Company Registration No. SC548164 (Scotland)
TARGET FUND MANAGERS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
TARGET FUND MANAGERS LIMITED
COMPANY INFORMATION
Directors
Mr S G Bland
Mr A S Brown
Mr J M Flannelly
Mr K MacKenzie
Mr M J Round
Mrs A MacKenzie
Mr S M Steven
Mrs T Mathieson
(Appointed 27 July 2022)
Company number
SC548164
Registered office
1st Floor
Glendevon House
Castle Business Park
Stirling
FK9 4TZ
Auditor
Johnston Carmichael LLP
7-11 Melville Street
Edinburgh
EH3 7PE
Solicitors
Dickson Minto WS
16 Charlotte Square
Edinburgh
EH2 4DF
TARGET FUND MANAGERS LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Statement of financial position
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 23
TARGET FUND MANAGERS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2022
- 1 -
The directors present the strategic
report
for the
year
ended 30 April 2022.
Fair review of the business
The principal activity of the Company in the year under review was the provision of investment and property management services. The Company is authorised and regulated by the Financial Conduct Authority.
The year to 30 April 2022 saw turnover increase to £6,775,019 (2021: £5,405,738). This increase was primarily as a result of the full-year effect of the growth of funds under management which occurred in March 2021 alongside the further significant increase in funds under management in September 2021.
The Directors are satisfied with the performance during the year and continue to invest in the business.
Principal risks and uncertainties
As identified through our Internal Capital Adequacy and Risk Assessment (ICARA) and Supervisory Review and Evaluation Process (SREP), the material risks for the firm are defined as Financial, Business, and Regulatory.
Financial - This risk can be split into Credit Risk and Market Risk.
Credit Risk - This is considered to be low given the make-up of the Company's client base.
Market Risk - This is relevant to the business given that revenue earned is dependent upon the assets managed. Accordingly, adverse market movements could have an impact on the Company's results.
Business - This risk relates to the running of the business, which includes poor client service and general market risk.
Regulatory - This risk considers treating clients appropriately and complying with FCA regulation, including Capital Adequacy requirements.
The following are risks of note at the present time:
COVID-19 – The COVID-19 pandemic was identified as an emerging then current risk for the business since its emergence in 2020 with the potential to affect the Company’s employees and counterparties as well as disrupting the ordinary running of the business through the closure of office premises. The pandemic also had the potential to adversely affect the wider market that the Company operates in, affecting assets under management (“AUM”) and revenue. At this point in time, the underlying investments have continued to be resilient with both AUM and revenue having been maintained. The Company’s employees worked from home during the office closure in the initial months of the pandemic and have since returned to the office as government restrictions have been lifted. Throughout the pandemic, the Company’s employees have continued to carry out their responsibilities effectively while the evolving situation is continually assessed by the senior management team.
Inflation, cost of capital and general recessionary fears – Recent increases in UK inflation has been identified as a risk for the Company affecting general operating costs and staffing costs. High levels of inflation will also affect the wider market the Company operates in, potentially affecting the value of investments and decreasing revenue and AUM. General recessionary fears in the wider market, increased inflation and other macroeconomic factors could also adversely affect the Company by impacting on client funds' abilities to grow as they have done in the past, thereby slowing the Company's growth of revenues and AUM.
The Directors regularly review business activity and performance to ensure that risks are mitigated or do not materialise to the extent possible via decision-making, improved processes and other initiatives. The Company’s Compliance function is led by an experienced external consultant, who manages a comprehensive Internal Compliance Monitoring programme. This programme seeks to ensure through regular review and reporting of all aspects of regulatory compliance that the Company continues to meet its requirements.
TARGET FUND MANAGERS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 2 -
Other performance indicators
The Company's primary objective is to grow and protect revenue streams through disciplined management of client funds and client satisfaction from general service levels. In line with this, and the principal risks the Company faces, the key performance indicators are:
Revenue and Assets under management
The KPI's used to assess the Company's success in meeting its objectives are its level of fee income and profitability which will correlate with assets under management. The Directors consider assets under management of £695m (2021: £558m) at the balance sheet date and profit for the period of £977,441 (2021: £288,792) to be an acceptable performance.
Regulatory responsibilities and capital adequacy
The Company is registered with the Financial Conduct Authority for alternative investment fund management. The Company is in a strong financial position with capital reserves in excess of the minimum regulatory capital requirement.
Section 172 (1) Statement
The Directors have a duty to promote the success of the Company for the benefit of Shareholders as a whole and to describe how they have performed this duty having regard to matters set out in section 172(1) of the Companies Act 2006. In fulfilling this duty, the Directors consider the likely consequences of their actions over the long term and on other stakeholders.
The following disclosure describes how the Board has had regards to the matters set out in section 172 (1) (a) to (f):
The likely consequence of any decision in the long term
The Board works to attract, develop and retain talent for the long-term. Our employees have a crucial role in creating value for our clients and delivering against our overall strategy. The Company’s primary activity (the provision of investment and property management service) also has a long-term focus with property investments typically having lease lengths of 30+ years. The recommendations which precede these investments and the ongoing relationship management with tenants requires consideration of the long-term, sustainable investment case suitably sensitised with a conservative focus.
Board meetings are held throughout the year in which significant matters are discussed, such as trading performance, financial forecasts and future expenditure.
The interest of the Company’s employees
The Company is committed to being a responsible business that is fully engaged with its employees and mindful of their various needs. The Company enacts consultation processes on matters that are likely to affect employees’ interests, ensuring that these are discussed through Company-wide meetings as well as in smaller contexts as appropriate.
Personnel matters are regularly discussed at Board meetings, including any health and safety considerations along with employee well-being. Regular formal training is provided to the Company’s employees with regard to compliance and other role-specific training such as advanced Microsoft Excel courses. Other training is regularly given through company-wide ‘TTLs’ or ‘Target Team Learning’ sessions, along with off-site strategy meetings and an induction programme that involves new team members meeting one-on-one with each of the four founders.
The core values of the Company are embedded at the heart of everything we do. These values are:
Collaboration, Professionalism, Integrity, Openness, Respect, Care, Humility and Forgiveness.
The need to foster the Company’s business relationships with suppliers, customers and others
The Board works to develop and maintain strong customer relationships. The Company’s senior management team attends the board meetings of its client fund along with providing regular communications, ensuring that constructive relationships are maintained and the highest levels of service are provided. Management engages with suppliers on an ongoing basis with many of the Company’s suppliers being long-standing and ensures that payments are made in accordance with terms. Key suppliers are reviewed by management with any issues arising communicated to the supplier.
TARGET FUND MANAGERS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 3 -
The impact of the Company’s operations on the community and the environment
The Board are conscious of the impact of the Company’s operations have both on the environment and have recently joined the net zero pledge. The investments that the Company manages have a huge positive social impact through providing modern, purpose-built care homes that are great environments for both residents and their care staff.
The desirability of the Company maintaining a reputation for high standards of business conduct
The Board are committed in their day-to-day operations and dealing with stakeholders, to uphold the highest standard of business conduct and integrity. If there are any concerns with the standard of conduct then this will be actively raised and discussed at Board meetings.
The need to act fairly between members of the Company
Principal decisions of the Company are those that are key to the Company’s success. The Board ensures that all shareholders have the ability to contribute to discussions on principal decisions and the interests of all shareholders are continually considered.
In accordance with MIFIDPRU 8, the required disclosures in respect of risk management objectives and policies, with own funds requirements, and remuneration policy and practices are available from the company's registered office on request or on the company's website.
Mr S G Bland
Director
24 August 2022
TARGET FUND MANAGERS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2022
- 4 -
The directors present their annual report and financial statements for the year ended 30 April 2022.
Principal activities
The principal activity of the company is the provision of investment and property management services.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £248,167 (2021: £341,450). The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr S G Bland
Mr A S Brown
Mr J M Flannelly
Mr K MacKenzie
Mr M J Round
Mrs A MacKenzie
Mr S M Steven
Mrs T Mathieson
(Appointed 27 July 2022)
Auditor
The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Energy and carbon report
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
On behalf of the board
Mr S G Bland
Director
24 August 2022
TARGET FUND MANAGERS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 APRIL 2022
- 5 -
The directors are responsible for preparing the strategic report, directors' 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 the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
TARGET FUND MANAGERS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TARGET FUND MANAGERS LIMITED
- 6 -
Opinion
We have audited the financial statements of Target Fund Managers Limited
(the 'company')
for the year ended 30 April 2022 which comprise
the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows
and
notes to the financial statements, including significant accounting policies
. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including
FRS
102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 30 April 2022 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor
responsibilities for the audit of the
financial statements
section of our report. We are independent of the
company
in accordance with the ethical requirements that are relevant to our audit of the
financial statements
in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors'
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
TARGET FUND MANAGERS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TARGET FUND MANAGERS LIMITED
- 7 -
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 identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters
in relation to which
the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement
set out on page 5
, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the
financial statements
, the
directors are
responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors
either
intend
to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements
.
Extent to which the audit is considered capable of detecting irregularities, including fraud
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
:
We obtained an understanding of the legal and regulatory frameworks that are applicable to the company, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
• FRS 102;
• Companies Act 2006;
• VAT legislation; and
• Financial services legislation.
TARGET FUND MANAGERS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TARGET FUND MANAGERS LIMITED
- 8 -
Extent to which the audit is considered capable of detecting irregularities, including fraud (continued)
We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management. We corroborated these enquiries through our review of submitted returns, external inspections, relevant correspondence with regulatory bodies and board meeting minutes.
We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur, by meeting with management to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk.
The following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
-
Reviewing minutes of meetings of those charged with governance;
-
Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
https://www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx.
This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
David Holmes (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
24 August 2022
Chartered Accountants
Statutory Auditor
7-11 Melville Street
Edinburgh
EH3 7PE
TARGET FUND MANAGERS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2022
- 9 -
2022
2021
Notes
£
£
Revenue
3
6,775,019
5,405,738
Administrative expenses
(5,235,705)
(4,698,182)
Operating profit
4
1,539,314
707,556
Finance costs
(1,050)
(2,166)
Profit before taxation
1,538,264
705,390
Tax on profit
8
(560,823)
(416,598)
Profit for the period and total comprehensive income
977,441
288,792
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
TARGET FUND MANAGERS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
30 APRIL 2022
30 April 2022
- 10 -
2022
2021
Notes
£
£
£
£
Non-current assets
Goodwill
11
4,213,082
3,776,516
Property, plant and equipment
10
105,219
49,699
4,318,301
3,826,215
Current assets
Trade and other receivables
12
2,636,433
842,684
Cash and cash equivalents
69,355
1,946,353
2,705,788
2,789,037
Current liabilities
13
(2,195,806)
(2,510,258)
Net current assets
509,982
278,779
Total assets less current liabilities
4,828,283
4,104,994
Provisions for liabilities
Deferred tax liability
14
5,985
-
(5,985)
Net assets
4,828,283
4,099,009
Equity
Called up share capital
16
401,040
401,040
Retained earnings
17
4,427,243
3,697,969
Total equity
4,828,283
4,099,009
The financial statements were approved by the board of directors and authorised for issue on 24 August 2022 and are signed on its behalf by:
Mr S G Bland
Director
Company Registration No. SC548164
TARGET FUND MANAGERS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2022
- 11 -
Share capital
Retained earnings
Total
Notes
£
£
£
Balance at 1 May 2020
401,040
3,750,627
4,151,667
Year ended 30 April 2021:
Profit and total comprehensive income for the year
-
288,792
288,792
Dividends
9
-
(341,450)
(341,450)
Balance at 30 April 2021
401,040
3,697,969
4,099,009
Year ended 30 April 2022:
Profit and total comprehensive income for the year
-
977,441
977,441
Dividends
9
-
(248,167)
(248,167)
Balance at 30 April 2022
401,040
4,427,243
4,828,283
TARGET FUND MANAGERS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 APRIL 2022
- 12 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
22
1,405,209
2,554,701
Interest paid
(1,050)
(2,166)
Income taxes paid
(710,798)
(509,534)
Net cash inflow from operating activities
693,361
2,043,001
Investing activities
Purchase of intangible assets
(2,254,771)
(832,660)
Purchase of property, plant and equipment
(67,831)
(10,804)
Proceeds on disposal of property, plant and equipment
410
Net cash used in investing activities
(2,322,192)
(843,464)
Financing activities
Dividends paid
(248,167)
(341,450)
Net cash used in financing activities
(248,167)
(341,450)
Net (decrease)/increase in cash and cash equivalents
(1,876,998)
858,087
Cash and cash equivalents at beginning of year
1,946,353
1,088,266
Cash and cash equivalents at end of year
69,355
1,946,353
TARGET FUND MANAGERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2022
- 13 -
1
Accounting policies
Company information
Target Fund Managers Limited is a
private
company
limited by shares
incorporated in
Scotland
.
The registered office is
1st Floor, Glendevon House, Castle Business Park, Stirling, Scotland, FK9 4TZ.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary 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
true
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
Revenue
Turnover represents the amounts earned from the provision of investment and property management services excluding value added tax. Revenue is recognised in the financial statements when and to the extent that the entity obtains the unconditional right to consideration in exchange for its performance.
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of
trade and assets
over the fair value of net assets acquired. It is initially recognised at cost and is subsequently measured at cost less accumulated
amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
1.5
Property, plant and equipment
Property, plant and equipment
are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Furniture and fixtures
20% reducing balance
Office equipment
20% reducing balance
1.6
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
1.7
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand
and
deposits held at call with banks
.
TARGET FUND MANAGERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
1
Accounting policies
(Continued)
- 14 -
1.8
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
trade and other receivables
and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method
.
Impairment of financial assets
Financial assets
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.
Basic financial liabilities
Trade payables 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 payments discounted at the market rate of interest.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
TARGET FUND MANAGERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
1
Accounting policies
(Continued)
- 15 -
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.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
non-current assets
.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
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.
The estimates and assumption which have a significant risk of causing material adjustment to the carrying amount of assets and liabilities are useful life assigned to the associated goodwill and its amortisation.
3
Revenue
2022
2021
£
£
Revenue analysed by class of business
Management Fees
6,649,835
5,285,096
Cosec and Admin Fees
125,184
120,642
6,775,019
5,405,738
TARGET FUND MANAGERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 16 -
4
Operating profit
2022
2021
Operating profit for the year is stated after charging:
£
£
Depreciation of owned property, plant and equipment
11,901
14,093
Amortisation of intangible assets
1,413,434
1,392,786
Operating lease charges
24,092
5
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
5,600
5,600
For other services
Other assurance services
775
775
All other non-audit services
1,050
1,050
1,825
1,825
6
Employees
The average number of persons (including those directors who are employees) employed by the company during the year was:
2022
2021
Number
Number
Finance, compliance, and admin
10
10
Portfolio management
14
14
Other
4
4
Total
28
28
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
2,160,676
2,080,023
Social security costs
263,780
268,024
Pension costs
224,135
200,962
2,648,591
2,549,009
TARGET FUND MANAGERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 17 -
7
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
607,094
401,193
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
214,533
180,523
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
566,808
416,464
Deferred tax
Origination and reversal of timing differences
(5,985)
134
Total tax charge
560,823
416,598
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
1,538,264
705,390
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
292,270
134,024
Tax effect of expenses that are not deductible in determining taxable profit
23,250
4,756
Adjustments in respect of prior years
(23,568)
13,160
Effect of change in corporation tax rate
318
Amortisation not allowable for tax purposes
268,553
264,658
Taxation charge for the year
560,823
416,598
TARGET FUND MANAGERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 18 -
9
Dividends
2022
2021
£
£
Interim paid
248,167
341,450
10
Property, plant and equipment
Furniture and fixtures
Office equipment
Total
£
£
£
Cost
At 1 May 2021
32,603
52,584
85,187
Additions
38,172
29,659
67,831
Disposals
(4,193)
(3,733)
(7,926)
At 30 April 2022
66,582
78,510
145,092
Depreciation and impairment
At 1 May 2021
15,712
19,776
35,488
Depreciation charged in the year
4,113
7,788
11,901
Eliminated in respect of disposals
(3,783)
(3,733)
(7,516)
At 30 April 2022
16,042
23,831
39,873
Carrying amount
At 30 April 2022
50,540
54,679
105,219
At 30 April 2021
16,891
32,808
49,699
11
Intangible fixed assets
Goodwill
£
Cost
At 1 May 2021
5,809,343
Additions
1,850,000
At 30 April 2022
7,659,343
Amortisation and impairment
At 1 May 2021
2,032,827
Amortisation charged for the year
1,413,434
At 30 April 2022
3,446,261
Carrying amount
At 30 April 2022
4,213,082
At 30 April 2021
3,776,516
TARGET FUND MANAGERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
11
Intangible fixed assets
(Continued)
- 19 -
The additions to goodwill represent additional consideration paid for an acquisition made in 2017 which became payable during the year and was not previously recognised.
12
Trade and other receivables
2022
2021
Amounts falling due within one year:
£
£
Trade receivables
2,377,963
Other receivables
152,208
283,423
Prepayments and accrued income
106,262
559,261
2,636,433
842,684
13
Current liabilities
2022
2021
£
£
Trade payables
235,438
35,664
Corporation tax
147,096
291,086
Other taxation and social security
122,824
257,126
Due to associated entities
913,949
1,365,632
Accruals and deferred income
776,499
560,750
2,195,806
2,510,258
14
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Timing differences
-
5,985
2022
Movements in the year:
£
Liability at 1 May 2021
5,985
Other
(5,985)
Liability at 30 April 2022
-
TARGET FUND MANAGERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 20 -
15
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
224,135
200,962
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.
16
Share capital
2022
2021
£
£
Ordinary share capital
Issued and fully paid
400,000 ordinary A shares of £1 each
400,000
400,000
1,000 ordinary B shares of £1 each
1,000
1,000
40 ordinary C shares of £1 each
40
40
401,040
401,040
A shares carry no voting rights. A shares have a right to dividends as and when declared by the company, until such time as the holders of the A shares have received an amount equal to 5 per cent per annum of the amount subscribed for the shares in issue.
B shares carry one vote per share. B shares have a right to dividends as and when declared by the company, after the holders of A shares have received their distributions. B shares are not redeemable at the option of shareholders or the company.
C shares carry no voting rights. C shares have a right to dividends once A shareholders have received their entitlement as outlined above.
17
Retained earnings
Includes all retained profit and loss less distributions.
18
Contingent Liability
Contingent consideration of up to £5,009,997 could be payable in respect of a business acquired during 2017.
However inter alia, this consideration is only payable if it would not impact the going concern status of the company.
TARGET FUND MANAGERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 21 -
19
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:
2022
2021
£
£
Within one year
106,470
Between two and five years
369,016
475,486
The operating lease commitments relate to the new office rental of 1st Floor, Glendevon House, Castle Business Park, Stirling, FK9 4TZ.
TARGET FUND MANAGERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 22 -
20
Related party transactions
Transactions with related parties
Target Fund Managers Limited, Target Advisers LLP, and Carlton Equity Limited are subject to common control.
During the year, an intercompany balance was provided to Target Fund Managers Limited from Target Advisers LLP. At the year end, Target Fund Managers Limited owed the LLP £913,949 (2021: £1,365,632).
Dividends of £248,167 (2021: £341,450) were paid to entities controlled by the directors of the company.
During the year the entity was recharged £248,261 (2021: the entity was recharged £225,133) of shared expenses by Target Advisers LLP. The entity also paid Target Advisers LLP £1,377,430 (2021: £832,660) and accrued £472,570 (2021: £877,340) due to Target Advisers LLP, for contingent consideration in respect of a business acquired from Target Advisers LLP in 2017.
At the year end the entity was owed £64 (2021: £280,814) by a director.
21
Ultimate controlling party
The immediate and ultimate parent company is Carlton Equity Limited by virtue of its controlling stake in the business. Carlton Equity Limited is jointly owned by Kenneth and Angela MacKenzie, who are thus the ultimate controlling parties.
22
Cash generated from operations
2022
2021
£
£
Profit for the year after tax
977,441
288,792
Adjustments for:
Taxation charged
560,823
416,598
Finance costs
1,050
2,166
Amortisation and impairment of intangible assets
1,413,434
1,392,786
Depreciation and impairment of property, plant and equipment
11,901
14,093
Movements in working capital:
Increase in trade and other receivables
(1,793,749)
(33,804)
Increase in trade and other payables
234,309
474,070
Cash generated from operations
1,405,209
2,554,701
TARGET FUND MANAGERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2022
- 23 -
23
Analysis of changes in net funds
1 May 2021
Cash flows
30 April 2022
£
£
£
Cash at bank and in hand
1,946,353
(1,876,998)
69,355
2022-04-30
2021-05-01
false
CCH Software
CCH Accounts Production 2022.300
Mr S G Bland
Mr A S Brown
Mr J M Flannelly
Mr J M Flannelly
Mr K MacKenzie
Mr M J Round
Mrs A MacKenzie
Mr S M Steven
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