The directors present the strategic report for the year ended 31 March 2024.
The company is regulated by the Financial Conduct Authority to hold client funds and act as a matched principal agent.
The company’s main source of revenue is commission, based upon the volume of trades carried out by the company’s clients. During the course of the year the turnover increased, as compared to 2023, reflecting success of the business strategy.The company’s institutional product offering to regulated entities and professional clients has been predominantly responsible for driving income.The retail product saw a decline in account applications and consequent reduction in profit contribution. Both sectors, professional and retail, remain highly competitive in the marketplace.The company underwent a rebrand during the year, refreshing its logo and launching a new website.
As a service provider the directors consider that the key financial risk exposure faced by the company relate to counterparties credit risk and the need to maintain sufficient liquidity to satisfy regulatory capital requirements and working capital needs. The company does not take positions which expose it to material risk, nor does it have a material exposure to foreign exchange movement.
The company's financial risk management objectives are therefore to minimise the key financial risks through having clearly defining terms of business with counterparties and stringent market control over transactions with them and regular monitoring of cash flow and management accounts to ensure regulatory capital requirements are not breached and the company maintains adequate working capital.
The principal non-financial risk faced by the company relates to information technology failure. This is mitigated by having appropriate backup systems and procedures and a disaster recovery programme.
The directors determine the company's business strategy and risk appetite along with designing and implementing a risk management framework that recognises the risks that the business faces. They also determine how those risks may be mitigated and assess on an ongoing basis the arrangements to manage those risks.
The directors meet on a regular basis and discuss current projections for profitability and regulatory capital management, business planning and risk management. The Directors manage the company risks through a framework of policy and procedures having regard to relevant law, standards, principals and rules with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as and when required. The company follows the standardised approach to the market risk and the simplified standard approach to credit risk.
Key performance indicators are turnover £16,039,380 (2023: £2,324,881) and gross profit for the year £1,999,954 (2023: £1,115,189). At the year end the firm had net assets of £2,254,250 (2023: £2,004,980).
The company continues to look for opportunities both in the UK and overseas.The Company continues to market its key product to regulated institutional clients and is optimistic of success. The Company is also seeking to reinvigorate its retail product in China with the introduction of a new CRM, local website and region-specific payment gateways.
The directors of the company have acted in a way that they consider, in good faith, would most likely promote the success of the company for the benefit of its shareholders, employees and customers as a whole, and in doing so, the directors have considered (amongst other matters):
The Directors are keenly focused on Compliance, undergoing regular updates to ensure they act in the best interest of the business and ensuring to follow conduct rules. The Directors are in periodical dialogue with the shareholder to assess and align the company’s strategic direction and activities.
The Directors meet regularly and are collectively responsible for ensuring that the Company's operations are aligned to its strategy, regulatory compliance requirements and good governance practices, including how the Company will act fairly with all stakeholders.
The Directors and Senior Managers, who hold a key role, are held accountable and assume the following additional responsibilities:. ·
The Directors are responsible for the setting and implementation of the Risk Management Framework (RMF) that strives for a robust, consistent and disciplined management of risk with the aim of facilitating the achievement of the Company’s corporate vision and strategic objectives.
Take reasonable steps to ensure the business of the firm is controlled effectively. The Directors ensure an audit trail is available for key decisions to be taken and any decisions made are in the best interests of clients. Information is only stored for the appropriate length of time and technological system updates are given high priority to ensure accuracy and security of data is not compromised.
Take reasonable steps to ensure the business of the firm complies with the relevant requirements and standards of the regulatory system. The Directors constantly review and monitor key areas of the business and seek advice from internal and external consultants when necessary.
Take reasonable steps to ensure any delegation of responsibilities is an appropriate person and oversee the discharge of the delegated responsibility effectively. The Directors push for professional growth and development for all employees and encourage staff to think independently, without heavily relying on senior management where possible. The Directors are regularly updated on employee performance and ensure this is reflected in their remuneration.
The Directors always consider the views and interests of a wider set of stakeholders and address the requirements above as follows.
Long Term Considerations
The Directors understand that the future success of the business is built around long-term strategies, and potential consequences need to be recognised alongside any risks. Any risks are required to be managed effectively, with processes in place to handle immediate term and long-term implications, allowing the business to continue to operate.
Company Employees
The Directors recognise that the employees are the Company's greatest asset. We are therefore committed to investing in our employees' personal and professional development. We offer a selection of rewards, benefits and training to ensure our employees are recognised for their efforts whilst ensuring their health and wellbeing are maintained.
Business Relationships
Conducting business with integrity, respect and diligence is essential for all our stakeholders. The Directors ensure conduct rules are followed during daily business interactions, whilst complying with all relevant regulatory standards. We constantly monitor employee performance through meetings with managers to ensure a reliable and accurate service is provided to stakeholders.
Regulatory Relationships
The Company is authorised and regulated in the UK by the FCA, which supervises the Company through periodic and ad-hoc reporting requirements. This ensures the financial performance, position and capital adequacy of the Company is within the requirements set out by the FCA. Through dedicated Compliance the Directors ensure strong compliance with the regulatory environment.
The Company's capital adequacy position is managed and monitored in accordance with FCA's Investment Firm Prudential Regime (IFPR) from 1st January 2022. The Company has established processes and controls in place to monitor and manage its capital adequacy position in accordance with the FCA's Internal Capital and Risk Assessment (ICARA) process. This ensures the Company maintains a strong capital base to support the development of its business, it can continue to operate as a going concern and comply with relevant FCA rules and guidance.
Providers and Customers
Providers are key to ensuring the Company meets the high standard of conduct which is expected by stakeholders. Active supplier management is maintained and reviewed to aid in the best services being delivered. The Directors review all invoices processed for payment and ensure they are paid within the stipulated credit terms. Extensive due diligence checks are carried out on potential customers and once onboarded, the Company works closely with customers to provide the highest level of service. The Directors remain dedicated to forging and preserving good relationships with customers, as this is crucial to the Company's success.
Community and Environment
The Company understands that small changes can make a big difference to our immediate
environment. Therefore, we have implemented environmental practices to reduce our overall carbon
footprint such as recycling. The company is committed to ensuring there is transparency in our own
business and in our approach to tackling modern slavery throughout our business under the Modern
Slavery Act 2015. We expect the same high standards from all our contractors, suppliers and other
business partners.
Shareholders
Regular communication is maintained with the shareholder through direct engagement by the
Directors in the form of meetings and emails. The shareholder is involved in all matters of strategic
importance, including financial performance, risks and opportunities.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £600,000. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company's current policy concerning the payment of trade creditors is to:
- settle the terms of payment with suppliers when agreeing the terms of each transaction;
- ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
- pay in accordance with the company's contractual and other legal obligations.
Price risk is defined as the risk that exposures to excessive price fluctuations in positions held by the company would cause a material loss to arise. All client positions are simultaneously matched with liquidity providers and hence this risk is mitigated.
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquidity resources to meet the operating needs of the business.
The company’s principal foreign currency exposures arise from trading with overseas companies. Company policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
The company's directors have made it clear that it is a high priority to satisfy FCA rules and meet other regulatory requirements.
The company is currently undertaking research and development to improve the performance of its existing services. The aggregate amount of research and development expenditure recognised as an expense during the year was £21,385 (2023: £19,568).
There have been no significant events affecting the company since the year end.
In accordance with the company's articles, a resolution proposing that Fisher, Sassoon & Marks be reappointed as auditor of the company will be put at a General Meeting.
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
Basis for opinion
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
Other information
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.
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.
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.
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.
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.
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the financial services sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Financial Conduct Authority (FCA), Companies Act 2006, taxation legislation, anti-money-laundering and employment legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
understanding the design of the company’s remuneration policies.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC, relevant regulators including the FCA and reviewing the company’s compliance monitoring procedures and findings.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or through collusion.
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 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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Black Pearl Securities Limited is a private company limited by shares incorporated in England and Wales. The registered office is 28 King Street, London, England, EC2V 8EH.
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 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.
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.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
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.
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.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Client money
The Company holds money on behalf of clients in accordance with the client money rules of its regulator. Client monies held in segregated bank accounts in accordance with regulations and the corresponding liabilities to these clients are not recognised in the Balance Sheet. At 31 March 2024, amounts held by the Company on behalf of clients in accordance with the Client Assets Rules of the Financial Conduct Authority amounted to £2,181,447 (2023: £1,651,589).
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The directors do not consider there to be any critical judgements or key sources of estimation uncertainty involved in the preparation of the company's financial statements.
An analysis of the company's turnover is as follows:
The Company's income is derived from trading in CFDs as principal which, for the purposes of segmental analysis, is considered by the directors to be a single global market.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 3).
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Included within the trade creditors was the sum of £275,949 (2023: £738,330 owed by) owed to liquidity providers.
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.
There are no other matters to report.
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:
The following amounts were outstanding at the reporting end date:
At the year end the company was owed £Nil (2023: £460,329) by London Prime Ltd. The entity acts as one of the liquidity and technology provider and is owned by V Gesperik.
At the year end the company owed £322,022 (2023: £Nil) to Gulf Brokers Ltd. The entity acts as one of the liquidity provider and is owned by V Gesperik.
At the year end the company owed £206,207 (2023: £Nil) to Le Morne Capital Ltd. The entity acts as one of the liquidity provider and technology provider and is owned by V Gesperik.