| Caygan Capital Ltd |
| Strategic Report |
|
|
|
| Fair review of the business |
| The Company was established as a fully owned subsidiary of Caygan Capital Pte. Ltd ("CCPL") on 10 March 2014. CCPL is a Singapore based investment manager that provides investment management and advisory services to investment funds and firms. As of 31 December 2021, the combined assets under management and investment advisory are estimated to be £372 million. |
| The Company was established solely for the purpose of providing services requested of it by its parent Company, CCPL. These services include marketing, investment research, investment advisory, limited investment management and other related services in relation to the Funds. The Company is not expected to provide any other services to any other clients. Accordingly, the Company's primary source of revenue is from CCPL. |
| As the company was established solely for the purpose of providing services to the parent Company, the key performance indicator for the Company is whether those services have been performed to the satisfaction of the parent Company. There are no financial Key Performance Indicators applicable to the Company. |
| Principal risks and uncertainties |
The Company maintains a risk register which details risks identified by the directors and the relevant mitigating measures. This register is reviewed at least annually by the directors. Among the risks identified, the directors would like to highlight:
a) Credit Risk - Single Client I Single Source of Fee Income Risk:
The Company has a single client, its parent company CCPL. However, CCPL has established the Company for the sole purpose of engaging it for certain services, and so the probability of CCPL disengaging with the Company is considered to be low. |
|
| Since early 2020, the Covid-19 pandemic has created challenges and future uncertainties for both the Company and its single client, CCPL. Two key issues that have been identified are the Company’s ability to operate under an increasingly restrictive environment and the uncertainty over its future financial health. |
| a) |
Business Continuity Plan (BCP) Measures |
|
For much of 2021 and as of the date of this report, the Company has continued to apply its BCP processes while maintaining high levels of service quality. The Company will continue to evaluate and refine its BCP processes in line with evolving best practices to minimize IT and data security vulnerabilities. |
|
The Company notes that, being leanly staffed, it is subject to key person risk. Mr Naruhisa Nakagawa, CEO/CIO of the Company, has been identified as a key person. Mr Nakagawa is aware of his status and is taking extra precautions to minimize his chances of infection. |
| b) |
Financial Health |
|
The Company notes that its financial health is dependent on its single client, CCPL. It further notes that CCPL's financial health may likewise be impacted by the Covid-19 pandemic and such an impact may flow down and materially impact the financial health of the Company. |
| To assess the potential impact, the Company has reached out to CCPL to obtain the following documents: |
| 1. |
Letter of confirmation from CCPL that states: |
|
a. |
CCPL’s intention to not exercise its right to terminate the service agreement with the Company for a period of 12 months from the date of this financial statement |
|
b. |
CCPL’s basis for making the above confirmation in light of the Covid-19 pandemic and its impact on CCPL. |
| 2. |
Final copy or latest draft of the FY 2021 financial audit reports of the funds managed by CCPL |
| 3. |
Final copy or latest draft of the FY 2021 audit report of CCPL |
| 4. |
Projected P&L and cash flow forecasts for the period of 12 months from the date of this statement. |
| The Company has reviewed the above documents and is of the opinion that there is limited impact on the financial health of CCPL and accordingly, there will be a limited impact on the financial health of the Company |
| The Company further notes that the Covid-19 pandemic is a fluid situation and changes may materially impact its above assessments. It will continue to monitor the situation and take the required actions to manage the overall risks faced by the Company. |
|
| Section 172 statement |
| The directors of the Company note that they have a duty to promote the success of the Company for the benefit of CCPL, having regard to a number of broader matters including the likely long term consequences, and the company's wider relationships. In this regard, the board: |
| ● |
considers on an annual basis the key business activities and the likely long term consequences of any key decision; |
| ● |
ensures employees are regularly engaged through annual reviews to discuss employee performance, suitability, and interest; |
| ● |
ensures the Company maintains strong business relations with suppliers, customers and others; |
| ● |
ensures Caygan's operations do not have a negative impact on its community and the environment; and |
| ● |
ensures, through the Company's policies and procedures, that the desired high standards of business conduct prevail across all functions. |
|
| This report was approved by the board on 25 March 2022 and signed on its behalf. |
|
|
|
| Nandakumar Lokanathan |
| Director |
|
| Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit. |
| In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit. |
| However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud. |
| In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the audit engagement team: |
| ● |
obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework that the company operates in and how the company is complying with the legal and regulatory framework; |
| ● |
inquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud; |
| ● |
discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial statements may be susceptible to fraud having obtained an understanding of the effectiveness of the control environment. |
| As a result of these procedures we consider the most significant laws and regulations that have a direct impact on the financial statements are FRS 102, the Companies Act 2006 and tax compliance regulations. We performed audit procedures to detect non-compliances which may have a material impact on the financial statements which included reviewing financial statement disclosures, inspecting correspondence with local tax authorities and evaluating advice received from internal/external tax advisors. |
| The most significant laws and regulations that have an indirect impact on the financial statements are those in relation to FCA compliance. We performed audit procedures to inquire of management and those charged with governance whether the company is in compliance with these laws and regulations, and inspected correspondence with the FCA. |
| The audit engagement team identified the risk of management override of controls as the area where the financial statements were most susceptible to material misstatement due to fraud. Audit procedures performed included but were not limited to testing manual journal entries and other adjustments and evaluating the business rationale in relation to any significant, unusual transactions and transactions entered into outside the normal course of business. |
| 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 them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. |
|
| Malcom Pirouet |
| (Senior Statutory Auditor) |
| for and on behalf of |
| RSM UK Audit LLP |
| Statutory Auditor |
| Chartered Accountants |
| 25 Farringdon Street |
| London |
| EC4A 4AB |
|
| Date: 25 March 2022 |
|
|
|
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 recognised in the income statement. |
|
|
Impairment of fixed assets |
|
An assessment is made at each reporting date of whether there are indications that a fixed asset may be impaired or that an impairment loss previously recognised has fully or partially reversed. If an indication exists, the Company estimates the recoverable amount of that asset.
Shortfalls between the carrying value of fixed assets and their recoverable amounts, being the higher of fair value less costs to sell and value-in-use, are recognised as impairment losses. Impairments of revalued assets, are treated as a revaluation decrease. All other impairment losses are recognised in the income statement.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Reversals of impairment losses are recognised in the profit or loss or, for revalued assets, as a revaluation increase. On reversal of an impairment loss, the depreciation or amortisation is adjusted to reflect the revised carrying value. |
|
|
Cash and cash equivalents |
|
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities. |
|
|
Financial assets |
|
The Company has elected to apply the provisions of Section 11 "Basic Financial Instruments" and Section 12 "Other Financial Instruments Issues" of FRS 102 to all of its financial instruments.
Financial assets are recognised in the Company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets are classified into specified categories. The classification depends on the nature and purpose of the financial assets and is determined at the time of recognition.
Basic financial assets, which include trade and other receivables and cash and bank balances, are initially recognised at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method, unless the transaction constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Other financial assets classified at fair value through profit or loss are measured at fair value. |
|
|
Loans and receivables |
|
Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as "loans and receivables". Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition. |
|
|
Impairment of financial assets |
|
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 assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. The impairment loss is recognised in profit and loss. |
|
|
Derecognition of financial assets |
|
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity. |
|
|
Financial liabilities |
|
Basic financial liabilities are initially measured 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. Other financial liabilities classified as fair value through profit or loss are measured at fair value. |
|
|
Other financial liabilites |
|
Other financial liabilities, are initially measured at fair value, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash payments through the expected life of the financial liability to the net carrying amount on initial recognition. |
|
|
Derocognition of financial liabilities |
|
Financial liabilities are derecognised when, and only when, the Company's obligations are discharged, cancelled, or they expire. |
|
|
Equity instruments |
|
Equity instruments issued by the Company are recorded at the proceed received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Company. |
|
|
Taxation |
|
The tax expense represents the sum of the current tax expense and deferred tax expense. Current tax assets are recognised when the tax paid exceeds the tax payable.
Current and deferred tax is charged or credited to the profit or loss, except when it relates to items charged or credited to other comprehensive income or equity, when the tax follow the transaction or event it relates to and is also charged or credited to other comprehensive income or equity.
Current tax assets and current tax liabilities and deferred tax assets and deferred tax liabilities are offset, if and only if, there is a legally enforceable right to set off the amounts and the entity intends either to settle on the net basis or to realise the asset and settle the liability simultaneously.
Current tax is based on taxable profit for the year. Taxable profit differs from total comprehensive income because it excludes items of income or expense that are taxable or deductible in other periods. Current tax assets and liabilities are measured using tax rates that have been enacted or substantively enacted by the reporting period.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based on tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is not discounted. |
|
Deferred tax liabilities are recognised in respect of all timing differences that exist at the reporting date. Timing differences are differences between taxable profits and total comprehensive income that arise from the inclusion of income and expenses in tax assessments in different periods from their recognition in the financial statements. Deferred tax assets are recognised only to the extent that it is probable that they will be recovered by the reversal of deferred tax liabilities or other future taxable profits. |
|
|
Provisions |
|
Provisions (ie liabilities of uncertain timing or amount) are recognised when there is an obligation at the reporting date as a result of a past event, it is probable that economic benefit will be transferred to settle the obligation and the amount of the obligation can be estimated reliably. |
|
|
Foreign currency translation |
|
Transactions in currencies other than the functional currency (foreign currency) are initially recorded at the exchange rate prevailing on the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies are translated at the rate ruling at the date of the transaction, or, if the asset or liability is measured at fair value, the rate when that fair value was determined.
All translation differences are taken to the profit and loss, except to the extent that they relate to gains or losses or non-monetary items recognised in other comprehensive income, when the related translation gain or loss is also recognised in other comprehensive income. |
|
|
Employee benefits |
|
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.
Termination benefits are recognised immediately as an expense when the Company is demonstrably committed to terminate the employment of an employee or to provide termination benefits. |
|
|
Leased assets |
|
Rentals payable under operating leases, including any lease incentives received, are charged to income 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 the economic benefits from the lease asset are consumed. |
|
|
Pensions |
|
Contributions to defined contribution plans are expensed in the period to which they relate. |
|
|
| 2 |
Critical accounting estimates and judgements |
|
|
Estimates and judgements are continually evaluated and are based on the directors historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. |
|
|
| 3 |
Analysis of turnover |
2021 |
|
2020 |
| £ |
£ |
|
|
Services rendered |
1,820,000 |
|
1,960,667 |
|
|
|
|
|
|
|
|
|
|
By geographical market: |
|
|
UK |
1,820,000 |
|
1,960,667 |
|
|
|
|
|
|
|
|
|
|
| 4 |
Operating profit |
2021 |
|
2020 |
| £ |
£ |
|
This is stated after charging: |
|
|
Depreciation of owned fixed assets |
2,986 |
|
2,714 |
|
Operating lease rentals - land and buildings |
158,273 |
|
185,705 |
|
Auditors' remuneration for audit services |
9,820 |
|
16,500 |
|
Auditors' remuneration for other services |
2,279 |
|
1,345 |
|
Contributions to defined contribution pension plans |
5,544 |
|
4,869 |
|
|
|
|
|
|
|
|
|
|
| 5 |
Directors' emoluments |
2021 |
|
2020 |
| £ |
£ |
|
|
Salary and bonuses |
692,430 |
|
609,193 |
|
Other benefits |
84,949 |
|
84,258 |
|
Company contributions to defined contribution pension plans |
1,318 |
|
1,313 |
|
|
|
|
|
|
778,697 |
|
694,764 |
|
|
|
|
|
|
|
|
|
|
|
Highest paid director: |
|
Emoluments |
777,379 |
|
693,451 |
|
Company contributions to defined contribution pension plans |
1,318 |
|
1,313 |
|
|
|
|
|
|
778,697 |
|
694,764 |
|
|
|
|
|
|
|
|
|
|
|
Number of directors to whom retirement benefits accrued: |
2021 |
|
2020 |
| Number |
Number |
|
|
Defined contribution plans |
1 |
|
1 |
|
|
|
|
|
|
|
|
|
|
The directors are the only key management personnel of the company. |
|
|
| 6 |
Staff costs (including directors) |
2021 |
|
2020 |
| £ |
£ |
|
|
Wages and salaries |
1,166,324 |
|
1,107,647 |
|
Social security costs |
168,418 |
|
178,180 |
|
Other pension costs |
5,544 |
|
4,868 |
|
|
|
|
|
|
1,340,286 |
|
1,290,695 |
|
|
|
|
|
|
|
|
|
|
|
Average number of employees during the year |
Number |
Number |
|
|
Office and management (including directors) |
5 |
|
5 |
|
|
|
|
|
|
|
|
|
|
| 7 |
Taxation |
2021 |
|
2020 |
| £ |
£ |
|
Analysis of charge in period |
|
Current tax: |
|
UK corporation tax on profits of the period |
19,753 |
|
45,073 |
|
Adjustments in respect of previous periods |
146 |
|
- |
|
|
|
|
|
|
19,899 |
|
45,073 |
|
|
|
|
|
|
|
|
|
|
Deferred tax: |
|
Origination and reversal of timing differences |
(370) |
|
5,835 |
|
|
|
|
|
|
|
|
|
|
|
Tax on profit on ordinary activities |
19,529 |
|
50,908 |
|
|
|
|
|
|
|
|
|
|
|
Factors affecting tax charge for period |
|
The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows: |
|
|
|
|
|
|
|
2021 |
|
2020 |
| £ |
£ |
|
Profit on ordinary activities before tax |
100,816 |
|
268,713 |
|
|
|
|
|
|
|
|
|
|
Standard rate of corporation tax in the UK |
19% |
|
19% |
|
| £ |
£ |
|
Profit on ordinary activities multiplied by the standard rate of corporation tax |
|
19,155 |
|
51,055 |
|
|
Effects of: |
|
Expenses not deductible for tax purposes |
227 |
|
(1,505) |
|
Capital allowances for period in excess of depreciation |
371 |
|
1,678 |
|
Utilisation of tax losses |
- |
|
(6,155) |
|
Adjustments to tax charge in respect of previous periods |
146 |
|
- |
|
|
Current tax charge for period |
19,899 |
|
45,073 |
|
|
|
|
|
|
|
|
|
|
|
|
| 8 |
Tangible fixed assets |
|
|
|
|
Computer equipment |
|
Fixtures, fittings,and equipment |
|
Total |
|
|
|
|
At cost |
|
At cost |
| £ |
£ |
£ |
|
Cost or valuation |
|
At 1 January 2021 |
21,104 |
|
13,005 |
|
34,109 |
|
Additions |
1,036 |
|
- |
|
1,036 |
|
At 31 December 2021 |
22,140 |
|
13,005 |
|
35,145 |
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
At 1 January 2021 |
18,106 |
|
12,310 |
|
30,416 |
|
Charge for the year |
2,291 |
|
695 |
|
2,986 |
|
At 31 December 2021 |
20,397 |
|
13,005 |
|
33,402 |
|
|
|
|
|
|
|
|
|
|
Carrying amount |
|
At 31 December 2021 |
1,743 |
|
- |
|
1,743 |
|
At 31 December 2020 |
2,998 |
|
695 |
|
3,693 |
|
|
|
|
|
|
|
|
|
|
|
| 9 |
Debtors |
2021 |
|
2020 |
| £ |
£ |
|
|
Other debtors |
42,967 |
|
45,616 |
|
Prepayments and accrued income |
54,039 |
|
40,157 |
|
|
|
|
|
|
97,006 |
|
85,773 |
|
|
|
|
|
|
|
|
|
|
| 10 |
Creditors: amounts falling due within one year |
2021 |
|
2020 |
| £ |
£ |
|
|
Trade creditors |
57,703 |
|
17,576 |
|
Corporation tax |
19,753 |
|
45,074 |
|
Other taxes and social security costs |
344,868 |
|
359,703 |
|
Other creditors |
1,935 |
|
813 |
|
Accruals and deferred income |
25,446 |
|
32,813 |
|
|
|
|
|
|
449,705 |
|
455,979 |
|
|
|
|
|
|
|
|
|
|
| 11 |
Financial instruments |
2021 |
|
2020 |
| £ |
£ |
|
|
Financial assets that are debt instruments measured at amortised costs |
|
Other debtors |
33,900 |
|
35,775 |
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at amortised costs |
|
Trade creditors |
57,703 |
|
17,576 |
|
Other creditors |
1,935 |
|
813 |
|
Accruals |
25,446 |
|
32,813 |
|
|
|
|
|
|
85,084 |
|
51,202 |
|
|
|
|
|
|
|
|
|
| 12 |
Deferred taxation |
2021 |
|
2020 |
| £ |
£ |
|
|
Accelerated capital allowances |
331 |
|
701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
2020 |
| £ |
£ |
|
|
At 1 January |
701 |
|
(5,134) |
|
(Credited)/charged to the profit and loss account |
(370) |
|
5,835 |
|
|
At 31 December |
331 |
|
701 |
|
|
|
|
|
|
|
|
|
|
|
| 13 |
Share capital |
Nominal |
|
2021 |
|
2021 |
|
2020 |
| value |
Number |
£ |
£ |
|
Allotted, called up and fully paid: |
|
Ordinary shares |
£1 each |
|
350,000 |
|
350,000 |
|
350,000 |
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares have attached to them full voting, dividend and capital distribution (including on winding up) rights, they do not confer any rights of redemption. |
|
| 14 |
Profit and loss account |
2021 |
|
2020 |
| £ |
£ |
|
|
At 1 January |
236,948 |
|
19,143 |
|
Profit for the financial year |
81,287 |
|
217,805 |
|
|
At 31 December |
318,235 |
|
236,948 |
|
|
|
|
|
|
|
|
|
|
| 15 |
Other financial commitments |
|
|
Total future minimum lease payments under non-cancellable operating leases: |
|
|
|
Land and buildings |
|
Land and buildings |
Other |
Other |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
| £ |
£ |
£ |
£ |
|
Falling due: |
|
within one year |
146,887 |
|
148,720 |
|
- |
|
- |
|
within two to five years |
203,062 |
|
- |
|
- |
|
- |
|
|
349,949 |
|
148,720 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
| 16 |
Related party transactions |
|
|
The Company has taken advantage of the exemptions provided by Section 33 of FRS 102 "Related Party Disclosures" and has not disclosed transactions entered into between two or more members of a group, provided that any subsidiary undertaking which is party to the transaction is wholly owned by a member of that group. |
|
At the balance sheet date Mr Nakagawa had a short term loan from the company of £1,250 which was repaid in February 2022. |
|
| 17 |
Controlling party |
|
|
Caygan Capital Pte. Ltd. ("CCPL"), a company incorporated in Singapore, is the immediate parent of the Company. CCPL is also the smallest and largest group for which consolidated accounts including those of the Company are prepared. The consolidated accounts of CCPL is available from its registered office at 600 North Bridge Road, #09-10 Parkview Square, Singapore 188778.
Mr Nakagawa holds 66% of CCPL's shares. Mr Nakagawa is presently the Director of CCPL and both Director and CEO of the Company.
The ultimate parent undertaking is CCPL and the ultimate controlling party is Mr Nakagawa. |
|
|
| 18 |
Presentation currency |
|
|
The financial statements are presented in Sterling which is the functional currency of the company rounded to the nearest whole £. |
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| 19 |
Legal form of entity and country of incorporation |
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Caygan Capital Ltd is a private company limited by shares and incorporated in England. |
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| 20 |
Principal place of business |
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The address of the company's principal place of business and registered office is: |
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4th Floor, 6 Lloyds Avenue |
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London |
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EC3N 3AX |
