Company Registration No. 04432678 (England and Wales)
DELFF MANAGEMENT LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
DELFF MANAGEMENT LIMITED
COMPANY INFORMATION
Directors
Mr D P Loubignac
Ms C A Lauer-Loubignac
Secretary
Ms C A Lauer-Loubignac
Company number
04432678
Registered office
1 Knightsbridge Green
5th Floor, Office 5.33
Knightsbridge
London
SW1X 7QA
Auditor
HW Fisher LLP
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
DELFF MANAGEMENT LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 21
DELFF MANAGEMENT LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Fair review of the business
The results for the period and the financial position at the end of the year were considered excellent by the directors.
The product range is considered very well positioned in the current environment of increasing interest rates, and its stable client base gives the firm stable recurring revenues and long term visibility, particularly in the context of the cost cutting measures taken in the last couple of years. With good fund performance expected in 2024, and a low and manageable cost base, directors expect profitability to remain good for the foreseeable future.
The company’s key performance indicators are not quantified. The directors focus on:
- Maintaining capital adequacy
- Achieving sufficient turnover to maintain capital adequacy
- Compliance with the FCA
The directors use the Internal Capital Adequacy and Risk Assessment (ICARA) to test the potential impact of a loss in revenue from the management fees which are required to cover the fixed overheads.
The company's key financial indicators during the year were as follows:
Unit 2023 2022
Turnover £'000 3,349 1,992
Gross profit £'000 2,024 1,173
Net assets £'000 619 176
Principal risks and uncertainties
Business risk
Business Risk is any risk to a firm arising from changes in its business including the risk that the firm may not be able to carry out its business plan and its desired strategy.
DELFF Management monitors risk using an ICARA to determine the adequacy of the capital it holds against the business risks it faces, and the possible effects of deteriorating market and trading circumstances. The ICARA examines the effect of a market downturn, and any other occurrence that may lead to a significant loss of funds under management. Different timings and severity of client loss are considered.
The company prepares periodic reviews of their accounts which are distributed to the main shareholders and bi-annual submissions to the FCA. Through these methods, DELFF Management is able to confirm the achievement of its business plan, or take action if necessary.
Operational Risk
The ICARA also considers various operational risks including the adequacy and availability of premises, systems and staffing, as well as operational errors, changes to the costs incurred by DELFF Management, and the effect each has on the firm’s ability to meet its Capital Adequacy requirements.
DELFF Management is risk averse and maintains robust controls to mitigate the effect of recognised risks. It believes that it has sufficient human resources to carry on the business and sufficient back up facilities to deal with system or process failures.
Capital adequacy
Whereas we are currently in a new inflationary environment, the directors consider the company's exposure to higher inflation very limited, as the vast majority of the company's contractual obligations are long term and not inflation-linked.
For the purposes of the Capital Requirements Directive, DELFF Management is taking advantage of the transition arrangements whereby its Permanent Minimum Requirement (“PMR”) will be £60k in 2024 rising by £5k each year until it reaches £75k. Under such arrangements the capital requirement will be the higher of the PMR or the Fixed Overhead requirement ("FOR"). The FOR is also subject to reduced rates under the transition period. 25% of the normal calculation for 2024 rising to 45% in 2025, 70% in 2026 and 100% in 2027.
The company ensures to always have enough capital to support the higher of the two requirements.
DELFF MANAGEMENT LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Section 172 (1) statement
Section 414CZA(1) of the Companies Act 2006 requires the directors to explain how they considered the matters set out in section 172(1) (a) to (f) of the Companies Act 2006 (‘S172 (1)’) when performing their duty to promote the success of the company. When making decisions, each director ensures that they act in the way that would most likely promote the company’s success for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to the following matters:
(a) The likely consequences of any decision in the long term
The company continues to operate in the asset management business, principally in the leverage finance asset class. The investment team has extensive experience in the European debt markets through fund management, credit research and trading.
(b) The interests of the company’s employees
The directors recognise that the shared ethics and complementary expertise of the DELFF team are fundamental to our company success. Over time, we have built a strong team of international and highly qualified specialists that work with one ultimate goal, the benefit of our investors. Our portfolio managers have established track records and have up to 30 years of investment experience.
(c) The need to foster the company's business relationships with suppliers, customers and others
The directors seek to promote strong mutually beneficial relationships with suppliers, customers, the regulators, and authorities. Such general principles are critical in the delivery of the company’s strategy. Our strong and strategic partnership in the industry provides our clients with the dedicated service a boutique asset manager can offer, while giving them the security of large financial institutions for functions such as depositaries and Manco.
(d) The impact of the company’s operations on the community and the environment
The company is committed to understanding the interests of these stakeholder groups. The directors receive information on these topics on a periodic basis to provide relevant information for specific board decisions.
(e) The desirability of the company maintaining a reputation for high standards of business conduct
The directors strongly believe in consistency, transparency and integrity. The relationship with our clients is pristine and based on mutual understanding of investment standards and high-quality services. We provide our customers with the highest degree of openness and transparency at any level of the investment process from trade to report analysis.
(f) The need to act fairly as between members of the company
We are an independent asset manager majority owned by its founders. The directors aim to act fairly between the company’s members when delivering the company’s strategy and consults its minority members as appropriate.
Mr D P Loubignac
Ms C A Lauer-Loubignac
Director
Director
22 April 2024
22 April 2024
DELFF MANAGEMENT LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of financial investment advisors.
Results and dividends
The results for the year are set out on page 8.
The directors will recommend payment of a dividend for the year ended 31 December 2023.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr D P Loubignac
Ms C A Lauer-Loubignac
Financial instruments
Liquidity risk
The company manages its cash and borrowing requirements centrally. It limits its external creditors and maintains a strong cash position.
Foreign exchange risk
The company has extensive trade overseas so is susceptible to changes in foreign exchange rates. The company reduces this risk through use of bank accounts held in foreign currencies, specifically Euros.
Objectives and policies
The directors regularly review the risks relating to competition and the wider economy and their potential impact on the company. The company aims to maintain a strong cash position and limit the debtor and creditor balances outstanding at year end.
Auditor
The auditor, HW Fisher LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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 D P Loubignac
Ms C A Lauer-Loubignac
Director
Director
22 April 2024
DELFF MANAGEMENT LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
The directors acknowledge their responsibilities for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and 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.
DELFF MANAGEMENT LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DELFF MANAGEMENT LIMITED
- 5 -
Opinion
We have audited the financial statements of Delff Management Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the 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 31 December 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.
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's 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' report 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.
DELFF MANAGEMENT LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DELFF MANAGEMENT LIMITED
- 6 -
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 and the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of 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' responsibilities statement, 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's 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.
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:
As part of our planning process:
We enquired of management the systems and controls the company has in place, the areas of the financial statements that are most susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud.
We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, Companies Act 2006, health and safety, employment law and compliance with the regulations of the Financial Conduct Authority.
We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.
Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual.
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
Assessing the extent of compliance, or lack of, with the relevant laws and regulations.
Testing key revenue lines, in particular cut-off, for evidence of management bias.
Obtaining third-party confirmation of material bank balances.
Documenting and verifying all significant related party balances and transactions.
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 auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
DELFF MANAGEMENT LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DELFF MANAGEMENT LIMITED
- 7 -
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. 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.
Gilles Siow (Senior Statutory Auditor)
For and on behalf of HW Fisher LLP
Chartered Accountants
Statutory Auditor
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
23 April 2024
DELFF MANAGEMENT LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
3,348,869
1,992,015
Cost of sales
(1,324,689)
(819,340)
Gross profit
2,024,180
1,172,675
Administrative expenses
(1,358,227)
(1,265,455)
Other operating income
450
Operating profit/(loss)
4
665,953
(92,330)
Interest receivable and similar income
8
8,606
17,652
Profit/(loss) before taxation
674,559
(74,678)
Tax on profit/(loss)
9
(156,321)
(3,515)
Profit/(loss) for the financial year
518,238
(78,193)
Other comprehensive income
-
-
Total comprehensive income for the year
518,238
(78,193)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
DELFF MANAGEMENT LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
5,946
7,445
Investments
12
15,155
15,155
21,101
22,600
Current assets
Debtors
14
2,106,157
577,052
Cash at bank and in hand
79,080
299,997
2,185,237
877,049
Creditors: amounts falling due within one year
15
(1,587,793)
(723,342)
Net current assets
597,444
153,707
Total assets less current liabilities
618,545
176,307
Capital and reserves
Called up share capital
17
60,000
75,000
Share premium account
163,737
163,737
Capital redemption reserve
22,500
7,500
Profit and loss reserves
372,308
(69,930)
Total equity
618,545
176,307
The financial statements were approved by the board of directors and authorised for issue on 23 April 2024 and are signed on its behalf by:
Mr D P Loubignac
Director
Company Registration No. 04432678
DELFF MANAGEMENT LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Share premium account
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2022
75,000
163,737
7,500
303,263
549,500
Year ended 31 December 2022:
Loss and total comprehensive income for the year
-
-
-
(78,193)
(78,193)
Dividends
10
-
-
-
(295,000)
(295,000)
Balance at 31 December 2022
75,000
163,737
7,500
(69,930)
176,307
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
-
-
518,238
518,238
Redemption of shares
17
(15,000)
15,000
(76,000)
(76,000)
Balance at 31 December 2023
60,000
163,737
22,500
372,308
618,545
DELFF MANAGEMENT LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
22
(149,937)
535,053
Income taxes paid
(81,703)
Net cash (outflow)/inflow from operating activities
(149,937)
453,350
Investing activities
Purchase of tangible fixed assets
(3,586)
(6,308)
Proceeds on disposal of tangible fixed assets
1
Interest received
17,652
Dividends received
8,606
Net cash generated from investing activities
5,020
11,345
Financing activities
Redemption of shares
(76,000)
Dividends paid
(295,000)
Net cash used in financing activities
(76,000)
(295,000)
Net (decrease)/increase in cash and cash equivalents
(220,917)
169,695
Cash and cash equivalents at beginning of year
299,997
130,302
Cash and cash equivalents at end of year
79,080
299,997
DELFF MANAGEMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
Delff Management Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1 Knightsbridge Green, 5th Floor, Office 5.33, London, SW1X 7QA.
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 amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention.
The company has taken advantage of Section 402 of the Companies Act 2006 not to prepare consolidated accounts on the basis its subsidiaries can be excluded from the consolidation in accordance with Section 405(2) of the Act as their inclusion would not be material for the purpose of giving a true and fair view.
1.2
Going concern
In 2022, there had been a logical impact from the rapid change in environment related to the conflict in Ukraine, the return of inflation, and the rapid increase in interest rates. Although the Funds have limited to no exposure to any of these factors, they were impacted by the related market volatility, particularly in the first 6 months, leading to some Fund redemptions, truethereby leading to a drop in revenue, partly compensated by the development of new products and cost cutting measures implemented by management.
For 2023, the management’s expectations were that the company would benefit from the expected recovery of fund performance, the full positive impact of the 2022 cost cutting measures, and further measures to be implemented at the start of 2023. The year has exceeded these expectations.
For 2024, management expects the dynamics of 2023 to continue, with good fund performance and new product development leading to sustained core revenues. At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operation for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover arising from the provision of investment management services is recognised in the period in which the services are provided. Performance fees are recognised in the period in which they crystallise.
1.4
Tangible fixed assets
Tangible fixed assets 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, fittings and equipment
33% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
DELFF MANAGEMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.5
Fixed asset investments
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company . Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.6
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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).
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet 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 debtors 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 unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
DELFF MANAGEMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities
Basic financial liabilities 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 a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.8
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.10
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 fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
DELFF MANAGEMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.12
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 leases asset are consumed.
1.13
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Materiality of subsidiary companies for consolidation
The company conducts certain business activities through its subsidiaries based in France and Luxembourg for regulatory purposes. These subsidiaries operate as cost centres of Delff Management Limited and their expenses are wholly met by this company and recognised in these financial statements. In the opinion of the directors, consolidating the results and activities of those subsidiaries would not materially affect the financial statements of the company.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Fees
3,348,869
1,992,015
2023
2022
£
£
Other significant revenue
Interest income
-
17,652
Dividends received
8,606
-
2023
2022
£
£
Turnover analysed by geographical market
Europe
3,348,869
1,992,015
DELFF MANAGEMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
4
Operating profit/(loss)
2023
2022
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(14,944)
267
Depreciation of owned tangible fixed assets
5,085
6,019
Operating lease charges
33,328
64,967
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
15,092
11,863
For other services
Other assurance services
1,563
1,500
Other taxation services
1,340
1,500
2,903
3,000
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Administration and support
8
10
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
623,213
493,584
Social security costs
66,845
47,891
Pension costs
3,513
3,437
693,571
544,912
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
45,000
70,406
DELFF MANAGEMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
17,652
Other income from investments
Dividends received
8,606
Total income
8,606
17,652
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
156,321
Adjustments in respect of prior periods
3,515
Total current tax
156,321
3,515
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit/(loss) before taxation
674,559
(74,678)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
158,656
(14,189)
Tax effect of expenses that are not deductible in determining taxable profit
10,357
7,350
Adjustments in respect of prior years
3,515
Other non-reversing timing differences
3,491
Fixed asset differences
(17)
(359)
Movement in deferrred tax not recognised
(12,675)
3,707
Taxation charge for the year
156,321
3,515
10
Dividends
2023
2022
£
£
Final paid
295,000
DELFF MANAGEMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
11
Tangible fixed assets
Furniture, fittings and equipment
£
Cost
At 1 January 2023
48,657
Additions
3,586
At 31 December 2023
52,243
Depreciation and impairment
At 1 January 2023
41,212
Depreciation charged in the year
5,085
At 31 December 2023
46,297
Carrying amount
At 31 December 2023
5,946
At 31 December 2022
7,445
12
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
13
15,155
15,155
Movements in fixed asset investments
Shares in group undertakings
£
Cost or valuation
At 1 January 2023 & 31 December 2023
15,155
Carrying amount
At 31 December 2023
15,155
At 31 December 2022
15,155
DELFF MANAGEMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
13
Subsidiaries
Details of the company's subsidiaries at 31 December 2023 are as follows:
Name of undertaking
Registered
Nature of business
Class of
% Held
office
shares held
Direct
Indirect
DELFF Luxembourg SARL
20 rue de la Poste L-2346 Luxembourg
Holding company
Ordinary
100.00
0
DELFF France SARL
150 rue du Château à Boulogne-Billancourt 92100
Holding company
Ordinary
100.00
0
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,772,521
458,951
Other debtors
240,302
43,417
Prepayments and accrued income
93,334
74,684
2,106,157
577,052
15
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
533,935
243,000
Corporation tax
156,321
Other creditors
158,509
261,690
Accruals and deferred income
739,028
218,652
1,587,793
723,342
16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
3,513
3,437
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.
DELFF MANAGEMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
60,000
75,000
60,000
75,000
During the year, the company repurchased 15,000 Ordinary Shares of £1 each for £76,000.
18
Reserves
Called up share capital represents the nominal value of Ordinary £1 shares that have been issued. Share premium reserve includes any premiums received on issue of share capital. The capital redemption reserve records the nominal value of share repurchased by the company. Profit and loss account includes all current and prior period retained profits and losses.
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:
2023
2022
£
£
Within one year
12,389
16,479
The amount of non-cancellable operating lease payments recognised as an expense during the year was £33,328 (2022: £64,967).
20
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2023
2022
£
£
Aggregate compensation
78,856
75,313
DELFF MANAGEMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
20
Related party transactions
(Continued)
- 21 -
Summary of transactions with other related parties
Included in accruals at 31 December 2023 is £65,000 (2022: £130,000) relating to advisory fees owed to a company with common directors and shareholders. In the year the company has expenses of £260,000 (2022: £260,000) relating to these advisory fees.
The company has incurred expenditure of £107,472 in Cost of Sales, relating to payments ot a wholly owned subsidiary of the company.
Included in other creditors at 31 December 2023 is £105,874 (2022: £152,803) owed to the directors of the company.
During the year dividends amounting to £nil (2022: £162,250) were paid to directors of the company.
At the year end date, other debtors included an amount of £206,692 (2022: £nil), relating to a loan to a company which shares a common director. Interest on the loan is payable at 6% per annum.
21
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
299,997
(220,917)
79,080
22
Cash (absorbed by)/generated from operations
2023
2022
£
£
Profit/(loss) for the year after tax
518,238
(78,193)
Adjustments for:
Taxation charged
156,321
3,515
Investment income
(8,606)
(17,652)
Depreciation and impairment of tangible fixed assets
5,085
6,019
Movements in working capital:
(Increase)/decrease in debtors
(1,529,105)
721,513
Increase/(decrease) in creditors
708,130
(100,149)
Cash (absorbed by)/generated from operations
(149,937)
535,053
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