The members present their annual report and financial statements for the year ended 30 November 2024.
The principal activity of the limited liability partnership continued to be that of providing discretionary investment management and advisory services.
The results for the year and financial position of the LLP are as shown in the financial statements. The profit for the year before members' remuneration and profit shares was £662,313 (2023: £449,694).
The LLP manages two funds, JK Global Opportunities Fund and JK Japan Fund ("the Funds"), which continue to be authorised by the Central Bank of Ireland as Irish UCITS Funds, and segregated accounts.
The principal risks relate to the performance of the Fund and other client investment assets that the LLP manages as this is the key determinant of profitability. Fees generated are related to the assets under management which are affected by performance and subscriptions and redemptions.
The LLP is exposed to operational risks, including IT system failure, fraud and human error. The LLP considers it has minimised the above risks by way of: a robust IT disaster recovery and contingency plan; appropriate infrastructure; suitable internal controls and segregation of duties. Compliance with applicable laws and regulations is also vital, and the LLP utilises third party advisers to reduce the risk of non-compliance to an acceptably low level.
Other risks, such as price, interest rate, foreign exchange and credit and liquidity risk are considered to have minimal potential impact.
The business has ongoing investment management and advisory contracts which generate regular cash inflow. Fee income exceeded expenses in the year to 30 November 2024, and the LLP is operating currently at above break-even on its management fees. The LLP has no external financing and a sufficient liquid working capital base, and will continue to be able to meet its liabilities as they fall due. The business has undertaken an Internal Capital Adequacy and Risk Assessment which indicates that it is sufficiently well capitalised to continue to operate for the foreseeable future.
The members conclude that there are no material uncertainties that may cast significant doubt about the LLP's ability to continue as a going concern. Accordingly, the financial statements are prepared on the going concern basis.
Pillar 3 Disclosures
Certain public disclosures as required by the Financial Conduct Authority can be found on the firm's website at www.jkim.co.uk.
Members' capital is determined by the regulatory capital requirements of the Financial Conduct Authority, the regulatory requirements of the Central Bank of Ireland, and to meet any working capital needs of the LLP, and the limited liability partnership agreement relating to the LLP (the "Partnership Agreement").
No member shall have the right to withdraw or receive back any part of the amount standing to the credit of their capital contribution account. Capital will not be repaid to outgoing members if the LLP considers it to be imprudent to do so, or such payment would cause the LLP to breach its capital resources requirements of the Financial Conduct Authority.
In order to maintain Common Equity Tier One capital of £225,000 under Financial Conduct Authority requirements, any outgoing capital will be made good by existing or new partners.
Members may make drawings in anticipation of profit allocations. Profit allocations are determined by the designated members on a discretionary basis.
The designated members who held office during the year and up to the date of signature of the financial statements were as follows:
The LLP continues to concentrate on marketing and performance of the Funds, as well as developing and marketing other products. It is the Members’ intention to grow the business and increase profitability.
With regard to Brexit, the Funds continue to be marketed in the United Kingdom under the Temporary Permissions Regime.
The auditor, MGI Midgley Snelling LLP will be proposed for re-appointment by a resolution put to the members.
The members are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) requires the members to prepare financial statements for each financial year. Under that law the members have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. Under company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) the members 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 limited liability partnership at the end of the financial year and of its profit or loss for the period. In preparing these financial statements, the members are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the limited liability partnership will continue in business.
The members are responsible for keeping adequate accounting records that are sufficient to show and explain the limited liability partnership’s transactions and disclose with reasonable accuracy at any time its financial position and enable them to ensure that the financial statements comply with the Companies Act 2006 (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008). They are also responsible for safeguarding the assets of the limited liability partnership and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of JK Investment Management LLP (the 'limited liability partnership') for the year ended 30 November 2024 which comprise the statement of comprehensive income, the statement of financial position, the reconciliation of members' interests, 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 Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the members' 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 limited liability partnership’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 members with respect to going concern are described in the relevant sections of this report.
Other information
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
In planning and designing our audit tests, we identify and assess the risks of material misstatements within the financial statements, whether due to fraud or error. Our assessment of these risks includes consideration of the nature of the industry and sector, the control environment and the business performance along with the results of our enquiries of management, about their own identification and assessment of the risks of irregularities. We are also required to perform specific procedures to respond to the risk of management override.
As a result of this assessment, we considered the opportunities and incentives that may exist within the limited liability partnership for fraud and identified that the greatest area of risk was in relation to management override and completeness of income.
We have obtained an understanding of the legal and regulatory frameworks that the limited liability partnership operates in from discussions with the members and our knowledge of the limited liability partnership and its industry sector. We have focused on the provisions of those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act, Financial Conduct Authority and local tax legislation.
We performed the following audit procedures after consideration of the above risks which included the following:
enquiry of management, those charged with governance, around actual and potential litigation and claims;
enquiry of entity staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations;
review of sales data to ensure revenue is correctly stated in the accounts;
performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias;
reviewing minutes of meetings of those charged with governance; and
reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
The engagement partner has assessed that all engagement team members were made aware of the relevant laws and regulations and potential fraud risks and were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. The risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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.
Use of our report
This report is made solely to the limited liability partnership's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 as applied by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008. Our audit work has been undertaken so that we might state to the limited liability partnership'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 limited liability partnership and the limited liability partnership's members as a body, for our audit work, for this report, or for the opinions we have formed.
The statement of comprehensive income has been prepared on the basis that all operations are continuing.
There were no items of comprehensive income for the current or prior year other than the profit for the financial year.
The notes on pages 12 to 17 form part of these financial statements.
JK Investment Management LLP is a limited liability partnership incorporated in England and Wales. The registered office is Bury House, 3 Bury Street, Guildford, Surrey, GU2 4AW.
The limited liability partnership's principal activities are disclosed in the Members' Report.
These financial statements have been prepared in accordance with the Statement of Recommended Practice "Accounting by Limited Liability Partnerships" issued in January 2019, together with Financial Reporting Standard 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 pounds, which is the functional currency of the LLP. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
At the time of approving the financial statements, the members have a reasonable expectation that the LLP has has ongoing investment management and advisory contracts which generate regular cash inflow. Fee income exceeded expenses in the year to 30 November 2024, and the LLP is operating currently at above break-even on its management fees.
The LLP has no external financing and a sufficient liquid working capital base, and will continue to be able to meet its liabilities as they fall due. The business has undertaken an Internal Capital Adequacy and Risk Assessment which indicates that it is sufficiently well capitalised to continue to operate for the foreseeable future.
The members conclude that there are no material uncertainties that may cast significant doubt about the LLP's ability to continue as a going concern. Accordingly, the financial statements are prepared on the going concern basis.
The limited liability partnership has only basic financial instruments.
Financial instruments are recognised in the statement of financial position when the limited liability partnership becomes party to the contractual provisions of the instrument.
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.
Financial assets, comprise debtors and cash at bank balances. Debtors are initially measured at transaction price and thereafter at the amount of cash or other consideration expected to be received. Any impairment loss is recognised in the statement of comprehensive income.
Cash is deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within creditors.
Financial assets are assessed for indications of impairment at each reporting period end date.
Impairment loss is measured as the difference between an asset's carrying amount and the best estimate of its recoverable amount, which is an approximation of the amount that the LLP would receive for the asset if it were to be sold at the statement of financial position date.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the limited liability partnership 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 comprise trade creditors, accruals and deferred income. They are initially recognised at transaction price and thereafter at the amount of cash or other consideration to be paid.
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.
Financial liabilities are derecognised when the limited liability partnership’s obligations expire or are discharged or cancelled.
The taxation payable on the partnership profits is the personal liability of the individual members consequently neither partnership taxation nor related deferred taxation arising in respect of the partnership are accounted for in these financial statements.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting period end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting period end date. Gains and losses arising on translation are included in the statement of comprehensive income.
Members' profit/(loss) allocations and capital
Profit allocations are discretionary and are recognised when formally approved by the members. Members' drawings are repayable to the LLP until such time as profits that offset the drawings are formally allocated to the Members.
Allocations made to Members which are not considered discretionary are accrued as an expense in the profit and loss account.
No member shall have the right to withdraw or receive back any part of the amount standing to the credit of their capital contribution account. Capital will not be repaid to outgoing members if the LLP considers it to be imprudent to do so, or such payment would cause the LLP to breach capital resources requirements of the Financial Conduct Authority. Capital contributions are therefore classified as equity in accordance with the LLP SORP.
In the event the LLP incurs losses, such losses shall be allocated amongst the Members in the proportions in which they share profits of the LLP as determined by the Partnership Agreement.
Research payments
With effect from the year ended 30 November 2018 and in accordance with new regulatory requirements, the costs of research are borne by the LLP. They are recovered from the funds to which the LLP provides investment management services. The recovery from the funds is recorded as other income and the costs are included in administrative expenses. These amounts are equal and opposite. Any difference between amounts paid by the funds and costs incurred by the LLP are recorded within debtors and as deferred income on the statement of financial position.
In the application of the limited liability partnership’s accounting policies, the members 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 business has ongoing investment management and advisory contracts which generate regular cash inflow. Fee income exceeded expenses in the year to 30 November 2024, and the LLP is operating currently at above breakeven on its management fees. The LLP has no external financing and a sufficient liquid working capital base, and will continue to be able to meet its liabilities as they fall due. The business has undertaken an Internal Capital Adequacy and Risk Assessment process which indicates that it is sufficiently well capitalised to continue to operate for the foreseeable future. Accordingly, the financial statements are prepared on the going concern basis.
No other significant judgements were required in the process of applying the accounting policies.
There are no sources of estimation uncertainty that may have a significant effect on the amounts recognised in the financial statements.
Turnover represents fees receivable for investment management and investment advisory services provided during the year to two funds based in Ireland and to a UK based charity. Turnover is recognised on an accruals basis when the LLP obtains the right to consideration in exchange for its performance of services and is measured at the fair value of the consideration received or receivable, excluding rebates and VAT.
The auditor received remuneration in respect of non-audit services during the period of £9,360 (2023: £9,360).
The LLP does not have any employees, Administration services are provided to the LLP by JK Investment Management Services Limited for which a charge is made to the LLP.
Investment income includes the following:
In the event of a winding up the amounts included in "Loans and other debts due to members" will rank equally with unsecured creditors.
No restrictions or limitations exist on the ability of the members to reduce the amount of Members other interests.
The LLP has been charged for services totalling £785,709 (2023: £705,158) in the year by the member JK Investment Management Services Limited. At the year end, £139,968 was due to (2023: £25,721) JK Investment Management Services Limited.
Management and performance fees totalling £1,071,178 (2023: £870,816) have been earned from JK Funds PLC, a company based in Ireland in which the members F H Kirkpatrick and S M H Jones have a material interest. At the year end, £79,966 (2023: £86,920) was due from JK Funds PLC. These amounts are due for repayment within 30 days.