60 Days 61-90 Days 90 Days past
past duepast duepast due due or more

Total

Loss allowance

31 December, 2020

Current

Total

Expected loss rate

0.3%

1.6%

3.6%

6.6%

10.6%

Gross Carrying amount trade receivables (£’000)

1,090

399

99

78

13

1,679

3

6

4

5

1

19

Loss allowance

The loss allowance as at 31 December, 2021 was determined as above for both trade receivables.
The loss rates for the year have been derived based on estimates of average bad debts and invoiced
sales for the year and prior years, with improved recovery for receivables below 90 days due andhigher loss allowance being carried for receivables over 90 days due.
7.2. Other debtors have no fixed terms of repayment, are interest free and have no security provided.
7.3. Collateral comprises of balances held with the prime brokers at the year end.

42

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
8. Inventories
Fair value less cost to sell of crypto currencies held by the Group

2021

2020

£’000

£’000

315,419

148,661

Total crypto currencies balance held by the Group includes £199m (2020: £128.4m) held on behalfof clients of LMAX Digital Broker Limited.

9. Cash and cash equivalents
Cash and cash equivalents

2021

2020

£’000

£’000

228,115

119,925

Cash and cash equivalents comprise of bank balances held by the Group on a short-term basis withoriginal maturity of three months or less. The carrying amount of these assets approximates theirfair value.
The Group holds client funds in segregated client trust bank accounts. The Group does notrecognise these bank accounts or the related client liability on the balance sheet. At the end of theyear, total funds held in these accounts was £46.4m (2020: £45m).
Below is an analysis of the change in net funds as per management:
Cash and cash
equivalents

Collateral*

Transfer of
title funds

Net funds

£’000

£’000

£’000

£’000

Opening balance at 1 January 2021

119,925

185,958(271,992)

33,891

Net fund movement

108,190

185,783(250,427)

43,546

Balance at 31 December 2021

228,115

371,741(522,419)

77,437*Collateral balance includes the balances held with the prime brokers and inventories.

43

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
10. Trade and other payables

Note

2021

2020

£’000

£’000

Transfer of title funds

10.1

522,419

271,992

Loan

10.2

25,87519,000Accruals and deferred income

10.4

11,1584,241

Lease liability

10.3

3,508

3,986

Trade creditors

242

940

Taxation and social security

705

452

5

-

563,912300,611

Non-current

25,972

19,024Current

537,940

281,587

563,912300,611

Derivative contracts
Total

10.5

Classification:

Total

10.1. Title transfer funds are held by the Group under a Title Transfer Collateral Arrangement, bywhich a client agrees that full ownership of such monies is unconditionally transferred to the Group.
These funds would be immediately transferable back to the client on request. No interest is payable
to the client for these funds. This balance reflects Group’s payable balance to the clients which
includes cash and inventory held on account together with any unrealised gain/loss on open trades.
10.2. The Group has a credit arrangement which provides the Company with a revolving credit
facility of £25m and a term debt of £10m. Of the revolving credit facility an additional £10m was
drawn during May 2021 thereby balance as at the end of reported year is £19m (2020: £9m) andfollowing the term debt quarterly repayments, the outstanding term loan balance is £6.9m (2020:£10m). The loan liability is thus recognized at £25.9m (2020: £19m) for term of the year 3 years
from the reporting date.
10.3. The Group recognises a lease liability in accordance with IFRS 16 which represents thepresent value of future rental obligations against the right to use assets for the office building
worth £3.1m (2020: 3.6m), Computer equipment worth £282k (2020: £293k) and furniture andfixtures worth £93k (2020: £112k). The discount rate used to determine the financing charges onleases relating to office building is based on the interest rate for non-repayment implicit in the lease
contract. The financing arrangements on other leased assets have terms of three to four years andare repayable on a quarterly basis, having effective interest rates of 0.8% to 4.8%.
10.4. The accruals and deferred income majorly include administrative expenses and employee
bonus accruals. The Group also reported deferred income representing contract liability accounted
under IFRS 15, “Revenue from Contracts with Customers” arisen on account of services due tocustomers for development and support of mobile trading applications worth Nil (FY2020: £29k).
10.5. The derivative contract liability disclosed above £5k (2020: £60k derivative contract asset
under note 7) are held under unhedged trading activity performed by Group subsidiary, LMAX
Bullion Limited.
44

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
11. Related party transactions
Internal controls are in place to ensure that any related party transactions including directors or
their connected persons are carried out on an arm’s length basis and are properly recorded.
Identified related parties
Identified related parties include:› Directors of the company.
› Directors of subsidiaries. These directors received no fees from their directorships, but were
paid salaries for services rendered to the subsidiaries in accordance with their employment
contracts.

› Group companies including: subsidiaries listed in note 2 to the Company financial statements.
2021

2020

Key management personal compensation

£’000

£’000

Short-term employee benefits

2,062

1,075

16

7

2,078

1,082

2,078

1,037

Post-employment benefits
Total
BalancesAmounts due from shareholders of LMAX Exchange Group Limited

12. Reorganisation reserve
The Group’s Reorganisation Reserve is formed as a result of transactions between the minority
shareholders of the subsidiaries and LMAX Exchange Group Limited (“LEG”). These transactions
include a share buy back by LEG and an equity swap with shareholders of LMAX Digital Group Ltd.
Minority shares buy backOn 01 February 2018, the Company acquired the 31.35% minority shareholding of the LMAX
Group from The Sporting Exchange Limited (part of the Betfair Group) making LEG the 95%
majority shareholder of the LMAX Group. Later, on 01 July 2019 the Company further acquired
4.5% shareholding and during the reported year on 12 July 2021 the Company completed the buyback for the remaining 0.5% holding of LMAX Limited and LMAX Broker Limited from minority
shareholder, Directa S.I.M.p.A for a consideration of £1.2m thereby making LMAX Exchange Group
Limited the 100% (2020- 99.5%) sole shareholder of the LMAX Group at that time.
As a result of the above transactions the Group has recognised a reorganisation reserve within theStatement of changes in Equity which includes any difference between the total consideration andnet assets acquired. This reserve was named as Demerger reserve in the comparatives, however
for the reported year this reserve has been renamed as Reorganisation Reserve to ensure its
presentation corresponds more to the nature of transactions and facilitates better readability forthe users of the financial statements. There is no other change to the balance except the title of
the reserve.
Notes to consolidated financial statements

45

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
Equity swap
On 12 October 2021, the Group’s subsidiary, LMAX Digital Group Limited issued 250,000 shares(i.e 20% shareholding of the Digital Group) for an exercise price of £3.8m to J Digital 4 LLC (aDelaware limited liability company) following their exercise of the equity option granted in 2018.
The Share Option Price of £0.4m paid on 12 October 2018 has now been reclassified from Other
Equity reserve (“Share Option”) to Reorganisation reserve as the option has now been exercised.
Subsequently, on 30 December 2021 LEG entered into an equity swap agreement where 20%
shareholding of J Digital 4 LLC in LMAX Digital Group Limited was swapped for 9,444,444 sharesi.e. 8.49% shareholding of LEG at a consideration (derived based on the fair value of LMAX Group’s
equity as at 31 December 2021) of £63.4m.
In accordance with IFRS10 Consolidated Financial Statements, when a change in parent’s
ownership interest in a subsidiary does not result in a loss of control, then parent shall accountfor such transaction as equity transaction and therefore any difference between the amount bywhich non-controlling interest is adjusted (£3.8m) and the fair value of the consideration received(£63.4m) for change in ownership interest, is accounted by the Group through Reorganisation
Reserve. This, alongside the £0.4m Share Option Price constitutes the £59.3m movement throughReorganisation Reserve based on market value of the investment. Refer to the Statement of
Changes in Equity for details.
In addition to the equity swap J Digital 4 LLC also acquired additional 1,654,322 shares i.e. 1.5%
shareholding of LMAX Group for consideration in cash worth £11.1m. As a result, J Digital 4 LLC isa 9.99% shareholder with voting rights of LMAX Group.

13. Goodwill
The Group owns a regulated Cypriot entity, LMAX Broker Europe Limited (formerly
known as CB Capital) since July 2019. The goodwill balance for £0.3m relates to theacquisition of this entity. The Group’s goodwill balance has been assessed for impairment
and there has been no impairment recognised for the year.
14. Post balance sheet event
Acquisition of PYTH cryptographic coins
On 4 January 2022, LMAX Capital Markets Limited acquired 250,000,000 PYTH cryptographic
tokens for a consideration of £11.1m ($15m), this was executed as a part of the forward contract of
the additional shares issued to J Digital 4 LLC (see note 12. Reorganisation reserve).
Share Exchange transaction with J.C. Flowers & Co.:
On 15 July 2021, the shareholders of the Group agreed to a deal for a secondary share sale andequity dilution to sell their 30% stake for a consideration of $300m to JCF LMAX Acquisition
Ltd, part of a leading private equity firm “J.C. Flowers & Co.”. This is considered a significant
milestone for the Group marking it to a valuation of $1bn. On 21 January 2022, after the necessary
regulatory approvals the share exchange transaction was executed between the shareholders andJ.C. Flowers, thereby making them a 30% stakeholder in the Group. As part of the transaction andon behalf of the existing shareholders, the Group converted 33,329,630 existing ordinary shares topreference shares (nominal value £0.1) allotted to JCF LMAX Acquisition Ltd.
46

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
Debt facility
On 21 January 2022, the Group entered a subordinate debt facility for £18m and £24.5m with twoof LMAX Group’s retiring employees and participants to the share sale to J.C Flowers & Co. The
facility bears interest at a rate per annum equal to SONIA plus a fixed margin, the effective interest
rate for the facility ranges between 1% and 1.5%.
On 19 January 2022, the Group extended the existing revolving credit facility by another £5m
thereby increasing the facility up to £30m. As at the period end, the drawn down balance of therevolving credit facility was £19m and on 30 June 2022, the Group repaid £10m of the balance.

15. Financial instruments
15.1 Credit risk
As a provider of leveraged financial instruments, clients are only required to deposit sufficientmargin on their accounts to enable them to trade on the platform, whilst still being fully exposed tothe position in the market. As a result, losses can exceed funds on account when there are sudden
and unexpected price movements exposing the Group to the risk of potential expected credit loss
where customers are unable to fund their losses.
This risk is managed by setting appropriate margin levels and position limits per currency pair.
Risks specifically around pegged instruments and emerging market currencies are monitored andhave margin rates increased where it is deemed necessary. Clients’ positions are actively monitored
and are requested to adjust their positions when positions sizes expose the Group to too muchrisk. Clients are encouraged to hold a diversified portfolio thereby further reducing risk. Risk
management procedures & policies and technology are designed to limit financial repercussions
from such events.
The Group is also exposed to credit risk for financial assets included in trade and other receivables
and cash and cash equivalents. The maximum exposure to credit risk is represented by the carrying
amount of each financial asset in the statement of financial position. The Group’s cash and collateralis held across four separate financial institutions with Moody’s credit ratings indicating they are low
credit risk.
The movement in the allowance for impairment in respect of trade receivables during the year was
as follows:
2021

2020

£’000

£’000

Balance as at 01 January

18

351

Provision recognised during the year

925

19

Provision released during the year

-

(176)

Amounts written off

(760)

(164)

Other movements*

(35)

(12)

Balance as on 31 December

148

18

*Other movements include foreign exchange movement on the provision held.

Notes to consolidated financial statements

47

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
15.2 Liquidity risk
The Group’s policy is to regularly monitor its liquidity requirements to ensure that it maintains
sufficient reserves of cash and adequate committed lines of funding from major financial institutions
and/or from other group companies to meet its liquidity requirements in the short and longer term.
Undiscounted
contractual
cash flows£’000

Carrying
amountliabilities
£’000

-

242

242

-

-

705

705

-

-

-

522,419

522,419

450

395

521

2,587

3,953

3,508

Loan

11,250

1,250

2,500

10,87525,87525,875

Accruals anddeferred income

11,158---

11,158

11,158

5

-

-

-

5

5

546,229

1,645

3,021

13,462564,357

563,912Trade payables

940

-

-

-

940

940

Taxation and social
security

452

-

-

-

452

452

271,992---

271,992

271,992

557

384

570

2,904

4,415

3,986

Loan

1,875

1,250

2,500

13,37519,00019,000Accruals anddeferred income

4,241

-

-

-

4,241

4,241

280,057

1,634

3,070

16,279301,040

300,611

Less than 6months£’000

6-12months£’000

Trade payables

242

-

-

Taxation andsocial security

705-

522,419

At 31 December, 2021

Between 1
Betweenand 2 years 2 and 5 years
£’000
£’000

Non-derivatives

Transfer of title funds*
Lease liabilities

Derivative contracts
Total

At 31 December, 2020
Non-derivatives

Transfer of title funds*
Lease liabilities

Total* The Transfer of title funds include £276m (2020: £128.4m) client liability in relation to crypto assets held under Inventories
on the Statement of Financial Position.

48

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
15.3 Interest rate risk
The Group has an interest-bearing borrowing of £25.9m (2020: £19m). This includes a revolving
credit facility of £19m (2020: £9m) and term debt of £6.875m (2020: £10m). The weighted averagerate of interest is 2.38%. The remaining term of the debt is 3 years from the financial year end date.
Sensitivity Analysis
The Group is exposed to interest rate risk on all interest rate sensitive instruments which includes
financial assets and liabilities. The interest rate risk sensitive Group’s financial assets and liabilities
at the end of each year were as follows:
Financial assets:

2021

2020

£’000

£’000

Cash and cash equivalents

228,115

119,925

Collateral balances held at Prime Brokers

56,32237,297

Borrowings(25,875)(19,000)

Total

258,562

138,222

Financial liabilities:

Interest rate sensitivity analysis has been performed on the floating rate financial instrumentsby considering a 50 basis points (0.50%) (FY2020: 25 basis points) interest rate decrease on thefinancial assets and a 50 basis points increase (2020: 25 basis points) on the financial liabilities heldat the period end date. The impact expressed below has been calculated considering no change inthe value of assets and liabilities over the next 12 months.

Cash and cash equivalents

Client collateralbalances

Borrowings

£’000

£’000

£’000

Impact 2021

(1,141)

(282)

(159)

Impact 2020

(300)

(93)

(63)

As shown in the table above, in the adverse circumstance of interest rate decrease on the cash
holdings and an increase in the interest rate on interest bearing borrowings the Group would havethe net outflow of £1,582k (2020: £456k).

Notes to consolidated financial statements

49

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
15.4 Price risk
As at the end of the reporting year one of the Group’s subsidiary, LMAX Bullion Limited held someopen metal, indices and commodities contracts under its proprietary trading business valued atfair value through the income statement. The Group is thus exposed to the risk that the fair valueof these financial instruments will fluctuate due to the changes in market prices of the underlying
instrument. The sensitivity analysis below relates to open position on derivatives for metal,
commodities and indices contracts based on a 10% decrease in prices of these open contracts. The
Group’s price risk in currency contracts is presented in Note15.5. The Group’s risk on crypto CFD
derivatives and crypto coins is presented in Note 15.6
2021
Derivative contracts

Notional value
long/(short)

Estimated (loss)/gain had theprices weakened by 10%

£’000

£’000

Gold

(83)

8

Indices

37,668(3,766)

Brent

67

(7)

(112)

11

Silver8(1)

Platinum92(9)Natural Gas

2020
Notional value
long/(short)

Estimated (loss)/gain had theprices weakened by 10%

£’000

£’000

Gold

(1,084)108

Indices

4,621

(462)

Silver11(1)

Platinum11(1)

Derivative Contracts

50

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
15.5 Foreign currency risk
The financial assets and liabilities of the Group are held predominantly in British Pounds, US
Dollars, Euros, Japanese Yen, Australian Dollars, Singapore Dollars and Hong Kong Dollars.
Cash and collateral balances are actively monitored and converted so as to maintain as best as
possible a net neural position in all non-British Pound currencies. Where this cannot be achieved
forward exchange contracts are entered into to limit foreign currency risk. The currency exposuresof financial assets and liabilities are as follows.
TOTAL
£’000

GBP
£’000

USD
£’000

EUR
£’000

JPY
£’000

AUD
£’000

SGD
£’000

HKD
£’000

Other
£’000

Cash and cash
equivalents

228,115

20,306 144,064

21,99735,117

968

365

403

4,895

Crypto currencies
held315,419- 315,419

-

-

-

-

-

-

Collateralrequirement for
trade clearing

56,322

137

35,682

20,503

-

-

-

-

-

Trade debtors

2,608

0

2,570

38

-

-

-

-

-

Transfer of title
funds(522,419)(4,016) (471,705) (29,824) (24,054)

(243)

5,416

418

1,589

Trade creditors

(242)

54

(293)

(42)

-

8

7

27

(3)

Net exposure

79,803

16,48125,737

12,672

11,063

733

5,788

848

6,481

(5)

-

(479)

474

-

-

-

-

-

79,79816,48125,25813,146

11,063

733

5,788

848

6,481

Derivatives
Net exposure

The currency exposures of financial assets and liabilities as at 31st December, 2020 were as follows
TOTAL
£’000

GBP
£’000

USD
£’000

EUR
£’000

JPY
£’000

AUD
£’000

SGD
£’000

HKD
£’000

Other
£’000

Cash and cash
equivalents

119,925

7,494

81,973

10,694

17,959

688

168

165

784

Crypto currencies
held148,661- 148,661

-

-

-

-

-

Collateralrequirement for
trade clearing

37,297

6,868

16,455

13,974

-

-

-

-

-

Trade debtors

1,679

44

1,617

18

-

-

-

-

-

Transfer of title
funds(271,992)(2,876) (235,336) (17,749) (17,074)

(512)

558

(65)

(1,062)

Trade creditors

(940)

(324)

(631)

(21)

(2)

10

12

19

(3)

Net exposure

34,630

11,206

12,739

6,916

883

186

738

119

1,843

Derivatives

236

144

3,694

234

(2,249)

2

(456)

-

(1,124)Net exposure

34,866

11,35016,4337,150(1,366)

188

273

119

719

Notes to consolidated financial statements

51

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
15.5 Foreign currency risk (continued)
Sensitivity analysis

Impact on post tax profit
2021

2020

£'000

£'000

USD value appreciates 5%

1,202

782

USD value depreciates 5%(1,329)(865)

EUR value appreciates 5%

627

340

EUR value depreciates 5%

(692)

(377)

JPY value appreciates 5%

527

(66)

JPY value depreciates 5%

(583)

71

As shown in the table above, the Group is primarily exposed to changes in USD EUR and JPY against
GBP. The sensitivity of profit or loss to changes in the currencies arises mainly from cash and cash
equivalents.

15.6 Fair value
At the end of the reporting year the Group is exposed to fair value risk on financial instruments andinventory. The carrying value of financial instruments carried at amortised cost are not materiallydifferent from their fair value as at 31 December, 2021 and therefore the Group’s fair value risk
is assessed on inventory and the financial instruments held at fair value through Statement ofComprehensive Income. The Group’s financial instruments held at fair value and inventory heldat fair value less cost to sell are shown below based on the fair value hierarchy levels 1 to 3 on the
degree to which fair value is observable.

52

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
Level 1

Level 2

Level 3

Total

£'000

£'000

£'000

£'000

-

315,419-

315,419

Trade payable 15.6a (ii)-(287,072)-(287,072)

Derivative contracts

-

(5)

-

(5)

-

28,342-

28,342

Level 1

Level 2

Level 3

Total

£'000

£'000

£'000

£'000

Inventories 15.6a (i)-148,661-

148,661

Derivative contracts

-

236

-

236

-

(133,742)-(133, 742)-

15,155-15,155

At 31 December, 2021
AssetsInventories 15.6a (i)Liabilities

Total
At 31 December, 2020

AssetsLiabilities
Trade payable 15.6a (ii)Total

15.6a(i) shows the value of crypto currency assets held by the Group which have been fair valued
through the income statement.
The Inventories; as also presented in Note 8 relates to the crypto assets held by the Group’s
subsidiary LMAX Digital Broker Limited. These crypto assets include £275.9m (2020: £128.4m)
held on behalf of clients, £33.7m (2020: £19.2m) under economically hedged positions against
crypto CFDs and £5.3m (2020: £1.0m) on account of proprietary trading.
15.6a(ii) shows the total client liabilities due to clients in relation to the crypto currency inventory
held by LMAX Digital Broker Ltd and the net unrealised losses on the Group’s open financial
derivatives positions which are economically hedged against the Group’s inventory as stated in
15.6a(i).

Notes to consolidated financial statements

53

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
The trade payable presented as financial liabilities held at fair value through income statement
reflects the Group’s payable balance with respect to clients’ crypto assets worth £275.9m (2020:£128.4m) and the net unrealised losses on open financial derivatives i.e crypto CFD trades worth£11.2m (2020: £5.3m).
This balance forms part of the Transfer of title funds as shown under Note 10 which includes£375.1m (2020: £189m) due to LMAX Digital Broker Limited’s clients; of which trade payable of£275.9m (2020: £128.4m) presented above relates to clients’ crypto assets holdings valued at fairvalue. The remaining £99.2m (2020: £60.6m) balance relates to margin held on clients’ trading
accounts denominated in fiat currencies and is therefore held at amortised cost.
The balances are stated at fair value with any movement posted through the Statement ofComprehensive Income.
The fair value is determined based on the end of day exit prices which are derived from the end of
day executed trades on the LMAX Trading platform, an active platform where transactions takeplace with sufficient frequency and volume. A high number of the transactions on the platform
are limit orders placed by market makers, thus quoted prices reflect only executed trades and areconsidered to be the exit prices.
According to IFRS 13, fair value measurement requires fair value to be price to sell the asset
or transfer the liability that takes place in the principal market for the asset or liability or, in theabsence of a principal market, in the most advantageous market for the asset or liability. The
principal market is the one with the greatest volume and level of activity for the asset or liability thatcan be accessed by the entity. The Group performs regular internal benchmarking to ensure theirend of day exist prices are maintained under the acceptance thresholds from the principal market
price, where acceptable threshold is variation of up to 1% of the assets under management (“AUM”)
in USD or $3m whichever is higher.
Fair value is derived based on observable market data; however, these are adjusted where relevant
to reflect a sufficient level of activity and volume in the calculation of the closing price. Thesebalances are accordingly classified as Level 2 financial instruments under IFRS, however as theseadjustments are not significant to the entire measurement, they are not classified as level 3 in thefair value hierarchy.
The Group’s exposure to the risk of fair value changes on the financial instruments held under
economically hedged positions is evaluated as not material. The Group’s exposure to the risk of fairvalue changes on the financial instruments held under proprietary trading is measured in light of therecent market performance and thus a sensitivity analysis of 25% decrease (2020: 20% increase) in
the prices of crypto assets held and open crypto CFD positions is presented below:
Sensitivity analysis on proprietary trading:

Impact:54

Year ended 31 Dec, 2021 (£'000)

Year ended 31 Dec, 2020 (£'000)

1,326

210

Notes to consolidated financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Notes to consolidated financial statements
15.7 Capital management
The Group’s primary objective when managing capital is to safeguard the Group’s ability to continue
as a going concern. In addition, the Group is required to maintain regulatory capital at subsidiarylevel which depends on the jurisdiction in which it is incorporated and operates. In each case theapproach is to hold an appropriate surplus over the local minimum.
The highest capital requirements arise from the two UK regulated entities where minimum capitalis determined in accordance with the Financial Conduct Authority through the requirements of
CRD IV, as well as the newly created entity in Gibraltar which was regulated as a full Distributed
Ledger Technology (“DLT”) licence from the GFSC to operate the crypto currency exchange in April
2019 and the CySec regulated entity acquired in July 2019 (see note 12 for details).
The Group’s capital structure is regularly reviewed and managed with due regard to overall capitalrequirements and the requirements of each subsidiary. Adjustments are made to the capital
structure in light of changes in conditions affecting each subsidiary, to the extent that these do notconflict with any of the directors’ fiduciary duties.

16. Developments in reporting standards and implementations
Standards and interpretations affecting the reported results or the financial position
There are no new accounting standards adopted by the Group during the year.
Future new standard and interpretations
There are no known changes in accounting standards to be implemented that would materially
impact the Group.

17. Registered address and country of domicile
LMAX Exchange Group Limited is a private company limited by shares, incorporated and domiciled
in Jersey.
Registered office:Principle place of business:

LMAX Exchange Group Limited
50 La Colomberie,
St Helier,Jersey,JE2 4QB

c/o LMAX Limited
Yellow Building
1A Nicholas Road
LondonW11 4AN

Notes to consolidated financial statements

55

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Company statement of comprehensive income
2021

2020

£'000

£'000

39,980-

Cost of sales--

Gross profit

39,980-Administrative expenses(3,439)(864)

Operating profit / (loss)

36,541

(864)

86

-

(808)

(873)

35,819(1,737)--35,819(1,737)--35,819(1,737)For the year ended 31 December, 2021

Revenue

Share of profits in associate
Financial expenses
Profit / (loss) before tax
Taxation
Profit / (loss) for the year
Other comprehensive income/(expense)
Total comprehensive income / (expense) for the year
The results shown above are derived wholly from continuing operations.
The notes on pages 60 - 66 form an integral part of these financial statements.

56

Company statement of comprehensive income

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Company statement of financial position
As at 31 December, 2021

Note

2021

2020

£'000

£'000

Non-current assets
Investments in subsidiaries

2

141,12176,431

Investment in associate

3

1,946

1,860

Property, plant and equipment

4

3,533

3,642

Intangibles

5

27

36

Trade and other receivables

6

460

612

277

-

Deferred tax assets

Current assets
Trade and other receivables

6

33,2206,000

Cash and cash equivalents

7

15,324761

195,908

89,342

8(25,972)(19,024)

8(15,514)(21,382)

Total liabilities(41,486)(40,406)

Net assets

154,42248,936

1,111

1,000

Share premium

74,433-Retained earnings

78,87847,936Equity attributable to equity holders of the parent

154,42248,936

Total equity

154,42248,936

Total assets

Non-current liabilities
Trade and other payables

Current liabilities
Trade and other payables

EquityShare capital9

The notes on pages 60 - 66 form an integral part of these financial statements.
These financial statements on 60 - 66 were approved by the Board on 31 October, 2022 and signed on behalfof the Board by:David Mercer, Director
31 October, 2022

Company statement of financial position

57

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Company statement of changes in equity
Share
capitalSharepremium

Retainedearnings

Total parent
equityTotalequity

£’000

£’000

£’000

£’000

£’000

1,000

-

47,93648,93648,936

Profit for the year--

35,81935,81935,819Total comprehensive income
for the year--

35,81935,81935,819Dividend paid--

(4,877)(4,877)(4,877)

Capital injection

111

74,433-74,54474,544

Total distributions to owners

111

74,433(4,877)

69,667

69,667

Balance at 31 December 2021

1,111

74,43378,878

154,422

154,422

For the year ended 31 December 2020

SharecapitalSharepremium

Retainedearnings

Total parent
equityTotalequity

£’000

£’000

£’000

£’000

£’000

1,000

-

49,67350,67350,673

Profit for the year--

(1,737)(1,737)(1,737)

Total comprehensive expense
for the year--

(1,737)(1,737)(1,737)

Balance at 31 December 2020

1,000

-

47,93648,93648,936

For the year ended 31 December, 2021

Balance at 1 January 2021

Balance at 1 January 2020

Dividend expense during the year £4.9m (2020: £NIL).

58

Company statement of changes in equity

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Company statement of cash flows
For the year ended 31 December, 2021

2021

2020

Cash flows from operating activities

£'000

£'000

Operating profit /(loss)

36,541(864)

Depreciation

547

491

Amortisation

9

1

(132)

(151)

Increase in trade and other receivables(3,729)(4,915)

Increase in trade and other payables

13,955

4,378

Net cash generated / (used) from operating activities

47,191(1,060)

(438)

(291)

-

(37)

74,544--(1,860)(64,690)

(15)

9,416

(2,203)

Borrowing(10,375)

19,000

Repayment of borrowing(2,500)(14,750)

Loans to subsidiaries(23,616)-

Dividend paid

(4,877)-

Finance expense

(676)

(722)

Net cash (used) / generated from financing activities(42,044)

3,528

Net increase in cash and cash equivalents

14,563

265

761

496

15,324761

Non Cash Finance expense

Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of intangibles
Capital injection
Investment in associate
Investment in subsidiaries
Net cash generated / (used) in investing activities
Cash flows from financing activities

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

The notes on pages 60 - 66 form an integral part of these financial statements.

Company statement of cash flows

59

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Company notes to the financial statements
1. Accounting policies
The financial statements have been prepared and approved by the Directors in accordancewith International Financial Reporting Standards (IFRS) and International Financial Reporting
Committee (IFRIC) Interpretations as adopted by the European Union (EU) (together“adopted IFRS”).
The accounting policies are consistent with the Group accounting policies set out on pages
29 - 55. Accounting policies specific to the company are as follows.
Investment in subsidiaries
Investments in subsidiaries have been accounted for at cost.
Investment in associate
An associate is an entity over which an investor has significant influence, i.e. being in the power toparticipate in the financial and operating policy decisions of the investee. A holding of 20% or moreof the voting power directly or through subsidiaries indicates a significant influence. The Company
holds 20% shares of the entity, “Tools 4 Broker Ltd” and thus this investment is considered as
investment in associate in accordance with IAS 28. The investment is accounted for using equity
method of accounting where the equity investment is initially recorded at cost and is subsequently
adjusted to reflect the Company’s share of net profit/(loss) in the associate.

2. Investments in subsidiaries
Investments

2021

2020

£’000

£’000

141,12176,431On 8 January 2021, LMAX Digital Exchange UK limited was incorporated with a share capital of£1 for one ordinary share. On 17 September 2021, LMAX Digital Broker (Singapore) Pte Limited
was incorporated with Singapore $1 for one ordinary share. As at the period end, both new entities
are subsidiaries of LMAX Digital Group Limited and as a result part of the wider Group.
On 28 May 2021, the Company invested £37k ($50k) i.e., 50,000 shares for nominal value $1 in
newly incorporated subsidiary, LMAX Capital Markets Limited.
On 12 July 2021, the Company did a minority buyback of 0.5% shareholding in the subsidiaries,
LMAX Limited and LMAX Broker Limited for £1.2m.
Further on 30 December 2021 the Company made an equity swap for the shares of LMAX Digital
Group Limited for a consideration of £63.4m. For details on Equity swap see notes to accounts on
Consolidated Financial Statements for Reorganisation Reserve.
All the Group’s subsidiaries for the year ended 31 December 2021 are shown below. The ordinary
shares held % shown is the effective shareholding which the company holds in the underlying
subsidiary.

60

Company notes to the financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Company notes to the financial statements

Subsidiary

Country ofincorporation

Principal
activity

Ordinary shares
held No.

Ordinary shares
held %

LMAX Limited

EnglandFinancial exchange
platform

599,078

100

LMAX Broker
LimitedEngland

FX brokerage

599,077

100

LMAX Bullion
LimitedHong Kong

Bullion broker

1,000

100

LMAX Hong
Kong Limited

Hong Kong

Dormant

3,000,000

100

LMAX Japan
Co. Limited

Japan

Sales presence

1

100

LMAX New
Zealand Limited

New Zealand

FX brokerage

1,000

100

LMAX Pte.
LimitedSingapore

Sales presence

1

100

LMAX USA
Incorporated

Delaware, USA

Development of
US market

1,000

100

LMAX Digital
Group Limited

JerseyHolding company

1,000,000

100

LMAX Digital
Broker Limited

Gibraltar

Digital currency
exchange broker

1,000,000

100

LMAX Broker
Mauritius Limited

Mauritius

Sales presence

20,001

100

LMAX Broker
Europe Limited

CyprusFX Brokerage

1,244,750

100

LMAX CapitalMarkets

Cayman Islands

Investment

50,000100

LMAX Digital
Exchange U.K. Limited

England

Dormant

1

100

LMAX Digital Broker
Singapore Pte. Limited

Singapore

Dormant

1

100Company notes to the financial statements

61

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Company notes to the financial statements
All the Group’s subsidiaries are shown below as at year ended 31 December, 2020.
The ordinary shares held % shown is the effective shareholding which the company holds in theunderlying subsidiary.

Country ofincorporation

Principal
activity

Ordinary shares
held No.

Ordinary shares
held %

LMAX
LimitedEnglandFinancial exchange
platform

596,083

99.5

LMAX Broker
LimitedEngland

FX brokerage

596,082

95.5

LMAX Bullion
LimitedHong Kong

Bullion broker

1,000

100

LMAX Hong
Kong Limited

Hong Kong

Dormant

3,000,000

95.5

LMAX Japan
Co. Limited

Japan

Sales presence

1

100

LMAX New
Zealand Limited

New Zealand

FX brokerage

1,000

100

LMAX Pte.
LimitedSingapore

Sales presence

1

100

LMAX USA
Incorporated

Delaware, USA

Development of
US market

1,000

100

LMAX Digital
Group Limited

JerseyHolding company

1,000,000

100

LMAX Digital
Broker Limited

Gibraltar

Digital currency
exchange broker

1,000,000

100

LMAX Broker
Mauritius Limited

Mauritius

Sales presence

20,001

100

LMAX Broker
Europe Limited

CyprusFX Brokerage

1,244,750

100

Subsidiary

3. Investment in associate
On 11 December, 2020 the company acquired 20% shareholding in T4B Holdings Limited (“T4B”)
for £1.9m (€ 2m). T4B is a business to business (B to B) technology provider focusing on softwaredevelopment for Meta trader trading platforms. This investment is recorded as investment inassociate under equity method of accounting in accordance with IAS28. Under the equity method of
accounting, the equity investment is initially recorded at cost and adjusted thereafter for the postacquisition change in the investor’s share of net assets of the associate.

62

Company notes to the financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Company notes to the financial statements
4. Property, plant and equipment

RTU
lease

Furniture& fixtures

Cost

£’000

£’000

£’000

£'000

£'000

Balance at 1 January 2021

3,629

150

112

287

4,178

-

2

364

72

438

3,629

152

476

359

4,616

Balance at 1 January 2021

(447)

(30)

(23)

(36)

(536)

Depreciation for the year

(407)

(30)

(75)

(35)

(547)

Balance at 31 December 2021

(854)

(60)

(98)

(71)

(1,083)

2,775

92

378

288

3,533

RTU
lease

Furniture& fixtures

Cost

£’000

£’000

£’000

£'000

£'000

Balance at 1 January 2020

3,629

-

-

258

3,887

-

150

112

29

291

3,629

150

112

287

4,178

Balance at 1 January 2020

(41)

-

-

(4)

(45)

Depreciation for the year

(406)

(30)

(23)

(32)

(491)

Balance at 31 December 2020

(447)

(30)

(23)

(36)

(536)

3,182

120

89

251

3,642

Additions
Balance at 31 December 2021

Leasehold Total property,
Computers improvements plant & equip.

Accumulated depreciation

Carrying value
at 31 December 2021

Additions
Balance at 31 December 2020

Leasehold Total property,
Computers improvements plant & equip.

Accumulated depreciation

Carrying value
at 31 December 2020

Company notes to the financial statements

63

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Company notes to the financial statements
5. Intangibles
SoftwareTotal intangibles

£'000

£'000

37

37

-

-

37

37

Balance at 1 January, 2021

(1)

(1)

Amortisation for the year

(9)

(9)

Balance at 31 December, 2021

(10)

(10)

27

27

2021

2020

£’000

£’000

1,037

1,037

Other debtors

49

27

Prepayments

886

826

Deposits

264

264

Inter-group receivables

31,444

4,458

Total

33,680

6,612

460

612

33,2206,000

33,6806,612

Cost
Balance at 1 January 2021
Additions
Balance at 31 December 2021

Accumulated amortisation

Carrying value
at 31 December 2021

6. Trade and other receivables

Amounts due from shareholders

Classification:
Non-current
Current
Total

64

Company notes to the financial statements

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Company notes to the financial statements
7. Cash and cash equivalents
Cash and cash equivalents

8. Trade and other payables

Note

2021

2020

£’000

£’000

15,324

761

2021

2020

£’000

£'000

Loan

8.1

25,87519,000

Lease liability

8.2

3,146

3,620

Social security liability

377

247

Trade creditors

174

398

4,378

1,594

7,536

15,54741,48640,406

Non-current

25,972

19,024Current

15,514

21,382

41,48640,406

Accruals and deferred income
Inter-group payables

8.3

Total
Classification:

Total

8.1. The Company has credit arrangement which provides with a revolving credit facility of £25m
and a term debt of £10m. Of the revolving credit facility an additional £10m was drawn during May
2021 thereby balance as at the end of reported year is £19m (2020: £9m) and following the term
debt quarterly repayments, the outstanding term loan balance is £6.9m (2020: £10m). The loan
liability is thus recognized at £25.9m (2020: 19m) for term of the year 3 years from thereporting date.
8.2. The lease liability represents the present value of future payments against the furniture on
lease and right to use office building. Refer note 4 for details on assets on lease.
8.3. The inter-group payable is due to the Group’s subsidiaries and has no fixed terms of repayment,
is interest free and no security has been provided.

9. Share capital

2021

2020

£’000

£’000

1,111

1,000

Allotted and called up and fully paid
111,098,766 (2020: 100,000,000) Ordinary shares of £0.01 each

100% ordinary shares are held by management team and directors.

Company notes to the financial statements

65

LMAX Group | 2021 Annual Report and Consolidated Financial Statements

Company notes to the financial statements

10. Related parties
Related parties of the company are the same as those of the Group.
There were no inter-company transactions affecting profit or loss. Balances with related parties of
the company are as follows:
Note

Amounts due from shareholders
Amounts due from / (to) Affinity Trust
Amounts due to Group companies

10.1

2021

2020

£’000

£'000

1,037

1,037

207

317

23,701(11,406)

Related party balances have no fixed terms of repayments, are interest free and haveno security provided.
10.1 Amounts due from / (to) Group companies

2021

2020

£’000

£'000

LMAX Bullion Limited

14,7793

LMAX Broker Limited(4,450)(15,547)

LMAX Digital Broker Limited

8,875

-

LMAX Exchange Limited

4,099

2,267

LMAX Digital Group Limited(2,430)1,550

LMAX Pte Limited

1,970

5

LMAX New Zealand Limited

(638)

269

LMAX Capital Markets

1,447

-

LMAX Broker Europe Limited

45

37

LMAX Broker Mauritius Limited

(18)

-

LMAX Japan K.K

16

6

LMAX US Limited

6

4

23,701(11,406)

BalancesAmounts due to group companies:

Total

11. Post balance sheet event
On 25 February 2022, the parent LMAX Exchange Group Limited invested £4m in LMAX Limited
for 1 ordinary share (nominal value £1) of the subsidiary.
Refer to note 14 for Post balance sheet events for the Group.

66

LMAX Exchange Group Limited - company registration number 125453
Annual report and consolidated financial statements - for the year ended 31 December, 2021
www.LMAX.com/annualreport

LMAX Exchange Group is the holding company of LMAX Limited, LMAX Broker Limited and LMAX
Digital Broker Limited
LMAX Exchange is a trading name of LMAX Limited, which operates a multilateral trading facility,
authorised and regulated by the Financial Conduct Authority (firm reference number 509778) and is acompany registered in England and Wales (number 6505809)
LMAX Global is a trading name of LMAX Broker Limited which is authorised and regulated by the
Financial Conduct Authority (firm reference number 783200) and is a company registered in England andWales (number 10819525)
LMAX Digital is a trading name of LMAX Digital Broker Limited, authorised and regulated by the Gibraltar
Financial Services Commission (license number FSC1342B) and is a company registered in Gibraltar(number 117528)
LMAX Exchange Group, Yellow Building, 1A Nicholas Road, London W11 4AN
www.LMAX.com | info@LMAX.com | +44 20 3192 2555

© 2022 LMAX Exchange Group Ltd