Annual Report &Financial Statements
For the year ended
31 December 2020

Contents
3

Strategic Report3

Revolut at a glance4

Our mission, history and progress

5

Business highlights

6

Financial highlights

7

Chairman’s statement

9

Chief Executive’s review

11

Our business model and strategy

13

Business performance

15

Financial performance

17

Engaging with stakeholders

19

Risk management27		 Board of Directors
29

Directors’ Report

35

Independent auditor’s report to the members of Revolut Ltd

37

Consolidated and company financial statements

44

Notes to the consolidated and company financial statements

78		 Appendix: Quarterly financial performance and other APMs (unaudited)
80

Company information

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Strategic report

Revolut at a glance
Revolut is building the world’s first global financial superapp, to help people get more from their money –from everyday spending to planning for the future.
In 2015 Revolut launched in the UK offering money transfer and exchange. As we start 2021, our customers around theworld use dozens of Revolut’s innovative products to make more than 150 million transactions a month.
Across our personal and business accounts, we help customers improve their financial health, give them more control,and connect people seamlessly across the world.

Amsterdam

BerlinParis
LondonVilnius
St Petersburg

TorontoDublinBucharest

Porto

Moscow
Iasi
Tokyo

Krakow
New York

MadridBudapest
Mumbai

Brussels
Milan
San Francisco

Singapore

Wellington

Melbourne

400k

15m

500k

Launched in

Operations in

2,200+

junior accounts

July 2015

retail customers

35+

countries

All figures as at 31 March 2021

Annual Report & Financial Statements 2020

3

business customers

full-time employees

Strategic report

Our mission
Revolut’s mission is to build the world’s first truly global financial services superapp. Our goal is to enable
our customers to manage all their financial needs in a single app that is 10 times cheaper and easier to use
than its competitors. To achieve that we aim to create a truly global digital bank.

Our history and progress2020• Launched in US and Japan• Open banking in UK and EEA• Launch of Revolut banking services in Lithuania and Poland• Launched merchant acquiring for Revolut Business customers• $580m Series D fundraising2019• First expansion to Australia & Singapore• Launched trading – offering access to fractional shares to millions of customers• Launched donations – partnering with international charities to support
global causes

2018
2017

• Banking licence granted by Bank of Lithuania• Launched Revolut Metal• $250m Series C fundraising• Launched Revolut Business• Launched Crypto Trading across EEA• Launched Revolut Premium• $66m Series B fundraising

2016
2015

• 100,000 personal customers• $15m Series A fundraising• Revolut launch

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Strategic report

Business highlights
Retail customers up 45%

Business customers up 127%
14.5m

>500k

10.0m

>220k
>50k

3.5m
2018

2019

2020

2018

2019

A customer is a person or business who has accepted Revolut’s terms and conditions

15 new retail products

9 new business products• Interest-bearing Savings Vaults• Debit cards• Open banking• Instant European payments• Gold and silver trading• International transfers• Junior accounts• Direct debits• Cash gifting• Expense management• Rewards• Open banking for businesses• Pockets• Rewards• Bill sharing• Metal cards for business• Subscription management• Merchant acquiring• Web app
• Early Salary• Four new crypto currencies• Confirmation of payee• Revolut PlusAwards 2020
• Deloitte Technology Fast 500 (EMEA)• Tech Company of the Year at the UK Tech Awards• Sunday Times Tech Track 100 (UK)• Telegraph Tech Hot 100 (UK)• British Bank Awards - Innovation of the Year (UK)

Annual Report & Financial Statements 2020

5

2020

Strategic report

Financial highlights
Adjusted revenue up 57% to £261m

Gross Profit up 215% vs. 2019

(£m)

(£m)
123

39

Adjustments
Revenue (statutory)

222
166

58
2018

2019

2020

2019

2020

51

22

16

39

2020
Q1

2020
Q2

34
2020
Q3

2020
Q4

Adjusted revenue for 2020 comprises statutory revenue of £222m
and fair value gains on cryptocurrency assets of £39m recognisedin other comprehensive income. See note 5 for further details.

Gross profit as reported above is an APM and is defined as
adjusted revenue less direct costs, excluding net onboarding
costs. See appendix for further details.

Gross margin improved to 61%

Quarterly adjusted operating losses reduced(£m)
2019 avg

2020 Q1

2020 Q2

2020 Q3

2020 Q4

(18)

(6)

61%
54%

49%

(25)

45%
29%

25%

(43)
(55)

2019

2020

2020
Q1

2020
Q2

2020
Q3

2020
Q4

Adjusted operating loss excludes non-cash share-based payments charge.

Gross margin as reported is an APM and is defined as gross profit
as a percentage of adjusted revenue excluding onboarding income.
See appendix for further details.

Customer balances up 96% vs. 2019

Equity:asset ratio increased to 7.9%

(£bn)
7.9%

3.8
2.4

2019 Q4

4.1

4.6

3.0

2020 Q1

3.4%2020 Q2

2020 Q3

20192020 Q4

Total e-money and customer deposits (Retail + Business).

2020

Equity attributable to owners of the parent company as a percentage
of total assets.

Certain alternative performance measures (“APMs”) have been used in this report. See Appendix on page 78 for an explanation of the relevance anddefinitions of these APMs.

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Chairman’s statement
Despite turmoil around the world, in 2020 Revolut entered a new phase as it launched new products to better serve
our growing customer base, broadened its global footprint, strengthened its capital base and enhanced governanceand executive management.
A broader global footprint

Board

While the global uncertainty triggered by the pandemic constrained
spending, the business nevertheless continued to expand its
global footprint. We launched in the US, Australia and Japan andstarted to roll out banking services in Lithuania and then Poland.
At the end of the year we made our application for a UK banking
licence and our application for an e-money licence in Ireland is
progressing. In March 2021 we submitted a draft application to
the US Federal Deposit Insurance Corporation (“FDIC”) and theCalifornia Department of Financial Protection and Innovation, thefirst step in the process to obtain a US banking licence.

We further strengthened the Board and executive management,
bringing talent and experience to the company. Michael Sherwood
and Ian Wilson joined the Board as non-executive directors
in February, each with long experience in financial services.
Both contribute to what has become a strong and active Board,
engaged in company strategy and providing robust challenge
to the executive team. Bruce Wallace stepped down as anon‑executive director in February 2021 on his appointment asprospective CEO of Brex Bank. The Board thanks him for his
contribution and guidance.

Capital requirements

We bolstered our governance framework, embedding acommittee structure that reflects the scale and complexity of
Revolut’s business and the need for vigorous challenge andindependent scrutiny.

In February 2020 we completed our Series D funding round led by
TCV and joined by a number of existing investors, raising $500m
to strengthen the company’s retail and business product growth,
support the roll-out banking operations in Europe and underpin our
progress towards profitability. The funding round was extended bya further $80m from TSG Consumer Partners in July.

A similar framework is being implemented in Ireland, Lithuania andthe US and will be replicated in subsidiary boards globally to ensure
continuity and cohesion across the Group.

CHAIRMAN

Martin Gilbert“Our revenue growththrough the year reflected
the increasing relevanceof our product mix,
the attractiveness ofsubscriptions and ourcontinued customer growth.”

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Strategic report

Chairman’s statement

Outlook
COVID-19 and Brexit each provided challenges in 2020 andboth left a permanent legacy.

The UK’s recent Financial Services Bill and the Kalifa Reviewof UK FinTech each recognise the dynamism of the FinTech
industry and are welcome efforts to spur innovation. Around theworld as countries recover from COVID-19 we are excited at theopportunities to bring Revolut’s services to customers in the US
and to further European and Asian-Pacific markets.

COVID-19 accelerated the move towards digital banking andcashless transactions, reducing the volume of international
business travel and changing the shape of many workplaces.
We increased our efforts to diversify our revenues, reducing
the reliance on interchange and international travel anddeveloping tools and services to facilitate consumer adoptionof digital financial management. Our revenue growth throughthe year reflected the increasing relevance of our productmix, the attractiveness of subscriptions and our continued
customer growth.

Martin Gilbert
Chairman
2 June 2021

Brexit precipitated a major transition as we moved more than ninemillion EEA customers to our European entity. The migration was
an operational achievement and a milestone on our path to roll out
banking services across Europe.
We continue to draw European policymakers’ attention to
the failure to prevent local IBAN discrimination but expect toovercome this obstacle in due course by creating branches inseveral European countries which will offer domestic IBANs
and strengthen our local banking offer.

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Strategic report

Chief Executive’s review
Every year is challenging but 2020 was both our most challenging and one in which we accelerated our aim todiversify our revenue and increase daily use services for our customers. We ended the year more resilient andproductive than we started and on a continued rapid growth trajectory.
Despite the disruption of the pandemic across the world and of
Brexit preparations in Europe, we made progress in 2020, ending
the year with two months of profitability, almost five million
additional retail customers and having doubled full-year grossmargins over 2019.

Our focus on innovation and technology enabled us to increaseadjusted revenue* by 57% from £166m in 2019 to £261m in 2020.
Our effectiveness in controlling costs and improving gross margin
enabled us to reduce the quarterly adjusted operating loss* from£55m in Q1 2020 to £6m in Q4 2020, and to achieve an adjusted
operating profit in November and December, supported by strong
trading conditions.

The discipline required to reduce or eliminate non-essential costs
also enabled us to accelerate activities and investment that
followed our goal of creating a financial superapp, developing
and releasing some 24 new retail and business products andenhancements to make customers’ lives easier and drive daily use.
By managing costs and focusing on margin driving activity we havestrengthened our ability to invest in long-term, profitable growth.

Our successful $500m fundraising in February 2020, extended
by $80m in July 2020, strengthened our capital position andsupported continued product innovation and the roll out ofbanking services in Lithuania, and later in Poland, enabling us
to make further progress in our road to profitability. We ended
the year with £417m equity as at December 2020.

Operationally we contended with the global challenge of COVID-19
and Britain’s exit from the European Union which required themigration of more than nine million customers from our UK to
our European EMI entity.

We continued our focus on international expansion, launchingin the US, Japan and, following the granting of our AustralianFinancial Services Licence, in Australia.

CHIEF EXECUTIVE

Nikolay Storonsky“We focused on activities
and investment that
followed our goal of
creating a financial
superapp, developing
and releasing 24 new
products to makecustomers’ lives easierand drive daily use.”* Certain alternative performance measures (“APMs”) have been used in this report. See Appendix on page 78 for an explanation of the relevance anddefinitions of these APMs.

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Chief Executive’s review

We strengthened our executive leadership with the addition of
Steven Harman as Chief Operating Officer, Jim MacDougall as
VP People and Matt Baxby as CEO Banking, replacing Richard
Davies as Chief Banking Officer. Mikko Salovaara joined as VP
Finance shortly after the end of the year. We’ve also built ourleadership and resources across key functions including finance,
audit and risk over the year.

As in every year, the most important people we engage withevery day are our millions of customers. In March, as millions ofworkplaces closed, as schools, offices, airports and leisure facilities
shut their doors, we hoped the disruption might be short but had
little idea how our customers would respond. Their enthusiasm for
new ways of running their financial lives, their curiosity about new
products and their willingness to try new tools inspires us all andis the focus of all our efforts. I’d like to thank them too.

I’d like to thank all our employees around the world who haveshown such commitment this year. Our resilience and growthover the past year is their success.

Nikolay Storonsky
Chief Executive Officer & Co-founder
2 June 2021

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Our business modeland strategy
We provide a wide range of financial services to retail and business customers around the world. By providing
all‑round account visibility and great value personalised products to meet all their financial needs, we aim to give ourcustomers full control of their financial well-being and reduce financial exclusion. We intend to offer our services on
a global scale, ensuring that Revolut operates efficiently wherever our customers may be.
This report relates to the operations of Revolut Ltd (“TheCompany”) and its subsidiaries (together, “The Group”).

In July 2020, Revolut launched consumer lending services,comprising unsecured loans and credit cards, to customers in
Lithuania through its Lithuanian incorporated banking subsidiary,
Revolut Bank UAB, which is authorised and regulated by the Bankof Lithuania. These services were extended to Polish customers
towards the end of the year.

Our products and services
In 2015, Revolut launched in the UK offering money transfer andexchange. Today, retail and business customers around the world
use dozens of innovative Revolut products to make more than
150 million transactions a month.

Our customers
By the end of 2020 we had registered almost 14.5 million retailcustomers and more than 500,000 business customers. We haveseen further growth into 2021 and reported reaching 15 million
retail customers in February.

Revolut helps customers improve their financial health, gives themmore control, and connects people seamlessly across the world.
We provide retail customers with services including electronicmoney and payments through a prepaid card via a free and tiered
subscription model, peer-to-peer payments, foreign currency
exchange services, junior accounts, exposure to precious metalcommodity prices, the ability to buy and sell certain shares andfractional shares in listed companies and cryptocurrencies throughthe Group’s trading partners, savings products through its Vaults
offering, insurance intermediary services and rewards when
shopping with the Group’s partners.

Learning from how our customers use our services is key todeveloping the quality and range of our products and enhancing
their experience. We designed the Revolut app and its products andservices from the ground up, working backwards from the needs ofour customers. We monitor their feedback using metrics such as
net promoter score (“NPS”) and Customer Satisfaction reviews andwe analyse in detail how customers use our product so that we canprioritise what they value most and make our products, marketingand communications relevant and valuable to them.

Launched in 2017, Revolut Business provides similar electronicmoney and payments services, multi-currency exchange services,
merchant acquiring, prepaid corporate cards, and internationaland domestic bank transfers for small and medium enterprises
and freelancers.

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Strategic report

Our business model and strategy

Our people

Our technology

We place a high value on attracting, retaining and developing
talented people throughout our business and promoting a diverse
and inclusive culture. Our team is key to our success and we work
hard to develop our colleagues’ skills and talents and to improvetheir experience in the workplace.

The Group continues to invest in our technology infrastructure,
improving our product offering and user experience. Since
day one we have been focusing on building a scalable andcost‑efficient infrastructure, unburdened by legacy IT systems
or physical branches. Developing key components of our back-end
infrastructure in-house gives us a competitive advantage in thisrespect. The dynamic nature of our technology enables us to makeenhancements quickly as we receive feedback from our users andlearn more about their requirements.

Some of our steps to engage with and support our employees’
wellbeing and to introduce diversity and inclusion initiatives are set
out in the Diversity, Inclusion and Employee Engagement sectionof the Directors’ Report below. Like many fintech businesses,
while we attract a very diverse talent pool across the business,that diversity reduces towards the top of the company. In addition
to the initiatives mentioned below, we want to raise the proportionof women in our leadership team to at least 20%. This is supported
by our new Women in Leadership programme, by recruitment
and sourcing policies and will need a company-wide effort tobe successful.

Looking ahead
Our priorities from 2021 onwards focus on three strategic objectives:
1. Drive primary account adoption
2. Continue to grow our customer base
3. Launch and grow new product lines

In what could have been a very challenging year given our
COVID dispersal we worked hard to strengthen company
culture, further develop our values and make these central
to performance management. We look forward to continuing
this work throughout 2021.

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Strategic report

Business performance
Despite the impact of COVID-19, 2020 was a year of innovation and growth in which we made progress towards ourgoal of delivering the first truly global financial services superapp.

Customers

2020

2019

ChangeTotal retail customers

14.5m

10.0m

+45%

Total business customers

>500k

>220k

+127%

Customers

We took further action to protect vulnerable customers, enablingcustomers to block gambling funded by credit and to toggle off
the ability to gamble from their account. As well as identifying
vulnerable customers through predictive tools we provide

Customer growth in the year was strong, in particular considering
COVID-19 headwinds. Retail customer numbers grew by 45% to
14.5m by year end and total business sign-ups by 127% to morethan 500k.

training for agents to identify and support these customers
and we restrict the marketing of certain products such as crypto
trading to them. We also welcomed training sessions with theSamaritans to help support agents identify and help vulnerable
or distressed customers.

Despite reduced travel and payments activity, our enhanced suiteof products ensured that customer activity levels were broadly inline with previous periods. We expect this to continue to improveas lockdown restrictions are relaxed.

Product innovation

Subscribers to our paid metal and premium plans increased
by 51%, outpacing overall customer growth. We increased the
proportion of new customers converting to paid subscriptions
from 11% to 14% driven by a stronger product mix.

During 2020 we launched 15 new products and innovations forretail customers designed to make their financial lives simpler,
make daily budgeting easier and help them save and make themost of investment opportunities. These included interest-bearing
savings vaults, open banking, gold and silver trading, Junioraccounts, Cash Gifting, Rewards, Pockets, bill sharing, subscription
management tools, our web app, Salary Advance, new crypto
tokens, confirmation of payee and the launch of Revolut Plus.

In 2020 we focused on improving customer experience throughan extensive programme addressing all aspects of a customer’s
journey, from satisfaction with support, eliminating defects andimproving customer response times. We delivered significant
improvements during 2020, increasing average satisfaction withagent interaction from 4.6 to 4.8 stars (out of five) and reducing
the percentage of detractors among those using support from
4% to 2%. Further operational excellence projects will continue
in 2021.

Revolut Business launched a new interface and mobile
functionality. New products included debit cards, instant European
payments, international transfers, direct debits, expense
management, open banking, Metal cards, Rewards, and discounts
on services and integrations. We launched our acquiring solution
as part of the Revolut Business starter pack, enabling businesses
in 13 European countries to accept online card payments directly
into their accounts, providing companies with an end-to-end
solution to enable them to manage everything in one place.

We work hard to protect customers. We run regular, dedicatededucation campaigns to help customers identify and prevent
fraud and we participate in industry-wide awareness campaigns.
We introduced confirmation of payee and we highlight the security
features of disposable and virtual cards and the ability to freeze
cards or switch off contactless payments in the app. We continue
to argue that social media and telecoms companies must do more
to prevent the misuse of their tools to exploit customers.

Annual Report & Financial Statements 2020

In 2020 we began to operationalise the Revolut UAB banking
licence, offering banking services and credit products to our first
customers in Lithuania and later in Poland. In 2021 we intend to
passport this licence to offer banking services and credit products
more widely in Europe.

13

Strategic report

Business performance

Technology

COVID-19

Throughout 2020 we continued to invest in the technology that
underpins our platform and services. We strengthened the scaling
and resilience of core systems to support continued rapid customer
growth and further scaled our data platform. We refreshed andunified the look and feel of the Revolut Business and Retailapps across all digital platforms. We launched our in‑house card
processing platform for MasterCard and VISA and the beta phaseof our in-house card acquiring platform. We introduced newinternational and local payment channels (including SEPA Instant,
Sofort, iDeal in EU, local payments in Singapore, Australia andJapan). We continue to develop and operate sophisticated systems
to reduce fraud and improve customer security. This year theseincluded developing an in‑house system for identity identificationand investing in multiple projects to maintain high levels of
information security. We also continued to automate internal
processes and controls, improving productivity and reducing
cost across functions.

As the pandemic spread, we closed offices around the world,
switching to fully remote working from late March. Retail Payments
revenue declined by more than 40% in April (compared with March)as international travel ceased, physical spending contracted andcustomer activity was curtailed by lockdowns in most countries.
We halted marketing and discretionary spending, paused
hiring and re-examined all costs, renegotiating, reducing orcancelling third-party spend, substantially reducing generaland administrative costs and improving operating margins.
Our response to the pandemic strengthened our business.
We learned that we could maintain and increase productivity
while our whole workforce worked from home, adapting overnight
to meeting through video calls and collaborating remotely.
Though international travel and many other activities reduced
significantly, customers switched to online shopping, leisure andentertainment, and we grew our total and paid customer basethroughout 2020 as we benefited from our improved proposition
and increased diversification of our product offering.

International expansion
Our expansion continued at pace with the launches of initialservices in the US, Australia and Japan. By the year end morethan 200,000 customers had signed up to Revolut US.

BrexitRevolut’s Brexit programme migrated more than 9 million EU
retail and 85,000 EU business customers from Revolut Ltd to our
Lithuanian entity, Revolut Payments UAB, monitoring customer
queries, issues and complaints throughout and minimisingcustomer disruption. This exercise ensured continuity of service
for our EU customers and we continue to monitor the feedback
from migrated customers to ensure that any issues are identified
and addressed promptly.

In 2021 we will strengthen our focus on the US, where we intend
to apply for a banking licence to offer an even more diverse rangeof financial services to our customers. These will strengthen our
initial offer that included Junior, crypto, and a 4.5% bonus on
eligible savings.
We announced our ambition to launch in India and have begun
recruitment and are exploring further opportunities to expand
and innovate internationally and offer new services enabled bytechnology, such as open banking, analytics, account management
and the democratisation of wealth management.

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Financial performance
Our financial performance during 2020 reflects continued customer growth and proposition improvement.
Our strong recovery from COVID-19 impacts demonstrates the benefits of increased diversification of ourbusiness model.

Key performance indicators

2020

2019

ChangeRevenue (statutory)

£222m

£166m

+34%

Adjusted revenue*

£261m

£166m

+57%

Gross profit*

£123m

£39m

+215%

Gross margin*

49%

25%

+24pp

Adjusted operating loss*

£122m

£98m

+24%

Total comprehensive loss for the year

£168m

£107m

+57%

Customer balances£4.6bn£2.4bn+96%

Total equity

£417m

£96m

+334%

7.9%

3.4%

+4.5ppEquity:Asset ratio

2020
£m

Share of
Total %
2020

2019
(restated)£m

Share of
Total %
2019

YoY Increase%

Card & Interchange

95

36%

74

45%

28%

Foreign exchange and wealth

80

31%

32

19%

150%

Subscription

75

29%

39

23%

92%

Other income

11

4%

21

13%

(48%)

261

100%

166

100%

57%

Adjusted revenue* by business line

*Certain alternative performance measures (“APMs”) have been used in this report. See Appendix on page 78 for an explanation of the relevanceand definitions of these APMs.

Adjusted revenue grew by 57% year on year, to £261m (2019:£166m). Our business proved resilient to the challenges of
the COVID-19 pandemic, which adversely impacted payment
volumes and margins from March onwards, reducing Q2 revenue
by 12% compared with Q1. This was particularly pronounced forInternational payment volumes which declined by two-thirds
compared to pre-COVID-19 levels and reduced the overall blended
interchange rate by 40%. We anticipate that this business will
return as restrictions are relaxed.

Full-year gross margin improved significantly during 2020
from 25% in 2019 to 49% in 2020, and rose to 61% in Q4. This
improvement reflects the focus on higher margin products andefficiencies in execution costs, which reduced underlying cost of
sales (mainly card scheme costs, acquiring costs and customer
acquisition costs) year on year. Combined with revenue growth,
gross profit achieved in 2020 was a three-fold increase on 2019.
Administrative costs increased from £125m in 2019 to £266m as
we continued to invest in growth and capability throughout thebusiness, including enhancing our Risk, Compliance and Control
functions. We sharply reduced discretionary costs during the year,
in particular in response to the COVID-19 pandemic, such that Q4
costs were 17% lower than Q1, driving a reduction in operating loss.

In the second half of the year these effects were more than offset
by increases in other product areas including Subscriptions,
Trading and Business. Adjusted revenue in the second half of 2020
was 41% higher than in the first half. Q4 revenue increased by 30%
on Q3, benefiting from strong trading conditions.

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Financial performance

Costs reported in 2020 include £40m in respect of share options
issued to staff, compared with £8m in 2019, reflecting higher
numbers of staff overall, high levels of equity participation in thesalary swap scheme launched mid-year, and a higher accounting
valuation following the fundraising in February and July.

Capital strength
While sustainable financial growth is key to delivering our vision,
our business may require additional capital from time to time as
we pursue our growth objectives. Our business incurs development
and operating costs ahead of building recurring revenue streams
from our customers; as a result, operating losses incurred in theearly years create the foundation for profitable growth to follow.

Our operating result was adversely impacted by negative interest
rates especially on Euro deposits reducing other operating income/(expense) by £8m year on year.

During 2020 we secured $580m of Series D equity funding
raising $500m in February and a further $80m in July froma range of existing and new investors. As a result, the groupwas well capitalised entering the COVID-19 pandemic, andremained well capitalised as at December 2020 with £417m of
total equity. The funds raised continue to be used to support our
growth plans and allow continued investment in our systems,
people and infrastructure. Our ratio of Equity to Total Assets
has more than doubled from 3.4% at 31 December 2019 to 7.9%
at 31 December 2020.

The combination of revenue growth, effective cost control
throughout 2020 and improved gross margins reduced adjusted
operating loss to £6m in Q4, compared with £55m in Q1 and £43m
in Q2. We reported adjusted operating profits in November andDecember 2020, supported by strong trading conditions towards
year end.
Customer deposit balances nearly doubled to £4.6bn comparedwith £2.4bn in 2019, driven by customer growth and increased
deposits per customer, with average deposits increasing byover 30%.

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Engaging with stakeholders
Revolut’s success depends on building and maintaining successful relationships with our stakeholders. When making
business decisions, the Board is mindful of its responsibilities under s172(1) of the Companies Act 2006 to promote
the long-term success of the company having regard to its range of stakeholders, as discussed in this section and in
our Directors’ Report below.
Foster business relationships with suppliers, customers
and other stakeholders

People and culture initiatives are championed by senior
management and regularly discussed at our Executive Committee
and Board. To assess employee engagement and well-being wecollect anonymous feedback continually across the businessand publish employee satisfaction scores and feedback for eachbusiness unit. At our regular company-wide Town Hall meetingssenior management present strategic plans and progress, newproduct demonstrations and focused training. As most employees
worked from home for most of 2020, we made particular efforts
to monitor and maintain employee morale and well-being.
We introduced a company-wide weekly newsletter, podcastswith senior leaders and moved Town Hall meetings fully online.

We describe our engagement with customers above.

Partners and suppliers
Our industry is highly interconnected and the Revolut experience
depends on our strong relationships with our partners andsuppliers. We collaborate with some of the most innovative
companies in the industry to protect our customers and develop
the pioneering products they love. We endeavour to deal with all
suppliers as valued partners.

Our investors
We value the trust, confidence and views of our investors.
We provide regular updates on financial performance, strategy,
culture and business developments. Our investors are importantpartners and offer guidance to Revolut on a range of matters.

We surveyed employees to assess the support they needed towork remotely and provided equipment grants, support forums
and tips for people working from home. In response to employee
feedback, we are making the option to work flexibly permanentand pivoting our offices into innovation and collaboration hubs or“Revolut Labs”. Employees can spend as much or as little time assuits them in Revolut Labs, working face to face or remotely. Where
possible, hiring is no longer location specific enabling us to offer
opportunities to a far greater number of non-mobile candidates.

Interest of employees
We place a high value on attracting, retaining and developing highly
talented people throughout our business and promoting a cultureof diversity and inclusion. We work hard to develop our colleagues’
skills and talents and to improve their experience in the workplace.
In 2020 we introduced initiatives focused on diversity andinclusion. We continue to review recruitment practices to attractand hire more women and carried out a group-wide data capture
to understand our current diversity and inform company decisions
on this topic.

Impact of operations on the community andthe environment
We want to build trust with our customers and the communities
around them. We work hard to understand and support the issues
and causes that concern the communities we work amongst.
Our donations feature enables customers to give safely andeffortlessly to the causes that mean the most to them, such as
the Trussell Trust’s COVID-19 food bank appeal, ILGA Europe’s
mission to support LGBTI rights or the WWF’s activities to protect
the natural world. Since the launch of Revolut Donations, ourcustomers have given more than £3 million to charity. 100% ofeach donation goes to the chosen charity. We are proud this yearof our new partnership with the Royal British Legion, which allowed
people in the UK to make their donation to the Poppy Appeal in a
COVID-19-secure manner.

The Engaging with stakeholders section describes how the directors have had regard to stakeholders’ interests when discharging the directors’ duties as
set out in Section 172 of the Companies Act 2006.

Annual Report & Financial Statements 202017

Strategic report

Engaging with stakeholders

Revolut is committed to complying with all applicable anti-bribery
and corruption laws and regulations and does not tolerate bribery
or corruption in any form. We require transparency and integrityin all our business dealings to avoid any improper advantage or
the appearance of questionable conduct by our employees or
associated third parties. Third parties associated with Revolutare prohibited from offering, promising, giving or authorising any
form of solicitation, agreement to receive, or accepting anythingthat constitutes or could be perceived as constituting bribery
or corruption.

Maintain a reputation for high standardsof business conduct
As a significant payments institution in the UK and Europe,
we value the opportunity to engage with governments andregulators to help develop policies that protect customers,
promote competition and better services and enable us tooffer customers ever better choice and value.
We take such dialogue seriously and engage with regulatorsand governments on topics including conduct, risk, complianceand the sustainable development of the industry. In 2020, toassist governments in planning support for communities and theeconomy during the COVID-19 pandemic, we provided guidanceon how spending in different sectors was affected during andafter lockdown.

Our mission is to make financial services fair and accessible forall. We are committed to delivering fair customer outcomes andalways look for ways to better support and protect our customers,
particularly the most vulnerable. We focus on recognising thedrivers for vulnerability, providing flexible and tailored support
and we work continuously to research and develop new features
to support the needs of our customers.

We place a high value on compliance with all relevant regulations
and require the highest levels of integrity and ethical behaviour.
We require employees to undertake appropriate mandatory
training and to attest annually that modules appropriate to theirrole have been completed. To reinforce training, employees aresent regular reminders of key compliance rules and requirements

Act fairly as between members of company
Revolut is committed to acting fairly with its members and beingtransparent in its activities and directions.

through a “Compliance Bot” and are asked to confirm that they
have read and understood the content of the bulletin.

Annual Report & Financial Statements 2020

Likely consequences of any decision in the long term
Revolut’s Board of Directors and its committees consider
holistically the long-term potential consequences of any decisionon its stakeholder groups and ensure that the same consideration
is given by all Revolut’s business units. The Board is provided
with regular reports from our business units, including key
decisions taken, material risks and business performance updates,
which provide the Board with assurance that the interests of all
stakeholder groups are carefully considered.

18

Strategic report

Risk management
Our Risk and Compliance teams sit at the core of Revolut, working across functions, products and regions tomonitor front-line performance and ensure that the business can perform and grow on a safe footing. Over the
past two years, alongside Revolut’s customer and commercial development, we have strengthened our risk andcompliance management and control capabilities. Revolut has invested in high-calibre people covering the entire risk
spectrum, nearly doubling the size of the group teams to some 140 people at the end of 2020 and building risk andcompliance capability in operational subsidiaries. We have upgraded our risk management framework and supporting
tools and infrastructure.
Risk and compliance culture

Our annually refreshed Risk and Compliance Development
Programme is designed to maintain and ensure control overhigh risk areas, focusing on our capabilities in respect of our
key strategic threats, improving risk culture and engagement
and continuing to build a world-class and innovative set of risk
products, tools and processes.

We view risk and compliance culture as the shared beliefs andvalues concerning risk and risk and compliance management that
affect and are affected by our risk taking and control decisions andthe outcome of these decisions. Revolut understands that strongrisk culture stems from an understanding of individuals’ roles andresponsibilities within the three lines of defence and an alignment
with the Company goals and values.

Elements of our approach to risk management
Revolut operates a comprehensive Enterprise Risk Management
Framework (“ERMF”), which has been significantly refined andextended as we have built out specialisation in all areas of risk
management over the past couple of years.

We undertake activities to positively influence Revolut’s risk
culture, namely:• Training and awareness building; based on specific and datadriven training needs analysis (e.g. informed by occurrence ofrisk incidents, engagement with governance, etc.)

The ERMF establishes our approach to identifying, measuring,monitoring, mitigating and reporting risks of all types. It documents
the methods and tools and overarching governance structures
within our “three lines of defence” operating model. The framework
establishes clarity of roles and responsibilities across theorganisation, while setting the ground rules to measure, reportand escalate risks and governance issues.

• Investment in making risk processes and tooling accessible,
engaging and easy to use• Incentivisation through positive reinforcement and consequence
management through our “Karma” scheme, a points-based
system driven by an evaluation of business engagementwith second line processes, which converts into a portion of
departmental bonus remuneration• Embedding risk management discipline through our growing
network of Business Control Officers situated in our key productand service teams.

Annual Report & Financial Statements 202019

Strategic report

Risk management

Risk strategy and appetite

Risk governance and policies

Our risk strategy is the bridge between the Group’s strategy andour risk appetite. It is based on the following guiding principles:

Revolut’s risk governance approach defines governance as the
combination of processes and structures implemented by the
Board to inform, direct, manage and monitor Revolut’s activities
to achieve its objectives for the benefit of its stakeholders.
Oversight of risk and strategic operations is conducted through thecommittee structure illustrated in the Directors’ report on page 30.

• Responsible, controlled and sustainable growth;• Prioritising our prudential risk obligations by maintaining
adequate capital and liquidity resources to support growth ina safe and sound manner;

Our policy framework ensures that each principal risk acrossour taxonomy is addressed through appropriate policies andprocedures that act as directive controls for the operation of
the business. These are established in a hierarchy including:i) tier 1, board approved policies; ii) tier 2, executive committee
approved policies; and iii) tier 3, departmental management
approved policies. Our risk management processes and platform
enable linkage between regulations, policies and underlying
processes and controls to monitor and ensure compliance andpolicy conformance.

• Complying with regulatory requirements across all of
our jurisdictions;• Building and maintaining confidence of all our businessstakeholders; and• Developing and retaining people with a growth and risk mindset
who are committed to balancing speed and quality of delivery
with sound governance processes.
This strategy is supported by the Group Risk Appetite Statement,
where Revolut determines the significant risks and aggregate risk
levels that it is willing to accept in order to achieve its objectives.
In some cases, we are not willing to accept exposure to certain
risks and a strategy of full risk reduction is adopted. In other cases
we are willing to accept a moderate level of risk inherent in ourchosen business model as long as the risk is taken rationally andis subject to appropriate levels of internal control.

Risk and control assessment and monitoring
Risk assessment provides management with a view of events that
could impact the achievement of its objectives. It is integrated into
management processes and conducted using a top-down approach(see principal risks and uncertainties, below) that is complemented
by a bottom-up assessment process. Our three-level risk taxonomy
ensures adequate coverage and enables risk data aggregation at
multiple levels. This assessment process combines probability(from almost certain to unlikely/rare) with impact, using aframework that incorporates metrics that assesses financial
impact as well as impact on customers, regulators and employees.

Revolut expresses risk appetite using qualitative statements andquantitative limits for Key Risk Indicators. Qualitative statements
are articulated for each risk type in our risk taxonomy. These
are set and approved at least annually by the Board, taking into
account the risk and reward trade-off of business activities. Board
level KRIs are supported by executive level monitoring KRIs acrossthe risk spectrum.

Annual Report & Financial Statements 2020

Scenario analysis and stress testing
Scenario analysis refers to the quantification and explanationof the impact of the risks contained within a scenario whichallows the Group and its entities to assess the risks and propose
appropriate mitigating actions. Revolut conducts this analysis
as part of its various stress testing activities whereby analysis isperformed based on quantitative techniques, supplemented withqualitative overlays, to provide quantitative assessments of adefined scenario.

20Strategic report

Risk management

Principal risks and uncertainties
Principal Risk

Mitigants

Outlook

Revolut’s strategy is defined andoverseen by our Executive Committee.
The strategy is articulated in company
goals supported by Key Performance
Indicators (“KPIs”) which are regularly
reviewed and assessed. Threats toour strategy are monitored through
Key Risk Indicators (“KRIs”) and otherautomated monitoring tools with formal
processes to investigate and remediate
potential or actual breaches to appetite.

As the 2020 COVID-19 pandemic
showed, restrictions on customers’ability to undertake travel and otherexpenditure can negatively affectRevolut’s ability to generate revenue.
The launch of new products helped tomitigate this risk as it diversified theGroup’s revenue streams.

Capital risk is mitigated using KRIs
that trigger immediate intervention if
the Group capital runway falls below
12 months. Revolut Ltd holds capital
buffers, ensuring that the entity has
sufficient capital based on its risk
profile and to mitigate the impact ofa stress on the firm’s financial position.

Revolut has, and expects to have in the
future, sufficient excess unencumberedliquidity to support its businessas-usual and contingent financial
obligations and sufficient capital tosupport its risk profile.

Strategic Risk
Strategic risk refers to the risks that threaten
to disrupt the assumptions underpinning
Revolut’s business model and strategy, thereby
materially affecting the achievement of ourstrategic objectives.
Revolut approaches strategic risk monitoring andmanagement from three aspects:
1. Strategic positioning, to make sure the rightstrategy is in place;
2. Strategic execution, monitoring threats to theability to execute the defined strategy; and3. Strategic consequences, coveringrepercussions of strategic choices.
Some key strategic risks to which Revolut is
exposed include its ability to iterate fast, growsustainably, attract, retain and develop a highperforming team and grow in line with changes
to macroeconomic, political, regulatory and otherexternal factors.

Revolut continues to closely monitor
the global pandemic through automatedmonitoring tools and regular committee
reviews to ensure contingency plans
are sufficient. Revolut plans to keep
expanding its product offering tofurther diversify revenue streams andto expand its presence in Europe, theUS and APAC regions.

Capital and Liquidity Risk
Capital Risk is the risk that Revolut does nothold adequate capital to support its businessactivities based on its regulatory requirements
and risk profile.
Liquidity risk is the risk that Revolut cannot meetits financial obligations when they fall due.
Funding risk is the risk that Revolut does nothave sufficient stable sources of funding to meetits financial obligations when they fall due or can
do so only at excessive cost. Risk arises whenassets maturing during a particular period arelower than corresponding liabilities maturing
during the same period. An unexpected increasein assets or a decrease in liabilities can also
create liquidity risk.
Revolut is, or may in the future be, exposed
to a number of liquidity and funding risks,
including: retail funding run-off, wholesalefunding reduction, contingent off-balance sheet
exposures and commitment drawdowns, intraday
requirements, funding concentration, and foreignexchange risk. These risks are managed by theTreasury department with control and oversightprovided by the Risk department, Asset andLiability Committee (“ALCO”), and the Board.

Annual Report & Financial Statements 2020

Revolut’s key liquidity policy is tomaintain a portfolio of unencumbered,high-quality cash instruments andsecurities that are readily convertible
to cash to ensure that it can meet allits financial obligations in businessas-usual circumstances and in stressconditions. Revolut currently complies
with this policy by holding surplus
cash in the form of overnight deposits
with banks.

21

Strategic report

Risk management

Principal Risk

Mitigants

Outlook

Revolut’s market risk management
policies and procedures provide
effective and robust mitigation. Revolut
monitors its exposures continually,using automated KRIs and associatedprocesses reviewing metrics such as
Value at Risk, FX stress tests for crypto
currencies, FX profit and losses andinterest rate risk. The company makes
hedging transactions as appropriate.
Key decisions are subject to review andapproval by the ALCO.

The market risks for the firm haveremained stable and well contained.
While Revolut has grown significantly,
the processes have remained robust,
accurate and reliable. We expect theprocesses and market risk exposures
to remain broadly consistent overthe next year, although we anticipate
that market risk will grow over time
as Revolut further rolls out its credit
offering, increasing its exposure tointerest rate risk, and as its investment
portfolio grows and includes more typesof liquid assets.

To manage credit risk appetite, Revolut’s
credit risk management policies andprocedures require all counterparties
giving rise to credit risk to be assessedat least annually and assigned a credit
risk limit commensurate with their risk
profile, subject to approved materiality
thresholds. Revolut’s Credit Risk
function monitors adherence to limits
and appropriate management of credit
risks where deterioration is identified.
Key decisions are subject to review andapproval by the ALCO.

Revolut’s exposure to financial
institutions is expected to evolve overtime alongside the Group’s intention to
obtain bank licences in the US and UK,with plans to grow a high-quality liquid
assets portfolio to support meeting
regulatory large exposure thresholds
alongside this.

Market Risk
Revolut provides foreign exchange andcryptocurrency services to its customers via
multi-currency wallets that allow spending
in different currencies. It is thus exposed tocurrency exchange rate fluctuations. We areexposed to FX risk arising from various corporate
activities and stemming from revaluation ofcontractual cash-flows or assets and liabilities
denominated in foreign currencies.
Revolut is exposed to the risk that its earnings,
capital or ability to meet business objectives
could be adversely affected by changes in thelevel or volatility of market variables, which might
include changes in interest rates, credit spreads,
commodity prices, equity prices and foreignexchange rates.

Credit Risk
Revolut is exposed to various credit risks inthe course of our operations, the majority ofwhich arise from our placements of corporate
and client safeguarded funds with financial
institutions. These are typically investment
grade rated institutions. We also have shortdated credit exposure for receivables duefrom merchant acquirers used to process usercard top-ups.
In July 2020, Revolut launched consumer credit
products, comprising loans and credit cards in
Lithuania, adding the same offer in Poland in
December. As a result, we have small amounts ofretail credit risk. As at 31 December 2020 grosslending amounted to £1.4m and is currently
not material.

Annual Report & Financial Statements 2020

22

The Group intends to scale up its
consumer credit offerings in acontrolled manner to ensure that its
credit models are robust. We expect
growth in the retail credit portfolio overthe coming year.

Strategic report

Risk management

Principal Risk

Mitigants

Outlook

The Group mitigates Conduct &Regulatory risk through its Enterprise
Risk management framework acrossthe product life-cycle. Key controls,
processes and governance oversight
exist throughout the product lifecycle and customer journeys tomitigate potential risks, with clear
roles, responsibilities and oversightarrangements defined at operationaland organisation levels. Regulatory risk
is further enhanced by comprehensive
policies and procedures underpinnedby an extensive mandatory staff
training programme.

Revolut is seeing an increase in
the inherent risks associated with
Conduct & Regulatory risk, which are
directly aligned to the expansion of
products, jurisdictions and volume ofcustomers. We continue to mitigate
this through our Enterprise Risk
management framework.

Conduct and Regulatory Risk
Revolut is a customer-focused company that
operates in a highly regulated industry. Revolut is
exposed to many risks related to compliance witha wide range of laws and regulations in different
global jurisdictions. These include the conduct
risks associated with customer outcomes,
market integrity and effective competition in thejurisdictions in which Revolut has customers.

Governance is fulfilled through theCompliance, Operational & Conduct
Risk Committee, with clear escalationlines to the Group Executive Risk
Committee & Board Risk andCompliance Committee.

Financial Crime Risk
The Group’s activities involve significant volumesof transactions in client funds and it is subject
to a heightened risk of criminal activity andpotential losses due to breaches of its termsof business by its customers (e.g., use of false
identity to open an account or the laundering ofillicit funds).

Annual Report & Financial Statements 2020

Revolut has robust Know Your
Customer (“KYC”), Anti-Money
Laundering (“AML”), and Sanctions
policies and procedures, monitorstransactions in real-time and screens
all customers on a daily basis. Revolutis committed to maintaining a control
environment that enables it to respondpromptly and effectively to emerging
financial crime threats.

23

Through a combination of Group-wideand entity-level risk assessments,
governance programmes and advanced
technology, Revolut continues toinvest in industry leading approaches
to Financial Crime prevention
and detection.
Revolut continues to adapt its
approach to emerging risks to ensure
the effectiveness of its Financial
Crime infrastructure.

Strategic report

Risk management

Principal Risk

Mitigants

Outlook

Revolut has a clear and comprehensive
view of its key risks and controls,
established business accountability of
its risk profile and senior management
risk reporting to the Board Risk andCompliance Committee (“BRCC”).

The Company continues toinvest in its Operational Risk andResilience capability through further
enhancements to its automationand predictive detection andforecasting capability.

Our active risk management approachhas been further embedded, driving
key risk and control initiatives
forward from initiation to design andimplementation including around
Internal Fraud Management, Authorised
Push Payments Fraud, Operational
Resilience and improved indicators overhigh-risk processes.

While the major sources of operationalrisk will continue to increase along withbusiness growth, our intensified efforts
to strengthen controls or introduce newcontrols where necessary, are reducing
overall residual key risks.

Operational Risk
In the course of its business activities Revolut
relies on its operational infrastructure,technology, processes and employees, which
create an inherent risk of loss stemming fromany potential failures in these areas.

The successful execution of Revolut’s
strategy is reliant on recruiting andretaining the right people to support
its growth.
Revolut continues to invest in its
Operational Risk and Operational
Resilience capability to enable a
prompt and effective risk identification,assessment and response to events.
The Company continues to invest
in strengthening its core teams,
including at the Executive level, as
well as in people engagement andculture initiatives.

Third Party Risk
The Group relies on third parties and outsourcing
service providers across a number of channels,
including payment processing, regulatorycompliance, foreign & crypto exchange, trading
services, AML and other critical services.

The Group mitigates this risk throughits third party and outsourcing risk
management framework, policy andgovernance structure, and ongoing
monitoring of outsourced services.

A number of our third parties rely on a high levelof staff to support our services.

We work closely with third parties
to ensure we are resilient and cancontinue to deliver our services withminimal disruption. This approachmeant that we were well placed to
manage risks arising from COVID-19.
The Group is developing its operational
resilience by taking a number ofkey functions in-house to reduce its
reliance on third parties.

Annual Report & Financial Statements 202024

As a regulated and compliant
institution we review our proceduresand processes from time to time.
Over the past year the vendor due
diligence process has evolved andwill continue to over the next year. We
are currently streamlining our vendor
due diligence process by enhancing
our policy and procedures and themateriality assessment for existing andnew vendors.

Strategic report

Risk management

Principal Risk

Mitigants

Outlook

Alongside the advanced security
features it provides to customers,
Revolut has implemented technicaland organisational controls to reducethese risks. These include dedicatedinternal team-led application security
testing, vulnerability management, acompany-wide training and phishing
threat simulation programme, advanced
endpoint threat protection, external
threat intelligence, monitoring andalerting across our key infrastructureand systems, 24/7 incident response
coverage, security assurance ofthird parties and regular external
testing and audit. Revolut implements
industry-leading security features
into the banking service, including
location-based card security featuresand 3-domain secure (“3DS”)
push notifications to ensure thatstakeholders can trust the service.

As a cloud-based fully digital company,
Revolut operated with minimal
disruption during COVID-19, with
employees able to work fully remotely.
The cyber risks that follow a remoteworking model and the opportunismof criminals during the pandemic
have been closely monitored withadditional controls implemented bothfor customer protection, and ourstaff and data protection. As this risk
persists, the company will continue tostrengthen our controls to support along-term remote working strategy.

Cyber and Data Security Risk
As an app-only financial services provider, cybersecurity threats which might attempt to access
Revolut systems or customer and payment data
are a principal risk.
Revolut handles significant amounts of personal
data provided by its customers, as well as
employee data and confidential corporate
information, and must comply with strict dataprotection and privacy laws and regulations,while protecting its own reputation andcorporate position.

Revolut operates a continual
improvement approach to security
controls, adapting to the threat
landscape as it evolves.

Revolut continues to invest in its digitalplatforms and security posture, andbuilds resilient and secure technologies
and processes to prevent breaches ofdata security.

Model Risk
Revolut uses models for a variety of reasons,
including (but not limited to) prediction of
expected support headcount capacity, meeting
accounting and regulatory requirements (e.g.
expected credit loss (“ECL”) provisions, detectionof fraud among its customers, stress-testing
exposures to simulate severe market stressconditions, identification of control indicators formeasuring conduct risk, and detection of money
laundering/terrorism financing. The extensive useof models exposes Revolut to the potential foradverse consequences from decisions we makebased on incorrect or misused model outputs.

The Group has a detailed and robustmodel risk framework. Model Risk is
independent of revenue-producing
units, model developers, model owners
and model users, and reports to theChief Risk Officer. It has primary
responsibility for assessing, monitoringand managing model risk throughoversight across Revolut’s businesses.
The Model Risk Committee is theprimary governance body overseeing
this risk. It provides oversight andchallenge to the identification, analysis
and validation of material models,
providing periodic updates to senior
management and the Board Risk andCompliance Committee.
In 2020 we increased the use of models
for business decision-making, customer
onboarding, monitoring of customer
accounts using automated alerts andpreventing and detecting fraud andmoney laundering.

Annual Report & Financial Statements 202025

Model risk management will be integral
to our risk management strategy
as we intensify our use of machinelearning models and data analytics
to responsibly grow our businesses,
improve our customers’ experienceand comply with regulations.

Strategic report

Risk management

Principal Risk

Mitigants

Outlook

While all business areas and staff
manage continued change anddevelopment as part of the normal
course of business, projects ofsignificant materiality and crossfunctional and cross-divisional
coordination are managed throughdedicated governance, including
robust new initiatives approval
processes to ensure that changes are
effectively managed and delivered
with executive and, where appropriate,
Board oversight.

The pace and volume of change at
Revolut will continue as we roll out
new products and features, create newentities in expansion territories, andcontinue organisational changes suchas corporate restructuring to better
enable internal group service delivery.
Our change management policies,
processes and governance will ensurethat these changes are effected in acontrolled manner.

Change Management Risk
Inherent in our strategy is rapid and complex
business change, through product innovation,
geographic and market expansion and insupporting technological enhancement.
This risk arises from organisational change,
product introduction and enhancement andchanges to our technology platform andsupporting infrastructure.

Revolut’s approach to managing
change has matured significantly
over the past year. The roll-out of thechange policy, increased awareness ofdepartmental interdependencies andcontinued development of programmemanagement helped to reduce changerisk. Maturity of these processes
helped in driving accountability within
Revolut to manage change effectively.
Revolut is driving an operational
excellence initiative to enhance thequality of our products and improvecustomer experience.

This report was approved by the Board on 2 June 2021 and signed on its behalf.

Nikolay Storonsky
Chief Executive Officer
2 June 2021

Annual Report & Financial Statements 202026

Board of Directors

Board of Directors
CHAIRMAN

Martin Gilbert
Martin Gilbert co-founded Aberdeen Asset Management in 1983, leading the company for 34 years
and overseeing its 2017 merger with Standard Life. He is senior independent director at Glencore,
deputy chair of River and Mercantile Group PLC (RMG), chair of Toscafund and of AssetCo plc anda non-executive director of Saranac Partners. Until November 2019 he was chairman of the UK’s
Prudential Regulation Authority’s Practitioner Panel and was deputy chairman of the board of Sky PLC
until 2018. Before this he was the chairman of FirstGroup. In 2015 he was ranked no. 22 of the Harvard
Business Review’s 900 top performing CEOs in the world. Martin holds an LLB from the University ofAberdeen and an MA in accountancy. He qualified as a chartered accountant with Deloitte.

CEO & CO-FOUNDER

Nikolay Storonsky
Nikolay Storonsky launched Revolut in 2015 to transform the way we spend and transfer money
abroad. Since then, he has put Revolut on the path to becoming a global financial superapp. Before
founding Revolut he was an emerging markets equity derivatives trader at Credit Suisse and Lehman
Brothers, where he traded more than $2bn across various options, swaps and FX instruments.
Nikolay holds an MS in Applied Physics and Mathematics from the Moscow Institute of Physics
and Technology and an MA in Economics from the New Economic School, Moscow.

CTO & CO-FOUNDER

Vlad Yatsenko
Vlad Yatsenko co-founded Revolut with Nikolay Storonsky in 2015 and is its chief technology officer.
His software engineering experience spans industries including travel and finance and includes
creating real-time billing systems at Comarch and booking engines for Sabre Airline Solutions.
Having built financial software systems at tier one investment banks including UBS, Deutsche Bank
and Credit Suisse, he realised that to deliver a next generation digital banking service he would
need to build it himself. He holds a MS in Computer Science from the National University of Kyiv,
Mohyla Academy.

Annual Report & Financial Statements 202027

Board of Directors

NON-EXECUTIVE DIRECTOR, CHAIR, REMUNERATION COMMITTEE

Michael Sherwood
Michael Sherwood retired as vice chairman of Goldman Sachs and co-chief executive officer ofGoldman Sachs International in 2016, after 31 years with the company and 22 years as a partner.
He is a Board member of Moscot Inc and of Credit Benchmark Ltd, a trustee of Greenhouse Sports,
chair of Grenada Schools, and a former trustee of the Mayor’s Fund for London and the Serpentine
Galleries. He was a founding sponsor of Harefield Academy and a member of the Westminster Abbey
Development Board.

NON-EXECUTIVE DIRECTOR, CHAIR, AUDIT COMMITTEE

Caroline Britton
Caroline Britton was at Deloitte LLP for 30 years until 2018 and was an audit partner for 18 years.
She is a non-executive director and chair of the Audit Committee at MoneySupermarket Group andat Sirius Real Estate Limited. She is a member of the Audit, Finance Risk and Investment Committee
at Make-A-Wish International. Caroline holds an MA in Economics from the University of Cambridge.
She is a fellow of the Institute of Chartered Accountants of England and Wales.

NON-EXECUTIVE DIRECTOR (CHAIR RISK & COMPLIANCE COMMITTEE FROM 21/02/21)

Ian Wilson
Ian Wilson spent much of his career with Royal Bank of Scotland, latterly as director of credit, retailbanking. Later executive roles included managing director business banking at Santander UK, chiefrisk officer for GE Money UK, Tesco Bank, Charter Court Financial Services and Monzo Bank, strategicrisk director for Virgin Money and executive director for Charter Court Financial Services. He is achartered banker, a fellow and former vice president of the Chartered Banker Institute in Scotland
and a fellow of the Institute of Financial Services.

NON-EXECUTIVE DIRECTOR, CHAIR RISK & COMPLIANCE COMMITTEE

Bruce Wallace
Bruce Wallace was chief operating officer and chief digital officer and head of global services at
Silicon Valley Bank until 2018. He held senior roles at Wells Fargo for 21 years, latterly as senior vicepresident and head of treasury management services, payment services and risk operations. He has
held board positions at The Federal Reserve Cash Advisory Council and many other organisations.
Bruce Wallace stepped down from the Revolut Board in February 2021 to become prospective CEO
for Brex Bank on its application for a US bank charter.

Annual Report & Financial Statements 202028

Directors' Report

Directors’ Report
The Directors present their report and the audited financial statements of the Group and Company
for the year ended 31 December 2020.
Matters covered in the Strategic Report

Directors

The Directors have addressed the following matters in the relevant
sections of the Strategic Report:

Revolut’s Board comprises two executive directors, who founded
the business, and five high-calibre independent non-executive
directors who have deep and extensive financial services
knowledge. Meetings of the Board are held at intervals of no
more than six weeks and more frequently if required. Biographiesof Revolut’s Board members are contained in the Leadership
section above. Martin Gilbert was appointed to the Board on
1 January 2020. Michael Sherwood and Ian Wilson were appointed
to the Board on 21 February 2020. Bruce Wallace served as anindependent non-executive director for the duration of 2020 and
stepped down from the Board on 12 February 2021. Martin Mignot
and Daniel Waterhouse each served as non-executive directors
until 21 February 2020.

• Review of the business performance: Business Performanceand Financial Performance• Strategy and future developments: Our Business Modeland Strategy• Engagement with suppliers, customers and others in a business
relationship with the Group: Engaging with stakeholders• Principal risks and uncertainties: Risk management

Results and dividends
The Total Comprehensive loss for the year, after taxation,amounted to £168m (2019 - loss £107m). No dividend was paid in2020 (2019: nil).

Revolut’s independent non-executive directors ensure that theperformance of management, including that of the executive
directors, is challenged and scrutinised effectively.

Political donations
The Group has not made any political donations to, nor incurred
any political expenses in relation to, any registered political parties,
organisations or candidates.

Board responsibilities
Revolut’s Board has overall responsibility for setting strategy andfor oversight of Revolut’s business, culture, risk management andinternal controls.
In setting Revolut’s strategy and culture, the Board seeks topromote the sustainable growth and long-term developmentof Revolut’s business within the limits of our risk appetite. In
discharging these responsibilities, the Board takes account of its
obligations to, and the expectations of, all of Revolut’s stakeholders
including customers, shareholders and employees. The Board
works closely with Revolut’s regulators to ensure that we operate,
at all times, within the regulatory frameworks which apply in thevarious jurisdictions in which we do business.

Annual Report & Financial Statements 202029

Directors' Report

Board committees
Revolut’s Board maintains effective oversight over Revolut through a series of committees with delegated authority from the Board.
The committees of the Board consist of the:• Audit Committee;• Remuneration Committee; and• Risk and Compliance Committee;• Nominations Committee.

The above committees are shown in the diagram below:

Board committees
Key:

Executive committee

Group Board

Group Audit
Committee

Group Risk andCompliance Committee

Group Executive
Risk Committee

Financial Crime
Committee

Group Remuneration
Committee

Group Nominations
Committee

Group Executive
Committee

New Initiatives
Committee

Model Risk
Committee

Retail Credit
Risk Committee

Value-setting from the top

Revolut’s day-to-day operations are managed by the executive
team, supported by three executive committees, being the:Our Board owns Revolut’s strategy and strives to provide robust
and constructive challenge to the executive team, holding eachof them to account for their performance against our strategy
and ensuring the strategy remains focused on good customer
outcomes and market integrity. Our Board is fully engaged
on conduct issues and sets the tone from the top. The Board,
supported by its committees, understands the risks associatedwith our business and in particular how our business model andstrategy could give rise to conduct issues. The Board also provides
excellent guidance and leadership support to our executive teamand, consequently, to all employees at Revolut. Our values, set by
the Board, permeate our business and ensure that decisions are
made in accordance with good governance, an appropriate risk
appetite, in line with regulatory expectations and always with ourcustomers at the forefront of our minds.

• Group Executive Committee (“ExCo”)• Group Executive Risk Committee (“GERC”)• Group Assets and Liabilities Committee (“ALCO”)
ExCo operates under delegated authority from the Board,while GERC and ALCO derive their authority from, and report to,
the Risk & Compliance Committee.
In addition to the above, Revolut has the following executive
sub‑committees, which operate with delegated authority fromGERC and/or ALCO (as applicable):• Financial Crime Committee• Compliance, Operational and Conduct Risk Committee• New Initiatives Committee• Model Risk Committee• Retail Credit Risk Committee

Annual Report & Financial Statements 2020

Executive sub-committee

Group Assets &Liabilites Committee

Compliance,
Operational & Conduct
Risk Committee

Board committee

30

Directors' Report

Our Board believes that Revolut’s success comes down to twothings: our people and our culture. Working with the Board,
Revolut has developed clear company values against which wehire, develop, promote and operate. We believe that by hiring thebest talent and allowing them to operate in a great culture, wedeliver the best outcomes for our customers, our employees andour shareholders. Our company values set the foundation for ourcompany culture. We keep our values under constant review andrefreshed them during 2020. Our company values can be found on
our website at www.revolut.com/our-culture.

In 2020, Revolut engaged extensively with employees on theirexperience of working from home during COVID-19. Employees
expressed a clear preference for home-working and a desire forcontinued flexibility, albeit many reported missing colleagues andface-to-face collaboration. In response the company is introducing
permanent flexible working and will convert its office estate toflexible Revolut Labs for innovation and collaboration. To attract
and retain the widest pool of exceptionally high-impact employees,
Revolut will adopt a “remote first” hiring strategy acrossits business.

Diversity, inclusion and employee engagement

Revolut engaged often on enhancing employees’ quality of life
while working from home. Our “Hi5” bot, publicly recognises
individual work and achievement on a daily basis in line with ourcultural values. Our Hi5 “Wall of Fame” is celebrated at Global Town
Halls and on Slack, attracting praise from leaders and colleagues.

Revolut is an equal opportunity employer, and we seek to promote
diversity and inclusion in all that we do. All aspects of employment,
including the decision to hire, promote, discipline or discharge, arebased on merit, competence, performance, culture alignment andbusiness needs. We do not tolerate discrimination or harassmenton the basis of race, ethnicity, religion, marital status, age, physicalor mental disability, medical condition, sexual orientation, gender
identity or expression, or any other characteristic protected under
the applicable legislation. We provide training to ensure that
unconscious bias does not deny opportunities to underrepresented
groups. We ensure fair and full consideration of applications for
employment from people with disabilities and provide appropriate,
relevant support and any adaptations required such that employeeswith disabilities can fully participate in the workplace and intheir careers.

Reward and employee share ownership
Revolut encourages employee share ownership and a meaningfulproportion of most employees’ total reward package (including
performance bonuses) is paid in Revolut share-based awards.
Following an HMRC decision in 2020, Revolut opted to increase thenumber of awards granted to employees to ensure that they were
not adversely affected by an increased tax charge they would incuron their awards. This contributed to an increase in the share-based
payments expense for the year, which totalled £40m. In February
2021, Revolut implemented a new growth share scheme to reward
employees in a way that was attractive to them.

During 2020, Revolut introduced diversity and inclusion (“D&I”)
initiatives to support our D&I goals. We conducted an organisationwide diversity data capture to enable the company to makebetter informed decisions on D&I strategy. We developed detailed
dashboards to measure and monitor the gender split in recruitment
to assess how to attract more women to Revolut. Our Women in
Leadership programme aims to increase the number of womenin director positions and above. Our five inclusive guilds: Women,
Pride, Parents and Carers, BAME and Well-being, each haveexecutive sponsorship to help support and drive change-initiatives.

Revolut’s new bonus framework, introduced shortly after year
end, is designed to better align variable compensation with
Revolut’s performance. It includes a dedicated bonus pool for
exceptionally high performing employees with mechanics similar
to a partnership model. Partners will be high impact employees
who have demonstrated a high standard of personal character andintegrity, a track record of contribution to the business, continued
commitment to the company’s mission, vision and values andservice with Revolut of not less than a year.

We communicate regularly and frequently with employees andencourage and respond to feedback. Organisational matters andpolicy changes are communicated through Town Halls and online
media. The CEO holds monthly Heads of Department briefings
which are cascaded through the business. Further news andupdates are included in our weekly newsletter and in podcastswith senior leaders.
Weekly pulse surveys provide staff feedback and enable us toassess engagement to ensure that the company can identify
and address any issues quickly.

Annual Report & Financial Statements 202031

Directors' Report

Directors’ liabilities

Energy usage and greenhouse gas emissions

Revolut has indemnified all Directors of the Company against
liability in respect of proceedings brought by third parties,
subject to the conditions set out in section 234 of theCompanies Act 2006. This qualifying third-party indemnity
provision was in force during the year.

Year ended
31 December 2020
Energy consumption used to calculate
emissions:

Research and development
The Group undertakes research and development activities inrespect of the development and enhancement of its technology
platform, and for the year ended 31 December 2020 research anddevelopment costs of £31.1m were recognised in the statementof comprehensive loss (2019: £13.2m).

Financial instruments
The Group enters into a number of material financial instruments
as part of its business operations, and details of the Group’s
financial instruments are set out in note 24 of the consolidated
financial statements.

Licences and authorisations-

Emissions from combustion of fuel fortransport purposes (Scope 1)-

Emissions from business travel
in rental cars or employee-owned
vehicles where company is responsible
for purchasing the fuel (Scope 3)-

160,370

Total gross CO2e based on above

160.4 tonnes

Intensity ratio: tCO2e/£million ofrevenue

0.72

Quantification and reporting methodology andorganisational boundary

In the UK, e-money services are provided by Revolut Ltd, which
is authorised and regulated by the FCA under the Electronic
Money Regulations (“EMR”) as an authorised e-money issuer(“EMI”). In European Economic Area (“EEA”) states these services
are provided by Revolut Payments UAB, which is incorporated in
Lithuania and which is authorised and regulated by the Bank of
Lithuania as an EMI.

In providing the above disclosure we have followed the 2013 UK
Government environmental reporting guidance, as updated andissued in March 2019, and applied the 2020 UK Government’s
Conversion Factors for Company Reporting.
We have used the financial control approach to define theorganisational boundaries.

Before 31 December 2020, Revolut Ltd was able to provide
services to non-UK EEA customers through its passporting rights
under the EMR. In order to continue providing services to EEA
customers following the end of the Brexit Transition Period (whenthe passporting rights would no longer continue to exist), during2020 these non-UK EEA customers were migrated to Revolut
Payments UAB. The Group also has a number of subsidiaries which
are regulated and provide similar services in non-UK and non-EEA
jurisdictions. These are listed in the notes to the consolidated
financial statements.

Intensity measurement
We have chosen the metric gross UK scope 1 and 2 emissions
in tonnes of CO2e per £million of revenue as this is a common
business metric for our industry sector.

Energy efficiency actions
Revolut has taken a number of steps to reduce our carbon
footprint. Our offices are equipped with energy-efficient lighting
and electrical equipment and the energy used at our headquarters
is from 100% renewable sources. This has also included going
paperless to the extent possible, introducing restricted use of
papers and only using recyclable papers where needed. All ourfacilities have reusable or recyclable items with restrictions on
single-use plastic. Our waste is completely recyclable and we havezero landfill contribution. We expect our policy to expand to otherareas as we grow.

Branches outside the UK
The Group operates through a number of branches outside the UK,
the details of which are disclosed in note 15 of the consolidated
financial statements.

Annual Report & Financial Statements 2020

Emissions from combustion of gas
tCO2e (Scope 1)

Emissions from purchased electricity(Scope 2, location-based)

The Group’s financial risk management objectives and policies are
set out in the Risk Management section of the Strategic Report,
along with the Group’s exposure to price risk, credit risk, liquidity
risk and cash flow risk.

687,869 kWh32

Directors' Report

COVID-19

Going concern

Employees and employee safety

The Group’s consolidated financial statements have been preparedon the going concern basis as, after making enquiries, the directors
have a reasonable expectation that the Group has adequate resources
to continue in operational existence within its current regulatory
permissions and business model for the foreseeable future.

Revolut operated during the pandemic with no disruption toservices to customers. The vast majority of Revolut employees
worked from home for the duration of the pandemic, supportedby the company throughout. From February 2020, Revolut actively
monitored the COVID-19 situation around the world and provided
daily updates, information and instructions to employees focusedon their safety and wellbeing. From February and early March
2020 onwards Revolut required employees returning from high-risk
jurisdictions to quarantine at home. Revolut required employees
to work from home, in most cases, before government-mandated
lockdowns, making arrangements for employees to receive
desktops and other office equipment at their homes within the firstweek of home-working.

In making this conclusion, the Board has given consideration to anumber of key sources of information such as the Group’s businessplan and forecasts, including the performance of stress tests toassess the impact of plausible but severe downside scenarios, current
trading performance, liquidity and capital resources, along with theGroup’s operational resilience and its business interruption plans given
the ongoing COVID-19 pandemic.
The Group successfully navigated the macroeconomic challenges
arising from the COVID-19 pandemic. As set out above, the Group
completed a follow-on fundraising in July 2020, raising a further$80m at the same valuation of the business prior to the start ofthe pandemic. In addition, despite the additional global restrictions
since the autumn, the Group’s performance to 31 December 2020,and subsequently in January and February 2021, has exceeded its

As countries prepared to lift certain lockdown restrictions andencourage workers to return to offices, Revolut developed an
office booking tool and check-in app to ensure that numbers
visiting the office were monitored and controlled, subject to daily
limits, and attendance tracked. Work stations and communal
areas were adapted to ensure that the office infrastructure andall office employees and contractors complied with government
safety guidelines.

business plan and forecasts at the revenue and adjusted operating
loss levels, with a corresponding positive impact on the Group’s capitaland liquidity resources.

Post balance sheet events

The Group has also continued to demonstrate its ability to continue
to operate successfully despite the requirements for a significant
proportion of its workforce to work from home over the past 12
months, following the implementation of the Group’s contingency
plans. These include prioritising the safety of the Group’s employees,
the continuity of service to the Group’s customers and the compliancewith the Group’s regulatory requirements. This has been achieved
through ensuring that the Group has the appropriate IT infrastructure
in place to enable employees to work effectively from home, assessing
the risk and monitoring the performance of the Group’s third-party
suppliers to address the risks of customer service interruption arisingfrom failures in the provision of services to the Group, and actively
monitoring a number of key KPIs and risk indicators to ensure thatissues are appropriately identified and addressed on a timely basis.

Since the year end the Group has entered into a new £100m
revolving credit facility, and repaid the remaining €91m outstandingon the existing term loan facility as at 31 December 2020.
On 9 February 2021 the Group announced to its employees thata new employee remuneration scheme was to be implemented in
April 2021 for employees in the UK, Ireland, France and Portugal
The new scheme is a growth shares scheme which enables
employees to either share in the growth of the value of the Groupabove a hurdle that will be determined at the grant date, or beentitled to the full value of a share in the event a certain growthhurdle is achieved, and will be offered to eligible employees as areplacement for the existing unapproved options scheme (see note
27 for further details of the existing scheme). Eligible employees
could also elect to exchange their existing unapproved shareoptions for growth shares at the time of implementation. As part of
the arrangement, a loan of £3.2m (repayable within one year) has
been made to the chief executive officer, Nikolay Storonsky, to fundthe purchase of the Growth Shares.

Since the year end, the Group has refinanced its debt funding with a
new revolving credit facility (see note 33 of the consolidated financial
statements) that provides an improved funding structure to support
the Group’s continued growth with a lower cost of funding.
As described in the Strategic Report, the Group’s business plan
includes the establishment of a UK bank, subject to regulatory
approval. In order to meet the initial regulatory capital requirements
for the UK Bank the Group will be required to raise additional capital.
However, to the extent that the Group does not successfully complete
such a fundraising, it has the discretion to defer the establishmentof the UK Bank until such time that the Group has sufficient capital,
and this would not adversely affect the Group’s ability to continue tooperate as a going concern for the foreseeable future.

Annual Report & Financial Statements 202033

Directors' Report

Directors’ responsibilities statement

Disclosure of information to auditors

The directors are responsible for preparing the strategic report,
the directors’ report /annual report and the financial statementsin accordance with applicable law and regulations.

Each of the persons who are directors at the time when thisDirectors’ Report is approved has confirmed that:• so far as the directors are aware, there is no relevant audit
information of which the Company and the Group’s auditors
are unaware, andCompany law requires the directors to prepare financial statements
for each financial year. Under that law the directors have elected
to prepare the Group and Company financial statements inaccordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicablelaw). Under company law the directors must not approve thefinancial statements unless they are satisfied that they give a trueand fair view of the state of affairs of the Group and Company andof the profit or loss of the Group for that period.

• the directors have taken all the steps that ought to have beentaken as a director in order to be aware of any relevant audit
information and to establish that the Company and the Group’s
auditors are aware of that information.

AuditorIn preparing these financial statements, the directors are
required to:

BDO LLP have indicated their willingness to be reappointed asauditors for another term and appropriate arrangements will be
put in place for them to be deemed reappointed.

• select suitable accounting policies and then apply
them consistently;

This report was approved by the Board on 2 June 2021 and signed
on its behalf.

• make judgments and accounting estimates that are reasonable
and prudent;• state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed andexplained in the financial statements; andNikolay Storonsky
Director
2 June 2021

• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company willcontinue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company’stransactions and disclose with reasonable accuracy at any time
the financial position of the company and enable them to ensurethat the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of thecompany and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of
the corporate and financial information on the company’s website.
Legislation in the United Kingdom governing the preparationand dissemination of the financial statements may differ fromlegislation in other jurisdictions.

Annual Report & Financial Statements 202034

Financial statements

Independent auditor’sreport to the membersof Revolut Ltd
Opinion on the financial statements
In our opinion the financial statements:• give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2020 of its loss forthe year then ended;• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Revolut Ltd (“the Parent Company”) and its subsidiaries (“the Group”) for the year ended
31 December 2020 which comprise the Consolidated income statement, Consolidated balance sheet, Consolidated statement ofchanges in equity, Consolidated statement of cash flows, Company balance sheet, Company statement of changes in equity andnotes to the financial statements, including a summary of significant accounting policies. The financial reporting framework thathas been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial ReportingStandard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted
Accounting Practice).

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of ourreport. We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.

Conclusions relating to going concern
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.
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 and Parent Company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sectionsof this report.

Other information
The directors are responsible for the other information. The other information comprises the information included in the annual reportother than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the otherinformation and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materiallyinconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether thisgives rise to a material misstatement in the financial statements themselves. If, based on the work we have 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 in this regard.

Annual Report & Financial Statements

35

Financial statements

Independent auditor’s report

Other Companies Act 2006 reporting
In our opinion, based on the work undertaken in the course of the audit:• the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements areprepared is consistent with the financial statements; and• the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the courseof the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you
if, in our opinion:• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visitedby us; or• the financial statements are not in agreement with the accounting records and returns; or• certain disclosures of Directors’ remuneration specified by law are not made; or• we have not received all the information and explanations we require for our audit.

Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine isnecessary to enable the preparation of financial statements that 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 and the Parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis ofaccounting unless the Directors either intend to liquidate the Group and the Parent Company or to cease operations, or have no realistic
alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is ahigh level of assurance, but is not a guarantee 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 considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud
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 ourprocedures are capable of detecting irregularities, including fraud is detailed below:
We gained an understanding of the legal and regulatory framework applicable to Revolut Ltd and the industry in which it operates
and considered the risk of acts by Revolut Ltd which would be contrary to applicable laws and regulations, including fraud. These
included but were not limited to compliance with the Payment Services Regulations 2017 (PSRs 2017), the Electronic Money
Regulations 2011 (EMRs), Financial Conduct Authority (“FCA”) regulations, other relevant regulatory bodies, pension legislation and tax
legislation. We focused on laws and regulations that could give rise to a material misstatement in the Group and the Parent Company’s
financial statements.
Our tests included, but were not limited to:• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws
and regulations discussed above;• enquiring of management and the audit committee;• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;• reading minutes of meetings of those charged with governance, reviewing internal audit reports and correspondence with
the Financial Conduct Authority and other relevant regulatory bodies;• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries andother adjustments;• assessing whether the judgments made in making accounting estimates are indicative of a potential bias; and evaluating the businessrationale of any significant transactions that are unusual or outside the normal course of business; and• considering the effectiveness of the control environment in monitoring compliance with laws and regulations.

Annual Report & Financial Statements

36

Financial statements

Independent auditor’s report

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members andremained alert to any indications of fraud or non-compliance with laws and regulations.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the riskof not detecting 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, misrepresentations or through collusion. There are inherent limitations in theaudit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely we are to become aware of it.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the riskof not detecting 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, misrepresentations or through collusion. There are inherent limitations in theaudit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for thisreport, or for the opinions we have formed.

Matthew Hopkins (Senior Statutory Auditor)
For and on behalf of BDO LLP, statutory auditor
London2 June 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Annual Report & Financial Statements

37

Financial statements

Financial statements
Consolidated statement of comprehensive income
for the year ended 31 December 2020

Note

2020
£000

2019
(restated)£000

5222,142

166,026

Direct costs(152,412)(148,932)

Administrative expenses(266,159)(124,534)

220

(261)

Revenue

Impairment of financial assets
Other operating (expense)/income

6(4,440)763

Operating loss

7(200,649)(106,938)

Interest receivable and similar income

10

2,028

687

Interest payable and similar charges

11(9,254)(1,429)(207,875)(107,680)

1,843

915

(206,032)(106,765)

38,659

-

(439)

115

-

-

38,220115(167,812)(106,650)

Loss before taxation on ordinary activities
Tax credit on loss

12

Loss for the financial year attributable to owners of the parent company
Revaluation gain on intangible assets (cryptocurrencies)1

13

Currency translation differences
Total tax on components of other comprehensive income
Other comprehensive income for the year
Total comprehensive loss for the year attributable to owners of the parent company

1
In accordance with FRS 102 and the Group’s accounting policies revaluation gains above historic cost in relation to intangible assets (cryptocurrencies)
are recognised in other comprehensive income. The corresponding loss on the associated customer balances is included within the revenue line.
Further explanation of the accounting treatment for management reporting purposes is set out in note 5 and the appendix to the consolidated financial
statements.

The notes on pages 44 to 77 form part of these financial statements.

Annual Report & Financial Statements

38

Financial statements

Consolidated balance sheet
as at 31 December 2020

Note

2020
£000

2019
(restated)£000

Intangible assets

13

411

93,927

Tangible assets

14

15,004

11,94015,415

105,867

Fixed assets

Current assets
Inventories

16

11,282

13,042

Debtors

17

156,432

211,560

Investments

18

50,366-

Cash and cash equivalents

19

5,055,023

2,462,986

5,273,103

2,687,588

Creditors: amounts falling due within one year
Customer liabilities

20(4,637,230)(2,367,200)

Creditors

21(230,507)(206,163)(4,867,737)(2,573,363)

Net current assets

405,366

114,225

Total assets less current liabilities

420,781

220,092

Creditors: amounts falling due after more than one year22

(2,716)(123,247)

Provisions for liabilities

23

(858)

(905)

417,207

95,940Net assets
Capital and reserves
Share capital

25

-

-

Share premium account26

697,444248,814

Foreign exchange reserve

27

(366)

73

Other reserves

27

50,81810,369Profit and loss account26(330,689)(163,316)

417,207

95,940Equity attributable to owners of the parent Company

The notes on pages 44 to 77 form part of these financial statements.
The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 2 June 2021.

Nikolay Storonsky
Director
Registered Company number: 08804411

Annual Report & Financial Statements

39

Financial statements

Company balance sheet
as at 31 December 2020

Note

2020
£000

2019
(restated)£000

Intangible assets

13

351

93,848

Tangible assets

14

14,344

10,960Investments

15

87,85815,554

102,553

120,362

Fixed assets

Current assets
Inventories

16

11,161

13,024

Debtors

17

124,809226,653

Investments

18

50,366-

Cash and cash equivalents

19

2,562,779

2,429,046

2,749,115

2,668,723

Creditors: amounts falling due within one year
Customer liabilities

20(2,121,085)(2,357,363)

Current liabilities

21(285,119)(205,672)(2,406,204)(2,563,035)

Net current assets

342,911

105,688

Total assets less current liabilities

445,464

226,050

Creditors: amounts falling due after more than one year22

(2,716)(123,247)

Provisions for liabilities

23

(560)

(905)

442,188

101,898

Net assets
Capital and reserves
Share capital

25

-

-

Share premium account26

697,444248,814

Foreign exchange reserve

26

(92)

87

Other reserves

26

50,81810,369Profit and loss account26(305,980)(157,372)

442,188

101,898

Total equity
The notes on pages 44 to 77 form part of these financial statements.

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statementof Comprehensive Income in these financial statements. The loss for the year ended 31 December 2020 amounted to £148.6m (2019: loss - £98.3m).
The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 2 June 2021.

Nikolay Storonsky Director
Registered Company number: 08804411

Annual Report & Financial Statements

40

Financial statements

Consolidated statement of changes in equity
for the year ended 31 December 2020
Sharecapitalaccount£000

Sharepremium
account£000

Foreignexchangereserve£000

Other
reserves£000

Profit andlossaccount£000

Total
equity£000

At 1 January 2019 as previously presented-

248,677

(42)

1,880

(56,444)

194,071

Impact of adoption of IFRS 9

-

-

-

-

(107)

(107)

At 1 January 2019 (restated)-

248,677

(42)

1,880

(56,551)

193,964

Loss for the year (restated)

-

-

-

-

(106,765)(106,765)

Other comprehensive income (restated)

-

-

115

-

-

115

Total comprehensive loss for the year (restated)

-

-

115

-

(106,765)(106,650)

Equity settled share-based payments

-

-

-

8,489

-

8,489

Shares issued during the year

-

137

-

-

Total transactions with owners

-

137

-

8,489

-

8,626

At 31 December 2019 (restated)-

248,81473

10,369(163,316)

95,940Loss for the year

-

-

-

-

(206,032)(206,032)

Other comprehensive income

-

-

(439)

-

38,65938,220Total comprehensive loss for the year

-

-

(439)

-

(167,373)(167,812)

Equity settled share-based payments

-

-

-

40,449-40,449

Shares issued during the year-

448,630---

448,630

Total transactions with owners-

448,630-

40,449-489,079

At 31 December 2020-

697,444(366)

50,818(330,689)

417,207

Transactions with owners

137

Transactions with owners

The notes on pages 44 to 77 form part of these financial statements.

Annual Report & Financial Statements

41

Financial statements

Company statement of changes in equity
for the year ended 31 December 2020
Sharecapitalaccount£000

Sharepremium
account£000

Foreignexchangereserve£000

Other
reserves£000

Profit andlossaccount£000

Total
equity£000

At 1 January 2019 as previously presented-

248,677-

1,880(58,997)

191,560

Impact of adoption of IFRS 9

-

-

-

-

(102)

(102)

At 1 January 2019 (restated)-

248,677-

1,880(58,999)

191,458

Loss for the year (restated)

-

-

-

-

(98,273)(98,273)

Other comprehensive income (restated)

-

-

87

-

-

87

Total comprehensive loss for the year (restated)

-

-

87

-

(98,273)(98,186)

Equity settled share-based payments

-

-

-

8,489

-

8,489

Shares issued during the year

-

137

-

-

-

137

Total transactions with owners

-

137

-

8,489

-

8,626

At 31 December 2019 (restated)-

248,81487

10,369(157,372)

101,898

Loss for the year

-

-

-

-

(187,269)(187,269)

Other comprehensive income

-

-

(179)

-

38,65938,480Total comprehensive loss for the year

-

-

(179)

-

(148,610)(148,789)

Equity settled share-based payments

-

-

-

40,449-40,449

Shares issued during the year-

448,630---

448,630

Total transactions with owners-

448,630-

40,449-489,079

At 31 December 2020-

697,444(92)

50,818(305,982)

442,188

Transactions with owners

Transactions with owners

The notes on pages 44 to 77 form part of these financial statements.

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42

Financial statements

Consolidated statement of cash flows
for the year ended 31 December 2020

Note

2020
£000

2019
(restated)
£000

29

2,195,162

1,389,954

R&D tax credit received

1,342

-

Taxes paid

(301)

(1,145)2,196,203

1,388,809

Cash flows from operating activities

Net cash generated from operating activities

Cash flows from investing activities
Purchase of intangible fixed assets (software)

13

(6)

(85)

Purchase of tangible fixed assets

14(6,326)(9,404)

Interest received

10

2,028

687

(4,304)(8,802)

Net cash used in investing activities

Cash flows from financing activities
Issue of ordinary shares

25

448,535-

Exercise of share options

25

95

137

(10,226)(452)

Interest paid
Loans drawn down

21, 22-

119,546

Loans repaid

21, 22(43,365)-

395,039

119,231

Net increase in cash and cash equivalents

2,586,938

1,499,238

Cash and cash equivalents at beginning of year

2,462,986

961,178

5,099

2,570

Net cash from financing activities

Foreign exchange gains and losses

Cash and cash equivalents at the end of year comprise:Own cash and cash equivalents

19

486,743

403,102

Cash held at central banks and other banks in respect of customers

19

4,568,280

2,059,884

5,055,023

2,462,986

The notes on pages 44 to 77 form part of these financial statements.

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43

Financial statements

Notes to the consolidated
financial statements
1.

General information

Revolut Ltd (the “Company”) and its subsidiaries (together, the “Group”) provides electronic money and payment services through a
prepaid card, currency exchange, peer to peer payments, cryptocurrency and commodity exposures, share trading and consumer loans
and credit cards for retail users. It also offers a similar proposition to business customers encompassing multi-currency exchange,
prepaid corporate cards, and international and domestic bank transfers to freelancers, and Small and Medium Enterprises.
The Company is a private company limited by shares and incorporated in England & Wales. The registered office and the principal placeof business is 7 Westferry Circus, The Columbus Building 4th Floor, London E14 4HD.

2.

Statement of compliance

The consolidated and individual financial statements of Revolut Ltd have been prepared in compliance with United Kingdom AccountingStandards, including Financial Reporting Standard 102, ‘The Financial Reporting Standard applicable in the United Kingdom and theRepublic of Ireland’ (“FRS 102”) and the Companies Act 2006.

3.

Accounting policies

The principal accounting policies applied in the preparation of these consolidated and separate financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.

3.1

Basis of preparation of financial statements
The consolidated and individual financial statements are prepared on a going concern basis, under the historical cost convention,
as modified by the recognition of certain financial assets and liabilities measured at fair value.
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management toexercise its judgment in the process of applying the Group and Company accounting policies. The areas involving a higher degreeof judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed innote 4.
The Company has taken advantage of the exemption in section 408 of the Companies Act from presenting its individual profit
and loss account.

3.2

Going concern
The directors have prepared forecasts of the Group’s financial position for the period ending twelve months from the date of
approval of these Financial Statements. They have also considered the effect on the Group’s business of operating under stressed
but plausible operating conditions. As a result, they are satisfied that the Group has adequate resources to continue in businessfor the foreseeable future. For this reason, the Financial Statements continue to be prepared on a going concern basis. The
directors have considered the impacts of the COVID-19 pandemic and the UK leaving the EEA and have concluded that this would
not impact the going concern basis under which these accounts have been prepared.

3.3

Exemptions for qualifying entities under FRS 102
FRS 102 allows a qualifying entity certain disclosure exemptions, subject to conditions.
The Company has taken advantage of the following exemptions in its individual financial statements:• from preparing a statement of cash flows, on the basis that it is a qualifying entity and the consolidated statement of cash
flows, included in these financial statements, includes the Company’s cash flows;• from the financial instrument disclosures, required under FRS 102 paragraphs, 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b) and 12.29A, as the information is provided in the consolidated financial
statement disclosures;• from disclosing share-based payment arrangements, required under FRS 102 paragraphs 26.18(b), 26.19 to 26.21 and 26.23,
concerning its own equity instruments, as the Company financial statements are presented with the consolidated financial
statements and the relevant disclosures are included therein; and• from disclosing the Company key management personnel compensation, as required by FRS 102 paragraph 33.7.

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44

Financial statements

3.4

Notes to the consolidated financial statements

Basis of consolidation
The Group consolidated financial statements include the financial statements of the Company and all of its subsidiary
undertakings made up to 31 December.
A subsidiary is an entity controlled by the Group. Control is the power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities. Where the group owns less than 50% of the voting powers of an entity but controls
the entity by virtue of an agreement with other investors which give it control of the financial and operating policies of the entity,
it accounts for that entity as a subsidiary.
Where a subsidiary has different accounting policies to the group, adjustments are made to those subsidiary financial statements
to apply the group’s accounting policies when preparing the consolidated financial statements.
All intra-group transactions, balances, income and expenses are eliminated on consolidation. Adjustments are made to eliminate
the profit or loss arising on transactions with associates to the extent of the group’s interest in the entity

3.5

Changes in accounting policy and restatement of prior year comparatives
Changes in accounting policy – adoption of IFRS 9
In accordance with FRS 102 11.2 (c) the Group has chosen to apply the recognition and measurement provisions of IFRS 9
Financial Instruments and the presentation and disclosure requirements of Sections 11 and 12 of FRS 102.
The directors of the Company have chosen to adopt the new accounting policy as a result of the establishment of the consumer
lending operations of the Group’s subsidiary, Revolut Bank UAB, and the Group’s future plans to establish additional banking
operations in other jurisdictions.
No adjustments to the recognition and classification of the Group’s financial assets and liabilities have been made as a result of
the adoption of IFRS 9.
In accordance with IFRS 9 expected credit loss provisions have been recognised on the financial assets that are not measured
at fair value through profit and loss. This has resulted in an adjustment to the opening profit and loss account of £106k as at
1 January 2019 and a net impact of £261k on the loss before tax for the year ended 31 December 2019, resulting a reduction of£367k on the net assets of the Group as at 31 December 2019.
The impact on the loss for the year ended 31 December 2020 was a net reversal of an impairment charge of £220k, and theimpact balance sheet as at 31 December 2020 was a closing provision adjustment of £147k, that would not have been recognised
under the previous accounting policy.
As this represents a change in accounting policy FRS 102 requires it to be accounted for retrospectively, restating thecomparative financial information as if the accounting policy had always been applied, and as such the comparative financial
information for the year ended 31 December 2019 has been restated.

Restatement of prior year comparatives
During the year the Group completed the implementation of a new general ledger system through which a detailed review
was undertaken of the mapping of general ledger accounts to the financial statement line items. This review identified certain
accounts that were incorrectly mapped to the financial statements, the details of which are set out below. The impact of therestatement of these prior period errors is a reallocation of these accounts between the relevant lines on the statement ofcomprehensive income, balance sheet and statement of changes in equity, resulting in a reduction of £115k in the consolidated
total comprehensive loss for the period, and no impact on the net assets of the Group or Company.

Income statement
Currency exchange fees charged by processing partners on certain currencies were previously presented net within revenue.
However, these costs represent the costs of providing payment services to customers and should be included within direct costs
as set out in the accounting policy in note 3.8, and costs totalling £3.3m have been reclassified from revenue to direct costs
for 2019.
The review of the classification of general ledger accounts has identified certain costs that were previously included within
direct costs that are administrative in nature, which have been reclassified accordingly. This has resulted in a net £32.3m
reclassification of costs from direct costs to administrative costs.
Interest income on customer balances in the form of safeguarded funds of £1.4m has been reclassified from interest receivableand similar income to other operating income as the net interest on these balances is considered to be an integral part of theGroup’s operations as set out in note 6.
Net foreign exchange losses arising on the settlement of monetary items and the retranslation of monetary items at subsequent
reporting dates of £603k was previously recognised in other comprehensive income, however in accordance with FRS 102 30.10
and the accounting policy set out in note 3.6 such exchange gains and losses should be recognised in profit or loss. Theseamounts have therefore been reclassified to other operating income.
Net foreign exchange gains on retranslation of foreign operations into the Group’s presentation currency on consolidation of £115k
were previously recognised directly in equity, however in accordance with FRS 102 30.18 (c) such retranslation gains should berecognised in other comprehensive income and have been reclassified accordingly.

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45

Financial statements

Notes to the consolidated financial statements

Balance sheet
Amounts due from the Group’s card acquiring providers of £148.0m (£145.3m for the Company) in relation to customer account
top ups were previously included within the cash balance as cash in transit. Given the nature of these balances, and to becomparable with developing disclosure practice of such balances by other entities in the payments industry, these balances
have been separately presented as settlement receivables in accordance with the accounting policy set out in note 3.20 below.
Amounts due to payment schemes and other third parties in relation to customer payments of £160.9m (£160.4m for the Company)
were also previously presented net within the cash balance, and as above for settlement receivables these amounts are now separately
presented as settlement payables consistent with the similar treatment applied by other companies within the payment industry.
Customer liabilities in respect of E-money in issue of £2.4bn included £4.8m (£4.7m for the Company) of negative customer
balance as at 31 December 2019 have been reclassified as debtors.
There was no impact on the client safeguarded funds from these reclassifications.
In addition, adjustments have been made to the statement of cash flows as a result of the restatements of the consolidated
statement of comprehensive income and consolidated balance sheet, along with presentational changes to provide greater clarity
regarding the Group’s cash flows from operations.

3.6

Foreign currency translation
Functional and presentation currency
The Group consolidated financial statements are presented in pound sterling and rounded to thousands. The Company’sfunctional and presentation currency is the pound sterling.

Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of
the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured athistorical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fairvalue are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange
rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Statement ofComprehensive Income.

Translation
On consolidation, the results of overseas operations are translated into sterling at the average exchange rates for the year. All
assets and liabilities of overseas operations are translated at the exchange rate ruling at the balance sheet date. Exchange
differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate arerecognised in other comprehensive income.

3.7

Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can bereliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates,
value added tax and other sales taxes.

Card and interchange
Card and payments income represents transactional related income including interchange fees receivable from the Group’s card
issuing partners, fair usage fees for cash withdrawals outside of customer plans allowances, and top up fees and is recognised at
the time of the transaction.

Subscription fees
Subscription fee income represents monthly and annual subscription fees for retail and business customers. Subscription fees
received in advance are initially recognised as deferred income and are recognised as revenue in the income statement on astraight-line basis over the period of the subscription. It also includes termination fees for early termination of the contract which
are recognised upon the termination date.

Foreign exchange
Foreign exchange revenue represents mark ups on market exchange rates for weekend transactions and less frequently tradedcurrencies, and fair usage fees where customers undertake additional exchange transaction volumes outside of their plan
allowances, which is recognised at the point of exchange. It also includes the fair value movements on derivative financial
instruments used to hedge the Group’s foreign exchange exposure as a result of its customer foreign exchange activities.

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46

Financial statements

Notes to the consolidated financial statements

WealthWealth comprises revenues from the Group’s cryptocurrency, commodities, trading and vaults products.
Where the Group acts as an agent on behalf of its customers to buy or sell cryptocurrencies (from 27 July 2020) and listedcompany shares, the revenue represents any exchange markup/commission charged, and any applicable fair usage fees, and isrecognised at the time of the transaction.
In relation to the commodities offering (and cryptocurrencies prior to 27 July 2020), the Group enters into positions withcustomers with exposure to the underlying precious metals and cryptocurrencies. When entering into these contracts withcustomers the Group charges a markup on the market exchange rate for the exchange of E-Money, and similarly when thecustomer settles the contact and receives E-Money. The relevant markup is recognised as revenue when the contract is enteredinto and when it is settled.
The Group hedges its exposure to these customer contracts through holding its own investments in commodities (andcryptocurrencies prior to 27 July 2020). Any gains and losses arising on the Group’s own investments used to hedge the exposure
are also recognised within revenue, with the exception of any fair value gains on cryptocurrencies above their original cost (prior
to 27 July 2020) which is recognised in other comprehensive income (see note 3.14). This also includes any fair value movements
on derivative financial instruments used to manage the Group’s exposure to commodity prices through these activities.
Both the assets and the customer positions are accounted for at fair value through profit or loss within revenue, with the resulting
net revenue representing the net profit margin arising on the positions.

Other
Other revenue mainly comprises card delivery fees and commission earned on the sale of insurance products to customers
and is recognised at the time of the transaction.

Interest income
Interest income is recognised using the effective interest rate (see note 3.19).

3.8

Direct costs
Direct costs primarily relate to fees incurred by the Group in the processing and settlement of transactions, the costs ofproviding cards to customers and the costs of any redress payments made to customers who have been the subject of fraudulent
transactions. This is net of rebates received from payment scheme providers for scheme fee costs.

3.9

Research and development
Research and development expenditure is recorded in the consolidated statement of comprehensive income in the period inwhich is incurred.

3.10 Employee benefits
The Group provides a range of benefits to employees, including annual bonus arrangements, paid holiday arrangements, defined
contribution pension plans and share-based payments.

Short term benefits
Short term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period
in which the service is received.

Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which
the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further
payment obligations.
The contributions are recognised as an expense in the Consolidated Statement of Comprehensive Income when they fall due.
Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from theGroup in independently administered funds.

Share-based paymentsGroup
The Group operates two share options schemes, a Company Share Option Plan (“CSOP”) and an Unapproved Option Plan (“UOP”)
to incentivise and remunerate its employees. Further details on these schemes are out in note 27. These schemes meet thedefinition of equity settled share-based payment schemes.
Share options awarded to employees are fair valued at the grant date using an appropriate option pricing model. Any market
performance vesting conditions and non-vesting conditions are taken into account in the grant date fair value of the awards.
The fair value of the awards is recognised as an expense in the Consolidated Statement of Comprehensive Income over thevesting period. The cumulative expense at each reporting date is based on the total number of awards that are expected to vest,
taking into account the service conditions and any non-market performance conditions such that the total cumulative amountrecognised as an expense over the vesting period is based on the number of options that eventually vest.

Annual Report & Financial Statements

47

Financial statements

Notes to the consolidated financial statements

Where the terms and conditions of options are modified before they vest, to the extent that there is an increase in the fair valueof the options, measured immediately before and after the modification, this increase is also recognised as an expense in theConsolidated Statement of Comprehensive Income over the remaining vesting period.

Company
Where the Company grants share options to employees of subsidiary companies, the relevant charge is recognised as an increasein cost of investment in subsidiaries.

3.11 Operating leases: The Group as lessee
Rentals paid under operating leases are charged to the Consolidated Statement of Comprehensive Income on a straight-line
basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over thelease term, unless another systematic basis is representative of the time pattern of the lessee’s benefit from the use of theleased asset.

3.12 Finance costs
Finance costs are charged to the Consolidated Statement of Comprehensive Income over the term of the debt using the effective
interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a
reduction in the proceeds of the associated capital instrument.

3.13 Current and deferred taxation
The tax credit for the year comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive
Income, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an
item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax credit is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by
the balance sheet date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance
Sheet date, except that:• The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversalof deferred tax liabilities or other future taxable profits;• Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and• Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and theGroup can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, whendeferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available
for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred
tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

3.14 Intangible assets
Cryptocurrencies
Pre-27 July 2020
Prior to 27 July 2020, the legal and beneficial ownership of the cryptocurrencies were held by Revolut Ltd, and they were
determined to meet the definition of cryptocurrencies included in the FCA policy statement issued on 22 July 2019 and wererecognised on the Group’s balance sheet applying the following accounting policy.
There remains limited guidance in respect of the treatment of cryptocurrencies under FRS 102, and as such it is appropriate
to look at the guidance within IFRS.
The International Financial Reporting Interpretations Committee (“IFRIC” or “the Committee”) reached an agenda decisionin June 2019 in respect of the recognition and measurement of cryptocurrencies under IFRS. The agenda paper “Holdings ofCryptocurrencies” concluded that where cryptocurrencies are not held for sale in the ordinary course of business an entity
applies IAS 38 (Intangible Assets). Consistent with the tentative agenda decision of March 2019, the Committee concluded
that cryptocurrencies do not meet the criteria of financial assets, or cash and cash equivalents.
Therefore, in the absence of specific UK GAAP guidance, the Group recognised its cryptocurrencies as intangible assets inaccordance with Section 18 of FRS 102.
The cryptocurrencies that the Group held are subject to significant trading volume on a number of cryptocurrency exchanges,
including trading to and from fiat currencies, and therefore an active market had been identified for all the cryptocurrencies heldby the Group.

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48

Financial statements

Notes to the consolidated financial statements

Therefore, up to 27 July 2020 cryptocurrencies were recognised at fair value using the revaluation model. Any revaluation gains
and losses above the assets’ original cost were recognised in other comprehensive income, with the revaluation gains and losses
below the assets’ original cost being recognised in profit or loss. The corresponding fair value movements on the customer
liability were recognised in profit or loss as set out in accounting policy 3.23 below.
The Group’s cryptocurrencies, subject to annual review, were considered to have indefinite lives and as such were not subject
to amortisation.

Post-27 July 2020
On 27 July 2020, the contractual arrangements with the Group’s customers were amended such that from that date Revolut Ltd isacting as an agent and nominee on behalf of the customer to facilitate the purchase of cryptocurrencies in the customer’s name.
As a result, the customer holds the beneficial interest in the cryptocurrencies and therefore is subject to the risks and rewardsof the asset. As Revolut Ltd is no longer exposed to the risks and rewards of the cryptocurrencies, they have been derecognisedfrom the Group’s balance sheet, along with the corresponding liability to the customer in relation to the assets. This is considereda significant judgment and further details are provided in note 4.

Computer software
Computer software is stated at cost less accumulated amortisation and accumulated impairment losses. Computer software isamortised on a straight-line basis over its estimated useful life, which is assessed to be 3 years.

3.15 Tangible fixed assets
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated
impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location andcondition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using thestraight-line method.
Depreciation is provided on the following basis:
Fixtures and fittings- 10% straight line

Office equipment- 25% straight line

Computer equipment- 33% straight line

The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate,
or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognisedin the Consolidated Statement of Comprehensive Income.

3.16 Impairment of non-financial assets
At each balance sheet date non-financial assets not carried at fair value are assessed to determine whether there is an indicationthat the asset (or asset’s cash generating unit) may be impaired. If there is such an indication the recoverable amount of theasset (or asset’s cash generating unit) is compared to the carrying amount of the asset (or asset’s cash generating unit).
The recoverable amount of the asset (or asset’s cash generating unit) is the higher of the fair value less costs to sell and value
in use. Value in use is defined as the present value of the future cash flows before interest and tax obtainable as a result of theasset’s (or asset’s cash generating unit’s) continued use. These cash flows are discounted using a pre-tax discount rate that
represents the current market risk free rate and the risks inherent in the asset.
If the recoverable amount of the asset (or asset’s cash generating unit) is estimated to be lower than the carrying amount,the carrying amount is reduced to its recoverable amount. An impairment loss is recognised in the profit and loss account,unless the asset has been revalued when the amount is recognised in other comprehensive income to the extent of any previously
recognised revaluation. Thereafter any excess is recognised in profit or loss.
If an impairment loss is subsequently reversed, the carrying amount of the asset (or asset’s cash generating unit) is increased
to the revised estimate of its recoverable amount, but only to the extent that the revised carrying amount does not exceed thecarrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised
in prior periods. A reversal of an impairment loss is recognised in the profit and loss account.

3.17 Investments in subsidiaries
Investments in subsidiaries are measured at cost less accumulated impairment.

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49

Financial statements

Notes to the consolidated financial statements

3.18 Inventories
Inventories are stocks of Basic, Premium and Metal plan cards for new and existing users held at the Group’s fulfilment partner
warehouses and are stated at the lower of cost (adjusted for loss of service potential if applicable) and replacement cost.
Inventories are recognised as an expense when the card is shipped to a customer.
Cost is determined using the weighted average cost to produce, including taxes and duties and transport and handling directly
attributable to bringing the inventory to its present location and condition.
At each balance sheet date, inventories are assessed for impairment. If inventory is impaired, the carrying amount isreduced to its selling price less costs to complete and sell and the impairment loss is recognised immediately in profit or loss.
Where a reversal of the impairment charge is required the impairment charge is reversed, up to the original impairment loss,
and is recognised as a credit in profit or loss.

3.19 Financial instruments
In accordance with FRS 102 11.2 (c) the Group has chosen to apply the recognition and measurement provisions of IFRS 9
Financial Instruments and the presentation and disclosure requirements of Sections 11 and 12 of the FRS 102.

Recognition and measurement of financial assets
The Group classifies its financial assets at either amortised cost, fair value through profit or loss or fair value through othercomprehensive income.
In order to determine the appropriate classification of non-derivative financial assets, the Group assesses the objective of thebusiness model in which the financial asset is held, and whether the contractual cash flows of the financial asset are “solely
payments of principal and interest”.
The Group assesses its business models at a portfolio level based on its objective for the relevant portfolio, how performance ofthe portfolio is measured and reported, how management are compensated and the frequency and reasons for asset sales fromthe portfolio. Financial assets are only reclassified when, and only when, the Group changes its business model for managing
the assets.

Financial assets at amortised cost
Financial assets in portfolios where the business model is to hold the assets to collect the contractual cash flows, and where
those cash flows represent solely payments of principal and interest, are measured at amortised cost.
Financial assets measured at amortised cost are initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue (with the exception of trade and other receivables with an expected term of less than
one year where the Group applies the practical expedient to recognise these amounts at transaction price), and are subsequently
measured at amortised cost using the effective interest rate method, less expected credit loss allowances as stipulated in IFRS 9.
Financial assets at amortised cost include cash and cash equivalents, loans and advances to customers, trade and otherreceivables, settlement receivables and amounts recoverable under long term contracts.

Financial assets at fair value through profit or loss
Financial assets that do not meet the criteria to be measured at amortised cost or fair value through other comprehensive income
are measured at fair value, with changes in fair value recognised in profit or loss in the consolidated statement of comprehensive
income. These financial instruments include derivative financial instruments.

Impairment of financial assets
In accordance with IFRS 9, the Group recognises impairment loss allowances for expected credit losses (“ECLs”) on financial
assets that are measured at amortised cost or fair value through other comprehensive income. These include loans andadvances to customers, trade and other receivables, settlement receivables, debt securities and amounts recoverable underlong term contracts.
There are three approaches to recognising ECL provisions under IFRS 9:• The Simplified Approach - which applies on a mandatory basis to trade receivables and contract assets that do not containa significant financing component. It may also be applied on an optional basis to trade receivables and contract assets that
do contain a significant financing component or to lease receivables;• The Credit Adjusted Approach - which applies to assets that are credit impaired on initial recognition (i.e., origination or
acquisition); and• The General Approach - which applies to all loans and receivables not eligible for the above two approaches.
All of the Group’s trade receivables are considered to qualify for the simplified approach (as they have terms of less than
one year and therefore do not contain a significant financing component), and therefore on initial recognition an impairment
provision is required for expected credit losses arising from default events expected to occur over the life of the financial asset(“lifetime ECL”).
The Group currently does not have any purchased or originated credit impaired financial assets.

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Financial statements

Notes to the consolidated financial statements

For loans and advances to customers, amounts recoverable on long term contracts, and amounts due from other Group
companies in the Company financial statements, the general approach to impairment is applied. This follows a three-stage modeland requires these financial assets to be assigned to one of the following three stages:• Stage 1 – Financial assets which have not experienced a significant increase in credit risk since initial recognition, against
which an expected credit loss provision is required for expected credit losses resulting from default events expected within
the next 12 months (a “12-month ECL”) is required on initial recognition;• Stage 2 – Financial assets which have experienced a significant increase in credit risk since initial recognition, against whicha lifetime ECL provision is required; and• Stage 3 – Financial assets which are credit impaired, for which objective evidence of an impairment exists, and as which also
requires a lifetime ECL provision.
Interest income on assets in Stages 1 and 2 is recognised using the effective interest rate method on the gross carrying value ofthe assets. For assets in Stage 3 interest income is recognised using the effective interest rate method on the carrying value ofthe assets net of the ECL provisions.

Significant increase in credit risk
Stage 2 includes financial assets that have had a significant increase in credit risk since initial recognition, but that do not have
objective evidence of being credit impaired.
For retail credit risks, Stage 2 includes assets for which any of the following SICR indicators are present as at the reporting date,that were not present at initial recognition:
1.

Obligors on watchlist status;

2. Obligors on forborne performing status (i.e., forbearance with material concession);
3. Obligors not eligible for forbearance measures based on their risk assessment;
4. Facilities more than 30 days past due;
5. Facilities with a significant increase in lifetime point-in-time forward looking PD compared to initial recognition. This occurs if:
a. The PD has increased by more than 2.5 times (this would be equivalent to downgrade by approximately 2 or more notches
according to the Revolut’s internal rating scale)b. The PD has increased is by more than 0.5% in absolute terms (to avoid classification as Stage 2 of obligors still being withlow risk despite a relative PD change exceeding 2.5 times).
SICR indicators in points 1 to 3 above are evaluated at obligor level, while the ones in points 4 and 5 are evaluated at individual
financial instrument level.
For wholesale credit risks, a low-risk exemption applies, such that all investment grade obligors will be allocated to Stage 1. Stage
2 assets will include non-investment grade exposures which have experienced a downgrade by 2 or more notches based Revolut’sinternal rating scale as at the reporting date compared to initial recognition and this results in a PD increase of more than 0.5% in
absolute terms.
Transfers from Stage 2 back to Stage 1 will be performed when none of SICR indicators are present as of the reporting date.

Definition of default and credit impaired
Assets which are past due by more than 90 days, or where the Group considers it unlikely that the obligor will be able to pay its
obligations, are considered to be in default for IFRS 9. Default status will be applied at an obligor level such that where any one
facility is in default, all facilities of that obligor will be considered in default.

Calculation of expected credit losses
The expected credit loss provision is calculated using the three following inputs:• Probability of default (“PD”) – the likelihood of default within a given time frame, either 12-months (for Stage 1 assets)or the life of a financial asset (for Stages 2 and 3 assets);• Loss given default (“LGD”) – the net value of loss in the event of a default; and• Expected balance at default (“EAD”) – the gross value of loss in the event of a default.
The expected credit loss provision on the outstanding financial assets at the balance sheet date is calculated by multiplying the
PD (dependent on the stage of the asset) by the LGD and EAD, taking into account the contractual period of credit risk exposure
from initial recognition in the case of loans. For overdrafts and credit cards, where the exposure to credit risk is not limited to thecontractual period, the expected life is calculated based on the estimated life of the loan and undrawn facility.
The measurement of the ECL provisions also takes into account all reasonable and supportable information, including forward
looking economic scenarios to calculate a probability weighted forward looking estimate.
Economic scenarios are currently derived from macro forecasts sourced from external providers and weightings determinedaccording to expert judgment.

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51

Financial statements

Notes to the consolidated financial statements

Details on the ECL calculation approach are contained in jurisdiction specific methodologies, respectively for wholesale and retailcredit exposures.

Modification of contractual terms and derecognition of financial assets
Where the contractual terms of financial assets are renegotiated or modified and the financial asset was not derecognised,
its gross carrying value is adjusted to reflect the new contractual cash flows discounted at the original effective interest ratewith a gain or loss recognised in the consolidated statement of comprehensive income.
Financial assets are derecognised when the contractual right to receive cash flows has expired or when the Group has transferred
its contractual right to receive the cash flows from the assets and either (i) substantially all of the risks and rewards of ownershiphave been transferred; or (ii) the Group has neither retained nor transferred substantially all of the risks and rewards but has
transferred control.

Write offs
Financial assets will be written off, either partially or in full, against the related allowance once there is no realistic prospect ofrecovery and the amount of the loss has been determined. Subsequent recovery of amounts written off are recognised against
the amount of impairment losses recognised in the consolidated statement of comprehensive income.

Recognition and measurement of financial liabilities
Financial liabilities that are not measured at fair value through profit or loss are classified as at amortised cost. Financial liabilities
designated as at amortised cost are initially measured at fair value (net of issue costs in the case of loans and borrowings) andsubsequently measured at their amortised cost using the effective interest rate method. They include loans and borrowings, tradeand other payables, and customer liabilities for E-Money in issue and customer deposits.
Non-derivative financial liabilities that are measured at fair value through profit or loss are measured at fair value with changes
in fair value recognised in consolidated statement of comprehensive income (except for those arising as a result of changes
in the Group’s own credit risk which are recognised directly in other comprehensive income and not subsequently recycled,
unless they result in an accounting mismatch in profit or loss or the liability is a loan commitment or financial guarantee
contract). These financial instruments include financial liabilities initially designated as fair value through profit or loss to avoid
an accounting mismatch including customer liabilities in respect of cryptocurrencies and commodities, where the associatedassets are accounted for at fair value.
Derivatives, including foreign currency and precious metals swaps and foreign currency forward contracts are measured at fairvalue through profit or loss. Derivatives are initially recognised at fair value on the date a derivative contract is entered into andare subsequently re-measured at their fair value.
Finance costs are charged to the consolidated statement of comprehensive income using the effective interest rate method.
Financial liabilities are derecognised when Group has either discharged the liability through settlement, or where it has beenlegally released from primary responsibility for the liability by process of law or by the creditor.

Offsetting of financial instruments
Financial assets and liabilities are offset, and the net amount is reported in the balance sheet when, and only when, there isa legally enforceable right to offset the recognised amounts with an intention to settle on a net basis, or alternatively to realise
the asset and settle the corresponding liability simultaneously.
Income and expenses are presented on a net basis only when permitted by the accounting standards.

3.20 Settlement receivables
Settlement receivables include balances arising from timing differences in the Group’s settlement process between the cash
settlement of a transaction and the recognition of the associated liability (for example, customer liabilities – E-Money in issue).
When customers fund their E-Money account using their bank account, or a credit or debit card, or sell stocks or cryptocurrencies
via our trading and cryptocurrency exchange partners, there is a clearing period before the cash is received or settled. This period
is usually within 5 business days.

3.21 Investment in commodities
Where the treatment of an asset class (such as commodities) is not addressed in the accounting framework as per Section
10 of FRS 102, judgment is to be applied in developing and applying an accounting policy that is relevant and reliable. These
investments represent holdings in precious metals that are held to hedge the Group’s exposure to movements in commodity
prices on its customer contracts. As these investments are not held for sale in the ordinary course of business, in the processof production for such sale, or in the form of materials or supplies to be consumed in the production process or in the renderingof services they are not considered to meet the definition of inventory.
Accordingly, they are classified as other current asset investments in the balance sheet, and as they are highly liquid assets,
which are frequently traded in an active market, with an observable market price, the Group’s accounting policy is to accountfor these investments at fair value through profit or loss. The fair value gains and losses on investments in commodities
are recognised in revenue along with the corresponding fair value gains and losses on the associated customer liability(see note 3.23).

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52

Financial statements

Notes to the consolidated financial statements

3.22 Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than
24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition
and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Cash and cash equivalents include £4,566m (2019: £2,060m) held on behalf of. In Europe client funds are held in segregatedaccounts with authorised credit institutions as part of the Group’s safeguarding policy. In other jurisdictions the funds are held
separately from the Group’s own cash resources and are safeguarded through the provision of a bank guarantee from a third
party authorised credit institution.
In the US, E-Money services are provided through partnerships with authorised credit institutions to provide the consumer
protection, and the client funds and the associated customer liability are held on the balance sheet of the relevant financial
institution, and therefore are not recognised on the Group’s balance sheet.

3.23 Customer liabilities
E-Money in issue
The Group recognises a liability upon the issue of electronic money to its customers equal to the amount of electronic moneythat has been issued.

Cryptocurrencies
Prior to the amendment to the terms and conditions relating to cryptocurrencies on 27 July 2020, the customer liabilities inrespect of cryptocurrencies are financial liabilities with an embedded derivative. The Group’s accounting policy is not to separate
the embedded derivative and to measure the entire instrument at fair value through profit or loss.

Commodities
Customer liabilities in respect of contracts relating to the commodities offering are financial liabilities with an embedded
derivative. The Group’s accounting policy is not to separate the embedded derivative and to measure the entire instrument
at fair value through profit or loss.

3.24 Provisions and contingencies
Provisions
Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires
settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the Consolidated Statement of Comprehensive Income in the year that the Group
becomes aware of the obligation and are measured at the present value of the expenditures expected to be required to settle
the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specificto the obligation. The increase in the provision due to passage of time is recognised as a finance cost.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.

Contingencies
Contingent liabilities are not recognised, except those acquired in a business combination. Contingent liabilities arise as aresult of past events when (i) it is not probable that there will be an outflow of resources or that the amount cannot be reliably
measured at the reporting date or (ii) when the existence will be confirmed by the occurrence or non-occurrence of uncertain
future events not wholly within the group’s control. Contingent liabilities are disclosed in the financial statements unless theprobability of an outflow of resources is remote.
Contingent assets are not recognised. Contingent assets are disclosed in the financial statements when an inflow of economic
benefits is probable.

3.25 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options
are shown in equity as a deduction, net of tax, from the proceeds.

3.26 Related party transactions
The group discloses transactions with related parties which are not wholly owned within the same group. Where appropriate,transactions of a similar nature are aggregated unless, in the opinion of the directors, separate disclosure is necessary tounderstand the effect of the transactions on the group financial statements.

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53

Financial statements

Notes to the consolidated financial statements

3.27 Reserves
The Group and Company reserves are as follows:• Called up share capital reserves represents the nominal value of the shares issued.
• The share premium account includes the premium on issue of equity shares, net of any issue cost.
• Other Reserves represents the cost of shares held for options granted to employees.
• Foreign exchange reserves represent the revaluation of foreign currency at the balance sheet date.
• Profit and loss account represents cumulative profits or losses, net of dividends paid, and any other adjustments.

4.

Judgments in applying accounting policies and key sources of estimation uncertainty

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectationsof future events that are believed to be reasonable under the circumstances.

Critical judgments in applying the Group’s accounting policies
Accounting for cryptocurrencies
Prior to 27 July 2020, when the contractual arrangements between the customer, the Group and the Group’s cryptocurrency partners
were amended, the Group’s cryptocurrencies all met the definition of cryptocurrencies and have been accounted for as intangible
assets using the revaluation model.
Following the amendments to the contractual arrangements, the legal title of the cryptocurrencies is held by Revolut Ltd as nominee,with the beneficial ownership of the cryptocurrencies held directly by the customer.
The implications of the amendments are that:• the customer is entitled to all the economic benefits, and exposed to the associated losses, from holding the cryptocurrencies;• the Group is contractually restricted from the use of the cryptocurrencies for its own benefit; and• the only economic benefit available to the Group is the predetermined fee based on the value of the cryptocurrencies.
FRS 102 requires an entity to determine whether it is acting as a principal or an agent in its transactions with customers, and thisrequires significant judgment and consideration of all relevant facts and circumstances. The Group has considered the requirementsof FRS 102 23A.38 and 23A.39, and has concluded that it is acting as an agent in its relationship with its customers to facilitate theiracquisition, holding and sale of cryptocurrencies, and that the cryptocurrencies ceased to represent intangible assets of the Group
following the amendment. Consequently, the cryptocurrencies have been derecognised from the balance sheet from that date. As at
31 December 2020, the Group held cryptocurrencies to the value of £536.9m in a trust arrangement on behalf of its customers.
The Group recognises the predetermined fee receivable as revenue in accordance with FRS 102 23A.41.

Recognition of deferred tax asset
The Company has substantial carried forward tax losses. Where carried forward tax losses can be utilised against future taxable profits,a deferred tax asset should only be recognised to the extent that it is probable that there will be sufficient taxable profits against which
it can be recovered.
Whilst the directors are forecasting the Group to reach sustained profitability from late 2021, as deferred tax assets are recognised onan entity basis in order for the Company to reach consistent profitability further monetisation of its intellectual property and services
via new product offerings or expansion into new territories (thus requiring regulatory licence approvals for banking and EMI authorised
entities) is required.
As a result, the directors have concluded that the criteria to recognise a deferred tax asset in the Company in relation to the carriedforward losses has not yet been met, and therefore no deferred tax asset has been recognised as at 31 December 2020 in respect of
the carried forward losses in the Company.

Key accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal
the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are addressed below.

Share-based payments
The estimate of share-based payments costs requires management to select an appropriate valuation model and make decisions about
various inputs into the model, including volatility of its own share price, the probable life of the options, the vesting date of options
where non-market performance conditions have been set and the risk-free interest rate. The key assumptions used in the models,and a sensitivity analysis of the impact of varying those assumptions, are disclosed in note 27.

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54

Financial statements

5.

Notes to the consolidated financial statements

Revenue

An analysis of revenue by class of business is as follows:

2020
£000

2019
(restated)£000

Card & Interchange

95,46673,982

Subscription

75,21539,499Foreign exchange and wealth40,99831,975

Other

10,463

20,570222,142

166,026

Revenue from foreign exchange and wealth includes the fair value movements on the customer liability in respect of cryptocurrencies
prior to 27 July 2020 (at which point the Group ceased to recognise the customer liability and cryptocurrencies as a result in thechange in the contractual arrangements) and the corresponding fair value movements on the Group’s holding of cryptocurrencies below
their original cost.
In accordance with FRS 102 and the Group’s accounting policy for cryptocurrencies, any fair value gains above the cryptocurrencies’
original cost are recognised in other comprehensive income, and an amount of £38.7m was recognised in the period to 27 July 2020.
From a management reporting perspective, this gain is included within the foreign exchange and wealth adjusted revenue for the year
for consistent treatment with the fair value movements on the associated customer liability, such that for management purposes theadjusted revenues for foreign exchange and wealth are £79.7m, and total adjusted revenue is £260.8m. The reconciliation of statutory
revenue to the adjusted revenue (including this gain) is set out in the appendix to the consolidated financial statements.
An analysis of revenue by location of entity providing the services is stated below:

2020
£000

2019
(restated)
£000

UK

196,419

165,631

EEA (excluding UK)

22,756

47

Rest of the World

2,967

348

222,142

166,026

2020
£000

2019
£000

Interest income on safeguarded funds

101

1,366

Negative interest on safeguarded funds(6,562)-

Net interest (expense)/income on safeguarded funds(6,461)

1,366

2,021

(603)

(4,440)763

6.

Other operating (expense)/income

Net foreign exchange losses
Other operating (expense)/income

Net interest income/costs on client safeguarded funds are included within operating loss as this is considered to represent an integral
part of the Group’s operations.

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Financial statements

7.

Notes to the consolidated financial statements

Operating loss

The operating loss is stated after charging/(crediting):

2020
£000

2019
(restated)£000

Total staff costs (see note 8)

169,916

59,290Research and development charged as an expense

31,106

13,715

Amortisation (included in administration costs)

174

13

Depreciation (included in administration costs)

3,365

1,491

Impairment of other financial assets held at amortised cost

(220)

261

(38,961)

7,549

Inventory recognised as expense

15,596

17,371

Foreign exchange differences(2,021)

603

Operating lease costs

8,516

4,330

Fees payable to the company’s auditor and its associates for the audit of the parent company and thegroup’s consolidated financial statements

650

290

Fees payable to the company’s auditor and its associates for the audit of the parent company and thegroup’s consolidated financial statements in respect of the prior period

185-

Fees payable to the company’s auditor and its associates for the audit of the company’s subsidiaries

128

100

Fair value changes in intangible assets below original cost (included in revenue)

8.

Employees

Staff costs, including directors’ remuneration, were as follows:
Group
2020
£000

Group
2019
£000

Company
2020£000

Company
2019£000

Wages & Salaries

115,191

45,38893,01035,087

Share based payments

40,462

8,489

34,892

8,489

Social Security Costs

12,8504,016

11,385

3,450

1,413

1,397

863

1,344

169,916

59,290140,150

48,370

Cost of defined contribution scheme

The average monthly number of employees, including the executive directors, during the year was as follows:

Staff
Directors

Group
2020
No.

Group
2019
No.

Company
2020
No.

Company
2019
No.

2,156

1,283

1,538

1,242

2

2

2

2

2,158

1,285

1,540

1,244

The increase in headcount reflects the continued investment in growth and capability throughout the business, including enhancing theGroup’s Risk, Compliance and Control functions.

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Financial statements

9.

Notes to the consolidated financial statements

Directors’ remuneration

Director emoluments
Company contributions to defined contribution pension schemes

2020
£000

2019
£000

211

331

2

2

213

333

From April 2020 the non-executive directors agreed to forego their cash remuneration in exchange for compensation in the formof shares in the company. During the year 5 (2019: none) of the directors received shares under this arrangement. See note 27 forfurther details.
During the year the company made contributions to a defined contribution pension scheme for 2 directors (2019: 2), and no directors(2019: 2) exercised share options during the year.
2020
£000

2019
£000

65

100

1

1

66

101

Highest paid director
Director emoluments
Company contributions to defined contribution pension schemes

Key management personnel include all directors and a number of senior managers across the group who together have authority
and responsibility for planning, directing and controlling the activities of the group. The total compensation paid to key management
personnel for services provided to the group was £2.5m (2019: £2.0m).

10.

Interest receivable and similar income

Other interest receivable

11.

2020
£000

2019
£000

2,028

687

2020
£000

2019
£000

9,254

1,429

Interest payable and similar charges

Other loan interest payable

The other loan interest payable for 2020 of £9.3m (2019: £1.0m) represents the interest cost on the loan facility as detailed in note 21.

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Financial statements

12.

Notes to the consolidated financial statements

Taxation
2020
£000

2019
£000

-

-

3,856

1,342

(2,303)

(469)

1,553

873

Origination and reversal of timing differences

(60)

42

Adjustments in respect of previous periods

350-

Total deferred tax

290

42

Taxation credit on loss on ordinary activities

1,843

915

Current tax
UK Corporation tax credit on loss for the year
UK Corporation tax in respect of prior year R&D credit
Foreign corporation tax charge for the year
Total current tax

Deferred tax

Factors affecting tax charge for the year
The tax assessed for the year differs from the standard UK rate of corporation tax of 19% (2019 - 19%). The differences are
explained below:

2020
£000

2019
(restated)£000

Loss on ordinary activities before tax

207,875

107,681

Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2019: 19%)

39,496

20,459(6,402)

1,273

350

-

(1,414)

(359)

886

-

Movement in other comprehensive income taxed as income(7,345)-Adjustment in research and development tax credit

3,856

1,342

(27,584)(21,802)

1,843

915

Effects of:
Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
Adjustments in respect of previous periods
Foreign tax credits
Impact of overseas tax rates

Unrecognised deferred tax for carried forward tax losses
Total tax credit for the year

Factors that may affect future tax charges
In March 2020 the UK Government announced that the proposed reduction in the main UK corporation tax rate to 17% from 1 April 2020
would no longer take effect and it would remain at 19%. This was substantively enacted on 17 March 2020. Subsequently, the UK
Government stated in its Budget announcement on 3 March 2021 that the main UK corporation tax rate would increase to 25% from
1 April 2023. As at the date the consolidated financial statements were approved the Finance Bill 2021 had yet to receive Royal Assent
and therefore had not been substantively enacted.
A deferred tax asset has not been recognised in respect of tax losses carried forward totalling £244m (2019: £122m) as there isinsufficient evidence as to their recoverability. See note 4 for further details on the consideration of the recognition of deferred tax
assets in relation to carried forward losses.

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Financial statements

13.

Notes to the consolidated financial statements

Intangible assets
Cryptocurrencies£000

Software
£’000

Total
£000

At 1 January 2020

132,311590

132,901

Additions

338,026

6

338,032

Disposals(470,337)-(470,337)

Foreign exchange

-

5

5

At 31 December 2020

-

601

601

At 1 January 2020

(38,961)(13)(38,974)

Charge for the year

77,620(174)

77,446(38,659)-(38,659)

Foreign exchange movements

-

(3)

(3)

At 31 December 2020

-

(190)

(190)

At 31 December 2020

-

411

411

At 31 December 201993,350577

93,927

Group
Cost or valuation

Amortisation, impairment and fair value movement

Disposals

Total net book value

Up until 27 July 2020, at which time the contractual arrangements related to the cryptocurrency product were amended, thecryptocurrencies were recognised at as intangible assets at fair value, which was based upon the quoted prices in their respective
active markets. Upon the amendment to the legal arrangements Revolut Ltd is now acting as agent on behalf of its customers andtherefore no longer recognises the cryptocurrencies, nor the corresponding customer liability, on its balance sheet.
The historical cost less impairment of the intangible assets at 31 December 2020 was therefore nil (2019: £93.4m).

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59

Financial statements

Notes to the consolidated financial statements

Cryptocurrencies£000

Software
£’000

Total
£000

At 1 January 2020

132,311510

132,821Additions

338,026-

338,026

Disposals(470,337)-(470,337)

-

510

510

At 1 January 2020

(38,961)(12)(38,973)

Charge for the year

77,620(147)

77,473(38,659)-(38,659)

-

(159)

(159)

At 31 December 2020

-

351

351

At 31 December 201993,350498

93,848

Fixtures &fittings£000

Officeequipment£'000

Computerequipment
£000

Total
£000

At 1 January 2020

7,573

1,553

4,737

13,863

Additions

4,322

158

1,846

6,326

(24)

(16)

(26)

(66)

11,871

1,695

6,557

20,123

At 1 January 2020

612

136

1,174

1,922

Charge for the year on owned assets

1,148

320

1,897

3,365

Foreign exchange movements

(58)

(16)

(94)

(168)

At 31 December 2020

1,702

440

2,977

5,119

At 31 December 2020

10,169

1,255

3,580

15,004

At 31 December 2019

6,960

1,417

3,563

11,940Company
Cost or valuation

At 31 December 2020

Amortisation, impairment and fair value movement

Disposals
At 31 December 2020

Total net book value

14.

Tangible fixed assets

Group
Cost or valuation

Foreign exchange movements
At 31 December 2020

Depreciation

Total net book value

The Group has no assets held under finance leases.

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Financial statements

Notes to the consolidated financial statements

Fixtures &fittings£000

Officeequipment£'000

Computerequipment
£000

Total
£000

At 1 January 2020

7,495

1,202

3,871

12,568Additions

4,294

205

1,792

6,291

19

3

(28)

(6)

11,808

1,410

5,635

18,853

At 1 January 2020

611

116

880

1,607

Charge for the year on owned assets

1,178

333

1,626

3,137

Foreign exchange movements

(89)

(25)

(121)

(235)

At 31 December 2020

1,700

424

2,385

4,509

At 31 December 2020

10,108986

3,250

14,344

At 31 December 2019

6,883

1,086

2,991

10,960Company
Cost or valuation

Foreign exchange movements
At 31 December 2020

Depreciation

Total net book value

The Company has no assets held under finance leases.

15.

Investments in subsidiaries

Investments in subsidiary companies£000

Cost or valuation
At 1 January 2020

15,554

Additions72,304

At 31 December 2020

87,858Net book value
At 31 December 2020

87,858At 31 December 201915,554The increase in investments in subsidiaries represents £66.7m of additional equity funding provided to the Group’s overseas
subsidiaries in order to meet local regulatory requirements and/or fund local expansion, and £5.6m related to share-based payments
where the Company has issued share options to employees of its subsidiaries.

Annual Report & Financial Statements

61

Financial statements

Notes to the consolidated financial statements

The list of subsidiary undertakings of the Company is set out below. All trading subsidiary undertakings are included in the consolidation.
Company

Class ofshare

Holding

Principal activity

Registered address

Revolut Travel Ltd

Ordinary

100%

Insurance Intermediary

7 Westferry Circus, Canary Wharf, London,
England, E14 4HD

Revolut Trading Ltd

Ordinary

100%

Security and commodity contracts
dealing activities

7 Westferry Circus, Canary Wharf, London,
England, E14 4HD

OOO Revolut Technologies

Ordinary

100%

Software development

125196, Moscow, Lesnaya str., bld. 9,
premises 2, 3, 27, 29

Revolut Bank UAB(formerly Revolut
Technologies UAB)

Ordinary

100%

Deposits acceptance and consumer
lending

Konstitucijos ave. 21B, Vilnius, LT-08130

Revolut Payments UAB

Ordinary

100%

Payments services, e-money issuance Konstitucijos ave. 21B, Vilnius, LT-08130
and insurance brokerage

Revolut Technologies
Singapore Pte. Ltd

Ordinary

100%

Payments services, e-money issuance 30 Cecil Street, #19-08, Prudential Tower,
and insurance brokerage
S049712

Revolut Technologies Ltd

Ordinary

100%

Technology Services, payments
services through Metropolitan
Commercial Bank

Suite 2300, Bentall 5, 550 Burrard Street
Vancouver, British Columbia V6C 2B5

Revolut Technologies S.A.

Ordinary

100%

Dormant at reporting date

19 rue du Bitbourg 1273 Luxembourg

Revolut Technologies
LimitedOrdinary

100%

Dormant at reporting date

13/F, Gloucester Tower, The Landmark, 15
Queen’s Road Central, Central, Hong Kong

Revolut Technologies
Poland Sp z o.oOrdinary

100%

Inactive, to be dissolved

Podium Park, Jana Pawła, 43a, Krakow, 31864

Revolut Technologies
Japan, Inc.

Ordinary

100%

Payments services, e-money issuance Roppongi 7-7-7, Minato-ku, Tokyo 1060032
and insurance brokerage

Revolut Securities Japan,
Inc

Ordinary

100%

Payments services, e-money issuance Roppongi 7-7-7, Minato-ku, Tokyo 1060032
and insurance brokerage

Revolut Payments Ireland
LimitedOrdinary

100%

Financial Services

Revolut Securities Europe
LimitedOrdinary

100%

Payments services, e-money issuance Matheson, 70 Sir John Rogerson’s Quay,
and insurance brokerage
Dublin 2, Ireland

Revolut Holdings US Inc.

Ordinary

100%

Technology Services, payments
services

1209 Orange Street, Wilmington DE, 19801,
County of New Castle, Delaware

Revolut Securities Inc.*

Ordinary

100%

Anticipates licence as broker-dealer
for trading services

1209 Orange Street, Wilmington DE, 19801,
County of New Castle, Delaware

Revolut Technologies Inc*

Ordinary

100%

Business Development

1209 Orange Street, Wilmington DE, 19801,
County of New Castle, Delaware

Revolut Australia NOHC
Pty Ltd

Ordinary

100%

Financial Services

Level 6, 152 Elizabeth Street, Melbourne VIC
3000

Revolut Payments
Australia Pty Ltd*

Ordinary

100%

Financial services

Level 6, 152 Elizabeth Street, Melbourne VIC
3000

Revolut HoldingsInternational Ltd

Ordinary

100%

Holding company

7 Westferry Circus, Canary Wharf, London,
England, E14 4HD

Revolut NewCo UK Ltd

Ordinary

100%

Dormant at reporting date

7 Westferry Circus, Canary Wharf, London,
England, E14 4HD

Revolut Payments New
Zealand Pty Ltd*

Ordinary

100%

Dormant at reporting date

Level 6, 152 Elizabeth Street, Melbourne VIC
3000

Revolut Holdings Europe
LimitedOrdinary

100%

Holding company

Matheson, 70 Sir John Rogerson’s Quay,
Dublin 2, Ireland* Held indirectly

Annual Report & Financial Statements

62

Matheson, 70 Sir John Rogerson’s Quay,
Dublin 2, IrelandFinancial statements

Notes to the consolidated financial statements

Branches
Revolut Ltd conducts business through branches in Germany, Lithuania, Poland and Portugal.
• Revolut Ltd (Sp z o.o.) Oddzial w Polsce. Registered address - Podium Park, Jana Pawła, 43a, Krakow, 31-864, Polska• Revolut Ltd - Sucursal em Portugal. Registered address - Rua Roberto Ivens, n.1353 4450-208 Matosinhos, Porto, Portugal• Revolut Ltd filialas. Registered address - Vilniaus m. sav. Vilniaus m. Lvovo g. 105A
• Revolut Ltd Zweigniederlassung Deutschland. Registered address - Friedrichstrasse 76, c/o WeWork, 10117 Berlin, Germany

16.

Inventories

Inventory

Group
2020
£000

Group
2019
£000

Company
2020£000

Company
2019£000

11,282

13,042

11,161

13,024Inventories comprise prepaid cards not yet distributed to customers.
The difference between purchase price of inventories and their replacement cost is not material.
Inventory recognised in cost of sales during the year as an expense was £15.6m (2019 - £17.4m).
There were no impairment losses recognised in cost of sales during the year in respect of obsolete inventory (2019 - nil).

17.

Debtors
Company
2020

£000

Group
2019
(restated)
£000

£000

Company
2019(restated)
£000

359

4,290

163

4,232

-

-

30,747

23,973

419

-

-

-

73,666150,860

24,414145,056

1,808

4,815

1,067

4,654

Other receivables

50,54625,10636,73923,193

Amounts recoverable on long term contracts

21,48821,452

21,48821,452

121

-

3,707

-

2,864

3,302

2,442

2,729

344

42

186

-

3,856

1,342

3,856

1,342

-

351

-

22

155,471

211,560

124,809226,653

961

-

-

-

156,432

211,560

124,809226,653

Group
2020

Amounts falling due within one year
Trade receivables
Amounts owed by group undertakings
Loans and advances to customers
Settlement receivables
Negative customer balances

Derivative financial assets
Prepayments and accrued income
Deferred taxation
Research & Development credit
Corporation tax

Amounts falling due after more than one year
Loans and advances to customers
Total debtors
Trade receivables are stated after provision for impairment of nil (2019: £8k).

Annual Report & Financial Statements

63

Financial statements

Notes to the consolidated financial statements

Amounts owed by group undertakings includes unsecured loans and accrued interest of £4.2m, of which £1.1m is repayable between
5 and 12 months from the balance sheet date, and the other loans being repayable on demand. The remaining intercompany receivables
relate to recharges of expenses incurred by Revolut Ltd on behalf of its subsidiaries and are unsecured, non-interest bearing andrepayable on demand.
Amounts recoverable on long term contracts are collateral requirements in respect of card schemes.
Other receivables include accrued rebates due from payment scheme providers.

18.

Current asset investments

Commodities

Group
2020
£000

Group
2019
£000

Company
2020£000

Company
2019£000

50,366-50,366-

Investments in commodities represent holdings in precious metals that are held to hedge the Group’s exposure to commodity price risk
on its customer liabilities related to precious metals. These investments are accounted for at fair value through profit or loss.

19.

Cash and cash equivalents
Company
2020

£000

Group
2019
(restated)
£’000

£000

Company
2019(restated)£000

537,974

403,108

405,807372,042

4,517,986

2,059,908

2,157,916

2,057,026

5,055,960

2,463,016

2,563,723

2,429,068

Group
2020

Own cash and cash equivalents
Restricted cash held at central banks and other banks
in respect of customers

Own cash and cash equivalents represent the Group’s own funds held for regulatory capital and liquidity requirements, including cashfrom customer deposits, and its own operating cash balances for general corporate purposes. Only cash in transit within own cash
and cash equivalents has been reclassified in the prior year. There is no change to the restricted cash balance as previously reported.
Restricted cash held at central banks and other banks in respect of customers represents safeguarded funds related to the Group’s
regulated E-Money services. In EEA territories client funds are held in segregated accounts with authorised credit institutions as partof the Group’s safeguarding policy. In other jurisdictions the funds are held separately from the Group’s own cash resources and aresafeguarded through the provision of a bank guarantee from a third-party authorised credit institution. In the US, E-Money services
are provided through partnerships with authorised credit institutions to provide the consumer protection, and the client funds and theassociated customer liability are held on the balance sheet of the relevant financial institution, and therefore are not recognised on theGroup’s balance sheet.

20.

Customer liabilities
Company
2020

£000

Group
2019
(restated)
£’000

£000

Company
2019(restated)£000

4,537,436

2,274,008

2,071,187

2,264,172-

93,177-

93,177

Customer liabilities in respect of commodities

49,91814

49,89814

Customer liabilities in respect of deposits

49,876

1--

4,637,230

2,367,200

2,121,085

2,357,363

Group
2020

E-Money in issue
Customer liabilities in respect of cryptocurrencies

Annual Report & Financial Statements

64

Financial statements

21.

Notes to the consolidated financial statements

Creditors: Amounts falling due within one year
Company
2020

£000

Group
2019
(restated)
£’000

£000

Company
2019(restated)
£000

2,438

17,7782,273

16,168--

68,1102,950

103,216

163,189

98,190162,662

Derivative financial liabilities

1,970

-

2,139

-

Corporation tax

1,670

-

1,178

7

Other taxation and social security

5,433

3,906

5,182

4,102

Other creditors

2,127

3,335

1,367

3,019

Accruals and deferred income

31,841

16,98324,86815,792Loans

81,812972

81,812972

230,507

206,163

285,119

205,672

Group
2020

Trade creditors
Amounts owed to group undertakings
Settlement payables

Amounts owed to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
In 2019 the Company entered into a €200m facility agreement which bears interest at 10% per annum and is repayable on or before
November 2021. As at 31 December 2019 €141m had been drawn (included within creditors: amounts falling due after more than oneyear). During the year the Company repaid €50m and the remaining €91m tranche was repayable on or before 21 November 2021 andtherefore is included within creditors falling due within one year as at 31 December 2020. As set out in note 33 this loan has been
repaid in full since the year end.
Interest charged in the year was £9.3m (2019: £1.0m).

22.

Creditors: Amounts falling due after more than one year

Deferred rent
Loans

There are no creditors repayable after more than five years.

Annual Report & Financial Statements

65

Group
2020
£000

Group
2019
£’000

Company
2020£000

Company
2019
£000

2,716

3,701

2,716

3,701

-

119,546-

119,546

2,716

123,247

2,716

123,247

Financial statements

23.

Notes to the consolidated financial statements

Provisions for liabilities

The Group had the following provisions during the year:

Dilapidation
Provision
£000

Group

Provision for
expected
credit losses
Deferred tax
on loanprovision commitments
£000
£000

Total
£000

At 1 January 2020

905

-

-

905

Provided during the year

338

18

4

360

(408)

-

-

(408)

835

18

4

858

Dilapidation
Provision
£000

Total
£000

At 1 January 2020

905

905

Provided during the year

338

338

(683)

(683)

560

560

Other movements
As 31 December 2020

The Company had the following provisions during the year:

Company

Other movements
As 31 December 2020

Dilapidation provision
The property dilapidation provision is based on a calculation of the best estimate for the leases the Group is party to. Uncertainty
associated with these factors may result in the ultimate liability being different from the reported provision. Dilapidation provisions
are expected to be utilised in 1 to 5 years.

Deferred tax
Group
2020
£000

Group
2019
£’000

Company
2020£000

Company
2019£000

Accelerated capital allowances

(19)

(390)

60

-

Other short term timing difference

191

292

126

-

Losses recognised

154

140

-

-

Net deferred tax

326

42

186

-

Deferred tax assets

344

42

186

-

Deferred tax liabilities

(18)

-

-

-

Net deferred tax

326

42

186

-

The net reversal of deferred tax assets and liabilities expected in 2021 is £0.2m. This is expected to arise because depreciation is
anticipated to be higher than the available capital allowances. However, it should be noted that further reversals (or further increases indeferred tax balances) may arise as a result of financial instruments. As the future deferred tax balances, if any, will be dependent on
future changes in fair values of assets and liabilities, it is not possible to estimate any further future reversals.

Provision for expected credit losses on loan commitments
In accordance with IFRS 9 the Group recognises a provision for expected credit losses on undrawn lending commitments. Total undrawn
lending commitments as at 31 December 2020 as disclosed in note 30.

Annual Report & Financial Statements

66

Financial statements

24.

Notes to the consolidated financial statements

Financial instruments

Information regarding the Group’s exposure to and management of credit risk, liquidity risk, and market risk (including foreign exchangerisk) is included in the Strategic report.
The Group had the following financial instruments:

Group

Notes

2020
£000

2019
£000

17

121

-

121

-

Financial assets at fair value through profit or loss
Derivative financial instruments

Financial assets that are debt instruments measured at amortised cost
Trade receivables

17

359

4,290

Loans and advances to customers

17

1,380

-

Settlement receivables

17

73,666150,860

Negative customer balances

17

1,808

4,815

Other receivables

17

50,54625,106

Amounts recoverable on long term contracts

17

21,48821,452

Accrued income

17

226

-

Cash and cash equivalents

19

5,055,023

2,462,986

5,204,496

2,669,509

Financial liabilities at fair value through profit or loss
Derivative financial instruments

21

1,970

-

Customer liabilities - cryptocurrencies

20-

93,177

Customer liabilities - commodities

20

49,91814

51,88893,191

Financial liabilities measured at amortised cost
Customer liabilities - E-Money in issue20

4,537,436

2,274,008

Customer liabilities - customer deposits

20

49,876

1

Trade creditors

21

2,438

17,778Settlement payables

21

103,216

163,189

Other creditors

21

2,127

3,335

Accruals (including deferred rent)

21, 22

18,603

10,897Loans

21, 22

81,812

120,518

4,795,508

2,589,726

Derivative financial instruments
The Group enters into a number of derivative financial instruments with third parties to mitigate the foreign currency exchange risk andliquidity risk for payments in certain currencies, including foreign currency swaps and deliverable and non-deliverable forward foreign
currency contracts.
The Group also uses precious metals swap contracts to enable it to meet its requirements for allocated commodity holdings in certain
jurisdictions, and foreign currency swaps to maximise the yield on its cash resources.
At 31 December 2020, the outstanding contracts all matured within 3 months (2019: 1 months) of the year end and have been enteredinto by the Company.

Annual Report & Financial Statements

67

Financial statements

Notes to the consolidated financial statements

The forward currency contracts are measured at fair value, which is determined using valuation techniques that utilise observable
inputs. The key inputs used in valuing the derivatives are the relevant forward exchange rates for the currencies involved.
The Company had the following financial instruments:

Company

Notes

2020
£000

2019
£000

17

3,707

-

3,707

-

Financial assets at fair value through profit or loss
Derivative financial instruments

Financial assets that are debt instruments measured at amortised cost
Trade receivables

17

163

4,232

Amounts owed by group undertakings

17

30,747

23,973

Settlement receivables

17

24,414145,056

Negative customer balances

17

1,067

4,654

Other receivables

17

36,73923,193

Amounts recoverable on long term contracts

17

21,48821,452

Cash and cash equivalents

19

2,562,779

2,429,068

2,677,397

2,651,628

Financial liabilities at fair value through profit or loss
Derivative financial instruments

21

2,139

-

Customer liabilities - cryptocurrencies

20-

93,177

Customer liabilities - commodities

20

49,89814

52,037

93,191

Financial liabilities measured at amortised cost
Customer liabilities - E-Money in issue20

2,071,187

2,264,172

Trade creditors

21

2,273

16,168Amounts owed to group undertakings

21

68,1102,950

Settlement payables

21

98,190162,662

Other creditors

21, 22

1,367

3,019

Accruals (including deferred rent)

21, 22

16,512

9,725

Loans

21, 22

81,812

120,518

2,339,451

2,579,214

In addition to the derivative financial instruments with third parties as disclosed in the Group disclosure above, the Company
has a number of internal derivatives with its subsidiaries as the management of foreign exchange and commodity price risk ismanaged centrally.

Annual Report & Financial Statements

68

Financial statements

Notes to the consolidated financial statements

Revolut Bank UAB (“RBUAB”), a wholly owned subsidiary of Revolut Ltd, is an EEA regulated bank and as such meets the definition ofa Financial Institution as defined by FRS 102. The following additional disclosures required are provided for RBUAB in accordance withthe requirements of paragraphs 34.17 to 34.33.
RBUAB had the following financial instruments:
2020
£000

2019
£000

Loans and advances to customers

1,380

-

Amounts owed by group undertakings

10,015

1

Cash and cash equivalents

65,254

7,599

76,649

7,600

275

-

275

-

49,876

1

123

48

15,21790

Other creditors

106

268

Accruals

154

212

65,476

619

Revolut Bank UAB
Financial assets that are debt instruments measured at amortised cost

Financial liabilities at fair value through profit or loss
Derivative financial instruments

Financial liabilities measured at amortised cost
Customer liabilities - customer deposits
Trade creditors
Amounts owed to group undertakings

Fair value
All derivative financial instruments represent foreign currency swap contracts with Revolut Ltd and are categorised as level twoin the fair value hierarchy as they are valued using direct and indirect observable inputs.

Credit risk and impairment
RBUAB is exposed to various credit risks in the course of its operations, the majority of which arise from the placement of fundswith financial institutions, which are typically investment grade rated institutions.
To manage credit risk appetite, the Group has credit risk management policies and procedures in place that require all counterparties
giving rise to credit risk to be assessed at least annually and assigned a credit risk limit commensurate to its risk profile, subject toapproved materiality thresholds. The Group’s Credit Risk function undertakes ongoing monitoring for adherence to limits and to ensure
credit risks are managed appropriately where deterioration is identified. Key decisions are subject to review and approval by the ALCO.

Central Bank accounts
As of 31 December 2020, RBUAB had £61.6m (2019: £89k) of cash deposits with the Bank of Lithuania.

Nostro accounts
As of 31 December 2020, RBUAB had £3.7m (2019: £7.5m) of cash deposits at other banks. All the above balances were held in both
Swedish banks (with a minimum Standard & Poor’s long-term borrowing rating of A+) and Lithuanian banks (not rated externally by
rating agencies on a stand-alone basis, but which are subsidiaries of foreign banks having a minimum Standard & Poor’s long-termborrowing rating of A+).

Loans and advances to customers and undrawn commitments
In July 2020, RBUAB launched consumer credit products, comprising loans and credit cards, in Lithuania and Poland.
As at 31 December 2020 gross lending amounted to £1.4m (2019: nil), against which a 12-month expected credit loss provisionof £9k (2019: nil) has been recognised during the year.
The nominal value of the undrawn commitments related to credit cards was £1.2m at 31 December 2020 (2019: nil), against which
a 12-month expected credit loss provision of £4k (2019: nil) has been recognised.
The Group intends to scale up the consumer credit offerings in a controlled manner to ensure that its credit models are robust.

Annual Report & Financial Statements

69

Financial statements

Notes to the consolidated financial statements

Liquidity risk
Liquidity risk is the risk that RBUAB cannot meet its financial obligations when they fall due. Funding risk is the risk that RBUAB does
not have sufficient stable sources of funding to meet its financial obligations when they fall due or can do so only at excessive cost.
Risk arises when assets maturing during a particular period are lower than corresponding liabilities maturing during the same period;
an unexpected increase in assets or a decrease in liabilities can also create liquidity risk.
RBUAB is, or may in the future be, exposed to a number of liquidity and funding risks, including retail funding run-off, wholesale funding
reduction, pre-funding, marketable and non-marketable assets, contingent off-balance sheet exposures and commitment drawdowns,
intraday requirements, collateral requirements, funding concentration, and foreign exchange. These risks are managed by the Treasury
Function, with control and oversight provided by the Risk Management Function, the Assets and Liabilities Management Committee andthe Management Board.
RBUAB’s key liquidity policy is to maintain a portfolio of unencumbered, high-quality cash instruments and securities that arereadily convertible to cash to ensure that it can meet all of its financial obligations in business-as-usual circumstances and in stressconditions. RBUAB complies with this policy by holding surplus cash in the form of overnight deposits with banks.
The maturity analysis of the financial liabilities of RBUAB is as follows:

Revolut Bank UAB

On demand£000

Less than
one year£000

One to five
years
£’000

More than
five years£000

Total (undiscounted
cashflows)£000

49,876----49,876

-

-

-

-

1

-

-

-

-

-

-

-

-

-

At 31 December 2020
Customer liabilities in respect of deposits

At 31 December 2019
Customer liabilities in respect of deposits

Market risk
Foreign currency risk
Based on the current business model, the foreign exchange risk related with user balances kept in non-base currencies results in a low
foreign exchange risk for RBUAB. The exposure is monitored on a daily basis to ensure the effective management of this risk.
The foreign exchange exposure of the banking book arises from the Treasury Function activities. This includes profit on the banking
products, interest earned on nostro balances and various costs (all in non-functional currency). A limited foreign exchange exposureis allowed as defined per RBUAB’s Risk Appetite Statement. Any material foreign exchange risk arising from Treasury Function activities
is hedged on a day-to-day basis and is subject to ongoing monitoring.
As of 31 December 2020, RBUAB had no material unhedged exposures to foreign exchange risk.

Interest rate risk
Interest rate risk in the banking book (“IRRBB”) is the risk that RBUAB’s balance sheet and profitability is structurally exposed to
unexpected movements in interest rates. This risk stems from maturity and repricing mismatches between assets and liabilities, which
would materialise with changes in the shape of the yield curve (“gap risk”), or from interest rate related options embedded in those thatmight affect future cash flows (“option risk”), or with changes in the relationship between various yield curves (“basis risk”).
To quantify the IRRBB, RBUAB uses two metrics: net interest income (“NII”) sensitivity and economic value of equity (“EVE”) sensitivity.
NII is computed as the impact of parallel shock in interest rates on the net interest income generated by the banking book items basedon their repricing profiles. EVE is assessed through a measurement of changes in the net present value of the interest rate sensitive
instruments (excluding Common Equity Tier 1 (“CET1”) instruments and other perpetual own funds) over their remaining life resulting
from interest rate movements assuming six different shock scenarios.
In line with regulatory guidelines and internal judgment, a floor is prescribed for downward shocks to stop the simulated interest rates
from being unrealistically negative.

Annual Report & Financial Statements

70

Financial statements

Notes to the consolidated financial statements

Both metrics are managed against a control framework, which is defined with set limits in place. The Treasury Function is responsible
for IRRBB management on an on-going basis using mitigation approaches such as the use of hedging and dynamic adjustment of
in-app rate offerings to influence uptake behaviour. Interest rate characteristics of funding are matched as far as possible to lending
and investments into securities. The Risk Management Function closely monitors IRRBB exposures, proposes limits and calculation
assumptions, and performs stress testing. Any breach of the limit is escalated to the senior management with mitigating actions taken.
The exposure to interest rate risk is not material for RBUAB.

CapitalRBUAB’s regulatory eligible capital consists exclusively of Common Equity Tier 1 (“CET1”). capital, which comprises share capital,
reserves and retained earnings (including current year losses), less intangible assets and deferred tax assets.
RBUAB maintains an actively managed capital base to cover risks inherent in the business and comply with the regulatory capital
adequacy requirements, which are calculated following the EU Capital Requirements Regulation (“CRR”) and the Capital Requirements
Directive (“CRD”).
In accordance with the regulatory capital requirements, banks are expected to operate with their capital being equivalent to at least
the sum of the minimum Pillar 1 requirements, Pillar 2 requirement (“P2R”), Combined Buffer Requirement (“CBR”) and Pillar 2
guidance (“P2G”).
As of 31 December 2020, the total capital requirement of RBUAB (in accordance with the regulatory requirements) is equal to 7.0%
for CET1 capital ratio and 10.5% for total capital ratio. RBUAB had no P2R and P2G requirements imposed by the Bank of Lithuania
as of 31 December 2020.
The main objectives of RBUAB in managing its capital are as follows:• The capital planning, and the capital held by RBUAB at any time, are consistent with RBUAB’s strategy and support
its implementation;• Ensuring that RBUAB’s capital level appropriately covers all material risks to which RBUAB is exposed and enables it to pursue
its business objectives;• RBUAB complies with the regulatory capital requirements;• RBUAB shall meet its internally determined capitalisation targets, which envisage appropriate additional capital resources above
the regulatory required capital in order to ensure capital adequacy in case of material deviations of RBUAB’s performance fromthe financial plan or the severe adverse scenarios (both bank-specific and systemic); and• RBUAB shall have a range of available and feasible management actions to restore its capitalisation in case of its deterioration.
RBUAB manages its capital structure and makes adjustments to it according to changes in economic conditions and the risk
characteristics of its activities. In order to maintain or adjust the capital structure, RBUAB may take such actions as adjustment of theamount of dividend payment to shareholders, return of capital to shareholders, issue capital securities or make structural changes to its
balance sheet ensuring optimal usage of capital. The objectives, policies and processes related with the RBUAB’s capital management
are reviewed at least annually to keep them up to date.
RBUAB’s capital resources and requirements are as set out below:£000

Actual
2020

Required2020

Actual2019

Required2019

Common Equity Tier 1 (CET1) capital

11,026

1,849

8,314

1,878

Total capital

11,026

1,849

8,314

1,878

Risk weighted assets

23,117

24,721

CET1 capital ratio

47.70%

33.63%

Total capital ratio

47.70%

33.63%RBUAB has complied in full with all of its externally imposed capital requirements during 2020 and 2019.

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71

Financial statements

25.

Notes to the consolidated financial statements

Share capital
2020
£

2019
£

13,827,741 (2019 ‑ 13,663,412) Ordinary shares

1.38

1.36

18,051,576 (2019 ‑ 6,187,209) A Ordinary shares

1.81

0.62

Nil (2019 ‑ 4,989,071) B Ordinary shares

-

0.50

Nil (2019 ‑ 6,879,002) C Ordinary shares

-

0.69

6,085,463 (2019 - 5,889,877) D Ordinary shares

0.61

0.59

4,833,694 (2019 - nil) E Ordinary shares

0.48

-

4.28

3.76

Allotted, called up and fully paid

All shares have a nominal value of £0.0000001 each.
On 12 February 2020, a bonus issue of 195,586 D Ordinary shares were issued at par from the share premium account.
In February and July 2020, the company completed a fundraising round and an extension thereto, raising $500m and $80m, with
4,118,566 E Ordinary shares allotted and fully paid at $121.4015 per share on 24 February 2020 and 658,970 E Ordinary shares allottedand fully paid at $121.4015 per share on 7 July 2020.
On 21 February 2020, 4,989,071 A Ordinary shares and 6,879,002 C Ordinary shares were redesignated as A Ordinary shares.
On 5 June 2020, 48,239 Ordinary shares and 3,706 A Ordinary shares were redesignated as E Ordinary shares. On 19 June 2020,
4,213 Ordinary shares were redesignated as E Ordinary shares.
During the year: 18,790 Ordinary Shares were allotted and fully paid at £0.0000001 each; 57,220 Ordinary Shares were allotted and fully
paid at £0.03 each; 56,527 Ordinary Shares were allotted and fully paid at £0.10 each; 19,319 Ordinary Shares were allotted and fully
paid at £0.32 each; 62,522 Ordinary Shares were allotted and fully paid at £0.50 each; 9,474 Ordinary Shares were allotted and fully
paid at £0.75 each; and 2,587 Ordinary shares were allotted and fully paid at £13.93 each; and 342 Ordinary shares were allotted andfully paid at £22.34 each to employees as they exercised their share options under the Group’s share option schemes. Proceeds of £95k
(2019: £137k) were received from the employees.
All shares have full voting and dividend rights. On a return of assets, capital distributions will be made to holders of A Ordinary,
D Ordinary and E Ordinary Shares in priority to all other Shareholders.

26.

Reserves

Share premium accountThis reserve records the amount above the nominal value received for shares issued, less transaction costs.

Foreign exchange reserve
The foreign exchange reserves represent the cumulative foreign currency translation movement on the assets and liabilitiesof the Group’s international operations at year-end exchange rates.

Other reserves
This records the fair value of equity-settled share options issued.

Profit & loss accountThis reserve records the accumulated results of the Group.

27.

Share-based payments

The Group issues equity-settled share-based payment awards to certain employees. Equity-settled share-based payments aremeasured at fair value (excluding the effect of non-market performance vesting conditions) at the date of grant. The fair value
determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period,
based on the Group’s estimate of the number of awards that will eventually vest and adjusted for the effect of non-market-based
vesting conditions.

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72

Financial statements

Notes to the consolidated financial statements

CSOP and Unapproved share option schemes
In 2019 the Group operated two share options schemes, the first is an HMRC approved Company Share Option Scheme (“CSOP”),
for UK employees, and the second one, is an Unapproved Options Plan (“UOP”), for the non-UK employees.
In 2020, the Group issued share options under the unapproved options plan for both UK and non-UK employees of the Group and issued
no share options under the CSOP plan.
The options are granted with a fixed exercise price, are exercisable after they have vested, and expire after 10 years.
Under both plans, options may have the following vesting periods: (i) a 4-year vesting period with the first 25% vested on thefirst‑year anniversary of the vesting commencement date, and the remaining 75% vesting monthly over the subsequent 36 months;or (ii) a 2-year vesting period with options vesting monthly over the 2 years. Employees are required to remain in employment with
the Group until the vesting period has elapsed, otherwise the awards lapse.
The fair value of the options granted during the year was determined by first valuing the total equity of the Group at the grant date.
The valuation of the Group was undertaken using both a price per user basis and a revenue multiple basis using ranges of multiples
based on a cohort of comparable companies to determine a range of possible equity values for the Group.
The mid-point of this range was used as an input to a Monte-Carlo simulation to determine the fair value of an ordinary share byrunning a large number of scenarios and attributing the resulting values to the classes of shares based on their economic rights.
The Black-Scholes option pricing model was then used to value the equity-settled share-based payment awards as the model isinternationally recognised as being appropriate to value employee share schemes similar to the UOP.
In addition to awards described above, a number of employees were granted share options in exchange for a temporary reduction insalary for a twelve-month period under the UOP. These options vest monthly over a 12-month vesting period, during which time theemployees must remain in employment with the Group. The options have a fixed exercise price and a maximum term of 10 years after
which they expire.
In accordance with FRS 102 26.7, equity settled awards should be valued by measuring the fair value of services received directly
where possible. In this case it was possible to measure the fair value of the employee services directly by reference to the value ofthe salary foregone.
Additional agreements are in place to grant up to 6,057,025 additional nil cost options over ordinary shares to members of senior
management at the CEO’s discretion if certain conditions are met, including the completion of a qualifying fundraising or initial public
offering on a recognised investment exchange, with certain share price, earnings, and operational performance targets. Such awards
would be granted and vest immediately upon meeting all the required conditions, except for certain awards which may also be subject
to time-based vesting requiements. No share-based payment charge has been recognised in the year ended 31 December 2020 inrelation to these options as it is currently not considered to be probable that these conditions will be met.

Shares awarded to Non-executive directors
Along with certain employees, the non-executive directors of the Company agreed to forego their cash salaries in exchange for payment
in shares. Whilst the issue of these shares is still subject to shareholder approval, the non-executive directors and the Company havea shared understanding of the terms and conditions of the arrangement and their services have been provided during the year andtherefore a shared based payment charge has been recognised in relation to these awards, based on an estimate of the fair valueof the shares at the grant date using the valuation of the shares undertaken for the employee share options issued during the year.
The final grant date fair value will be determined when the shareholder approval is obtained and the share-based payment charge will
be adjusted accordingly.
A reconciliation of share option movements over the year to 31 December 2020 is shown below:

Number
2020

Weighted
average
exercise
price
2019

Number2019£0.69

891,765£0.04

2,922,941

Granted during the year

£0.60

1,973,009£1.44

420,340

Exercised during the year

£0.44

(216,583)£0.06(2,293,560)

Expired/sold during the year

£3.04

(201,485)£0.07(157,956)

Outstanding at the end of the year

£0.45

2,446,706£0.69

891,765

Exercisable at the end of the year

£0.31

1,759,322£0.29

484,982

Weighted
average
exercise
price
2020
Outstanding at the beginning of the year

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73

Financial statements

Notes to the consolidated financial statements

The total share-based payment expense recognised in the Statement of Comprehensive Income is as follows:

Equity settled schemes

Group
2020
£000

Group
2019
£000

40,462

8,489

Sensitivity analysis
The Group has conducted an analysis of the sensitivity of the share-based payment charge recognised in the income statement tochanges in the key assumptions used to determine the fair value of the share options granted. The fair value is most sensitive to theordinary equity value used in the Monte-Carlo simulation, which is derived from the enterprise value determined at the grant date.
The fair value is not considered sensitive to reasonable changes in volatility or other assumptions used.
A 10% increase in the equity value at the valuation date for the share options granted in the year (which are not valued by reference
to the salary foregone) would result in a 8.9% (£3.6m) increase in the total share-based payment expense for the year, with all otherassumptions remaining unchanged. A 10% decrease in equity value assumption would result in 8.9% (£3.6m) decrease in the total
share-based payment expense for the year, with all other assumptions remaining unchanged.

28.

Pension commitments

The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in
an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted
to £1.4m (2019: £1.4m). Contributions totalling £0.3m (2019: £1.2m) were payable to the fund at the balance sheet date and are includedin creditors.

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Financial statements

29.

Notes to the consolidated financial statements

Notes to the cash flow statement
2020
£000

2019
£000

(206,032)(106,765)

Tax credit on loss

(1,843)(915)

Interest payable and similar charges

9,254

1,429

Interest receivable and similar income(2,028)(687)(200,649)(106,938)

Amortisation of intangible assets

174

13

Depreciation of tangible assets

3,365

1,491

Impairment of financial assets

(220)

261

Share based payment charge

40,462

8,489

Fair value gains on cryptocurrencies recognised in other comprehensive income

38,659-Changes in provisions less payments made

10,625905

Net fair value losses on derivative financial instruments

1,849

-

(105,735)(95,779)

1,759(9,489)- Increase in trade and other receivables(21,100)(12,718)- (Increase)/decrease in trade and other creditors(1,146)

19,425(126,222)(98,561)

2,263,427

1,425,668(7,687)(4,815)

17,44767,858136,142

56,128(135,970)(56,338)

49,904

14(50,366)-- Net increase in loans and advances to customers(1,389)-- Net increase in customer deposits4

49,876-2,195,162

1,389,954

Cash flows from operating activities
Loss for the financial year
Adjustments for:

Operating loss

Operating cash flows before changes in customer balances and hedging arrangements,
and changes in working capital
Working capital movements:- Decrease/(increase) in inventories

Operating cash flows before changes in customer balances and hedging arrangements
Cash flows from customer balances and hedging activities:- Increase in E-Money in issue1- Increase in negative customer balances1- (Increase)/decrease in net settlement balances

1- Increase in customer liability in respect of cryptocurrencies

2- Increase in cryptocurrencies2- Increase in customer liability in respect of commodities3- Increase in commodities

3
4

Net cash generated from operating activities

1 The cash flows from the increase in E-Money in issue, negative customer balances and the change in net settlement payables and receivables
represents the cash flows from the Group’s E-Money and payment processing business.
2 The increase in the customer liability in respect of cryptocurrencies and net purchases of cryptocurrencies show the cash flow impacts for the period
from 1 January 2020 to 26 July 2020, as from 27 July 2020 the legal arrangements regarding the cryptocurrencies product were amended such that
the Group is now acting as agent on behalf of its customers in processing transaction and the assets and liabilities are no longer recognised on theGroup’s balance sheet from that date. See note 4 for further details.
3 Changes in the customer liability in respect of the Group’s commodity trading product, net of changes in the Group’s investment in commodities held
for hedging purposes represents the net cash flows from the commodity trading product.
4 Net increases in customer deposits, less net cash flows from customer lending, are related to the consumer lending products offered by Revolut Bank UAB.

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75

Financial statements

Notes to the consolidated financial statements

Analysis of changes in net debt
Fair value
andexchange 31 December
movements
2020
£000
£000

1 January
2020
£000

Cash flows£000

Cash and cash equivalents

2,462,986

2,586,938

5,099

5,055,023

Loans(120,518)

44,337(5,631)(81,812)--(1,849)(1,849)2,342,468

2,631,275(2,381)

4,971,362

Derivative financial instruments

30.

Capital and other commitments

Capital commitments
The Group had no capital commitments at 31 December 2020 (2019: nil).

Undrawn commitments
As at 31 December 2020, total committed but undrawn facilities in respect of consumer credit cards and loans were £1.2m (2019: nil).

Operating lease commitments
At 31 December 2020 the Group and the Company had future minimum lease payments under non-cancellable operating leases foreach of the following periods:

Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years

Group
2020
£000

Group
2019
£000

Company
2020£000

Company
2019
£000

7,471

6,174

5,688

4,990

13,882

21,087

7,871

18,573

-

726

-

-

21,35327,987

13,55923,563

				

31.

Contingent liabilities

The Group may be subject to legal claims arising in the ordinary course of business. Any such actions are reviewed and assessed todetermine whether there is a likelihood of the Group being required to make any payments resulting from such claims, and where it
is considered more likely than not such a payment will have to be made a provision will be recognised for management’s best estimateof the amount required to settle the obligation. Where it is not considered more likely than not that a payment will be required, any
contingent liabilities are required to be disclosed. However, the Group currently has no material contingent liabilities.

32.

Related party disclosures

At the balance sheet date, included in other debtors were balances of £6k and £9k (2019: £6k and £9k) owed by Revolut Ltd’s directors
N Storonsky and V Yatsenko respectively.

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76

Financial statements

33.

Notes to the consolidated financial statements

Post balance sheet events

Subsequent to the year end, the Group has repaid in full the €91m loan financing that was outstanding as at 31 December 2020, andentered into a new £100m revolving credit facility (“RCF”) on 30 April 2021. The RCF has an initial term of two years and is extendable
by a further two years if required and will case to be available in the event that the Group is granted a UK banking licence.
Following the year end the Group announced a new share-based remuneration scheme for directors and employees that will replace
the existing UOP option scheme for employees in certain jurisdictions. Under the new scheme directors and employees will be awarded
growth shares in the Company which will entitle the participants to either share in the growth of the value of the Group above a hurdle
that will be determined at the grant date or be entitled to the full value of a share in the event a certain growth hurdle is achieved (the“Growth Shares”). Directors and employees also had the ability to exchange any existing share options they held for Growth Shares
upon the implementation of the new scheme. As part of the arrangement, a loan of £3.2m (repayable within one year) has been madeto the chief executive officer, Nikolay Storonsky, to fund the purchase of Growth Shares.

34.

Controlling party

The company is owned by a number of private shareholders and companies, none of whom own more than 25% of the issued sharecapital of the company. Accordingly, there is no parent entity nor ultimate controlling party.

35.

Capital (unaudited)

As an authorised EMI, Revolut is required by the Electronic Money Regulations 2011 (EMRs) to hold a minimum amount of capital at
all times to enable absorption of losses as they might arise. The capital requirement is met through Revolut’s own holdings of capital
resources, which is formed of Own Funds as defined by Article 4(1)(118) of the Capital Requirements Regulation.
As at 31 December 2020 Revolut Ltd had total capital resources, all of which is Common Equity Tier 1 (“CET1”), of £398.2m(2019: £85.5m), which represented a comfortable surplus over the total regulatory capital requirement of £63.1m (2019: £34.7m).

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Financial statements

Appendix
Quarterly financial performance and other APMs (unaudited)

3 months
ended 31
March 2020£000

3 months
ended 30
June 2020£000

3 months
ended 30
September
2020
£000

57,77837,20341,05986,102

222,142

166,026-

13,38525,274-38,659-57,77850,58866,333

86,102

260,801

166,026(48,003)(32,555)(35,065)(36,789)(152,412)(148,932)

Add back: Net onboarding costs

5,909

3,895

2,562

2,013

14,37921,408Gross profit3

15,68421,92833,83051,326

122,768

38,502Gross margin3

29%

45%

54%

61%

49%

25%

Less: Net onboarding costs2(5,909)(3,895)(2,562)(2,013)(14,379)(21,408)

Administrative expenses (excluding sharebased payment charge)(66,136)(58,292)(49,002)(52,267)(225,697)(116,045)

58

59

54

49

220

(261)

1,049

(2,720)(67)(2,702)(4,440)763

Adjusted operating loss4(55,254)(42,920)(17,747)(5,607)(121,528)(98,449)

Share-based payment charge(9,952)(9,823)(10,143)(10,544)(40,462)(8,489)-(13,385)(25,274)-(38,659)-(65,206)(66,128)(53,164)(16,151)(200,649)(106,938)

Revenue
Revaluation gain on intangible assets(cryptocurrencies) - recognised in OCI1
Adjusted revenue
Direct costs
2

Impairment of financial assets
Other operating income / (expense)

Less: Revaluation gain on intangible assets(cryptocurrencies) – recognised in OCI2
Operating loss

3 months
ended 31
Year ended
Year ended
December 31 December 31 December
2020
2020
2019
£000
£000
£000

The above unaudited quarterly operating loss is provided for use in the analysis of the Group’s performance within the strategic reportin order to provide greater detail on the financial performance of the business. The non-GAAP measures used by management include
gross profit and adjusted operating loss. The reconciliation of these metrics to the statutory income statement is shown above, and thedefinitions and explanations of the adjustments are as follows:

1 Revaluation gain on cryptocurrencies
The Group’s accounting policy for cryptocurrencies prior to the change in contractual arrangements on 27 July 2020 (as explainedin note 4), was to recognise them as intangible assets using the revaluation model. This requires any changes in the fair value ofthe cryptocurrencies below the original cost of the assets to be recognised in profit or loss, and any changes in fair value above
the original cost to be recognised in other comprehensive income. All changes in the fair value of the customer liability in respectof cryptocurrencies is recognised in profit or loss in accordance with IFRS 9.
Whilst in previous years the fair value of the Group’s cryptocurrencies had not exceeded their original cost, between 1 April 2020
and 27 July 2020 as the market value of cryptocurrencies increased the value of the Group’s cryptocurrencies exceeded their original
cost, and a net gain of £38.7m was recognised prior to the derecognition of the cryptocurrencies (and associated customer liabilities).
Whilst the requirements under FRS 102 Section 18 are that this gain should be recognised in other comprehensive income in thestatutory financial statements, for management purposes this gain is recognised within revenue as with all fair value movements on
cryptocurrencies and associated customer liabilities as the Group used the cryptocurrencies to hedge the customer liabilities.
This adjustment results in the inclusion of the £38.7m gain within the non-GAAP adjusted revenue, gross profit and adjusted operating
loss as shown above.

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Financial statements

Appendix

2 Net onboarding costs
Net onboarding costs represent the net costs of opening new customer accounts, including the cost of production, delivery andactivation of customer cards, and is net of fees charged to customers for the issuance of new cards. These fees and costs are included
in revenue and direct costs in the statutory statement of comprehensive income, however for management reporting purposes thesenet costs are excluded from gross margin in assessing the performance of the business as it enables management to assess theperformance of the underlying business separately from the impacts of growth in users. Total onboarding revenue for the year was£10.6m (£2.9m in Q1, £1.5m in Q2, £3.5m in Q3 and £2.7m in Q4) and total onboarding costs were £25.0m.

3 Gross profit/gross margin
Gross profit is defined as adjusted revenue (including revaluation gains on cryptocurrencies) less direct costs, excluding net onboarding
costs. Gross margin is defined as gross profit divided by adjusted revenue (excluding onboarding income).

4 Adjusted operating loss
Adjusted operating loss is a non-GAAP performance measure and is defined as operating profit/loss for the period excluding equity
settled share-based payments charges (which are non-cash costs) and including revaluation gains on cryptocurrencies that arerecognised in other comprehensive income.

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Financial statements

Company information
Directors
Martin Gilbert, Chairman
Nikolay Storonsky, CEO & co-founder
Vlad Yatsenko, CTO & co-founderMichael Sherwood, Non-executive director, chair, Remuneration Committee
Caroline Britton, Non-executive director, chair, Audit Committee
Ian Wilson, Non-executive director (chair Risk & Compliance Committee from 21/02/21)
Bruce Wallace, Non-executive director, chair Risk & Compliance Committee

Company Secretary
Thomas Bruce Hambrett

Registered number
08804411

Registered office
7 Westferry Circus
Canary Wharf
LondonE14 4HD

Independent auditors
BDO LLP
55 Baker Street
LondonW1U 7EU

Annual Report & Financial Statements82

7 Westferry Circus,
Canary Wharf,
London,England,E14 4HDrevolut.com