Company Registration No. 08272810 (England and Wales)
EDESIA ASSET MANAGEMENT UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
EDESIA ASSET MANAGEMENT UK LIMITED
COMPANY INFORMATION
Directors
I McIntosh
P Vidalie
Company number
08272810
Registered office
Aldermary House
10-15 Queen Street
London
EC4N 1TX
Auditor
Deloitte LLP
2 New Street Square
London
EC4A 3BZ
EDESIA ASSET MANAGEMENT UK LIMITED
CONTENTS
Page
Directors' report
1 - 2
Directors' responsibilities statement
3
Independent auditor's report
4 - 5
Statement of profit and loss
6
Statement of comprehensive income
7
Statement of financial position
8
Statement of changes in equity
9
Notes to the financial statements
10 - 23
EDESIA ASSET MANAGEMENT UK LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2016
- 1 -
The directors present their report and financial statements for the year ended 31 December 2016.
The company has taken advantage of section 414b of the Companies Act 2006 not to produce a strategic report on the grounds that it is a small company.
The company has also taken advantage of the disclosure exemption relating to the provision of a cash flow statement in accordance with FRS 102 paragraph 1.12 (b).
Principal activities
The company provides portfolio management and advisory services to professional clients and eligible counterparties and has been authorized as a full scope Alternative Investment Manager under the UK Alternative Investment Management Directive as of December 1
st
2016.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
I McIntosh
R Moledina
(Resigned 18 July 2016)
S Proctor
(Resigned 18 July 2016)
P Vidalie
Results and dividends
The results for the year are set out on page 6.
No
interim
dividends were paid
(2015: £1,000,000). As per note 24 of the financial statements the directors recommend a final dividend of £1,600,000.
Financial instruments
Financial risk management objectives and policies
The Company's activities expose it to a number of risks including credit risk, cash flow risk and liquidity risk.
The Company does not use derivative financial instruments for speculative purposes.
Liquidity risk
In order to maintain liquidity and sufficient funds, the Company receives regular instalments from those fellow group companies that have amounts due to the company for services rendered.
Credit risk
The Company's principal financial assets are bank balances and other receivables.
The Company's credit risk is primarily attributable to its other receivables. As these are primarily due from other group undertakings the credit risk is deemed limited in nature.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are intergroup companies.
Future developments
There are no future developments of note.
EDESIA ASSET MANAGEMENT UK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 2 -
Auditor
Deloitte LLP
were appointed auditors to the company and are deemed to be reappointed in accordance with Section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each director is aware, there is no relevant audit information (information needed by the company's auditors in connection with preparing their report) of which the company's auditor are unaware. Additionally, each director has taken all the necessary steps that they ought to have taken as a director in order to make themselves aware of all relevant audit information and to establish that the company's auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.
This
report has been prepared in accordance with the special provisions for small companies under Part 15 of the Companies Act 2006.
Going concern
Having reviewed the company's financial forecasts and expected cashflows, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future, thus the going concern basis has been adopted in preparing the financial statements for the year ended 31 December 2016.
On behalf of the board
P Vidalie
Director
25 April 2017
EDESIA ASSET MANAGEMENT UK LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2016
- 3 -
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including Financial Reporting Standard FRS 102.
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 FRS 102 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;
-
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business;
-
• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.
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.
Where appropriate the directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. It is important to bear in mind that legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.
EDESIA ASSET MANAGEMENT UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF EDESIA ASSET MANAGEMENT UK LIMITED
- 4 -
We have audited the financial statements of Edesia Asset Management UK Limited for the year ended 31 December 2016 which comprise Profit and Loss Account, the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, and the related notes 1 to 24. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland".
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.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities Statement set out on page 2, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
-
• give a true and fair view of the state of the company's affairs as at 31 December 2016 and of its profit for the year then ended;
-
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Pracitice; and
-
• have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
true
In our opinion, based on the work undertaken in the course of the audit:
-
the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
-
the Directors’ Report has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified any material misstatements in the Directors’ Report.
EDESIA ASSET MANAGEMENT UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF EDESIA ASSET MANAGEMENT UK LIMITED
- 5 -
Matters on which we are required to report by exception
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; or
-
• the directors were not entitled to take advantage of the small companies exemption from the requirement to prepare a Strategic Report
Alana Sainsbury (Senior statutory auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
London
United Kingdom
25 April 2017
EDESIA ASSET MANAGEMENT UK LIMITED
STATEMENT OF PROFIT AND LOSS
FOR THE YEAR ENDED 31 DECEMBER 2016
- 6 -
2016
2015
Notes
£
£
Turnover
3
8,754,467
5,914,983
Administrative expenses
(6,224,399)
(3,468,057)
Profit before taxation
2,530,068
2,446,926
Taxation
8
(588,841)
(508,511)
Profit for the financial year
20
1,941,227
1,938,415
The profit and loss statement has been prepared on the basis that all operations are continuing operations.
The notes on pages 10 to 23 form an integral part of the financial statements.
EDESIA ASSET MANAGEMENT UK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
- 7 -
2016
2015
£
£
Profit for the year
1,941,227
1,938,415
Other comprehensive income
Cash flow hedges loss arising in the year
(709,081)
-
Tax relating to other comprehensive income
141,816
-
Other comprehensive income for the year
(567,265)
-
Total comprehensive income for the year
1,373,962
1,938,415
The notes on pages 10 to 23 form an integral part of the financial statements.
EDESIA ASSET MANAGEMENT UK LIMITED
STATEMENT OF FINANCIAL POSITION
AT
31 DECEMBER 2016
31 December 2016
- 8 -
2016
2015
Notes
£
£
£
£
Fixed assets
Tangible assets
10
81,739
130,322
Investments
11
2,438,832
1,730,652
2,520,571
1,860,974
Current assets
Debtors
12
8,896,874
2,765,675
Cash at bank and in hand
589,613
1,561,372
9,486,487
4,327,047
Creditors: amounts falling due within one year
13
(6,500,156)
(3,661,468)
Net current assets
2,986,331
665,579
Creditors: amounts falling due after more than one year
14
(1,606,387)
-
Net assets
3,900,515
2,526,553
Capital and reserves
Called up share capital
17
250,000
250,000
Hedging reserve
18
(567,265)
-
Profit and loss reserves
20
4,217,780
2,276,553
Total equity
3,900,515
2,526,553
The financial statements of Edesia Asset Management UK Limited were approved by the board of directors and authorised for issue on
25 April 2017
25 April 2017
and are signed on its behalf by:
P Vidalie
Director
Company Registration No. 08272810
EDESIA ASSET MANAGEMENT UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016
- 9 -
Share capital
Hedging reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2015
250,000
-
1,338,138
1,588,138
Year ended 31 December 2015:
Total comprehensive income for the year
-
-
1,938,415
1,938,415
Dividends
9
-
-
(1,000,000)
(1,000,000)
Balance at 31 December 2015
250,000
-
2,276,553
2,526,553
Year ended 31 December 2016:
Profit for the year
-
-
1,941,227
1,941,227
Cash flow hedges (losses)
-
(709,081)
-
(709,081)
Tax relating to cash flow hedges
-
141,816
-
141,816
Balance at 31 December 2016
250,000
(567,265)
4,217,780
3,900,515
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
- 10 -
1
Accounting policies
Company information
Edesia Asset Management UK Limited is a
private
company
limited by shares
incorporated in England and Wales under the Companies Act.
The registered office is
Aldermary House, 10-15 Queen Street, London, EC4N 1TX. The nature of the Company's operations and its principal activities are set out in the directors report on pages 1 and 2.
1.1
Accounting convention
These financial statements have been prepared in accordance with “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) issued by the Financial Reporting Council and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling (£)
, which is the functional currency of the company.
Monetary a
mounts
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.
1.2
Going concern
A
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover represents amounts receivable from fund management and advisory services.
Revenue comprises the fair value of the consideration received or receivable for the sale of services in the ordinary course of the Group's activities. Service revenue resulting from services provided by the Group is recognised when the services have been rendered. This revenue is earned at Group level and then distributed in accordance with a transfer pricing policy driven by headcount, remuneration and administrative expenses.
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:
Leasehold improvements
straight line over 60 months
Fixtures, fittings & equipment
33.33% straight line basis
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
.
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
1
Accounting policies
(Continued)
- 11 -
1.5
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
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.
1.6
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 statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include 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.
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.
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.
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
1
Accounting policies
(Continued)
- 12 -
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, 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.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts 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.
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
1
Accounting policies
(Continued)
- 13 -
Financial instruments (continued)
Other financial liabilities
Derivatives, including forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.7
Derivatives
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
1.8
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
1
Accounting policies
(Continued)
- 14 -
Taxation (continued)
Deferred tax
Deferred tax liabilities are generally recognised for all
material
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 income statement, 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.
1.9
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 fixed assets.
1.10
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.11
Leases
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 economic benefits from the lease asset are consumed.
1.12
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 are included in the
profit and loss statement
for the period.
1.13
Financial risk management
The Company has in place a deferred cash plan for some employees of the Company. The deferred cash plan exposes the Company to share price volatility. Awards are exercisable at a price equal to the estimated fair value of the Company's shares in a fund managed by Edesia Asset Management at the date of the vesting. In order to hedge against price difference when the vested amounts are paid to the employees, the cash is invested in this fund.
The Company does not use derivative financial instruments for speculative purposes.
Hedge Accounting
The Company designates certain derivatives as hedging instruments in cash flow hedges.
At the inception of the hedge relationship, the entity documents the economic relationship between the hedging instrument and the hedged item, along with its 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.
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
1
Accounting policies
(Continued)
- 15 -
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the 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.
1.14
Related party relationships and transactions
In accordance with
FRS 102 section 33 'related party disclosures'
, the company has taken advantage
, with approval of its shareholders,
of the exemption for subsidiary undertakings, whose 100% voting rights are controlled within a group, from the requirement to disclose transactions with members of the group.
1.15
The company has issued a deferred cash plan to provide for the incentivisation of certain employees through the payment of cash bonuses by way of a phantom arrangement referenced to the future value of a participants notional interest in a fund managed by Edesia Asset Management.
As such a liability equal to the portion of the services received is recognised at the current fair value determined at each balance sheet date.
1.16
Cash flow statement
The company is a qualifying company for the purpose of FRS 102 and has taken advantage of the disclosure exemption relating to the provision of a cash flow statement in accordance with FRS 102 paragraph 1.12 (b). The cash flow statement can be seen in the consolidated financial results of the parent company Louis Dreyfus Holding B.V and copies of group accounts can be obtained from the Chamber of Commerce in The Netherlands.
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.
Critical judgements
The Company has invested the amounts granted in the employee cash plan in shares of a fund managed by the Group. As this is an unlisted holding in a hedge fund the valuation is based on inputs that are not directly observable and market related.
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 16 -
3
Turnover and other revenue
An analysis of the Company's turnover is as follows:
2016
2015
£
£
Turnover
Management fees
8,754,467
5,914,983
Turnover analysed by geographical market
2016
2015
£
£
Netherlands
8,754,467
5,914,983
4
Auditor's remuneration
2016
2015
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the company's financial statements
36,000
12,000
5
Operating profit before taxation
2016
2015
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)
(589,267)
(101,026)
Depreciation of owned tangible fixed assets (note 10)
61,296
63,713
(Profit) on disposal of tangible fixed assets
(13,995)
-
Operating lease charges
112,602
118,327
6
Directors' remuneration
2016
2015
£
£
Remuneration for qualifying services
2,733,276
910,859
Company pension contributions to defined contribution schemes
8,640
7,410
2,741,916
918,269
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2015 - 1).
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 17 -
7
Employees
The average monthly number of persons (including executive directors) employed by the company during the year was:
2016
2015
Number
Number
Directors
2
2
Portfolio managers & analysts
9
6
IT operative
2
1
13
9
Their aggregate remuneration comprised:
2016
2015
£
£
Wages and salaries
4,345,358
1,854,822
Social security costs
917,612
294,356
Deferred cash plan cost
813,218
731,291
Pension costs
90,818
83,978
6,167,006
2,964,447
8
Taxation
2016
2015
£
£
Current tax on profit ordinary activities
UK corporation tax on profits for the current period
599,274
556,444
Adjustments in respect of prior periods
-
(2,038)
Total current tax
599,274
554,406
Deferred tax
Origination and reversal of timing differences
(10,433)
(45,895)
Total current tax and deferred tax
588,841
508,511
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
8
Taxation
(Continued)
- 18 -
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:
2016
2015
£
£
Profit before taxation
2,530,068
2,446,926
Expected tax charge based on the standard rate of corporation tax in the UK of 20.00% (2015: 20.25%)
506,014
495,503
Tax effect of expenses that are not deductible in determining taxable profit
94,849
12,442
Effect of change in corporation tax rate
-
566
Capital allowances
(2,766)
-
Deferred tax
(10,433)
-
Other
1,177
-
Total current and deferred tax charge for the period
588,841
508,511
In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:
2016
2015
£
£
Relating to cash flow hedges
(141,816)
-
9
Dividends
2016
2015
£
£
Interim paid
-
1,000,000
-
1,000,000
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 19 -
10
Tangible fixed assets
Leasehold improvements
Fixtures, fittings & equipment
Total
£
£
£
Cost
At 1 January 2016
97,834
156,218
254,052
Additions
-
12,713
12,713
At 31 December 2016
97,834
168,931
266,765
Depreciation and impairment
At 1 January 2016
34,242
89,488
123,730
Depreciation charged in the year
19,567
41,729
61,296
At 31 December 2016
53,809
131,217
185,026
Carrying amount
At 31 December 2016
44,025
37,714
81,739
At 31 December 2015
63,592
66,730
130,322
11
Fixed asset investments
2016
2015
£
£
Unlisted investments
2,438,832
1,730,652
The Company has invested the amounts granted in the cash plan in shares of a fund managed by Edesia Asset Management. The fair value of the shares at 31 December 2016 was £2,438,832 (2015: £1,730,652).
Movements in fixed asset investments
Shares
£
Cost
At 01 January 2015
1,730,652
Additions
708,180
At 31 December 2016
2,438,832
Carrying amount
At 31 December 2016
2,438,832
At 31 December 2015
1,730,652
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 20 -
12
Debtors
2016
2015
Amounts falling due within one year:
£
£
Trade debtors
-
2,142
Corporation tax recoverable
206,065
-
Amounts due from fellow group undertakings
7,444,270
1,860,678
Other debtors
967,886
676,048
Prepayments
48,720
162,843
8,666,941
2,701,711
Amounts falling due after more than one year:
Deferred tax asset (note 15)
229,933
63,964
8,896,874
2,765,675
13
Creditors: amounts falling due within one year
2016
2015
£
£
Trade creditors
959
17,818
Amounts due to group undertakings
-
141,048
Corporation tax
-
553,992
Other taxation and social security
1,396,636
65,837
Derivative financial instruments
777,682
-
Other creditors
832,445
1,660,643
Accruals
3,492,434
1,222,130
6,500,156
3,661,468
14
Creditors: amounts falling due after more than one year
2016
2015
£
£
Other creditors
1,606,387
-
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 21 -
15
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:
Assets
Assets
2016
2015
Balances:
£
£
Accelerated capital allowances
(6,525)
-
Open Hedges
155,536
-
Deferred tax on staff bonuses
80,922
63,964
229,933
63,964
2016
Movements in the year:
£
(Asset) at 1 January 2016
(63,964)
Credit to profit and loss
(152,249)
Other
(13,720)
(Asset) at 31 December 2016
(229,933)
16
Retirement benefit schemes
2016
2015
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
90,818
83,978
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.
17
Called up Share Capital
2016
2015
£
£
Ordinary share capital
Issued and fully paid
250,000 Ordinary shares of £1 each
250,000
250,000
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 22 -
18
Hedging reserve
2016
2015
£
£
At beginning of year
-
-
Gains and losses on cash flow hedges
(709,081)
-
Income tax related to gains and losses transferred to inventories
141,816
-
At end of year
(567,265)
-
19
Deferred cash plan scheme
The Company has put in place a deferred cash plan for some employees of the Company. Awards are exercisable at a price equal to the estimated fair value of the Company’s shares in the Fund at the date of vesting. The fair value of the shares corresponds to the Net Asset Value of the part of the fund which the grant relates to. The vesting period of the award can be progressive over four years or be a cliff vesting at the end of the four years period. Awards unvested are forfeited if the employee resigns or leaves the Company for cause.
In 2016, 964 awards have been granted to the employees of the Company. The fair value of the awards granted is of £2,438,832 as at December 31, 2016; £1,147,935 has been recognised under the operating expenses at December 31, 2016.
A total of 266 awards have been exercised during the year and nil awards have been redeemed due to employee departure. The number of awards exercisable at the balance sheet date is 3,111. The fair value of the awards as of 31 December 2016 is £854 on average.
The balance of £2,438,832 included in other creditors relates to the cash plan.
20
Profit and loss reserves
2016
2015
£
£
At the beginning of the year
2,276,553
1,338,138
Profit for the year
1,941,227
1,938,415
Dividends
-
(1,000,000)
At the end of the year
4,217,780
2,276,553
EDESIA ASSET MANAGEMENT UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 23 -
21
Operating lease commitments
Lessee
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:
2016
2015
£
£
Within one year
113,851
113,851
Between two and five years
132,826
246,677
246,677
360,528
22
Controlling party
The company's immediate parent undertaking and controlling party is Edesia Asset Management Switzerland Holdings SA, a company registered in Switzerland. The ultimate parent undertaking and controlling party is Louis Dreyfus Holding B.V., a company incorporated in the Netherlands. The smallest and largest group for which group accounts are prepared and of which the company is a member, is Louis Dreyfus Holding B.V.. Copies of group accounts can be obtained from Chamber of Commerce in Amsterdam, the Netherlands.
23
Significant events
Edesia Asset Management UK Limited is now regulated as a collective portfolio management investment firm and therefore authorized to carry out collective portfolio management of alternative investment funds and provide certain additional services to its clients such as segregated investment management, investment advice and reception and transmission of orders in financial instruments.
24
Subsequent events
The directors recommend a final dividend of £1,600,000.
EDESIA ASSET MANAGEMENT UK LIMITED
SCHEDULE OF ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED 31 DECEMBER 2016
2016
2015
£
£
Administrative expenses
Wages and salaries
2,329,036
1,505,616
Social security costs
917,612
294,356
Staff pension costs defined contribution
82,178
76,568
Redundancy costs - staff
-
135,432
Other staff costs
96,264
34,206
Directors' remuneration
2,733,276
910,859
Directors' pension costs - defined contribution scheme
8,640
7,410
Rent re operating leases
112,602
118,327
Rates
23,618
19,711
Cleaning
2,950
2,626
Power, light and heat
-
867
Property repairs and maintenance
1,682
635
Insurance
80,415
50,593
Computer running costs
2,241
2,108
Travelling expenses
37,996
7,382
Professional subscriptions
209,710
96,298
Legal and professional fees
48,453
183,269
Accountancy
9,100
12,553
Audit fees
36,000
14,297
Bank charges
905
891
Bad and doubtful debts
-
5,000
Printing and stationery
3,912
4,125
Telecommunications
19,577
15,952
Entertaining
8,342
3,301
Sundry expenses
1,856
2,989
Depreciation
61,296
63,712
Profit or loss on sale of tangible assets (non exceptional)
(13,995)
-
Profit or loss on foreign exchange
(589,267)
(101,026)
6,224,399
3,468,057
2016-12-31
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