Registered number:
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2020
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COMPANY INFORMATION
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CONTENTS
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GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The Subsidiary Companies specialise in advising private equity funds and private equity investors. Both Subsidiary Companies assist General Partners in their fundraising activities and provide advisory services for the secondary sales of private equity funds, companies, portfolios of funds and portfolios of Companies.
The directors present the group strategic report for the period ended 31 December 2020.
In the current year, the group reported a profit before tax of £999,883 (2019 - £624,999). The Subsidiary Companies have generated Intermediation and placement fees of £6,605,898 (2019 - £5,259,542) in the year to 31 December 2020. The results for the year and the financial position at the year-end were considered satisfactory by the directors who expect continued growth in the foreseeable future.
The main risks facing the Subsidiary Companies and the group are market risk, operational risk and regulatory risk. Market risk remains the most important as adverse market conditions will undermine the search of investors for new funds. The directors have the ability and the knowhow to diversify the group business. The Subsidiary Companies employ adequately skilled professionals to carry out their business. The regulatory risk is typically minimal, however in 2021, Brexit has had an impact on the company’s regulatory regime. In order to continue to operate smoothly in the European Union, the Company has taken a number of measures which are detailed below. The directors believe that the measures taken have allowed the Company and its subsidiaries to address the new regulatory environment and do not expect regulatory risk to be an important risk factor going forward.
The Coronavirus COVID 19 pandemic is a stark reminder of how complex and interdependent the world's economy has become. The group is well structured and resilient. "Management decision-making and control mechanisms" are robust and continued to function without interruption. The group has considered the inherent risks and evaluated the potential impact. It is is confident that thanks to it's reoccurring income and their financial resources, any impact from the Coronavirus will be manageable. However the group cannot predict future events or conditions which may result in outcomes that are inconsistent with judgments made in this report.
Given the straightforward nature of the business, the Company's directors are of the opinion that any further analysis using KPIs is not necessary for an understanding of the development, performance or position of the business.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
The board of directors of Elm Capital Holding Limited consider that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole (having regard to the stakeholders and matters set out in S172(1)(a-f) of the Act) in the decisions taken during the financial year ended 31 December 2020.
Consideration of long-term consequences are an inherent part of the Group's decision-making processes. As a privately-owned Group, the board considers that the interests of the Group and its shareholder are aligned in seeking sustainable value creation over the longer term through it's operations, promoting long term strategic decision-making. These factors also drive a continuing focus on the maintenance of durable relationships with stakeholders, built on the Group's reputation with clients and suppliers. The Group operates in a sector characterised by long term relationships with stakeholders. Maintaining a reputation for high standards of business conduct is vital and the Group expects all members of the supply chain to always act with integrity, acting openly, honestly and ethically. The Group has zero tolerance to fraud and consistently maintains effective oversight and scrutiny processes, executed with independence and impartiality. Integrity is underpinned with policies in relation to bribery and corruption, data protection, equality, diversity and inclusion, modern slavery, fraud and whistleblowing, each of which is reinforced through appropriate measures.
This report was approved by the board on 15 April 2021
and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors present their report and the financial statements for the year ended 31 December 2020.
The directors who served during the year were:
The profit for the year, after taxation, amounted to £
796,109
(2019 -
£
496,024
)
.
Dividends amounting to £24,000 (2019 - £48,000) were issued during the year.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the
consolidated
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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙
select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙
make judgments 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 Group 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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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ELM CAPITAL HOLDING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
The Group intends to expand its operations in 2021 by establishing companies in Portugal and Belgium in order to ensure continuity of a regulatory passport throughout the EU, in a post-Brexit world. The entity in Portugal will be a tied agent of a regulated investment adviser and will not require a physical presence (office nor personnel) in the country. It is not expected that the establishment of such company will have a significant impact on the overall financial situation of the business.
As the directors prefer the Group to be independent from third party firms and to act under its own license, the Group will also establish a company in Belgium and apply for a full regulatory license in that country. The directors expect that the new entity will be able to passport its activities into other EU jurisdictions. The Group’s proposed entity in Belgium will involve a physical presence in the country and the Group therefore expects to incur staffing and office costs, in relation to this addition. However, the Group generally projects year-on-year growth and expects that these additional costs will be more than covered by additional revenues.
The Group has continued throughout the year to provide employees with relevant information and to seek their views on matters of common concern. Priority is given to ensuring that employees are aware of all significant matters affecting the Group's performance and of any significant organisational changes.
In 2021, the Company made a further donation to the Elm Capital Employee Trust allowing it to acquire more shares from the main shareholder. As a result, the Trust currently owns 20.8% of the Company and having reached the threshold of 15% ownership, it is entitled to appoint a director to the Company’s Board.
The Group does not confirm to any code or standard regarding payment practice. However, it is the Group's policy to settle the terms of payment with suppliers when business is agreed, to ensure that suppliers are made aware of them and to pay invoices in accordance with these terms.
The Group has not disclosed information in respect of greenhouse gas emissions, energy consumption and energy efficiency action as its energy consumption in the United Kingdom for the year is 40,000kWh or lower.
Elm Capital EU Unipessoal LDA, a company 100% owned by the Company was established in Portugal on 21st January 2021 and was approved by the The Portuguese Securities Market Commission "CMVM" to operate as a tied agent of Carne Global Financial Services (Europe) Unipessoal, Lda. on 4th March 2021.
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ELM CAPITAL HOLDING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
The auditors,
This report was approved by the board on
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ELM CAPITAL HOLDING LIMITED
We have audited the financial statements of Elm Capital Holding Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2020, which comprise the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity
and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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 Group's or the parent 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.
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ELM CAPITAL HOLDING LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ELM CAPITAL HOLDING LIMITED (CONTINUED)
The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors' Report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the Group 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 Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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ELM CAPITAL HOLDING LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ELM CAPITAL HOLDING LIMITED (CONTINUED)
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 Auditors' 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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. 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 directors and other management, and from our commercial knowledge and experience of the Financial Services sector;
∙
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 and data protection, anti-bribery, employment 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.
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;
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ELM CAPITAL HOLDING LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ELM CAPITAL HOLDING LIMITED (CONTINUED)
∙
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 3 were indicative of potential bias; and
∙
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;
∙
reading the minutes of meetings of those charged with governance; and
∙
enquiring of management as to actual and potential litigation and claims.
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 for the audit of the financial statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our Auditors' Report.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' 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.
Chartered Accountants
Statutory Auditors
5 Elstree Gate
Elstree Way
Hertfordshire
WD6 1JD
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 16 to 28 form part of these financial statements.
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COMPANY STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 16 to 28 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2019
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2020
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2019
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Elm Capital Holding Limited is a Limited Company incorporated and domiciled in England and Wales, with its registered office address at 7th Floor, Southwest House, 11A Regent Street, London, SW1Y 4LR.
The company's principal activity is that of a holding company. It is the parent company to Elm Capital Associates Limited and Elm Capital USA Limited.
2.
Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
Functional and presentation currency
Transactions and balances
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
Revenue is recognised as per the terms defined in the service agreements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
Goodwill
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
Depreciation is provided on the following basis:
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Statement of Financial Position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
Basic financial instruments include trade & other debtors, trade & other creditors, cash at bank & in hand and investments in subsidiaries.
Trade and other debtors are recognised initially at the transaction price less attributable transaction costs. Trade and other creditors are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses in the case of trade and other debtors. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of interest. Cash and cash equivalents comprise cash balances and call deposits. Investments in subsidiaries are measured at cost less accumulated impairment.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Property, plant and equipment - are depreciated over their useful life taking into account, where appropriate, residual values. Assessment of useful lives and residual values are performed annually, taking into account factors such as economic viability and expected future financial performance of the asset. In assessing the residual values, the remaining life of the asset, its projected disposal value and future market conditions are taken into account.
Analysis of turnover by country of destination:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
There were no factors that may affect future tax charges.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Share premium account
Capital redemption reserve
Profit and loss account
started trading. It is a distributable reserve. The operating profit before management fee and tax is £3,332,864. It is made up as follows: Turnover £6,605,898 Administrative Expenses £5,606,050 Operating Profit £3,332,829 Interest £35 Profit before management fee and tax £3,332,864 The management fee for the year payable to Elm Capital LLP is £2,332,981.
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £64,006 (2019 - £59,823).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
The ultimate controlling party is E Deshormes by virtue of his shareholding.
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