Company Registration No. 02705948 (England and Wales)
BLACKFINCH INVESTMENTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
BLACKFINCH INVESTMENTS LIMITED
COMPANY INFORMATION
Directors
Mr R J Cook
Mr R L Simmonds
Company number
02705948
Registered office
1350-1360 Montpellier Court
Brockworth
Gloucester
GL3 4AH
Auditor
Kendall Wadley LLP
Granta Lodge
71 Graham Road
Malvern
Worcestershire
WR14 2JS
Bankers
Lloyds Bank plc
48 Belle Vue Terrace
Malvern
Worcestershire
WR14 4PZ
BLACKFINCH INVESTMENTS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 25
BLACKFINCH INVESTMENTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report and financial statements for the year ended 31 December 2022.
The principal activity of the company continued to be that of the provision of agency services in respect of investment services.
Fair review of the business
The last year saw headwinds caused by inflation and base rate rises. The company raised a healthy level of new investment into the business which has assisted with the continued growth. Over the course of 2022 the business progressed with projects aimed to diversify revenue streams and to widen the customer base.
The results for the company show a pre tax profit of £3,704,689 for the period (2021 : £1,607,823) on turnover of £16,644,845 (2021 : £12,590,985).
The company paid dividends of £2,504,304 (2021 : £1,011,995) and there were no significant events requiring disclosure in the financial statements after the balance sheet date.
The company has debt of £226,375 (2021 : £156,106) and shareholder's funds amount to £3,371,764 (2021 : £2,629,248).
Principal risks and uncertainties
Key risks and uncertainties relate to inflation and base rate increases, the later provides opportunities for certain business areas due to market pricing. Investments performed in line with expectations and client investment redemptions were minimal. The business has continued to raise a healthy flow of new funds and investment management activities continue to generate revenue. The management team are confident in the company's resilience and ability to trade and adjust to the 'new normal'.
Section 172 (1) Statement
The Directors have acted in a way that they considered, in good faith, to be the most likely to promote the success of Blackfinch Investments Limited for the benefit of its stakeholders, and in doing so had regard, amongst other matters to:
the likely consequences of any decision in the long term,
the interests of the company's employees,
the need to foster the company's business relationships with suppliers, customers and others,
the impact of the company's operations on the community and the environment,
the desirability of the company maintaining a reputation for high standards of business conduct, and
the need to act fairly as between members of the company.
These matters were achieved by the Directors in the following ways:
Long term view
The Directors carry out a robust and thorough assessment of the risks faced by the company, this defines the strategic objectives and long-term viability of the company and allows it to remain in a healthy and stable condition.
Employees
Our employees are critical to the progression of the company moving forwards, we value every member and improve systems to enhance the working environment where possible. The working conditions (post Covid-19) have allowed our teams to flexibly work from home. An enhanced employee benefits package is also in place.
BLACKFINCH INVESTMENTS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Customers
We aim to deliver a truly outstanding customer experience that is clear, concise and provide a rewarding journey.
We have made a portal which empowers our customers to obtain real time information and have efficient communication channels that enables strong business relationships.
Suppliers
We aim to treat suppliers fairly and pay them within agreed timescales, holding ourselves to high standards of business conduct.
Community and environment
Environmental, social and governance (ESG) is a core pillar of the company’s framework. We work to ensure that any impact on the environment is positive; that we always consider social responsibility; and that the Group makes governance a priority.
Mr R J Cook
Director
26 April 2023
BLACKFINCH INVESTMENTS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company continued to be that of the provision of agency services in respect of investment services.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £2,504,304. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr R J Cook
Mr R L Simmonds
Auditor
In accordance with the company's articles, a resolution proposing that Kendall Wadley LLP be reappointed as auditor of the company will be put at a General Meeting.
Statement of disclosure to auditor
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 directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr R J Cook
Director
26 April 2023
BLACKFINCH INVESTMENTS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 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 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.
BLACKFINCH INVESTMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF BLACKFINCH INVESTMENTS LIMITED
- 5 -
Opinion
We have audited the financial statements of Blackfinch Investments Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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 31 December 2022 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.
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
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
BLACKFINCH INVESTMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BLACKFINCH INVESTMENTS LIMITED
- 6 -
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 directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with management, and from our commercial knowledge and experience of the industry;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, FCA regulation, data protection, anti-bribery, employment, environmental and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
BLACKFINCH INVESTMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BLACKFINCH INVESTMENTS LIMITED
- 7 -
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
understanding the design of the company’s remuneration policies.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates.
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC and FCA regulator and the company’s legal advisors.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
BLACKFINCH INVESTMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BLACKFINCH INVESTMENTS LIMITED
- 8 -
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.
Elizabeth Needham ACA CTA (VAT)
Senior Statutory Auditor
For and on behalf of Kendall Wadley LLP
26 April 2023
Chartered Accountants
Statutory Auditor
Granta Lodge
71 Graham Road
Malvern
Worcestershire
WR14 2JS
BLACKFINCH INVESTMENTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
2022
2021
Notes
£
£
Turnover
3
16,644,845
12,590,985
Cost of sales
(325,739)
(217,557)
Gross profit
16,319,106
12,373,428
Administrative expenses
(12,588,534)
(10,757,776)
Other operating income
16,385
825
Operating profit
4
3,746,957
1,616,477
Interest receivable and similar income
8
813
456
Interest payable and similar expenses
9
(16,346)
(9,110)
Amounts written off investments
10
(26,735)
Profit before taxation
3,704,689
1,607,823
Tax on profit
11
(457,869)
(64,118)
Profit for the financial year
3,246,820
1,543,705
The profit and loss account has been prepared on the basis that all operations are continuing operations.
BLACKFINCH INVESTMENTS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 10 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
13
100,371
29,859
Investments
14
11,576
11,576
111,947
41,435
Current assets
Debtors
16
4,337,293
3,858,134
Cash at bank and in hand
943,735
350,461
5,281,028
4,208,595
Creditors: amounts falling due within one year
17
(1,900,610)
(1,529,737)
Net current assets
3,380,418
2,678,858
Total assets less current liabilities
3,492,365
2,720,293
Creditors: amounts falling due after more than one year
18
(107,155)
(91,045)
Provisions for liabilities
Deferred tax liability
20
13,446
(13,446)
-
Net assets
3,371,764
2,629,248
Capital and reserves
Called up share capital
22
85,000
85,000
Profit and loss reserves
3,286,764
2,544,248
Total equity
3,371,764
2,629,248
The financial statements were approved by the board of directors and authorised for issue on 26 April 2023 and are signed on its behalf by:
Mr R J Cook
Director
Company Registration No. 02705948
BLACKFINCH INVESTMENTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2021
85,000
2,012,538
2,097,538
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
1,543,705
1,543,705
Dividends
12
-
(1,011,995)
(1,011,995)
Balance at 31 December 2021
85,000
2,544,248
2,629,248
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
3,246,820
3,246,820
Dividends
12
-
(2,504,304)
(2,504,304)
Balance at 31 December 2022
85,000
3,286,764
3,371,764
BLACKFINCH INVESTMENTS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
27
3,363,270
1,378,708
Interest paid
(16,346)
(9,110)
Income taxes paid
(199,575)
(124,660)
Net cash inflow from operating activities
3,147,349
1,244,938
Investing activities
Purchase of investments
-
(12,500)
Interest received
813
456
Net cash generated from/(used in) investing activities
813
(12,044)
Financing activities
Payment of finance leases obligations
(50,584)
(33,571)
Dividends paid
(2,504,304)
(1,011,995)
Net cash used in financing activities
(2,554,888)
(1,045,566)
Net increase in cash and cash equivalents
593,274
187,328
Cash and cash equivalents at beginning of year
350,461
163,133
Cash and cash equivalents at end of year
943,735
350,461
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 13 -
1
Accounting policies
Company information
Blackfinch Investments Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1350-1360 Montpellier Court, Brockworth, Gloucester, GL3 4AH.
1.1
Accounting convention
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. The principal accounting policies adopted are set out below.
Blackfinch Investments Limited is a wholly owned subsidiary of Blackfinch Group Limited and the results of Blackfinch Investments Limited are included in the consolidated financial statements of BF Inter Limited which are available from 1350-1360 Montpellier Court, Gloucester Business Park, Gloucester, GL3 4AH.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover represents amounts receivable for arrangement and exit fees, legal fees, management and ongoing monitoring fees and other fees for investment products during the period, exclusive of Value Added Tax.
The company recognises the commission income from investment portfolios completed only when full legal title has been granted.
The company recognises the investment management fees in line with the agreements held with the investors.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
1.4
Tangible fixed assets
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:
Motor vehicles
33% on cost
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.
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
1.5
Fixed asset investments
Investments are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.6
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Cash at bank and in hand
Cash and cash equivalents are basic financial assets and include cash in hand.
1.8
Financial instruments
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 instruments are recognised in the company's balance sheet 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
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 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. Financial assets classified as receivable within one year are not amortised.
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
Other financial assets
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.
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. 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 a 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.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
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
Basic financial liabilities, including creditors, 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. Financial liabilities classified as payable within one year are not amortised.
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
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.
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
1.10
Taxation
The tax expense represents the sum of the tax currently payable.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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.
Group relief is paid for in full at the rate of corporation tax prevailing in respect of the year of surrender.
Deferred tax
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.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 17 -
1.14
Foreign exchange
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 in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are 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.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Management and admin fees
5,248,715
4,089,110
Other commission
3,484,100
2,207,845
Sales fees
3,080,678
2,497,223
Investment management fees
1,957,016
2,204,146
Directors and monitoring fees
593,692
434,167
Arrangement, legal and exit fees
2,280,644
1,158,494
16,644,845
12,590,985
2022
2021
£
£
Turnover analysed by geographical market
UK sales
16,644,845
12,590,985
4
Operating profit
2022
2021
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
10,000
10,000
Depreciation of owned tangible fixed assets
50,341
80,056
Operating lease charges
30,174
85,872
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
5
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
10,000
10,000
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Administrative
104
79
Directors
2
2
Total
106
81
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
8,156,802
6,360,465
Social security costs
1,006,925
754,799
Pension costs
386,124
231,305
9,549,851
7,346,569
7
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
253,743
330,335
Company pension contributions to defined contribution schemes
15,705
18,098
269,448
348,433
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2021 - 2).
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
7
Directors' remuneration
(Continued)
- 19 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
253,743
246,335
Company pension contributions to defined contribution schemes
15,705
14,249
8
Interest receivable and similar income
2022
2021
£
£
Interest income
Other interest income
813
456
9
Interest payable and similar expenses
2022
2021
£
£
Other finance costs:
Interest on finance leases and hire purchase contracts
11,478
7,888
Other interest
4,868
1,222
16,346
9,110
10
Amounts written off investments
2022
2021
£
£
Amounts written off financial assets held at cost
(26,735)
-
11
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
706,883
331,581
Adjustments in respect of prior periods
(266,874)
(250,537)
Total current tax
440,009
81,044
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
11
Taxation
2022
2021
£
£
(Continued)
- 20 -
Deferred tax
Origination and reversal of timing differences
14,633
(16,926)
Changes in tax rates
3,227
Total deferred tax
17,860
(16,926)
Total tax charge
457,869
64,118
The change in UK corporation tax rate from 19% to 25% enacted in the Finance Act 2021 for profits arising after 1 April 2023 has led to the deferred tax liability being revalued based on these rates changes.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
3,704,689
1,607,823
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
703,891
305,486
Tax effect of expenses that are not deductible in determining taxable profit
12,545
9,169
Effect of change in corporation tax rate
3,227
Adjustments in respect of financial assets
5,080
Research and development tax credit
(266,874)
(250,537)
Taxation charge for the year
457,869
64,118
The prior year adjustments is for the 2021 research and development claim and 2021 the adjustment relates to research and development claims for 2020.
12
Dividends
2022
2021
£
£
Final paid
2,504,304
1,011,995
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
13
Tangible fixed assets
Motor vehicles
£
Cost
At 1 January 2022
287,021
Additions
120,853
At 31 December 2022
407,874
Depreciation and impairment
At 1 January 2022
257,162
Depreciation charged in the year
50,341
At 31 December 2022
307,503
Carrying amount
At 31 December 2022
100,371
At 31 December 2021
29,859
14
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
15
1
1
Unlisted investments
11,575
11,575
11,576
11,576
15
Subsidiaries
Details of the company's subsidiaries at 31 December 2022 are as follows:
Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Blackfinch Nominees Limited
1350 - 1360 Montpellier Court, Brockworth, Gloucester, England, GL3 4AH
Dormant
Ordinary
100.00
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
16
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
505,045
262,130
Amounts owed by group undertakings
2,319,992
2,362,313
Other debtors
10,893
14,361
Prepayments and accrued income
1,501,363
1,214,916
4,337,293
3,853,720
Deferred tax asset (note 20)
4,414
4,337,293
3,858,134
17
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Obligations under finance leases
19
119,220
65,061
Payments received on account
56,700
268,878
Trade creditors
447,626
396,715
Amounts owed to group undertakings
87,604
Corporation tax
706,883
466,449
Other taxation and social security
123,710
69,938
Accruals and deferred income
358,867
262,696
1,900,610
1,529,737
18
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Obligations under finance leases
19
107,155
91,045
19
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
130,058
68,675
In two to five years
116,784
95,285
246,842
163,960
Less: future finance charges
(20,467)
(7,854)
226,375
156,106
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
19
Finance lease obligations
(Continued)
- 23 -
Finance lease payments represent rentals payable by the company for motor vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
20
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Asset/(Liabilities)
Assets/(Liabilities)
2022
2021
Balances:
£
£
Capital Allowances
(17,686)
1,192
Investment revaluations
4,240
3,222
(13,446)
4,414
2022
Movements in the year:
£
Asset at 1 January 2022
(4,414)
Charge to profit or loss
17,860
Liability at 31 December 2022
13,446
The deferred tax liability set out above is expected to reverse in the foreseeable future.
21
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
386,124
231,305
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.
22
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 10p each
850,000
850,000
85,000
85,000
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 24 -
23
Financial commitments, guarantees and contingent liabilities
The banking arrangements of Blackfinch Corporate Services Limited, a fellow subsidiary of Blackfinch Group Limited are secured by a charge over £125,000 held on deposit with the bank on 23rd December 2010. At 31 December 2022, Blackfinch Corporate Services Limited owed Lloyds Bank plc £nil (2021 £79,254).
The property in Rcs Solutions Ltd, 1145 Regent Court, a fellow subsidiary of Blackfinch Group Limited is secured by a series of charges on Blackfinch Investments Limited.
Blackfinch Investments Limited is a guarantor for their product investment companies.
24
Operating lease commitments
Lessee
Operating lease payments represent rentals payable by the company for its office equipment and motor vehicles. Leases are negotiated for an average term of 1-5 years.
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:
2022
2021
£
£
Within one year
30,174
BLACKFINCH INVESTMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 25 -
25
Related party transactions
The company is a 100% owned subsidiary of Blackfinch Investment Group International Limited. The company has therefore elected to make use of the exemption provided in FRS102.33.1A (Related Party Transactions) not to disclose related party transactions with other members of the group.
26
Ultimate controlling party
The ultimate parent company is BF Inter Ltd, a company registered in England and Wales, which owns 100% of the issued share capital of Blackfinch Group Limited, the immediate parent company. The ultimate controlling party is Richard Cook who owns 55% of the share capital in BF Inter Ltd.
27
Cash generated from operations
2022
2021
£
£
Profit for the year after tax
3,246,820
1,543,705
Adjustments for:
Taxation charged
457,869
64,118
Finance costs
16,346
9,110
Investment income
(813)
(456)
Depreciation and impairment of tangible fixed assets
50,341
80,056
Impairment of investment
-
16,960
Other gains and losses
26,735
-
Movements in working capital:
(Increase)/decrease in debtors
(510,308)
703,541
Increase/(decrease) in creditors
76,280
(1,033,826)
Decrease in deferred income
-
(4,500)
Cash generated from operations
3,363,270
1,378,708
28
Analysis of changes in net funds
1 January 2022
Cash flows
31 December 2022
£
£
£
Cash at bank and in hand
350,461
593,274
943,735
Obligations under finance leases
(156,106)
(70,269)
(226,375)
194,355
523,005
717,360
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