REGISTERED NUMBER: |
FUNDAMENTAL ASSET MANAGEMENT LIMITED |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023 |
REGISTERED NUMBER: |
FUNDAMENTAL ASSET MANAGEMENT LIMITED |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023 |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
CONTENTS OF THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 30 JUNE 2023 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Report of the Directors | 5 |
Report of the Independent Auditors | 7 |
Statement of Comprehensive Income (Profit and Loss) | 11 |
Statement of Financial Position | 12 |
Statement of Changes in Equity | 13 |
Statement of Cash Flows | 14 |
Notes to the Financial Statements | 15 |
FUNDAMENTAL ASSET MANAGEMENT LIMITED |
COMPANY INFORMATION |
FOR THE YEAR ENDED 30 JUNE 2023 |
DIRECTORS: |
SECRETARY: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
SENIOR STATUTORY AUDITOR: |
AUDITORS: |
Chartered Accountants and Statutory Auditors |
Batchworth Lock House |
99 Church Street, Rickmansworth |
WD3 1JJ |
BANKERS: |
6 Church Street |
Rickmansworth |
Hertfordshire |
WD3 1BT |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 30 JUNE 2023 |
The directors present their strategic report for the year ended 30 June 2023. |
REVIEW OF BUSINESS |
The main activity of the company during the reporting period was the provision of investment management services. The activity will continue in 2023/2024. The company, limited by shares, is authorised and regulated by the Financial Conduct Authority to undertake the activity. The nature of the company's business and the factors determining the level of regulatory capital have not changed during the current reporting period. |
Results and performance |
The company results for the year, as set out in the primary statement 'Statement of Comprehensive Income (Profit and Loss)', show a profit before taxation of £841,436 (2022 - £1,078,095). As set out in the primary statement 'Statement of Financial Position', the company shareholders' funds total £631,409 (2022 - £637,678). |
The company managed to generate revenue and operating profit in line with the previous year despite continued weak market conditions. This was achieved by winning new mandates which offset the fall in value of existing assets under management due to market weakness. |
FINANCIAL AND NON-FINANCIAL KEY PERFORMANCE INDICATORS |
The directors have carefully considered the key performance indicators which they have set for the company. |
The directors consider that the key financial KPIs are: |
30.6.23 | 30.6.22 |
£ | £ |
Turnover | 1,313,206 | 1,315,029 |
Operating Profit | 845,668 | 814,562 |
In respect of the non financial FPIs |
1. Growth in net inflows as a % of Assets under management 11% (2022 - 41%) |
2. Growth in number of client accounts 12% (2022 - 56%) |
The directors are satisfied that the company has performed well against each of these indicators. |
BUSINESS ENVIRONMENT |
The UK investment management sector is highly competitive and dominated by large multi-national groups, however, the company's activities principally address a sub-sector where smaller specialist firms operate. Pricing structure in our specialist sector has remained reasonably stable over the past few years although investment intermediaries who introduce clients to the company's investment management services have witnessed a huge amount of change following the Retail Distribution Review ('RDR'). The firm outsources the majority of back office functions and therefore benefits from the technology investment of key service providers. |
GOING CONCERN |
In adopting the going concern basis for preparing the financial statements, the directors have considered company's business activities, objectives and strategy, principal risks and uncertainties in achieving its objectives, and performance that are set out in the strategic report. The directors have performed a robust assessment of the company's financial forecasts across a range of scenarios over a 12-month period from the date the financial statements are authorised for issue. The directors anticipate profits will continue to grow strongly over the coming years due to continued outperforming of all client portfolios, notably the AIM portfolios which are attracting increased interest from intermediaries. Based on these, the directors confirm that they have a reasonable expectation that the company has adequate resources to continue for the 12 months from the date the financial statements are authorised for issue. The directors therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements. |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 30 JUNE 2023 |
MIFIDPRU 8 DISCLOSURE |
The directors continue to consider that the firm meets the Materiality exemption and therefore the do not make any financial disclosures, apart from in respect of Remuneration. |
Our Remuneration statement can be found in the final section of our Conflicts of Interest Policy via this link https://fundamentalasset.com/conflicts-of-interest/ |
FUTURE DEVELOPMENTS |
The company anticipates a greater level of income from the expansion of Discretionary Investment Management activities as a result of increased marketing activity and its growing reputation in the market. The company's AIM portfolios continue to perform well and it is anticipated that a number of new mandates will be secured in the year. |
PRINCIPAL RISKS AND UNCERTAINTIES |
Principal risks and uncertainties are continually assessed by management. These risks, including marketing and competition risk, are managed through maintaining close sensitivity to the market and to changes in demand, customer interests and competitive pressures. The directors monitor performance on a weekly and monthly basis using a range of financial and non-financial indicators. Working capital management is a primary indicator which is reviewed regularly to monitor cashflow. |
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES |
Credit risk for the company principally takes the form of debtors and cash deposits. The company has not experienced any bad debt problems and has not written off any fee income receivables. |
The company does not carry out principal trading activities but does have indirect exposure to market risk as management fee income is based on funds under management. Stress testing of market risk is carried out as part of the company's Internal Capital Adequacy and Risk Assessment ("ICARA") under the Investment Firms Prudential Regime. The company's financial resources are managed to ensure that sufficient funds are retained to meet short-term liabilities, i.e. to manage liquidity risks. The company's capital requirement is assessed and managed via ICARA. |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 30 JUNE 2023 |
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 the section 172 (1) of the Companies Act 2006. |
a) The likely consequences of long-term decisions |
The company holds regular meetings. Shareholder representation is strong at all these meetings and the ongoing performance and future direction of the business is at the heart of discussions. Additionally, staff wellbeing and practical matters regarding the operational aspects of the business are considered and issues addressed. |
b) The interests of the company's employees |
The company's business relies completely relies on its staff, so the calibre of employees and their wellbeing is extremely important. A performance appraisal process is in place to encourage conversation and the raising of concerns, and to consider training and support requirements. Meetings of all staff take place weekly. |
c) The need to foster good business relationships with suppliers, customers, and others |
The company puts a great deal of effort into communications with investors in, and interested parties to, its portfolios. Factsheets are prepared and issued monthly and regular communication events such as webinars, and videos are run. |
Fundamental places great importance in its ongoing relationship with the brokers and platforms through whom it arranges trades and who custody client assets. |
d) The desirability of the company maintaining a reputation for high standards of business conduct |
The Board is committed to maintaining high standards of corporate governance in relation to business conduct. It monitors and expects good standards of companies in which its portfolios invest. Environmental, social, and governmental considerations are part of the investment management decision process. In support of this the company is a signatory of the Principles for Responsible Investment ('PRI'), the world's leading proponent of responsible investment. |
e) The impact of the company's operations on the community and the environment |
The company understands the importance of being a good corporate citizen. |
f) The need to act fairly between members of the company |
Members of the company are encouraged to contribute ideas and thoughts as to a future strategy. The Board believes that consistent delivery of investor expectations in terms of returns and client servicing is the best way to grow funds under management and that new opportunities provide a platform for step change to the business, which benefits all and ensures the long terms success of the business. |
ON BEHALF OF THE BOARD: |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 30 JUNE 2023 |
The directors present their report with the financial statements of the company for the year ended 30 June 2023. |
DIVIDENDS |
Ordinary £1 shares |
During the reporting year, an aggregate interim dividend of £16.5 (2022: £16.225) per share were paid. The directors recommend no final dividend be paid. |
The total equity dividends for the reporting year will be £660,000 (2022: £649,000). |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1 July 2022 to the date of this report. |
INFORMATION DISCLOSED IN THE STRATEGIC REPORT |
As permitted by Section 414C(11) of the UK Companies Act, some of the matters required to be included in the directors' report have instead been included in the strategic report, as the Board considers them to be of strategic importance. |
Specifically, these are: |
i. Future developments |
ii. Financial risk management objectives and policies; and |
iii. The exposure of the company to various risks. |
EVENTS AFTER THE REPORTING PERIOD |
The directors are not aware of any significant events post reporting period that require disclosure in this report of the financial statements. |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Strategic Report, the Report of the Directors 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), 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 of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | state whether applicable 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. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 30 JUNE 2023 |
AUDITORS |
The auditors, Cox Costello & Horne, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
FUNDAMENTAL ASSET MANAGEMENT LIMITED |
Opinion |
We have audited the financial statements of Fundamental Asset Management Limited (the 'company') for the year ended 30 June 2023 which comprise the Statement of Comprehensive Income (Profit and Loss), Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and Notes to the Financial Statements, 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). |
In our opinion the financial statements: |
- | give a true and fair view of the state of the company's affairs as at 30 June 2023 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. |
Basis for opinion |
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 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. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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 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 the audit: |
- | the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors. |
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. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
FUNDAMENTAL ASSET MANAGEMENT LIMITED |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page five, 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 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. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
FUNDAMENTAL ASSET MANAGEMENT LIMITED |
Auditors' 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 a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our: general commercial and sector experience; through verbal and written communications with those charged with governance and other management; and via inspection of the company's regulatory and legal correspondence. |
We discussed with those charged with governance and other management the policies and procedures regarding compliance with laws and regulations. |
We communicated identified laws and regulations to our team and remained alert to any indicators of non-compliance throughout the audit, we also specifically considered where and how fraud may occur within the company. |
The potential effect of these laws and regulations on the financial statements varies considerably. |
Firstly, the company is subject to laws and regulations that directly affect the financial statements, including: the company's constitution, relevant financial reporting standards; company law; tax legislation and distributable profits legislation and we assess the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. |
Secondly the company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on the amounts or disclosures in the financial statements, for instance through the imposition of fines and penalties, or through losses arising from litigation. We identified the following areas as those most likely to have such an effect: laws and regulations relevant to an FCA regulated company- the requirements of the FCA handbook; employment legislation; health and safety legislation; anti money laundering regulations, data protection legislation; anti-bribery and corruption legislation. |
International Auditing Standards (UK) limit the required procedures to identify non-compliance with these laws and regulations, and no procedures over and above those already noted are required. These limited procedures did not identify any actual or suspected non-compliance with laws and regulations that could have a material impact on the financial statements. |
In relation to fraud, we performed the following specific procedures in addition to those already noted: |
i. Challenging assumptions made by management in its significant accounting estimates; |
ii. Identifying and testing journal entries, in particular any entries posted with unusual nominal ledger account combinations, journal entries crediting cash or any revenue account, and journal entries posted by senior management; |
iii. Performing analytical procedures to identify unexpected movements in account balances which may be indicative of fraud; |
iv. Ensuring that testing undertaken on both the performance statement and the Statement of Financial Position includes a number of items selected on a random basis; |
These procedures did not identify any actual or suspected fraudulent irregularity that could have a material impact on the financial statements. |
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with International Auditing Standards (UK). For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the procedures that we are required to undertake would identify it. In addition, as with any audit, there remains a high risk of non-detection of irregularities, as these might involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal controls. We are not responsible for preventing non-compliance with laws and regulations or fraud, and cannot be expected to detect non-compliance with all laws and regulations or every incidence of fraud. |
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 Report of the Auditors. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
FUNDAMENTAL ASSET MANAGEMENT LIMITED |
Use of our 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 a Report of the Auditors 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. |
for and on behalf of |
Chartered Accountants and Statutory Auditors |
Batchworth Lock House |
99 Church Street, Rickmansworth |
WD3 1JJ |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
STATEMENT OF COMPREHENSIVE INCOME (PROFIT AND LOSS) |
FOR THE YEAR ENDED 30 JUNE 2023 |
30.6.23 | 30.6.22 |
Notes | £ | £ | £ | £ |
TURNOVER | 4 |
Cost of sales |
GROSS PROFIT |
Administrative expenses |
OPERATING PROFIT | 6 |
Provision written back | 8 |
845,668 | 1,218,776 |
Income from fixed asset investments |
Interest receivable and similar income |
11,913 | 11,948 |
857,581 | 1,230,724 |
Gain/(loss) on investment assets | (16,145 | ) | (152,629 | ) |
PROFIT BEFORE TAXATION |
Tax on profit | 9 |
PROFIT FOR THE FINANCIAL YEAR |
OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
STATEMENT OF FINANCIAL POSITION |
30 JUNE 2023 |
30.6.23 | 30.6.22 |
Notes | £ | £ |
CURRENT ASSETS |
Debtors | 12 |
Investments | 13 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 14 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
PROVISIONS FOR LIABILITIES | 17 |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 18 |
Capital redemption reserve |
Retained earnings |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the Board of Directors and authorised for issue on |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
STATEMENT OF CHANGES IN EQUITY |
FOR THE YEAR ENDED 30 JUNE 2023 |
Called up | Capital |
share | Retained | redemption | Total |
capital | earnings | reserve | equity |
£ | £ | £ | £ |
Balance at 1 July 2021 |
Total comprehensive income | - |
Dividends | - | ( |
) | - | ( |
) |
Balance at 30 June 2022 |
Total comprehensive income | - |
Dividends | - | ( |
) | - | ( |
) |
Balance at 30 June 2023 |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
STATEMENT OF CASH FLOWS |
FOR THE YEAR ENDED 30 JUNE 2023 |
30.6.23 | 30.6.22 |
Notes | £ | £ |
Cash flows from operating activities |
Cash generated from operations | 20 |
Tax paid | ( |
) | ( |
) |
Net cash from operating activities |
Cash flows from investing activities |
Disposal/(purchase) of investments | 40,301 | (49,337 | ) |
Interest received |
Dividends received | ( |
) |
Net cash from investing activities | ( |
) |
Cash flows from financing activities |
Amount introduced by directors | - | 12,000 |
Equity dividends paid | ( |
) | ( |
) |
Net cash from financing activities | ( |
) | ( |
) |
(Decrease)/increase in cash and cash equivalents | ( |
) |
Cash and cash equivalents at beginning of year |
21 |
217,399 |
Cash and cash equivalents at end of year | 21 | 277,438 | 313,390 |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
NOTES TO THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 30 JUNE 2023 |
1. | STATUTORY INFORMATION |
Fundamental Asset Management Limited ('the company') provide services to fund management activities at Cardinal Place, Rickmansworth.. The company has offices at Cardinal Place, Park Road, Rickmansworth, Herts WD3 1RE and makes services primarily within the UK. |
The company is a private company limited by shares and is incorporated in England. The address of its registered office is c/o Batchworth Lock House, 99 Church Street, Rickmansworth, WD3 1JJ. |
2. | STATEMENT OF COMPLIANCE |
The company financial statements of Fundamental Asset Management Limited have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, ''The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland'' (''FRS 102'') and the Companies Act 2006. |
3. | ACCOUNTING POLICIES |
Summary of significant accounting policies |
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. |
Basis of preparation |
These financial statements are prepared on a going concern basis, under the historical cost convention, as modified by the recognition of certain financial assets and liabilities measured at fair value. |
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in policy "critical accounting judgements and estimation uncertainty". |
The functional and presentational currency of the company is pound sterling. |
Going concern |
The financial statements have been prepared on a going concern basis. |
In making this assessment the directors have consider the foreseeable future, which is a period of at least 12 month from the date of signing of the Net Asset Statement. |
The directors are not aware of any material uncertainties that cast doubt over the company's going concern status. |
Critical accounting judgements and estimation uncertainty |
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below. |
a. Recognition of revenue (see policy "Revenue") |
The company recognises revenue when (a) the amount of revenue can be measured reliably; (b) it is probable that future economic benefits will flow to the entity and (c) when the specific criteria relating to each of the company's sales channels have been met. |
b. Recognition of deferred tax assets (see policy "Taxation") |
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Recognition, therefore, involves judgement regarding the prudent forecasting of future taxable profits of the business and in applying an appropriate risk adjustment factor. The final outcome of some of these items may give rise to material profit and loss and/or cash flow variances. |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 30 JUNE 2023 |
3. | ACCOUNTING POLICIES - continued |
Revenue |
Revenue is measured at the fair value consideration received or receivable and represents amounts receivable for services provided in the normal course of business net of VAT and other taxes. Services comprise investment management services supplied and comprise advisory, management fees and commissions in relation to the management of third party investment portfolios. |
Pension costs |
The company makes contributes into the personal retirement schemes of certain staff. Contributions by the company and staff are determined by mutual agreement. Staff contract directly with the pension company, and assets of those schemes are held separately from those of the company. The company acts as agent in collecting and paying over staff pension contributions. Once the contributions have been paid, the company as employer has no further obligations. |
The company's contributions are charged to the profit or loss in the period to which they relate. At the reporting date, outstanding contributions amounted to £40,000 (2022: £40,000). |
Exceptional items |
The financial statements have separately disclosed exceptional items where they represent material items and are not in the normal course of business. |
Tangible fixed assets |
Tangible assets are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes the original purchase price, costs directly attributable to bringing the asset to its working condition for its intended use, dismantling and restoration costs. |
a. Depreciation and residual values |
Depreciation on other assets is calculated, using the straight-line method, to allocate the depreciable amount to their residual values over their estimated useful lives, as follows: |
- Office equipment | - 25% on cost |
- Furniture and fittings | - 25% reducing balance |
The assets’ residual values and useful lives are reviewed, and adjusted, if appropriate, at the end of each reporting period. The effect of any change is accounted for prospectively. |
b. Derecognition |
Tangible assets are derecognised on disposal or when no future economic benefits are expected. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss and included in ‘Other operating (losses)/gains’. |
Taxation |
Taxation for year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income (Profit and Loss). |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date. |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 30 JUNE 2023 |
3. | ACCOUNTING POLICIES - continued |
Investments |
Investments which are held in an actively managed portfolios are classified as current asset investments. |
Purchases and sales of financial instruments are recognised on the trade date, being the date on which the company commits itself to the purchase or sale. Financial instruments at FVPL are initially recognised at fair value, when the company becomes party to the contractual provisions of the instrument, with their associated transaction costs being charged immediately, when incurred, to profit or loss. |
Subsequent to the initial recognition, financial assets and liabilities at FVPL are measured at fair value with the resultant gains and losses being taken to profit or loss. Financial assets are derecognised when the contractual rights to the cash flows from the asset expire, or when the company has transferred substantially all the risks and rewards of ownership. The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. |
The fair value of assets and liabilities traded in an active market is based on quoted market prices at the close of trading on the reporting date. For quoted financial assets the valuation is based on the closing bid price. |
Cash and cash equivalents |
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts, when applicable, are shown within borrowings in current liabilities. |
Share capital |
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds. |
Final distributions to equity holders |
Dividends and other distributions to the company's shareholders are recognised as a liability in the financial statements in the period in which the dividends and other distributions are approved by the shareholders. These amounts are recognised in the statement of changes in equity. |
Interim dividends are recognised when the directors have approved them and the earlier of their payment or the date when they were recognised in the company's accounting records. |
Provisions and contingencies |
a. Provisions |
Provisions are recognised when the company has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount of the obligation can be estimated reliably. |
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations might be small. |
In particular: |
i. Restructuring provisions are recognised when the company has a detailed, formal plan for the restructuring and has raised a valid expectation in those affected by either starting to implement the plan or announcing its main features to those affected and therefore has a legal or constructive obligation to carry out the restructuring; and |
ii. Provision is not made for future operating losses. |
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as a finance cost. |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 30 JUNE 2023 |
3. | ACCOUNTING POLICIES - continued |
Provisions and contingencies - continued |
b. Contingencies |
Contingent liabilities are not recognised, except those acquired in a business combination. Contingent liabilities arise as a result of past events when (i) it is not probable that there will be an outflow of resources or that the amount cannot be reliably measured at the reporting date or (ii) when the existence will be confirmed by the occurrence or non-occurrence of uncertain future events not wholly within the company's control. Contingent liabilities are disclosed in the financial statements unless the probability of an outflow of resources is remote. |
Contingent assets are not recognised. Contingent assets are disclosed in the financial statements when an inflow of economic benefits is probable. |
Financial instruments |
The company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments. |
a. Financial assets |
Other than equity investments held at fair value basic financial assets, including trade and other debtors, own cash and bank balances, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. |
Such assets are subsequently carried at amortised cost using the effective interest method. |
b. Financial liabilities |
Basic financial liabilities, including trade and other creditors are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. |
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 payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method. |
c. Derecognition of financial assets and liabilities |
Financial assets are only derecognised when the contractual rights to receive cash flows from them have expired or when the croup has transferred substantially all risks and rewards of ownership. Financial liabilities are only derecognised when the obligation is discharged, cancelled or has expired. |
d. Offsetting |
Financial assets and liabilities are offset and 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. |
4. | TURNOVER |
In the opinion of the directors the disclosure of any information required by class of business and geographical markets would be seriously prejudicial to the interests of the company. |
5. | EMPLOYEES AND DIRECTORS |
30.6.23 | 30.6.22 |
£ | £ |
Wages and salaries |
Social security costs |
Other pension costs |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 30 JUNE 2023 |
5. | EMPLOYEES AND DIRECTORS - continued |
The average number of employees during the year was as follows: |
30.6.23 | 30.6.22 |
Investment and fund management | 4 | 3 |
Support | 3 | 3 |
30.6.23 | 30.6.22 |
£ | £ |
Directors' remuneration |
The number of directors to whom retirement benefits were accruing was as follows: |
Money purchase schemes |
The directors were awarded £20,000 each as a pension contribution for the year (2022 - £20,000 each). In addition, the directors received benefits in kind amounting to £9,142 (2022 - £8,231). |
Directors’ and key management compensation |
Key management are considered to be the directors. |
6. | OPERATING PROFIT |
The operating profit is stated after charging: |
30.6.23 | 30.6.22 |
£ | £ |
Other operating leases |
7. | AUDITORS' REMUNERATION |
30.6.23 | 30.6.22 |
£ | £ |
Fees payable to the company's auditors and their associates for the audit of the company's financial statements |
4,571 |
4,800 |
Auditors' remuneration for non audit work |
8. | PROVISION WRITTEN BACK |
The provision written back, considered to be an exceptional item, relates to certain specialist investment services the company had provided previously, which ceased in 2017. The directors are of the opinion that this is no longer required and accordingly have written back the provision. An analysis of the exceptional provision write back is as follows: |
30.6.23 | 30.6.22 |
£ | £ |
Provision brought forward - 1 July | - | 454,214 |
Provision management and reduction fee | - | 50,000 |
Credit to the Profit and Loss | - | (404,214 | ) |
Provision carried forward - 30 June | - | - |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 30 JUNE 2023 |
9. | TAXATION |
Analysis of the tax charge |
The tax charge on the profit for the year was as follows: |
30.6.23 | 30.6.22 |
£ | £ |
Current tax: |
UK corporation tax |
Deferred tax | ( |
) |
Tax on profit |
UK corporation tax has been charged at 20.50% (2022 - 19%). |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below: |
30.6.23 | 30.6.22 |
£ | £ |
Profit before tax |
Profit multiplied by the standard rate of corporation tax in the UK of - |
Effects of: |
Income not taxable for tax purposes | ( |
) | ( |
) |
Unrealised investment losses | 11,379 | - |
Deferred tax | 7,918 | (21,788 | ) |
Change in tax rates | (39,510 | ) | - |
Total tax charge | 187,705 | 180,887 |
On 24 May 2021, legislation was substantially enacted in the UK to increase the corporate tax rate to 25% (from 19%) with effect from 1 April 2023. From the same date, a ‘small profits rate’ of 19% will apply to profits up to £50,000. For businesses with profits between £50,000 and £250,000, tax will be charged at the main rate, subject to marginal relief provisions which will provide a gradual increase in the effective corporation tax rate. |
10. | DIVIDENDS |
30.6.23 | 30.6.22 |
£ | £ |
Ordinary shares of £1 each |
Interim |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 30 JUNE 2023 |
11. | TANGIBLE FIXED ASSETS |
Furniture |
Office | and |
equipment | fittings | Totals |
£ | £ | £ |
COST |
At 1 July 2022 |
and 30 June 2023 |
DEPRECIATION |
At 1 July 2022 |
and 30 June 2023 |
NET BOOK VALUE |
At 30 June 2023 |
At 30 June 2022 |
12. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
30.6.23 | 30.6.22 |
£ | £ |
Trade debtors |
Prepayments and accrued income |
13. | CURRENT ASSET INVESTMENTS |
30.6.23 | 30.6.22 |
£ | £ |
Listed investments | 423,371 | 479,817 |
Market value of listed investments at 30 June 2023 - £ 423,371 (2022 - £ 479,817 ). |
14. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
30.6.23 | 30.6.22 |
£ | £ |
Trade creditors |
Tax |
Social security and other taxes |
VAT | 54,242 | 34,427 |
Other creditors |
Directors' current accounts | 1,059 | 1,059 |
Accruals |
15. | LEASING AGREEMENTS |
Minimum lease payments under non-cancellable operating leases fall due as follows: |
30.6.23 | 30.6.22 |
£ | £ |
Between one and five years |
16. | FINANCIAL INSTRUMENTS |
The company has the following financial instruments: |
30.6.23 | 30.6.22 |
£ | £ |
Financial assets measured at fair value | 423,371 | 479,817 |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 30 JUNE 2023 |
17. | PROVISIONS FOR LIABILITIES |
30.6.23 | 30.6.22 |
£ | £ |
Deferred tax | 17,290 | 9,372 |
Deferred tax |
£ |
Balance at 1 July 2022 |
Provided during year |
Balance at 30 June 2023 |
The deferred tax provision relates entirely to unrealised gains on the investment portfolio. |
18. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 30.6.23 | 30.6.22 |
value: | £ | £ |
Ordinary | £1 | 40,000 | 40,000 |
19. | RELATED PARTY DISCLOSURES |
During the year, total dividends of £660,000 (2022 - £649,000) were paid to the directors . |
Dividends to directors have been aggregated to include dividends paid to close family. |
Details of Key Management Compensation are disclosed in Note 5 'Employees and Directors', to the financial statements. |
During the reporting period, the company received contracted professional services from a related party in the amount of £13,000 (2022 - £53,000). Both parties have joint key management personnel. |
At the reporting date, the amount outstanding was £nil (2022 - £nil). |
20. | RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS |
30.6.23 | 30.6.22 |
£ | £ |
Profit before taxation |
(Gain)/loss on disposal of investments | (29,367 | ) | 12,595 |
Loss on revaluation of investments | 45,512 | 140,034 |
Write back of provisions | - | (404,214 | ) |
Finance income | (11,913 | ) | (11,948 | ) |
845,668 | 814,562 |
Increase in trade and other debtors | ( |
) | ( |
) |
(Decrease)/increase in trade and other creditors | ( |
) |
Cash generated from operations |
FUNDAMENTAL ASSET MANAGEMENT LIMITED (REGISTERED NUMBER: 05089880) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 30 JUNE 2023 |
21. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts: |
Year ended 30 June 2023 |
30.6.23 | 1.7.22 |
£ | £ |
Cash and cash equivalents | 277,438 | 313,390 |
Year ended 30 June 2022 |
30.6.22 | 1.7.21 |
£ | £ |
Cash and cash equivalents | 313,390 | 217,399 |
22. | ANALYSIS OF CHANGES IN NET FUNDS |
At 1.7.22 | Cash flow | At 30.6.23 |
£ | £ | £ |
Net cash |
Cash at bank | 313,390 | (35,952 | ) | 277,438 |
313,390 | ( |
) | 277,438 |
Liquid resources |
Current asset investments | 479,817 | (56,446 | ) | 423,371 |
479,817 | (56,446 | ) | 423,371 |
Total | 793,207 | (92,398 | ) | 700,809 |