Registration number:
Year Ended
Knox Capital Company Limited
Contents
Company Information |
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Strategic Report |
|
Directors' Report |
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Statement of Directors' Responsibilities |
|
Independent Auditor's Report |
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Profit and Loss Account |
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Balance Sheet |
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Statement of Changes in Equity |
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Statement of Cash Flows |
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Notes to the Financial Statements |
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Pillar 3 Disclosures |
Knox Capital Company Limited
Company Information
Company number |
08531026 |
FCA FRN |
670881 |
Directors |
J C S Chenevix-Trench A L De Normann K J Steele |
Registered office |
|
Auditors |
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Page 1 |
Knox Capital Company Limited
Strategic Report for the Year Ended 31 May 2017
The directors present their strategic report for the year ended 31 May 2017.
Principal activity
The principal activity is the provision of investment management and related services.
Review of the business
During the financial year, the company continued the investment management activities commenced in 2015. The company made a profit before tax for the 2017 financial year of £70,848.00, which follows the loss before tax of £32,486 in 2016 incurred in establishing the company’s activities. The company’s income is a percentage of managed funds. The company intends to pursue similar activities during the next financial year and will be looking to increase the value of funds under management in the latter half of that year.
At the year end the company had capital and reserves of £159,866.00 represented primarily by liquid assets. These reserves exceed the company’s regulatory capital requirements and are more than adequate to enable the company to continue to trade for the foreseeable future.
The company is authorised and regulated by the Financial Conduct Authority with reference number 670881. The firm's Pillar 3 disclosures are published at the end of the financial statements.
Principal risks and uncertainties
The principal risk to the company is a failure in operational controls or poor performance that could lead to reputational damage, loss of clients, compensation, penalties and potentially the loss of authorisation to carry out regulated activities. These could have a significant impact on the company's ability to continue in business.
Approved by the Board on
.........................................
A L De Normann
Director
Page 2 |
Knox Capital Company Limited
Directors' Report for the Year Ended 31 May 2017
The directors present their report and the financial statements for the year ended 31 May 2017.
Directors of the company
The Directors who held office during the year were as follows:
Financial instruments
Liquidity risk
Expenditure consists largely of fixed overheads. Liquid reserves are maintained to meet forthcoming expenses plus an appropriate margin. At present the company has sufficient liquid reserves in excess of anticipated needs.
Foreign currency risk
The company has no foreign denominated financial instruments.
Credit risk
Cash surpluses are only deposited with regulated financial institutions. Amounts due under management or service contracts are invoiced regularly and the creditworthiness of clients is monitored. Debtors are also monitored on an ongoing basis. The level of credit risk experienced by the company is taken into account for the purpose of its capital levels, in accordance with the company's FCA authorisation.
Disclosure of information to the auditors
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.
Approved by the Board on
.........................................
A L De Normann
Director
Page 3 |
Knox Capital Company Limited
Statement of Directors' Responsibilities
The directors acknowledge their responsibilities 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 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; and |
• |
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.
Page 4 |
Knox Capital Company Limited
Independent Auditor's Report to the Members of Knox Capital Company Limited
We have audited the financial statements of Knox Capital Company Limited for the year ended 31 May 2017, set out on pages 7 to 18. 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).
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 Statement of Directors' Responsibilities (set out on page 4), 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 (APB’s) Ethical Standards for Auditors to the financial statements.
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 the 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 May 2017 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. |
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• |
the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
Page 5 |
Knox Capital Company Limited
Independent Auditor's Report to the Members of Knox Capital Company Limited
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• |
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
• |
the financial statements are not in agreement with the accounting records and returns; or |
• |
certain disclosures of directors’ remuneration specified by law are not made; or |
• |
we have not received all the information and explanations we require for our audit. |
......................................
For and on behalf of
22 Chancery Lane
WC2A 1LS
Page 6 |
Knox Capital Company Limited
Profit and Loss Account for the Year Ended 31 May 2017
Note |
2017 |
2016 |
|
Turnover |
|
|
|
Administrative expenses |
( |
( |
|
Operating profit/(loss) |
|
( |
|
Profit/(loss) before tax |
|
( |
|
Taxation |
( |
|
|
Profit/(loss) for the financial year |
|
( |
The above results were derived from continuing operations.
The company has no recognised gains or losses for the year other than the results above.
Page 7 |
Knox Capital Company Limited
(Registration number: 08531026)
Balance Sheet as at 31 May 2017
Note |
2017 |
2016 |
|
Fixed assets |
|||
Tangible assets |
|
|
|
Current assets |
|||
Debtors |
|
|
|
Cash at bank and in hand |
|
|
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current assets |
|
|
|
Total assets less current liabilities |
|
|
|
Provisions for liabilities |
( |
- |
|
Net assets |
|
|
|
Capital and reserves |
|||
Called up share capital |
|
|
|
Share premium reserve |
|
|
|
Profit and loss account |
|
( |
|
Total equity |
|
|
Approved and authorised by the
.........................................
A L De Normann
Director
Page 8 |
Knox Capital Company Limited
Statement of Changes in Equity for the Year Ended 31 May 2017
Share capital |
Share premium |
Profit and loss account |
Total |
|
At 1 June 2016 |
|
|
( |
|
Profit for the year |
- |
- |
|
|
At 31 May 2017 |
|
|
|
|
Share capital |
Share premium |
Profit and loss account |
Total |
|
At 1 June 2015 |
|
- |
- |
|
Loss for the year |
- |
- |
( |
( |
New share capital subscribed |
|
|
- |
|
At 31 May 2016 |
|
|
( |
|
Page 9 |
Knox Capital Company Limited
Statement of Cash Flows for the Year Ended 31 May 2017
Note |
2017 |
2016 |
|
Cash flows from operating activities |
|||
Profit/(loss) for the year |
|
( |
|
Adjustments to cash flows from non-cash items |
|||
Depreciation and amortisation |
|
|
|
Corporation tax expense |
|
( |
|
|
( |
||
Working capital adjustments |
|||
Increase in trade debtors |
( |
( |
|
Increase in trade creditors |
|
|
|
Net cash flow from operating activities |
|
( |
|
Cash flows from investing activities |
|||
Acquisitions of tangible assets |
- |
( |
|
Cash flows from financing activities |
|||
Proceeds from issue of ordinary shares, net of issue costs |
- |
|
|
Decrease in loans from related parties |
( |
( |
|
Net cash flows from financing activities |
( |
|
|
Net (decrease)/increase in cash and cash equivalents |
( |
|
|
Cash and cash equivalents at 1 June |
|
|
|
Cash and cash equivalents at 31 May |
129,214 |
146,978 |
Page 10 |
Knox Capital Company Limited
Notes to the Financial Statements for the Year Ended 31 May 2017
General information |
The company is a private company limited by share capital incorporated in England & Wales.
The address of its registered office is:
United Kingdom
The principal place of business is:
83 Marylebone High Street
London
W1U 4QW
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.
Basis of preparation
These financial statements have been prepared using the historical cost convention.
Revenue recognition
Turnover comprises the fair value of the consideration received or receivable for the provision of portfolio management services to customers. Turnover is recognised as the related services are supplied to customers. Turnover is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the company.
Tax
All tax is recognised in and relates to items of income and expense included in profit or loss.
Current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates taxable income.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the Company. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets are recognised in respect of unused tax losses only to the extent that they are more likely than not to be recovered.
Tangible assets
Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
Page 11 |
Knox Capital Company Limited
Notes to the Financial Statements for the Year Ended 31 May 2017
Depreciation
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
Furniture, Fittings and Equipment |
Straight line over 5 years |
Trade debtors
Trade debtors are amounts due from customers for services performed in the ordinary course of business.
Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables.
Trade creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the Company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
Leases
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Financial instruments
Financial assets and liabilities are recognised when the company becomes party to the contractual provisions of the relevant instrument. All of the company's financial instruments are cash or basic debt instruments. Such financial instruments are measured initially at the transaction price and subsequently at amortised cost. Financial assets are considered for objective evidence of impairment at the end of each reporting period and any impairment is recognised in profit and loss.
Revenue |
The analysis of the company's revenue for the year from continuing operations is as follows:
2017 |
2016 |
|
Investment Management Services |
|
|
100% of services were supplied to customers based in the UK.
Page 12 |
Knox Capital Company Limited
Notes to the Financial Statements for the Year Ended 31 May 2017
Operating profit |
Arrived at after charging
2017 |
2016 |
|
Depreciation expense |
|
|
Operating lease expense - property |
|
|
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
2017 |
2016 |
|
Wages and salaries |
|
- |
Directors' remuneration |
The directors' remuneration for the year was as follows:
2017 |
2016 |
|
Remuneration |
|
- |
Auditors' remuneration |
2017 |
2016 |
|
Audit of the financial statements |
|
|
Other fees to auditors |
||
Taxation compliance services |
|
|
All other non-audit services |
|
|
|
|
Page 13 |
Knox Capital Company Limited
Notes to the Financial Statements for the Year Ended 31 May 2017
Taxation |
Tax charged/(credited) in the income statement
2017 |
2016 |
|
Current taxation |
||
UK corporation tax |
|
- |
Deferred taxation |
||
Arising from origination and reversal of timing differences |
|
( |
Tax expense/(credit) in the income statement |
|
( |
The tax on profit before tax for the year is higher than (2016 - higher than) the standard rate of corporation tax in the UK of
2017 |
2016 |
|
Profit/(loss) before tax |
|
( |
Corporation tax at standard rate |
|
( |
Effect of expense not deductible in determining taxable profit (tax loss) |
|
|
Total tax charge/(credit) |
|
( |
Deferred tax balances
2017 |
Liability |
Tax losses carried forward |
- |
Capital allowances in excess of depreciation |
|
|
2016 |
Asset |
Tax losses carried forward |
|
Capital allowances in excess of depreciation |
( |
|
The calculation of deferred tax balances at the year-end takes into account the reduction in the UK main corporation tax rate to 19% effective from 1 April 2017. Deferred tax in both the current and prior year has been calculated using the tax rates that are expected to apply in the periods in which timing differences reverse.
Page 14 |
Knox Capital Company Limited
Notes to the Financial Statements for the Year Ended 31 May 2017
Tangible assets |
Furniture, fittings and equipment |
Total |
|
Cost |
||
At 1 June 2016 |
|
|
At 31 May 2017 |
|
|
Depreciation |
||
At 1 June 2016 |
|
|
Charge for the year |
|
|
At 31 May 2017 |
|
|
Carrying amount |
||
At 31 May 2017 |
|
|
At 31 May 2016 |
|
|
Debtors |
2017 |
2016 |
|
Amounts owed by related parties |
|
- |
Other debtors |
|
- |
Prepayments |
|
|
Accrued income |
|
|
Deferred tax assets |
- |
|
|
|
Cash and cash equivalents |
2017 |
2016 |
|
Cash at bank |
|
|
Page 15 |
Knox Capital Company Limited
Notes to the Financial Statements for the Year Ended 31 May 2017
Creditors |
2017 |
2016 |
|
Due within one year |
||
Trade creditors |
|
|
Amounts due to related parties |
- |
|
Social security and other taxes |
|
- |
Accrued expenses |
|
|
Corporation tax liability |
8,245 |
- |
|
|
Provisions for liabilities |
Deferred tax |
|
At 1 June 2016 |
( |
Arising from origination and reversal of timing differences |
|
At 31 May 2017 |
|
Share capital |
Allotted, called up and fully paid shares
2017 |
2016 |
|||
No. |
£ |
No. |
£ |
|
Ordinary Shares of £1 each |
13,000 |
13,000 |
13,000 |
13,000 |
Page 16 |
Knox Capital Company Limited
Notes to the Financial Statements for the Year Ended 31 May 2017
Related party transactions |
Key management personnel
There are no key management personnel other than the directors. Remuneration is shown in note 6.
Transactions with directors |
In the prior year the directors provided working capital to and paid certain expenses on behalf of the company. During the period the balances due to the directors were cleared in full.
During the year, the company advanced £10,100 (2016 - £nil) to the directors. At the balance sheet date the amount due from the directors was £10,100 (2016 - £58,035 due to the directors). The advances are interest free and repayable on demand.
The directors are interested in a client of the company, the CCM Knox Global Balanced Fund. Investment management fees chargeable to the fund in respect of the year amount to £164,890.00 (2016 - £98,681.00). At 31 May 2017 the company had accrued income due from the fund of £17,382.00 (2016 - £14,187.00).
From April 2017 the company shares office space leased by a company under the control of a director. Costs are apportioned based on use. At 31 May 2017 the company was owed £27,026.00 in respect of amounts paid relating to obtaining the office lease, primarily a deposit.
Balances due to / (from) related parties
2017 |
Directors |
At start of period |
|
Advanced |
( |
Repaid |
( |
At end of period |
( |
2016 |
Directors |
At start of period |
|
Advanced |
|
Repaid/share capital issued |
( |
At end of period |
|
Page 17 |
Knox Capital Company Limited
Notes to the Financial Statements for the Year Ended 31 May 2017
Financial instruments |
2017 |
2016 |
|
Financial assets that are debt instruments measured at amortised cost |
|
- |
Financial liabilities measured at amortised cost |
( |
( |
Control |
Page 18 |
Knox Capital Company Limited
Pillar 3 Disclosures for the Year Ended 31 May 2017
Introduction
Knox Capital Company Limited (“KCC” or “the Firm”) is authorised and regulated in the UK by the Financial Conduct Authority (“FCA”) and is therefore subject to the FCA’s Prudential Sourcebook for Banks, Building Societies and Investment Firms (“BIPRU”), specifically BIPRU 11.3.3 R. This follows the introduction of the Capital Requirements Directive (“CRD”), which came into force on 1st January 2007. The CRD rules were designed to generally increase investor protection throughout the market and these rules require the Firm to assess the adequacy of its capital resources given its risks.
The CRD requirements have three pillars:
• |
Pillar 1 establishes the minimum capital requirements given the credit, market and operational risks; |
• |
Pillar 2 requires the Firm and the FCA to take a view on whether the Firm needs to hold additional capital to cover firm-specific risks not covered by the Pillar 1 minimum requirements; and |
• |
Pillar 3 requires the Firm to publish certain details about its risks and risk management process. |
The Firm’s Pillar 3 disclosures provide transparency about its capital requirements, risk exposures and risk assessment processes and are made for the benefit of the Firm’s clients. The FCA generally requests that firms address specific risks pertinent to its business (i.e. market, credit, liquidity, operational, business, concentration and any residual risks), and these items are addressed below.
The rules in BIPRU 11 require a Pillar 3 disclosure. This document satisfies our obligation and the Firm will provide its Pillar 3 disclosure annually, covering the previous financial year.
Materiality
Information is generally viewed as material if its omission or misstatement could change or influence the assessment or decision of someone relying on that information for the purpose of making economic decisions. If a certain disclosure is omitted from this statement, the Firm viewed the disclosure to be immaterial or inapplicable.
Confidentiality
Information is generally viewed as proprietary if sharing that information with the public would undermine a competitive position. Proprietary information may include information on products or systems that, if shared with competitors, would render the Firm’s investments therein less valuable. Furthermore, KCC must regard information as confidential if there are obligations to customers or other counterparty relationships binding the Firm to confidentiality. In the event that any such information is omitted, the Firm shall disclose such and explain the grounds why it has not been disclosed.
Background of the Firm
KCC was incorporated on 16 May 2013 under Firm Number 08531026 and has registered offices at 22 Chancery Lane, London, WC2A 1LS. The Firm was authorised by the FCA on 1 June 2015.
Risk Management Objectives and Policies
The Firm’s general risk management objective is to develop systems and controls that mitigate risk to a level that does not require the allocation of Pillar 2 capital.
Knox Capital Company Limited
Pillar 3 Disclosures for the Year Ended 31 May 2017
The Firm has not identified any internal or external risks that resulted in KCC having to increase its capital levels. Accordingly, the Firm’s business and operational risks are limited in scope and KCC believes that it has a minimal risk profile.
Governance and Risk Framework
KCC oversees and manages its risks through a combination of a compliance manual, routine monitoring of policies and procedures, a business continuity plan, an annual independent audit and reporting process, and the use of an independent UK compliance consultant. The Firm’s policies, procedures and financial controls are regularly reviewed and revised as needed.
Disclosures
Market Risk
Market risk is the risk that the value of, or income arising from, assets and liabilities as a result of changes in the market price of financial assets, changes in exchange rates or changes in interest rates.
Credit Risk
Credit risk refers to the potential risk that customers fail to meet their obligations as they fall due. KCC is exposed to the credit risk of its bankers and receivable from its clients. KCC considers these risks on a continuous basis but does not believe that it is significant.
Liquidity Risk
KCC’s liquidity policy is to maintain sufficient liquid resources to cover cash flow imbalances and fluctuations in fees received/receivable. The Firm maintains sufficient cash balances with its banking partners to cover liquidity risk. Furthermore, the Firm continuously monitors income and expenditure levels and adjusts plans accordingly.
Operational Risk
The Firm has simple systems and data processing requirements and the Firm does not require its systems to be available ‘real time’. The risk of any systems failures is therefore not high-risk and the Firm believes that it has minimal operational risk.
Other risks
Other risks the Firm considered included:
• |
Business Risk: failure of business plan, resulting in losses or reduced income |
• |
Concentration Risk: whether overly dependent on any customer or group in terms of income or credit risk |
• |
Residual Risk: any other material risk specific to the Firm |
The Firm does not consider these risks, or any other material risks mentioned above, would require the Firm to increase its capital levels.
Capital Resources
KCC is designated as a BIPRU Limited Licence Firm and is subject to an expenditure requirement. At 31 May 2017 KCC’s capital resource requirement was £43,000 and Tier 1 Capital resources were £159,866.
Knox Capital Company Limited
Pillar 3 Disclosures for the Year Ended 31 May 2017
Remuneration Disclosures
The FCA has amended the Prudential Sourcebook for Banks, Building Societies and Investment Firms (BIPRU), and specifically BIPRU 11, to now include a requirement for disclosure of the Firm’s approach to linking remuneration to risk.
The Firm feels that its Remuneration Policy appropriately addresses potential conflicts of interest and that the Firm’s authorised persons are not rewarded for taking inappropriate levels of risk. Under the Remuneration Code, the Firm is classified as a Level Three firm, which allows the Firm to disapply many of the technical requirements of the Code and proportionately apply the Code’s rules and principles in establishing the Firm’s policy.
The Decision Making Process
On grounds of proportionality KCC’s Governing Body also serve as the remuneration committee.
The link between pay and performance
Overall remuneration may include an annual incentive compensation reflecting individual performance and responsibility, both short-term and long-term, as well as the Firm’s overall performance.
Incentive Compensation
The award of incentive compensation is a qualitative decision where employee and supervisory input are significant components and is currently not used.
Code Staff: Management Team
Due to the size and complexity of KCC’s business, the principals of the Firm are the investment team and the only Code Staff.