ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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Company registration number:
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COMPANY INFORMATION
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CONTENTS
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2020
We have experienced a very active 12 months in financial markets where four major macroeconomic events have provided the narrative: The US China trade war, the UK Brexit negotiations, Saudi-Arabia/Russia oil dispute and finally the devastating global Coronavirus pandemic. These events separately have the ability to move markets but together they resulted in the dramatic volatility that effected all asset classes.
Against this backdrop Guy Butler has weathered the storm well with a strong increase in revenue for the year. We have been able to provide our clients an uninterrupted service due to our experienced team of market professionals and our investment in technology. We continue to carefully grow our business with increased geographic coverage and further investment in personnel.
The Directors are pleased with the overall result for 2019/20 given the political/economical uncertainty facing the world's major economies, particularly as the world deals with the impact of the Coronavirus.
The results of the company are set out in the income statement on page 9. The profit after tax for the year of: £1,835,000 (2019: £1,350,000).
The Company's activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.
The overall financial risk management framework, strategy and policies of the Company are determined by the board. a) Market risk Foreign exchange risk The Company is exposed to both transactional and translational fluctuations in the value of financial instruments due to exchange rate movements. Transactional exposure arises from brokerage and remittance of funds in currencies other than the Company’s functional currency (sterling), principally United States dollars and euros. Translational exposure arises on the conversion of foreign currency denominated investments into sterling. The Company does not hedge its translational exposure but its impact is mitigated by the Company’s use of average exchange rates. Interest rate risk The Company’s interest rate risk arises from cash and cash equivalents where changes in market rates can have an adverse impact on cash flows and income streams. Interest rate risk is monitored at a company level by the directors. Price risk The Company is exposed to price risk when a counterparty fails to satisfy it's settlement obligations, through trade mismatches or when positions are taken. Risk is restricted to short term price movements in the underlying stock held. Unmatched transactions are identified and monitored daily. The Company has policies and procedures in place to reduce the likelihood of such situations but should they arise, the policy is to close out positions immediately or, with Director approval to manage the position in the short/medium term with the aim of achieving the best outcome for the company. Price risk in regards to positions is monitored and controlled by the setting of cash limits for counterparties.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
b) Credit risk
Credit risk arises from the potential that a counterparty is unable or unlikely to perform on an obligation resulting in a loss for the Company. The company's exposure to credit risk is limited since the vast majority of transactions are undertaken on a delivery-versus-payment basis. All counterparties are subject to review before trading lines are established. Typically, the Company’s counterparties are highly credit rated large financial institutions. c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and ensuring the availability of funding through an adequate amount of committed credit. This is important to ensure that the Company can meet all present and future financial obligations as they fall due and comply with regulatory requirements. The Company’s exposure to liquidity risk is not significant.
Given the straightforward nature of the business, the directors believe analysis using key performance indicators is not necessary for an understanding of the development performance or position of the business.
The company's return on assets, calculated as net profit/(loss) divided by net assets is 17.3% (2019: 13.4%). Revenue increased by 56.1% due to increased volumes of business in the principal broking business. This was driven by organic growth and extreme market conditions caused by Covid-19. The number of client facing employees (those classified as Certified Staff under the Senior Managers & Certification Regime) of 22 increased by 2 on the prior year.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2020
The directors present their report and the financial statements for the year ended 31 March 2020.
Disclosure of information in the Strategic Report
The company has chosen in accordance with the Section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to set out within the Company's Strategic Report Information required by Schedule 7 of the Large and Medium Sized Companies (Accounts and Reports) Regulation 2008. This includes information that would have been included in the business review and details of the principal risks and uncertainties.
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The company's principal activity is the broking of fixed income instruments with settlement taking place on a delivery-versus-payment basis. Trades are settled and cleared via Pershing Securities Limited under a model B agreement.
The company is regulated by the Financial Conduct Authority. The company is incorporated and domiciled in England. The registered office is Lynton House, 7-12 Tavistock Square, London, WC1H 9LT.
In accordance with the rules of the Financial Conduct Authority, the company has made available information on its risk management objective and policies on its regulatory capital requirement and resources.
These details are included below and within the Strategic Report - Financial Risk Management.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
Pillar 1
The company's capital resources consist of common Equity Tier 1 capital (share capital and reserves). In accordance with the FCA's prudential rules, the company's variable capital requirement, its Pillar 1, has been determined as the sum of its credit risk, counterparty risk, operational risk and market risk capital requirements. Pillar 2 The Company’s overall approach to assessing the adequacy of its internal capital is set out in its Internal Capital Adequacy Assessment Process (ICAAP). The ICAAP involves consideration of a range of risks faced by the Company and determines the level of capital needed to cover these risks. The level of capital required by the Company to cover identified risks is a function of their impact and probability. Impact is assessed by modelling the changes in the Company’s income and expenditure caused by various potential risks and probability is assessed subjectively by senior management. The ICAAP incorporates stress testing over a five year time frame where the Company’s income and expenses are adversely affected by a range of factors. After considering the ICAAP the firm has determined that no additional capital is required in excess of its Pillar 1 capital requirement, although total capital resources are maintained in excess of this level. As at 31 March 2020 Guy Butler Limited’s regulatory capital position was: 
Remuneration The Company is required to publish information relating to its remuneration policy for the year ended 31 March 2020. The Company is a full scope BIPRU and IFPRU Investment Firm which limits its disclosures to those required of a “Tier 3” firm as defined by the FCA’s Remuneration Code (SYSC 19A). Remuneration Policy The Company operates as a single business unit and therefore remuneration will reflect at least in part the overall profitability or otherwise of the Company. Employees, including directors, are paid a fixed salary and a discretionary bonus, the level of which is determined by the directors. The discretionary element of bonuses is limited by available profits. Pay and performance All employees, including directors, are part of an annual appraisal process which includes the setting of objectives each year and subsequent assessment against those objectives. In addition to the results of the annual appraisal process, the profitability of the area of business in which the employee or director is involved may be taken into account along with other relevant factors, in setting the level of discretionary bonus. Code Staff The directors carry out an annual assessment of those staff who control the firm and / or could affect its risk profile. For the year ended 31 March 2020 they consider that they are the key personnel and hence act in the role of Code Staff. Aggregate remuneration The aggregate remuneration of the employees of the Company for the year ended 31 March 2020 is fully disclosed in note 7, Staff Costs and of the directors in note 8, Directors Remuneration. Remuneration for employees and directors represents salaries paid during the year and benefits received from the company.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
The directors who served during the year were:
Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
Under section 487(2) of the Companies Act 2006, Menzies LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GUY BUTLER LIMITED
We have audited the financial statements of Guy Butler Limited (the 'Company') for the year ended 31 March 2020, which comprise the Statement of Income and Retained Earnings, the Statement of Financial Position, the Statement of Cash Flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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 a basis for our opinion.
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
∙the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
∙the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors' Report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GUY BUTLER LIMITED (CONTINUED)
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 are prepared 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 Company and its environment obtained in the course of 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:
As explained more fully in the Directors' Responsibilities Statement on page 3, 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 is necessary 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 Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
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 Auditors' Report that includes our opinion. Reasonable assurance is a high 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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GUY BUTLER LIMITED (CONTINUED)
This report is made solely to the Company's members 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 Company's members those matters we are required to state to them in an Auditors' 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 Company and the Company's members for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditor
Centrum House
36 Station Road
Surrey
TW20 9LF
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STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 MARCH 2020
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STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 13 to 25 form part of these financial statements.
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STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2020
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ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MARCH 2020
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
Guy Butler Limited (03869802) is a private limited liability company, and it is incorporated and dominated in England. The company's principal activity during the year was the brokerage of securities on a matched principal basis. Details of the company's registered office can be found on the Company Information page.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
Revenue is recognised to the extent that economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is stated net of VAT, rebates and discounts. Rendering of services includes fees and commissions from trading in financial markets. Open positions in financial instruments are carried at the lower of cost and market value gains and losses arising on this valuation are recognised in revenue, as well as gains and losses on positions that have closed. Revenue is recognised on a trade date basis.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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 recognised in the Statement of Income and Retained Earnings.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.Accounting policies (continued)
Investments in unlisted Company shares, whose market value can be reliably determined, are remeasured to market value at each balance sheet date. Gains and losses on remeasurement are recognised in the Statement of Income and Retained Earnings for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
Investments in listed company shares are remeasured to market value at each Statement of Financial Position date. Gains and losses on remeasurement are recognised in profit or loss for the period.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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.
In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Company's cash management.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Investments in non-derivative instruments that are equity to the issuer are measured:
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of Income and Retained Earnings.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.Accounting policies (continued)
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Functional and presentation currency
The Company's functional and presentational currency is GBP.
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 at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value 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 Statement of Income and Retained Earnings except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of Income and Retained Earnings within 'finance income or costs'. All other foreign exchange gains and losses are presented in the Statement of Income and Retained Earnings within 'other operating income'.
Finance costs are charged to the Statement of Income and Retained Earnings 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.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Rentals paid under operating leases are charged to the Statement of Income and Retained Earnings on a straight line basis over the lease term.
The Company has taken advantage of the optional exemption available on transition to FRS 102 which allows lease incentives on leases entered into before the date of transition to the standard 01 April 2015 to continue to be charged over the period to the first market rent review rather than the term of the lease.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
2.Accounting policies (continued)
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in the Statement of Income and Retained Earnings when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
Interest income is recognised in the Statement of Income and Retained Earnings using the effective interest method.
Provisions are made where an event has taken place that gives the Company 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 Statement of Income and Retained Earnings in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Statement of Financial Position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of Financial Position date, except that:
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred 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 reporting date.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Key sources of estimation uncertainty Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: Assumptions have been made around the fair value of the Long Position shares held by the company as trade investments, due to the volatile nature of this industry fair value can be difficult to measure.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
12.Taxation (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
Page 22
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
Capital redemption reserve
This reserve records the nominal value of shares repurchased by the company. Profit and loss account This reserve records retained earnings and accumulated losses.
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £32,997 (2019 - £22,938). Contributions totalling £6,362 (2019 - £4,647) were payable to the fund at the reporting date and are included in creditors.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
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