ARJAN_CAPITAL_LTD - Accounts

The director presents the strategic report for the year ended 30 April 2020.

The company became authorised by the Financial Conduct Authority (FCA) on 14 August 2015.

The principal activity of the company continued to be that of advising clients on Central Asian, Middle East and African markets.

The key financial performance indicators are as follows:

In the year ended 30 April 2019, the parent company entered into an agreement to sell the company, subject to regulatory approval which was received during the year. As a result of the reorganisation of the company and the steps taken to establish and expand its client base, the company made a loss for the year of £49,781 (2019: £458,867). The loss incurred in the year is not core-business related and results from the company continuing to market its services and establish a client base. Generally, the performance throughout the year was satisfactory and in line with the company's expectations.

The company's principle financial instruments comprise bank balances and trade receivables. The main purpose of these instruments is to fund the company's operations.

The directors of the company believe the main uncertainty and risk will be the ability to generate sufficient revenues from corporate finance activities to cover fixed costs. The shareholders continue to provide financial support to the company to deal with such uncertainties whilst the company establishes its client base.

Pandemic Risk (COVID-19)

A risk currently faced by the company is the significant disruption caused by the COVID-19 pandemic. The director has taken all reasonable steps possible to protect the company’s financial stability and adapt working practices so that operations can continue on an uninterrupted basis.

Based on the information currently available the director believes that the company has sufficient resources, including shareholder support if required, to continue throughout the duration of the pandemic and is ultimately not expecting a significant deterioration of the company's financial performance.

Interest rate risk
The company's financial assets are not materially exposed to interest rate risk.

Market risk
The company does not take positions which materially expose it to market risk.

Credit risk
As an advisory firm the director considers that the key financial risk exposures faced by the company relate to counterparty credit risk and the need to maintain sufficient liquidity to satisfy regulatory capital requirements and working capital needs. The director therefore attempts to minimise the risk through having clearly defined terms of business with counterparties and stringent credit control over transactions with them.

Foreign currency risk
The company's potential risk arises on its exposures, from time to time, to foreign currencies. The company's income can, in part, be generated in Euro's, Emirati Dirham and Swiss Franc's. The director is responsible for managing the company's risk to foreign currency by monitoring the exposure on all foreign currency denominated assets and liabilities. The director takes a prudent approach by holding a healthy level of liquid resources to mitigate any significant fluctuations in the applicable exchange rates.

Liquidity risk
In respect of bank balances, the company makes use of money market facilities where funds are available and trade payables liquidity risk is managed by ensuring sufficient funds are available to meet amounts due. The director regularly monitors cash flow and management accounts to ensure regulatory capital requirements are not breached and that the company maintains adequate working capital.

The company is cautious in the current economic climate and anticipates the future will be challenging, particularly as a result of the impact of Brexit and the Covid-19 pandemic. Despite the loss incurred in the year, the company has grown significantly in the year with turnover almost tripling with no significant increase in overheads.  The director continues to take steps to minimise the company’s overheads and operate the business on an even keel and continues to seek opportunities for further growth.

The sole director of the company, who is also the sole ultimate shareholder, considers that he has acted in a way he considers, in good faith, to promote the success of the company in the decisions that have been taken during the year ended 30 April 2020. In doing so, he considered the likely consequence of any decisions in the long-term, having regard to an approach that is fair and equitable.

Underlying his decision making process, the director considered the impact on the company’s employees and are mindful of how the company’s business operations impact on others. The director’s overarching responsibility is to maintain a reputation for high standards of business conduct and seek to build strong business relationships with customers, suppliers and other key counterparties. His intention throughout is to behave responsibly and to ensure that management operate the business in a responsible manner, operating within the high standards of business conduct, good governance and regulatory compliance expected of an FCA regulated business.

During the year under review, the company continued to explore ways of expanding both its client base and the advisory services it offers but its business strategy remained largely unchanged. There were no key decisions made that could negatively or significantly impact other potential interested parties.

On behalf of the board

The director presents his annual report and financial statements for the year ended 30 April 2020.

The director who held office during the year and up to the date of signature of the financial statements was as follows:

The results for the year are set out on page 7.

No ordinary dividends were paid. The director does not recommend payment of a final dividend.

The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is 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 director is required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The director is 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 enable them to ensure that the financial statements comply with the Companies Act 2006. He is 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.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the director has taken all the necessary steps that he ought to have taken as director in order to make himself aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments and risk management.

We have audited the financial statements of Arjan Capital Ltd (the 'company') for the year ended 30 April 2020 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows and notes to the financial statements, 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 FRS 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:

•     give a true and fair view of the state of the company's affairs as at 30 April 2020 and of its loss for the 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.

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 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 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 a basis for our opinion.

Conclusions relating to going concern

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 director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the director has 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.

Other information

The director is responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the director's 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 and the director's report.

We have nothing to report in respect of the following matters where 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 visited by us; or

•     the financial statements are not in agreement with the accounting records and returns; or

•     certain disclosures of director's remuneration specified by law are not made; or

•     we have not received all the information and explanations we require for our audit.

As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has 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 auditor’s 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: http://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 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 company's members those matters we are required to state to him 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 company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

The Income Statement has been prepared on the basis that all operations are continuing operations.

Arjan Capital Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Devonshire House, 1 Devonshire Street, London, W1W 5DR. The principle business address is 96 Great Titchfield Street, London, W1W 6SQ.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of investments at fair value. The principal accounting policies adopted are set out below.

The financial statements have been prepared on a going concern basis.true

At 30 April 2020, the company had net assets of £95,244 (2019: £45,025) having incurred a loss for the year of £49,781 (2019: £458,867). As a result, steps have been taken by the director to minimise overheads and operate the business on an even keel.  Furthermore, the shareholder subscribed for £100,000 of capital to support the business on 30 April 2020, with the funds received by the company after the year end.

The World Health Organization declared the Coronavirus (COVID-19) outbreak a pandemic on 11 March 2020.  The pandemic, and the measures to control its human impact, have resulted in disruptions to economic activity and business operations worldwide.  This could potentially have an impact on the activities of the company depending on factors such as the duration and continued spread of the outbreak, the level of restrictions and advisories from governments worldwide and the effects on the economy overall.  Although the outcome of all these factors is highly uncertain, the director believes that the company has adequate resources, including shareholder support, to continue operating throughout the pandemic and does not ultimately expect a significant deterioration of the company's financial performance.

The company's sole shareholder and ultimate controlling party have confirmed that they will provide the company ongoing financial support for the foreseeable future, to enable the company to meet its commitments and obligations as they fall due.  Accordingly, the director considers it appropriate to continue to adopt the going concern basis in preparing the financial statements.

Fee income represents revenue earned from services performed derived from the company's activities. Revenue is recognised as earned, when and to the extent that, the company obtains the right to consideration in exchange for its performance under contracts. It is measured at the fair value of the right to consideration, which represents amounts chargeable to clients, including expenses and disbursements but excluding VAT.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Cash at bank and in hand are basic financial assets and include deposits held at call with banks.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, are initially recognised at transaction price. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the income statement for the period.

In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

There were no material estimates or assumptions at 30 April 2020.

In the year ended 30 April 2019, an agreement was entered into for the sale of the company, subject to receiving regulatory approval which was received during the current year.   As a result of the sale of the business, the debt due from the former parent company is no longer recoverable and was fully provided for in the prior year.  The provision is a one-off exceptional expense and does not form part of the ordinary operating expenditure of the company.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

At the year end contributions of £103 (2019: £35) were outstanding.

On 30 April 2020 100,000 Ordinary Shares of £1 each were allotted at par.

Operating lease payments represent rentals payable by the company for its property. The lease is for a period of five years and nine days to 31 August 2021.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

On 30 April 2020, the shareholder subscribed for £100,000 of capital to support the business, with the funds received by the company after the year end.

At 30 April 2020, £nil (2019: £457,463) was owed to the company by its former parent company, Sturgeon Holdings Limited.   Following the sale of the company, the director is of the opinion that the debt is non-recoverable and a full provision for non-collection was recognised in 2019 (see note 4).

During the year, the Company advanced £8,751 (2019: £6,901) to the director which remained outstanding at the year end (2019: £6,901, which was outstanding at 30 April 2019 and used to fund business expenses during the year ended 30 April 2020).

The ultimate controlling party of the company as at 30 April 2020 was Investissements Mistral Limited.

By virtue of his shareholding in Investissements Mistral Limited, Mr A M Schweitzer is currently the ultimate controlling party.