Fundamental Asset Management Limited - Limited company accounts 20.1

REGISTERED NUMBER: 05089880 (England and Wales)

FUNDAMENTAL ASSET MANAGEMENT LIMITED

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

4

Profit and Loss account

6

Balance Sheet

7

Statement of Changes in Equity

8

Cash Flow Statement

9

Notes to the Financial Statements

10

DIRECTORS:

C A Boxall

S Drabwell

SECRETARY:

C A Boxall

REGISTERED OFFICE:

C/o Cox Costello & Horne

26 Main Avenue

Moor Park

Northwood

HA6 2HJ

REGISTERED NUMBER:

05089880 (England and Wales)

AUDITORS:

Cox Costello & Horne

Chartered Accountants and Statutory Auditors

26 Main Avenue

Moor Park

HA6 2HJ

BANKERS:

Barclays Bank Plc

6 Church Street

Rickmansworth

Hertfordshire

WD3 1BT

The directors present their strategic report for the year ended 30 June 2020.

The company's principal activity continues to be the provision of investment management services. The nature of the company's business and the factors determining the level of regulatory capital have not changed during the current reporting period.

REVIEW OF BUSINESS

Results and performance

The results of the company for the year, as set out on page 7, show a profit on ordinary activities before tax of £416,326(2019 - £553,601). The shareholders' funds of the company total £136,321 (2019 - £228,540).

Despite a strong performance from portfolios under management and further growth in AIM portfolio mandates for the purpose of inheritance tax mitigation, overall turnover fell 4% on the prior year as funds under management were impacted by the stock market correction in the second half of the financial year. Operating profit decreased by 25% as the company restructured its arrangements with a related party and increased its marketing effort.

Business environment

The UK investment management sector is highly competitive and dominated by large multi-national groups, however, the company's activities principally address a sub-sector where smaller specialist firms operate. Pricing structure in our specialist sector has remained reasonably stable over the past few years although investment intermediaries who introduce clients to the company's investment management services have witnessed a huge amount of change following the Retail Distribution Review ('RDR'). The firm outsources the majority of back office functions and therefore benefits from the technology investment of key service providers.

Pillar III

In accordance with the rules of the Financial Conduct Authority ("FCA"), required under Chapter 11 of the FCA's Prudential Sourcebook for Banks, Building Societies and Investment Firms ("BIPRU"), the company has published information on its risk management objectives and policies, and on its regulatory capital requirement and resource.

Future developments

The company anticipates a greater level of income from the expansion of Discretionary Investment management activities as a result of increased marketing activity and its growing reputation in the market. The company's AIM portfolios continue to perform well and it is anticipated that a number of new mandates will be secured in the year.

Going Concern

The Directors anticipate profits will continue to grow strongly over the coming years due to continued outperforming of all client portfolios, notably the AIM portfolios which are attracting increased interest from intermediaries. Accordingly, the directors feel it is appropriate to adopt the going concern basis of accounting.

There are no going concern issues as a result of the Coronavirus outbreak and subsequent downturn in the global macroeconomic environment.

PRINCIPAL RISKS AND UNCERTAINTIES AND KEY PERFORMANCE INDICATORS

Principal risks and uncertainties are continually assessed by management. These risks, including marketing and competition risk, are managed through maintaining close sensitivity to the market and to changes in demand, customer interests and competitive pressures. The directors monitor performance on a weekly and monthly basis using a range of financial and non-financial indicators. Working capital management is a primary indicator which is reviewed regularly to monitor cashflow.

Financial risk management

Credit risk for the company principally takes the form of debtors and cash deposits. The company has not experienced any bad debt problems and has not written off any fee income receivables.

The company does not carry out principal trading activities but does have indirect exposure to market risk as management fee income is based on funds under management. Stress testing of market risk is carried out as part of the company's Individual Capital Adequacy Assessment Process ("ICAAP") under Pillar 2 of the Capital Requirements Directive. The company's financial resources are managed to ensure that sufficient funds are retained to meet short-term liabilities, i.e. to manage liquidity risks. The company's capital requirement is assessed and managed via the ICAAP.

ON BEHALF OF THE BOARD:

C A Boxall - Director

16 October 2020

The directors present their report with the financial statements of the company for the year ended 30 June 2020.

DIVIDENDS

Ordinary £1 shares

During the reporting year, an aggregate interim dividend of £7.875 (2019: £7.525) per share were paid. The directors recommend no final dividend be paid.

The total equity dividends for the reporting year will be £315,000 (2019: £301,000).

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 July 2019 to the date of this report.

C A Boxall

S Drabwell

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), 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 and then apply them consistently;

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

-	state whether applicable 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 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 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Cox Costello & Horne, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

C A Boxall - Director

16 October 2020

Opinion

We have audited the financial statements of Fundamental Asset Management Limited (the 'company') for the year ended 30 June 2020 which comprise the Profit and Loss account, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement 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 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:

-	give a true and fair view of the state of the company's affairs as at 30 June 2020 and of its profit 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 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 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 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.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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 the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

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 Report of the Directors.

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 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 Statement of Directors' Responsibilities set out on page three, 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 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.

Auditors' 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 a Report of the Auditors 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 Report of the Auditors.

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 them in a Report of the Auditors 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.

Michael F Cox FCA (Senior Statutory Auditor)

for and on behalf of Cox Costello & Horne

Chartered Accountants and Statutory Auditors

26 Main Avenue

Moor Park

HA6 2HJ

16 October 2020

TURNOVER

4

675,659

706,848

Cost of sales

85,684

143,944

GROSS PROFIT

589,975

562,904

Administrative expenses

194,394

222,373

395,581

340,531

Other operating income

49,987

200,025

OPERATING PROFIT

6

445,568

540,556

Loan written off

7

38,000

-

407,568

540,556

Income from fixed asset investments

7,399

9,062

Interest receivable and similar income

1,359

3,983

8,758

13,045

PROFIT BEFORE TAXATION

416,326

553,601

Tax on profit

8

88,020

100,938

PROFIT FOR THE FINANCIAL YEAR

328,306

452,663

Other comprehensive income

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

328,306

452,663

FIXED ASSETS

Tangible assets

10

-

-

Investments

11

-

34,500

-

34,500

CURRENT ASSETS

Debtors

12

178,357

332,985

Investments

13

34,500

-

Cash at bank

61,210

54,369

274,067

387,354

CREDITORS

Amounts falling due within one year

14

137,746

193,314

NET CURRENT ASSETS

136,321

194,040

TOTAL ASSETS LESS CURRENT LIABILITIES

136,321

228,540

CAPITAL AND RESERVES

Called up share capital

16

40,000

54,000

Capital redemption reserve

17

14,000

-

Retained earnings

17

82,321

174,540

SHAREHOLDERS' FUNDS

136,321

228,540

The financial statements were approved by the Board of Directors and authorised for issue on 16 October 2020 and were signed on its behalf by:

C A Boxall - Director

Called up

Capital

share

Retained

Share

redemption

Total

capital

earnings

premium

reserve

equity

£

£

£

£

£

Balance at 1 July 2018

54,000

(28,123

)

44,999

6,001

76,877

Share premium cancelled

-

44,999

(44,999

)

-

-

Share redemption cancelled

-

6,001

-

(6,001

)

-

Dividends

-

(301,000

)

-

-

(301,000

)

Total comprehensive income

-

452,663

-

-

452,663

Balance at 30 June 2019

54,000

174,540

-

-

228,540

Reduction in share capital

(14,000

)

-

-

-

(14,000

)

Dividends

-

(315,000

)

-

-

(315,000

)

Total comprehensive income

-

328,306

-

-

328,306

Purchase of own shares

-

(105,525

)

-

14,000

(91,525

)

Balance at 30 June 2020

40,000

82,321

-

14,000

136,321

Cash flows from operating activities

Cash generated from operations

22

527,979

449,223

Tax paid

(100,933

)

(81,205

)

Net cash from operating activities

427,046

368,018

Cash flows from investing activities

Sale of fixed asset investments

(8,438

)

57,381

Interest received

1,359

3,983

Dividends received

7,399

9,062

Net cash from investing activities

320

70,426

Cash flows from financing activities

Amount withdrawn by directors

-

(67

)

Purchase of own shares

(105,525

)

-

Hedging instruments

-

(187,684

)

Equity dividends paid

(315,000

)

(301,000

)

Net cash from financing activities

(420,525

)

(488,751

)

Increase/(decrease) in cash and cash equivalents

6,841

(50,307

)

Cash and cash equivalents at beginning of year

23

54,369

104,676

Cash and cash equivalents at end of year

23

61,210

54,369

1.	STATUTORY INFORMATION

Fundamental Asset Management Limited ('the company') provide services to fund management activities. The company has offices in the UK and makes services primarily within the UK.

The company is a private company limited by shares and is incorporated in England. The address of its registered office is c/o 26 Main Avenue, Moor Park, HA6 2HJ.

2.	STATEMENT OF COMPLIANCE

The company financial statements of Fundamental Asset Management Limited have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, ''The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland'' (''FRS 102'') and the Companies Act 2006.

3.	ACCOUNTING POLICIES

Summary of significant accounting policies

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

Basis of preparation

These 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 to exercise its judgement in the process of applying the company accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in policy "critical accounting judgements and estimation uncertainty".

Going concern

The company meets its day-to-day working capital requirements through its bank facilities. The current economic conditions continue to create uncertainty over (a) the level of demand for the company's services; and (b) the availability of bank finance for the foreseeable future. The company's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the company should be able to operate within the level of its current facilities. After making enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future; taken to be 12 months from the signing the financial statements. The company therefore continues to adopt the going concern basis in preparing its financial statements.

Critical accounting judgements and estimation uncertainty

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

a. Recognition of revenue (see policy "Revenue")

The company recognises revenue when (a) the significant risks and rewards of ownership have been transferred to the buyer; (b) the company retains no continuing involvement or control over the goods; (c) the amount of revenue can be measured reliably; (d) it is probable that future economic benefits will flow to the entity and (e) when the specific criteria relating to each of the company's sales channels have been met.

b. Recognition of deferred tax assets (see policy "Taxation")

Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Recognition, therefore, involves judgement regarding the prudent forecasting of future taxable profits of the business and in applying an appropriate risk adjustment factor. The final outcome of some of these items may give rise to material profit and loss and/or cash flow variances.

Critical accounting judgements and estimation uncertainty - continued

c. Trade and other debtors (see policy "Financial instruments")

A provision for impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade debtor is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the profit and loss account within administrative expenses. When a trade debtor is considered uncollectible, it is written off against the allowance account for trade debtors. Subsequent recoveries of amounts previously written off are credited against administrative expenses in the profit and loss account.

d. Financial assets and financial liabilities at fair value through profit or loss (see policy "Financial instruments")

In preparing the financial statements, the directors have exercised judgement over the inputs used in the determination of fair value of equities not quoted in an active market.

The valuation of these equity securities inevitably involves estimation uncertainty as there is no active market to determine the fair value of the funds or their underlying investments. The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including, the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction.

Revenue

Revenue is measured at the fair value consideration received or receivable and represents amounts receivable for services provided in the normal course of business net of VAT and other taxes. Services comprise investment management services supplied and comprise advisory, management fees and commissions in relation to the management of third party investment portfolios.

Pension costs

The company makes contributes into the personal retirement schemes of certain staff. Contributions by the company and staff are determined by mutual agreement. Staff contract directly with the pension company, and assets of those schemes are held separately from those of the company. The company acts as agent in collecting and paying over staff pension contributions. Once the contributions have been paid, the company as employer has no further obligations.

The company's contributions are charged to the profit and loss in the period to which they relate. At the reporting date, outstanding contributions amounted to £111 (2019: £107).

Tangible fixed assets

Tangible assets are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes the original purchase price, costs directly attributable to bringing the asset to its working condition for its intended use, dismantling and restoration costs.

a. Plant and machinery and fixtures, fittings, tools and equipment

Plant and machinery and fixtures, fittings, tools and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

b. Depreciation and residual values

Depreciation on other assets is calculated, using the straight-line method, to allocate the depreciable amount to their residual values over their estimated useful lives, as follows:

- Office equipment

- 25% on cost

- Furniture and fittings

- 25% reducing balance

The assets’ residual values and useful lives are reviewed, and adjusted, if appropriate, at the end of each reporting period. The effect of any change is accounted for prospectively.

c. subsequent additions and major components

Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that economic benefits associated with the item will flow to the group and the cost can be measured reliably.

The carrying amount of any replaced component is derecognised. Major components are treated as a separate asset where they have significantly different patterns of consumption of economic benefits and are depreciated separately over its useful life.

Repairs, maintenance and minor inspection costs are expensed as incurred.

d. Derecognition

Tangible assets are derecognised on disposal or when no future economic benefits are expected. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss and included in ‘Other operating (losses)/gains’.

Investments in associates

Investments in associate undertakings are recognised at cost.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Profit and Loss account, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

a. Functional and presentation currency

The company's functional and presentation currency is the pound sterling.

b. 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 profit and loss account.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the profit and loss account within 'finance (expense)/ income'. All other foreign exchange gains and losses are presented in the profit and loss account within 'Other operating (losses)/gains'.

Borrowing costs

All borrowing costs are recognised in profit or loss in the period in which they are incurred.

Leased assets

At inception the company assesses agreements that transfer the right to use assets. The assessment considers whether the arrangement is, or contains, a lease based on the substance of the arrangement.

a. Finance leased assets

Leases of assets that transfer substantially all the risks and rewards incidental to ownership are classified as finance leases.

b. Operating leased assets

Leases that do not transfer all the risks and rewards of ownership are classified as operating leases. Payments under operating leases are charged to the profit and loss account on a straight-line basis over the period of the lease.

c. Lease incentives

Incentives received to enter into a finance lease reduce the fair value of the asset and are included in the calculation of present value of minimum lease payments.

Incentives received to enter into an operating lease are credited to the profit and loss account, to reduce the lease expense, on a straight-line basis over the period of the lease.

Investments

a. Interest in subsidiary

Investment in a subsidiary company is held at cost less accumulated impairment losses. At the reporting date, the company had no such investment.

b. Interest in associate

Investment in an associate is held at cost less accumulated impairment losses.

c. Interest in non-traded equity

Investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Equity instruments that are not publically traded and whose fair values cannot be measured reliably are measured at cost less impairment.

d. Interest in public traded equity

Investments in equity held by the company are classified as financial assets or liabilities at fair value through profit or loss (FVPL), except as held for hedging purposes.

Regular purchases and sales of financial instruments are recognised on the trade date, being the date on which the company commits itself to the purchase or sale. Financial instruments at FVPL are initially recognised at fair value, when the company becomes party to the contractual provisions of the instrument, with their associated transaction costs being charged immediately, when incurred, to profit or loss.

Subsequent to the initial recognition, financial assets and liabilities at FVPL are measured at fair value with the resultant gains and losses being taken to profit or loss. Financial assets are derecognised when the contractual rights to the cash flows from the asset expire, or when the company has transferred substantially all the risks and rewards of ownership. The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value of assets and liabilities traded in an active market is based on quoted market prices at the close of trading on the reporting date. For quoted financial assets the valuation is based on the closing bid price; for quoted liabilities the closing asking price is applied.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts, when applicable, are shown within borrowings in current liabilities.

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.

Distributions to equity holders

Dividends and other distributions to the company's shareholders are recognised as a liability in the financial statements in the period in which the dividends and other distributions are approved by the shareholders. These amounts are recognised in the statement of changes in equity.

Provisions and contingencies

a. Provisions

Provisions are recognised when the group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount of the obligation can be estimated reliably.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations might be small.

In particular:

i. Restructuring provisions are recognised when the company has a detailed, formal plan for the restructuring and has raised a valid expectation in those affected by either starting to implement the plan or announcing its main features to those affected and therefore has a legal or constructive obligation to carry out the restructuring; and

ii. Provision is not made for future operating losses.

Provisions 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 specific to the obligation. The increase in the provision due to passage of time is recognised as a finance cost.

b. Contingencies

Contingent liabilities are not recognised, except those acquired in a business combination. Contingent liabilities arise as a result 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 company's control. Contingent liabilities are disclosed in the financial statements unless the probability 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.

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 indication that the asset (or asset's cash generating unit) may be impaired. If there is such an indication the recoverable amount of the asset (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 the asset's (or asset's cash generating unit) 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 the carrying 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.

Financial instruments

The company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.

a. Financial assets

Basic financial assets, including trade and other debtors, cash and bank balances and investments in commercial paper, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.

Such assets are subsequently carried at amortised cost using the effective interest method.

At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. The impairment loss is recognised in profit or loss.

If there is decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

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 publically traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.

b. Financial liabilities

Basic financial liabilities, including trade and other creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest.

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

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors 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.

c. Derecognition of financial assets and liabilities

Financial assets are only derecognised when the contractual rights to receive cash flows from them have expired or when the croup has transferred substantially all risks and rewards of ownership. Financial liabilities are only derecognised when the obligation is discharged, cancelled or has expired.

d. Offsetting

Financial assets and liabilities are offset and 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.

Financial instruments - continued

e. Fair value hedges

The company uses financial instruments and certain listed equity investments ("hedge instruments") to adjust protected investment portfolio ("hedged item") exposures. The company does not hold or issue hedge instruments for speculative purposes.

Listed equity investments are initially measured at fair value, which is normally the transaction price and are subsequently re-measured to their value at each reporting date. At the inception of the hedge relationship, the economic relationship between the hedging instrument and the hedged item is documented, along with the risk management objectives and clear identification of the risk in the hedged item that is being hedged by the hedging instrument. Furthermore, at the inception of the hedge the company determines and documents causes for hedge ineffectiveness.

The hedged instruments are classified as cash flow hedges because the hedged instruments hedge the volatility of the market risk of the cash flows associated with the recognised hedged item measured at amortised cost. The effective portion of changes in the fair value of the designated hedging instrument is recognised in other comprehensive income. The gain or loss relating to any ineffective portion is recognised immediately in profit or loss. Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods in which the hedged item affects profit or loss or when the hedging relationship ends.

Hedge accounting is discontinued when the company revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time is reclassified to profit or loss when the hedged item is recognised in profit or loss. When a forecast transaction is no longer expected to occur, any gain or loss that was recognised in other comprehensive income is reclassified immediately to profit or loss.

4.

TURNOVER

In the opinion of the directors the disclosure of any information required by class of business and geographical markets would be seriously prejudicial to the interests of the company.

5.	EMPLOYEES AND DIRECTORS

30.6.20

30.6.19

£

£

Wages and salaries

54,187

82,658

Social security costs

1,847

787

56,034

83,445

The average number of employees during the year was as follows:

30.6.20

30.6.19

Investment and fund management

2

2

Support

3

3

5

5

30.6.20

30.6.19

£

£

Directors' remuneration

17,334

16,950

Directors’ and key management compensation

Key management are considered to be the directors.

6.	OPERATING PROFIT

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

30.6.20

30.6.19

£

£

Other operating leases

26,875

30,000

Depreciation - owned assets

-

118

Loss/(profit) on disposal of fixed assets

8,438

(57,381

)

Auditors' remuneration

3,700

3,400

7.	EXCEPTIONAL ITEM

30.6.20

30.6.19

£

£

Loan written off

(38,000

)

-

The exceptional item relates to a larger share restructure with a related party. The amount written off is considered to be the final transaction. The amount is not deductible for tax purposes.

8.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

30.6.20

30.6.19

£

£

Current tax:

UK corporation tax

88,020

100,938

Tax on profit

88,020

100,938

UK corporation tax has been charged at 19% .

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

30.6.20

30.6.19

£

£

Profit before tax

416,326

553,601

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2019 - 19%)

79,102

105,184

Effects of:

Expenses not deductible for tax purposes

7,220

-

Income not taxable for tax purposes

(1,406

)

(1,722

)

Depreciation in excess of capital allowances

-

23

Unrealised losses/(gains)

3,104

(2,547

)

Total tax charge

88,020

100,938

9.

DIVIDENDS

30.6.20

30.6.19

£

£

Ordinary shares of £1 each

Interim

315,000

301,000