illustrative frs 102 financial statements 2015

Investment fundsIllustrative FRS 102 fi nancial statements31 December 2015

www.moorestephens.co.uk PREC ISE . PROVEN . PERFORMANCE .

Illustrative financial statements

i

Introduction

The City of London spearheads the UK’s access to worldwide markets and the availability of

associated, world-class, financial services, which makes the UK an attractive centre for

investments and investment funds. As with all jurisdictions though, there are challenges

associated with adopting the local financial reporting requirements and ensuring that the

financial information presented is both compliant and engaging.

This is currently an even greater challenge in the UK as a result of the switch, as of

1 January 2015 for all but small entities, to Financial Reporting Standard 102 (FRS 102)

which replaces the previous requirements of ‘old’ UK GAAP.

As such, we have developed the following illustrative financial statements for UK investment

funds preparing their financial statements under FRS 102 in order to complement our

previous offerings covering IFRS, IFRS for SMEs and US GAAP.

In order to ensure that these illustrative financial statements remain fully compliant and

up-to-date, we will review and revise them on an annual basis to incorporate

changes made to UK GAAP (FRS 102) by the Financial Reporting Council. As part of our

review we will also consider any developments in best practice, evolving our accounts

presentation accordingly.

Having advised international investment funds for many years, our professional teams at

Moore Stephens understand not only the content required by the differing accounting

regimes, but also how best to present it. In the future we intend to combine all four sets of

illustrative financial statements in a single document, providing a handy point of reference

for anyone preparing investment fund accounts in line with IFRS, IFRS for SMEs, US or

UK GAAP.

If you would like to discuss any aspects of our approach in presenting these illustrative

accounts, please get in touch. We would be delighted to receive any feedback you have

to offer.

FRS 102 Investment Funds

ii

Europe

London

Geoff Woodhouse – [email protected]

Lorraine Bay – [email protected]

Tim West – [email protected]

Monaco

Andrew Gallagher – [email protected]

Patricia Osborne – [email protected]

Geneva

Jacques Grossen – [email protected]

Dublin

Andy Quinn – [email protected]

Cormac Reilly – [email protected]

Jersey

Phillip Callow – Partner [email protected]

Nicholas Solt – [email protected]

Luxembourg

Anna Skornik – [email protected]

Holger Stölben – [email protected]

Our team

Americas

Grand Cayman

Karl Jordan – [email protected]

New York

Barry Goodman – [email protected]

San Francisco

Matt Armanino – [email protected]

Chicago

Timothy J. Quinn – [email protected]

Far East

China

Liang Chun – [email protected]

Zhou Long – [email protected]

Singapore

Mei Leng Lao – [email protected]

Mick Aw – [email protected]

Middle East

Dubai

John Adcock – [email protected]

Kuwait

Idris Atcha – [email protected]

Muscat

Prasad Inna – [email protected]


iii

Contents

MS FRS 102 Investment Fund Ltd ....................................................................... 1Strategic report ..................................................................................................................................................................................2

Directors’ report .................................................................................................................................................................................3

Statement of comprehensive income .................................................................................................................................................6

Statement of financial position ...........................................................................................................................................................7

Statement of changes in equity ...........................................................................................................................................................8

Statement of cash flows .....................................................................................................................................................................9

Notes to the financial statements ......................................................................................................................................................10

1. General information ................................................................................................................................................................10

2. Basis of preparation ................................................................................................................................................................10

3. Summary of significant accounting policies .............................................................................................................................10

3.1 Foreign currency translation ............................................................................................................................................10

3.2 Revenue recognition .......................................................................................................................................................10

3.3 Financial assets and financial liabilities at fair value through profit or loss ........................................................................11

4. Critical accounting estimates and judgments ...........................................................................................................................11

5. Financial risk management .....................................................................................................................................................12

5.1 Fair value ........................................................................................................................................................................12

5.2 Nature and extent of risks arising from financial instruments ...........................................................................................13

5.3 Market risk .....................................................................................................................................................................14

5.4 Credit risk .......................................................................................................................................................................16

5.5 Liquidity risk ....................................................................................................................................................................17

5.6 Capital risk management ................................................................................................................................................18

6. Revenue ..................................................................................................................................................................................19

7. Auditors’ remuneration ...........................................................................................................................................................19

8. Taxation ..................................................................................................................................................................................19

9. Investments ............................................................................................................................................................................20

9.1 Financial assets at fair value through profit or loss ...........................................................................................................20

9.2 Financial liabilities at fair value through profit or loss .......................................................................................................20

10. Trade Receivables ..................................................................................................................................................................21

11. Accruals and other payables ..................................................................................................................................................21

12. Redeemable shares ...............................................................................................................................................................21

12.1 Issued and fully paid up redeemable shares ..................................................................................................................21

13. Related parties ......................................................................................................................................................................21

13.1 Investment manager .....................................................................................................................................................22

13.2 Administrative Agent ....................................................................................................................................................22

13.3 Custodian .....................................................................................................................................................................22

13.4 Directors .......................................................................................................................................................................22

14. Events after the end of the reporting period ..........................................................................................................................22

15. Ultimate controlling party .....................................................................................................................................................22

16. Approval of financial statements ...........................................................................................................................................22

Appendix I – Transition to FRS 102 ....................................................................................................................................................23

About Moore Stephens .................................................................................... 27

FRS 102 Investment Funds

iv

Contents (continued)


1

MS FRS 102 Investment Fund Ltd

Model FRS 102 Investment Fund Financial Statements31 December 2015

FRS 102 Investment Funds Financial statements for the year end 31 December 2015

2 Strategic report

Reference:SI2013/1970CA06s414C

Strategic report1

(Registered number: #######))

CA06s414C(2)(a)

CA06s414C(2)(b)

CA06s414C(3)

CA06s414C(4)

CA06s414C(12)

1. Business review2

A fair review of the company’s business.

A description of the principal risks and uncertainties facing the company.

The review must include a balanced and comprehensive analysis, consistent with the size and complexity of the

business, of:

(a) the development and performance of the company’s business during the financial year; and

(b) the position of the company at the end of that year.

To the extent necessary for an understanding of the development, performance or position of the company’s

business:

(a) analysis using financial key performance indicators; and

(b) where appropriate, analysis using other key performance indicators, including information relating to

environmental matter and employee matters

Where appropriate, the review must include references to, and explanations of, amounts included in the

company’s annual accounts.

CA06s414D(1)2. Approval of the strategic report The strategic report must be approved by the board of directors and signed on behalf of the board by a director

or the secretary (if any) of the company.

1 The strategic and directors’ reports have not been prepared specifically for MS FRS 102 Investment Fund Limited; instead an outline of the disclosures required by the company has been provided.

2 Although it is no longer a requirement to disclose the principal activities, it would be unclear if the strategic report did not explain what these activities were.


3Directors’ report

Reference: Directors’ report(Registered number: #######))

CA06s416(1)(a)

SI 2008/410

Sch. 7.7.1(b)

SI 2008/410

Sch. 7.7.1(a)

CA06s416(3)

SI 2008/410

Sch. 7.7.1(c)

SI 2008/410

Sch. 7.6

1. General information – directorsThe names of the persons who, at any time during the financial year, were directors of the company.

2. General information – activitiesAn indication of likely future developments in the business of the company.

3. Events since the end of the financial yearParticulars of any important events affecting the company which have occurred since the end of the financial

year.

4. DividendsThe amount (if any) that the directors recommend should be paid by way of dividend.

5. Research and developmentAn indication of the activities of the company in the field of research and development.

6. Financial instrumentsUnless not material for the assessment of the assets, liabilities, financial position and profit or loss of the

company, an indication of:

(a) the financial risk management objectives and policies of the company;

(b) the policy for each major type of forecasted transaction for which hedge accounting is used;

(c) the exposure of the company to:

(i) price risk;

(ii) credit risk;

(iii) liquidity risk;

(iv) cash flow risk.

SI 2008/4100

Sch. 7.3

SI 2008/410

Sch. 7.3

SI 2008/410

Sch. 7.3

SI 2008/410

Sch. 7.4

SI 2008/410

Sch. 7.7.1(d)

7. Political donations and expenditureThe name of each EU political party, other EU political organisation or EU independent election candidate to

whom any donation has been made.

The amounts given to each EU political party, other EU political organisation or EU independent election

candidate to whom any donation has been made.

The amount of any other EU political expenditure incurred by the company in the year.

None of the disclosures above is required where the total of all political donations and expenditure in the EU is

£2,000 or less.

A statement of the amount of contributions made by the company in the year to non-EU political parties.

8. BranchesAn indication of the existence of branches of the company outside the United Kingdom.


4 Director’s report

Reference:

SI 2008/410

Sch. 7.9

9. Acquisition of own shares3 Where shares in the company are purchased or acquired by the company, or on its behalf, or are subject to a lien

or charge by the company, then:

(a) the number of shares purchased;

(b) the nominal value of the shares purchased;

(c) the consideration paid by the company;

(d) the reasons for the purchase;

(e) the number of shares otherwise acquired or charged by the company;

(f) the nominal value of shares otherwise acquired or charged by the company;

(g) the maximum number of shares held or charged by or for the company during the financial year;

(h) the maximum nominal value of shares held or charged by or for the company during the financial year;

(i) the number of shares previously purchased, otherwise acquired or charged by the company that have been

disposed of or cancelled by the company during the year;

(j) the nominal value of shares previously purchased, otherwise acquired or charged by the company that have

been disposed of or cancelled by the company during the year;

(k) where shares previously purchased, otherwise acquired or charged by the company have been disposed of

by or on behalf of the company during the year for money or money’s worth, then the amount or value of

the consideration in each case;

(l) in respect of each category above, the percentage of the called up share capital which those share

represent;

(m) where shares have been charged, the amount of the charge.

SI 2008/410

Sch. 7.10

10. Disabled personsThe following disclosures apply only where the average number of persons employed by the company (and

working wholly or mainly in the United Kingdom) in each week during the financial year exceeded 250.

The policy that has been applied in the year for giving full and fair consideration to applications for employment

made by disabled persons, having regard to their particular aptitudes and abilities.

The policy that has been applied in the year for continuing the employment of, and arranging appropriate

training for, employees who have become disabled during their period of employment.

The policy that has been applied in the year otherwise for the training, career development and promotion of

disabled persons.

SI 2008/410

Sch. 7.11

11. Employee involvementThe following disclosures apply only where the average number of persons employed by the company (and

working wholly or mainly in the United Kingdom) in each week during the financial year exceeded 250.

A statement describing the actions that have been taken during the financial year to introduce, maintain or

develop arrangements aimed at:

(a) providing employees systematically with information on matters of concern to them as employees;

(b) consulting employees or their representatives on a regular basis so that the views of employees can be

taken into account in making decisions which are likely to affect their interests;

3 The disclosures in relation to the acquisition of the company’s own shares are required only for public companies.


5Directors’ report

Reference: (c) encouraging the involvement of employees in the company’s performance through an employees’ share

scheme or by some other means;

(d) achieving a common awareness on the part of all employees of the financial and economic factors affecting

the performance of the company.

CA06s418(2)

CA06s419(1)

12. Statement as to disclosure to auditorsA statement to the effect that, in the case of each of the persons who are directors at the time the report is

approved:

(a) so far as the director is aware, there is no relevant audit information of which the company’s auditor is

unaware;

(b) he has taken all the steps that he ought to have taken as a director in order to make himself aware of any

relevant audit information and to establish that the company’s auditor is aware of that information.

13. Statement of directors’ responsibilitiesA description of the responsibilities of those charged with governance (the directors) for the financial

statements.

14. Approval of the directors’ reportThe directors’ report must be approved by the board of directors and signed on behalf of the board by a director

or the secretary (if any) of the company.


6 Statement of comprehensive income

Reference:3.23(a-e)3.17(b)(i)3.195.2(a)SI 2008/410 Sch.1

Statement of comprehensive income4,5 (Stated in US Dollars, unless otherwise indicated)

Note 2015 2014

5.5(a)5.9

Revenue 6

11.48(a)23.30(b)(iii)

Interest income 3.2 24,116,758 16,282,936

11.48(a)23.30(b)(v)

Dividend income 3.2 3,568,529 5,972,401

30.25(a)23.30(b)(viii)

Net foreign currency gain/(loss)6 97,367 223,171

11.48(a)12.823.30(b)(viii)

Net gain/(loss) from financial assets and liabilities at fair value through profit or loss

41,042,674 21,369,001

Total net income/(loss) 68,825,328 43,847,509

5.11(a) Expenses

Management fees (6,712,779) (3,432,865)

Custodian fees (134,256) (68,657)

Administration fees (895,037) (457,715)

Directors’ fees (30,635) (25,058)

Performance fees (8,325,686) (5,613,990)

Legal and professional fees (256,662) (104,061)

Other expenses (77,818) (77,648)

Total operating expenses (16,432,873) (9,779,994)

Profit or loss before tax 52,392,455 34,067,515

29.19 Taxation 8 (5,099,792) (833,077)

3.19 Profit or loss 47,292,663 33,234,438

4 FRS 102 (3.17(b); 5.2) gives a choice of presenting all items of income and expense recognised in a period either (1) in a single statement of comprehensive income, or (2) in two statements comprising (a) a separate income statement, which displays components of profit or loss, and (b) a statement of comprehensive income, which begins with profit or loss and displays components of other comprehensive income. MS FRS 102 Investment Fund Ltd. has elected to use the single statement approach.

5 The statement of comprehensive income format adopted in these financial statements is Format 1 per SI2008/410 Schedule 1. Any of the formats presented in schedules 1, 2 or 3 of the Statutory Instrument would be appropriate for FRS 102 financial statements provided that they are suitable for the business, however schedules 2 and 3 are unlikely to be relevant for investment funds.

6 The net foreign currency gains and losses presented do not include those arising on financial instruments measured at fair value through profit and loss in accordance with Section 30.25(a).


7Statement of financial position

Reference:3.17(a)3.23(a-e)4.2(a)SI 2008/410 Sch. 1

Statement of financial position7

(Stated in US Dollars, unless otherwise indicated)

Note 2015 2014

Assets

Current assets

11.41(a) Investments8 9 1,032,844,225 520,694,332

Trade receivables 10 72,460,629 85,581,244

Cash and cash equivalents 23,585,288 133,642,010

Total assets 1,128,890,142 739,917,586

Liabilities and equity

Current liabilities

Financial liabilities 9 528,463,437 425,587,845

Due to brokers 8,660,169 5,256,368

Accruals and other payables 11 4,642,271 1,160,367

Total liabilities 541,765,877 432,004,580

Net assets/(liabilities) 587,124,265 307,913,006

Capital and reserves

22.4 Share capital9 12 454,544,794 219,626,198

4.12(b) Profit and loss account 132,579,471 88,286,808

Total capital and reserves 587,124,265 307,913,006

7 The statement of comprehensive income format adopted in these financial statements is Format 1 per SI2008/410 Schedule 1. Any of the formats presented in schedules 1, 2 or 3 of the Statutory Instrument would be appropriate for FRS 102 financial statements provided that they are suitable for the business, however schedules 2 and 3 are unlikely to be relevant for investment funds.

8 Section 11.2 of FRS 102 allows entities a choice between applying the provisions of Sections 11 and 12 of FRS 102 in full, or applying the measurement provisions of IAS 39 and the disclosure requirements of Sections 11 and 12. In these financial statements the measurement criteria of IAS 39 have been applied on the basis that the Fund, for management purposes, will be regularly valued. Therefore, the classification of all financial instruments at fair value through profit or loss per IAS39.9(b)(ii) will be both more informative to the users and better aligned with the information available to management.

9 In accordance with section 22.4 of the FRS 102 redeemable shares, or units, where there is no subordinate class of shares will be classified as equity instruments as they represent the residual interest in the entity. Conversely, any subordinate shares, for instance management shares, would result in all redeemable shares being classified as debt.


8 Statement of changes in equity

Reference:3.17(c)3.23(a-e)6.3

Statement of changes in equity(Stated in US Dollars, unless otherwise indicated)

6.3Share capital

Profit and loss account

Total

6.3(c) As at 1 January 2014 94,750,000 55,052,370 149,802,370

6.3(c)(iii) Proceeds from redeemable shares issued 149,663,840 – 149,663,840

6.3(c)(iii) Redemption of redeemable shares (24,787,642) – (24,787,642)

6.3(a) Total comprehensive income – 33,234,438 33,234,438

6.3(c)(iii) Dividends – – –

6.3(c) As at 31 December 2014 / 1 January 2015 219,626,198 88,286,808 307,913,006

6.3(c)(iii) Proceeds from redeemable shares issued 282,594,433 – 282,594,433

6.3(c)(iii) Redemption of redeemable shares (47,675,837) – (47,675,837)

6.3(a) Total comprehensive income – 47,292,663 47,292,663

6.3(c)(iii) Dividends – (3,000,000) (3,000,000)

6.3(c) As at 31 December 2015 454,544,794 132,579,471 587,124,265


9Statement of cash flows

Reference:3.17(d)3.23(a-e)7.3

Statement of cash flows10,11,12 (Stated in US Dollars, unless otherwise indicated)

Note 2015 2014

7.4 Cash flows from operating activities

7.4(f) Purchase of financial assets and settlement of financial liabilities (512,149,893) (136,411,304)

7.4(f) Proceeds from sale of financial assets 136,598,068 109,067,510

7.4(f) Purchase and settlement of derivative financial instruments 19,830,008 22,658,943

7.4(f) Dividends received 2,736,059 4,830,698

7.4(f) Interest received 28,986,349 17,306,891

7.4(c) Operating expenses paid (12,950,969) (7,893,641)

Taxation paid (5,077,082) (798,125)

Net cash flow from operating activities (342,027,460) 8,760,972

7.6 Cash flows from financing activities

7.147.16

Distributions paid to holders of redeemable shares (3,000,000) –

7.6(a) Proceeds from issue of redeemable shares 282,594,433 149,663,840

7.6(b) Redemptions of redeemable shares (47,675,837) (24,787,642)

Net cash flow from financing activities 231,918,596 124,876,198

Net increase/(decrease) in cash and cash equivalents (110,108,864) 133,637,170

Cash and cash equivalents at 1 January 2015 133,642,010 6,636

Exchange gains/(losses) on cash and cash equivalents 52,142 (1,796)

Cash and cash equivalents at 31 December 2015 23,585,288 133,642,010

10 The statement of cash flows presented uses the direct method due to the nature of the operations. Many entities however used the indirect method which is also acceptable under Section 7.7(a) of FRS 102.

11 The statement of cash flows presented does not include the third standard heading, ‘Investing Activities’ on the basis that the investing carried out by the Fund forms part of its operations.

12 As financial institutions, under the definition given by FRS 102, investment funds may take advantage of paragraph 34.33 of FRS 102 which permits cash receipts and payments arising on the placement and withdrawal of deposits to be presented on a net basis provided that the deposits either had a fixed maturity date or were with other financial institutions.


10 Notes to the financial statements

Reference:3.17(e)3.23(a-e)8.2

Notes to the financial statements(Stated in US Dollars, unless otherwise indicated)

3.24(a)

3.24(b)

1. General informationMS FRS 102 Investment Fund Ltd is an open ended investment company which is incorporated, as a limited

liability company, and domiciled in the United Kingdom. The address of the legal representative and registered

office is 150 Financial Road, London.

The Company’s objective is to generate long-term absolute growth through diversified investment in long and

short positions in North American and European emerging market equities, as well as derivative instruments and

both company and sovereign debt.

8.2(a)

3.3

8.4(a)

SI 2008/410

Sch. 1.45

8.5(a)

2. Basis of preparationThese financial statements have been prepared in accordance with Financial Reporting Standard 102 as issued by

the Financial Reporting Council.

The financial statements have been prepared on the historical cost basis with the exception of financial instruments

at fair value through profit or loss which have been measured at fair value.

8.2(a)

8.4(b)

8.5(b)

30.2

3. Summary of significant accounting policies

3.1 Foreign currency translationThe Company has determined that the US$ is its functional currency, as this is the currency of the primary

economic environment in which the Company predominantly operates.

Transactions in currencies other than US$ are recorded at the rate of exchange prevailing on the date of the

transaction.

At each reporting date, monetary assets and liabilities denominated in currencies other than US$ are retranslated

at the rate of exchange prevailing at the reporting date. Non-monetary assets and liabilities carried at fair value

that are denominated in currencies other than US$ are also translated at the rate of exchange prevailing at the

reporting date.

Gains and losses arising on translation are included in profit or loss and are reported on a net basis.

8.5(b)

23.30(a)

3.2 Revenue recognition

3.2.1 Interest income and expense

Interest income and expense, including interest income from non-derivative financial assets at fair value through

profit or loss, are recognised in profit or loss, using the effective interest method.

3.2.2 Dividend income and expense

Dividend income is recognised in profit or loss on the date at which the right to receive payment is established.

Dividends payable to holders of redeemable shares are recognised as a liability and in the profit and loss account

when they have been authorised.


11Notes to the financial statements

Reference:

8.5(b)

3.3 Financial assets and financial liabilities at fair value through profit or loss3.3.1 Classification

All the investments in debt, equity and derivatives held by the Company are classified as financial assets or

liabilities at fair value through profit or loss.

8.5(a)

11.40

3.3.2 Recognition, derecognition and measurement

Regular purchases and sales of financial instruments are recognised on the trade date, being the date on which

the Company commits itself to the purchase or sale. Financial instruments at fair value through profit or loss are

initially recognised at fair value, when the Company becomes party to the contractual provisions of the

instrument, with their associated transaction costs being charged immediately, when incurred, to profit or loss.

Subsequent to the initial recognition, financial assets and liabilities at fair value through profit and loss are

measured at fair value with the resultant gains and losses being taken to profit or loss.

Financial assets are derecognised when the contractual rights to the cash flows from the asset expire, or when

the Company has transferred substantially all the risks and rewards of ownership.

11.43

SI 2008/410

Sch.1.32(3)

3.3.3 Fair value

The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date.

The fair value of assets and liabilities traded in an active market is based on quoted market prices at the close of

trading on the reporting date. For quoted financial assets the valuation is based on the closing bid price; for

quoted liabilities the closing asking price is applied.

Where financial instruments are not traded in an active market, the fair value is determined using valuation

techniques. The valuation techniques used are dependent on the level of data, the circumstances and the

availability of observable inputs for each such financial instrument but may include comparable recent arm’s

length transactions, discounted cash flow analysis and option pricing models.

3.3.4 Net gain or loss from financial assets and liabilities at fair value through profit or loss

Net gains or losses from financial instruments at fair value through profit or loss includes all realised and

unrealised fair value changes but does not include interest and dividend income.

8.6

8.7

4. Critical accounting estimates and judgmentsIn preparing the financial statements, the investment managers have exercised judgement over the inputs used

in the determination of fair value of equities not quoted in an active market.

The valuation of these equity securities inevitably involves estimation uncertainty as there is no active market to

determine the fair value of the funds or their underlying investments.

The availability of valuation techniques and observable inputs can vary from security to security and is affected

by a wide variety of factors including, the type of security, whether the security is new and not yet established in

the marketplace, and other characteristics particular to the transaction.



Reference:

11.27

5. Financial risk management 5.1 Fair valueThe following table provides an analysis of the position of assets and liabilities, classified at fair value through

profit or loss following their initial recognition, within the fair value hierarchy.

The fair value hierarchy13 groups assets and liabilities measured at fair value according to the extent to which the

inputs used to determine the fair values are observable:

• Level 1: Inputs derived from quoted prices (unadjusted) in active markets, that the entity can access at the

measurement date, for identical assets or liabilities;

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,

either directly (i.e. prices) or indirectly (i.e. derived from prices);

• Level 3: Inputs which are not observable from market data and which are derived from valuation techniques.

The fair value hierarchy level is determined based on the lowest level input that is significant to the valuation.14

34.20

34.22

5.1.1 Classification of fair value assets and liabilities

2015 Level 1 Level 2 Level 3 Total

Assets

• Equity securities

– Eurozone

- Transport 124,123,552 – – 124,123,552

- Energy 95,193,019 – – 95,193,019

- Telecoms 62,061,776 – – 62,061,776

– United States

- Transport 51,268,424 – – 51,268,424

- Energy 262,621,213 – 8,472,019 271,093,232

- Healthcare 115,435,206 – 5,648,012 121,083,218

- Financial 74,520,120 – – 74,520,120

• Derivatives

– Traded options 25,698,458 – – 25,698,458

• Debt securities

– Eurozone sovereign 27,645,262 49,420,112 – 77,065,374

– Treasury bills – 130,737,052 – 130,737,052

Total assets at fair value through profit or loss

838,567,030 180,157,164 14,120,031 1,032,844,225

13 Under FRS 102 11.27 the fair value hierarchy is not as described above, is not in line with that included within IFRS and applies specifically to the valuation of non-puttable ordinary shares and non-convertible preference shares. However, in November 2015 Financial Reporting Exposure Draft 62 was issued for comments (the period for which closed on 31 January 2016) with the intention of aligning the FRS 102 hierarchy with IFRS. This amendment was ultimately made on 8 March 2016 and will be mandatory from 1 January 2017 with early adoption permitted. These financial statements have taken advantage of the permissible early adoption, however, you should consult with your audit engagement team before completing you draft financial statements.

14 In addition to classification within the fair value hierarchy section 34.20 of FRS 102 requires the assets and liabilities to be classified on the basis of their characteristics. What constitutes a ‘characteristic’ is not defined by FRS 102, however it seems likely that the intention was for the disclosures to be in line with those required under IFRS. Accordingly ‘characteristics’ have been taken to be, for the purposes of these financial statements, those things that market participants would take in to account when pricing the asset, including the condition and location of the asset and any restrictions on the use or sale of the asset.



Reference: 2015 Level 1 Level 2 Level 3 Total

Liabilities

• Equity securities sold short

– United States

- Energy 169,337,640 – – 169,337,640

- Transport 112,891,760 – – 112,891,760

• Other derivatives

– Traded options 246,234,037 – – 246,234,037

Total liabilities at fair value through profit or loss

528,463,437 – – 528,463,437


Assets

• Equity securities

– United States

- Energy 359,224,416 – 14,783,554 374,007,970

- Financial 14,794,488 - 14,794,488

• Derivatives

– Traded options 61,598,139 – – 61,598,139

• Debt securities

– Eurozone sovereign 9,381,871 33,262,995 – 42,644,866

– Treasury bills 8,435,248 19,213,621 - 27,648,869

Total assets at fair value through profit or loss

453,434,162 52,476,616 14,783,554 520,694,332


Liabilities

• Equity securities sold short

– United States

- Energy – 347,765,497 – 347,765,497

• Other derivatives

– Traded options 77,822,348 – – 77,822,348

Total liabilities at fair value through profit or loss

77,822,348 347,765,497 – 425,587,845

34.23 5.2 Nature and extent of risks arising from financial instrumentsThe Company has exposure to the following risks from its use of financial instruments:

• Market risk

– price risk

– currency risk

– interest rate risk

• Liquidity risk

• Credit risk



Reference: The board of directors has overall responsibility for the establishment and oversight of the Company’s risk

management framework. The board has established a finance committee which is responsible for developing

and monitoring the Company’s risk management strategy and policies. The committee reports regularly to the

board of directors on its activities. There have been no changes to the Company’s exposures to risk or the

methods used to measure and manage these risks during the year.

The Company’s audit committee overseas how management monitors compliance with the Company’s risk

management policies and procedures and reviews the adequacy of the risk management framework regarding

the risks faced by the Company.

The Company’s financial investments which are measured at fair value consist mainly of long equity, corporate

bonds, derivatives and bank deposits. The Company holds derivative instruments for the purposes of

speculation.

34.29 5.3 Market risk5.3.1 Price risk

The Company invests in financial instruments, taking positions on listed and unlisted investments, in order to

take advantage of movements in the equity and fixed income markets. The Company may also purchase traded

options to buy or sell shares.

All securities investments present a risk of loss of capital. The investment managers moderate this risk through

diversification of the investment portfolio. Except for derivative contracts, the maximum risk resulting from

financial instruments is determined by the fair value of the financial instruments. Possible losses from derivatives

contracts can be greater.

It is the Company’s investment policy to limit investment in any given industry or debt sector to 25% of the net

assets attributable to redeemable shareholders and to limit the investment in any individual security to 3% of

these net assets

The Company’s overall market positions are monitored on a daily basis by the investment managers.

At 31 December 2015 had equity prices increased by 10%, with all other variables held constant, there would

have been an increase in the net assets attributable to the redeemable shareholders of US$10,047,278 (2014:

US$3,564,879). Had equity prices fallen 10% there would have been a corresponding decrease in net assets of

US$10,002,395 (2014: US$559,016).

Variances of 10% are used when reporting price risk to the Company’s key management personnel and

represent management’s assessment of the reasonably possible change in equity prices.15

15 Please note that the use of symmetrical upside and downside variances for sensitivity purposes are not required by FRS 102. If management felt, for instance, that based on market data the reasonably possible changes were +10% and -5% reporting on this basis would be acceptable.



Reference: 5.3.2 Currency risk

The Company holds monetary and non-monetary assets in currencies other than its functional currency, the US

Dollar. The value of monetary assets denominated in foreign currencies will fluctuate due to changes in foreign

exchange rates. The investment manager monitors the exposure to currency risk on a daily basis and the risk

exposure is monitored by the Board of Directors on a quarterly basis.

At 31 December 2015, monetary assets and liabilities were denominated in the following currencies16:

Cash Accounts

ReceivableAccounts

PayableTotal

2015 (USD)

US Dollars 12,500,202 23,732,686 8,660,169 44,893,057

Euros 8,254,851 8,283,750 - 16,538,601

Pounds Sterling 2,830,235 40,444,193 4,642,271 47,916,699

23,585,288 72,460,629 13,302,440 109,348,357

2014 (USD)

US Dollars 92,212,976 58,578,970 5,256,368 156,048,314

Euros 34,746,933 6,480,546 - 41,227,479

Pounds Sterling 6,682,101 20,521,728 1,160,367 28,364,196

133,642,010 85,581,244 6,416,735 225,639,989

At 31 December 2015, had the exchange rates between the US Dollar and the Euro and the US Dollar and the

Pound Sterling increased or decreased by 3% (2013: 4%), with all other variables held constant, the respective

increase or decrease in net assets attributable to the holders of redeemable shares would amount to

US$17,110,194 (2014: US$15,894,124). 3% represents management’s best estimate of the reasonable possible

shift in foreign exchange rates.

5.3.3 Interest rate risk

Interest rate risk arises where the fair value or future cash flows of a financial instrument will fluctuate due to

changes in market interest rates. The Company is exposed to interest rate risk through its investments in debt

securities, associated derivative instruments and its interest bearing current and deposit accounts.

The overall exposure to interest rate risk is monitored on a daily basis by the investment manager and is

reviewed on a quarterly basis by the Board of Directors.

16 Debt instruments held for trading as part of the fund are not considered to be monetary assets as they are not held for the redemption and interest cash flows. The Fund does not hold currency or interest swaps, however it should be noted that these would be included as monetary items were they held.



Reference: The table below summarises the Company’s exposure to interest rate risk at 31 December 2015:

Less than 3 months

3 months to 1 year

More than 1 year

Total

Assets

Non-interest bearing 953,261,398 – – 953,261,398

Floating rate listed debt – 8,704,300 – 8,704,300

Fixed rate listed debt 34,781,832 12,689,100 92,106,321 139,577,253

Traded bond index options – 3,761,903 – 3,761,903

Cash and bank balances 23,585,288 – – 23,585,288

Total assets 1,011,628,518 25,155,303 92,106,321 1,128,890,142

Liabilities

Non-interest bearing 541,765,877 – – 541,765,877

Net assets attributable to holders of redeemable shares

587,124,265 – – 587,124,265

Total liabilities 1,128,890,142 – – 1,128,890,142

At 31 December 2015, had interest rates on floating rate instruments increased or decreased by 50 basis points

(2014: 50), with all other variables held constant, the respective decrease or increase in net assets attributable to

the holders of redeemable shares would amount to US$161,448 (2014: US$201,354). The impact on the value

of the fixed rate debt held by the Company of a 50 basis point increase or decrease would be US$44,400 (2014:

US$56,100), US$48,900 (2014: US$42,000) and US$701,450 (2014: US$514,900) respectively for the debt

maturing within three months, three months to one year and more than one year. 50 basis points represents

management’s best estimate of the reasonable possible shift in interest rates.

34.25

34.25(a)

34.25(d)

5.4 Credit riskCredit risk refers to the risk that a counterparty will be unable to pay amounts in full when they fall due,

resulting in a financial loss for the Company.

The Company is exposed to credit risk through its investments in debt securities, derivatives and its deposits of

cash. In management’s opinion the carrying amounts of the financial assets represent the maximum exposure to

credit risk at the year end. None of the Company’s assets at the reporting date are considered to be past due or

impaired.

Credit risk is monitored by the investment manager on a daily basis and the Company’s exposure is reviewed by

the Board of Directors on a quarterly basis. The Company further manages credit risk through its policy of only

investing in debt securities with a minimum credit rating of BBB/Baa as designated by the well-known ratings

agency MSRatings Ltd.

The table below summarises the Company’s exposure to different credit qualities at the reporting date.

Rating 2015 2014

AAA/Aaa 73% 68%

AA/Aa 12% 18%

A/A 9% 12%

BBB/Baa 6% 2%

Total 100% 100%



Reference:

34.25(d)

Credit risk in the Company’s dealings with brokers is managed principally by using only approved brokers.

Additionally, when purchasing securities, cash is delivered only once the securities have been received by the

broker and when selling securities the security is delivered only after the cash is received by the broker.

When transacting in cash or derivative financial instruments the credit risk is mitigated by dealing only with

counterparties which are either regulated entities or have high credit-ratings assigned by recognised ratings

agencies. Where an instrument is settled in a foreign currency or where the counterparty operates in a foreign

currency; clearing houses are used so that transactions may be settled on a delivery versus payment basis in

order to reduce the settlement risk on non-standard transactions.

The Company is exposed to credit risk with the Custodian. Should the Custodian become insolvent, the

operation of the Company may be subject to delay if the Company is unable to access its assets. This risk is

managed through the choice of a reputable custodian.

34.28 5.5 Liquidity riskLiquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial

liabilities as they fall due.

The Company is exposed to liquidity risk by the daily settlement of margin calls on derivative instruments and

the redemption of its redeemable shares. These risks are managed by the Company’s policy of investing the

majority of the Company’s assets in active markets so that they may be readily converted to cash at, or near,

their fair value should the need to respond to market events arise.

34.28

Some of the Company’s assets are, however, invested in over-the-counter derivative instruments and inactive

equity markets and are thus less easily realisable in the short term. The Company manages this risk through

maintaining the option of short to medium term credit facilities. These facilities were not utilised during the year.

The liquidity risk exposure of the Company is monitored on a daily basis by the investment managers and is

reviewed on a quarterly basis by the Board of Directors.

The table below summaries the maturities of the Company’s non-derivative financial liabilities which were

outstanding at 31 December 2015, the amounts included represent the contractual undiscounted cash flows:

Less than 1 month

2015

Due to brokers 8,660,169

Accruals and other payables 4,642,271

13,302,440

2014

Due to brokers 5,256,368

Accruals and other payables 1,160,367

6,416,735

There were no non-derivative liabilities outstanding at 31 December 2015 with maturities in excess of one month.



Reference: The following table details the maturities of the Company’s derivative financial instruments which were, at the

reporting date, standing at a loss. The cash flow timings reported are on a contractual basis. All cash flows are

undiscounted.

Less than 7 days

7 days to 1 month

1-3 months Total

2015

• Gross settled derivatives

– DAX options

- Outflow 397,977,671 77,654,180 9,706,772 485,338,623

- Inflow (196,065,761) (38,256,734) (4,782,091) (239,104,586)

• Net settled derivatives

– NYSE short sold equity 220,138,932 42,334,410 19,756,058 282,229,400

422,050,842 81,731,856 24,680,739 528,463,437

2014

• Gross settled derivatives

– DAX options

- Outflow 137,258,281 17,762,836 6,459,213 161,480,330

- Inflow (71,109,285) (9,202,378) (3,346,319) (83,657,982)

• Net settled derivatives

– NYSE short sold equity 302,555,982 34,776,550 10,432,965 347,765,497

368,704,978 43,337,008 13,545,859 425,587,845

The liquidity risk in respect of the above items is managed principally through the investment of the Company’s

assets in assets which may be easily liquidated within 7 days. The table below illustrates the liquidity of the short

term assets held as at 31 December 2015.

Less than 7 days

7 days to 1 month

1-3 months Total

2015

Assets 748,605,103 252,907,130 10,116,285 1,011,628,518

2014

Assets 537,772,101 115,723,110 27,228,968 680,724,179

34.31 5.6 Capital risk managementThe capital structure of the Company consists of cash, bank balances and the proceeds from the issue of

redeemable shares.

The Company has no specific requirements in relation to the subscription or redemption of shares, however the

Investment Manager reviews the capital structure of the Company on a monthly basis to determine the risks

associated with the classes of capital employed. It is the Company’s policy to maintain the net debt of the

Company at below 1% of the net assets attributable to the holders of redeemable shares.



Reference:

8.4(c)

SI 2008/410

Sch. 1.68(2)

6. RevenueAll revenues of the company arise from the investments held. The investments are in equities, debt securities and

derivative instruments traded across Europe and the United States, however, all investment decisions and trading

by the company is undertaken in the United Kingdom. Accordingly, management considers revenue to have

wholly arisen to the United Kingdom.

8.4(c)

SI 2008/489s5 SI

2011/2198

7. Auditors’ remunerationThe following remuneration was received by the Company’s auditors and is included within Legal and

professional fees in the Statement of comprehensive income.

2015 2014

Remuneration receivable for auditing the accounts of the company 40,000 40,000

Remuneration receivable for taxation compliance services 10,000 8,000

Total 50,000 48,000

8.4(c)

SI 2008/410

Sch 1.67(2)

29.26(a)

26.19

29.27(d)

29.19

8. Taxation

2015 2014

Current tax:

Current tax expense 4,079,834 624,808

Withholding taxes 1,019,958 208,269

Total current tax 5,099,792 833,077

UK income tax is calculated at 20% (2014: 21%) of the estimated assessable profit for the year.

Withholding taxes imposed by other jurisdictions on investment income and capital gains are incurred by the

Company. The income and gains subject to these taxes are presented gross of the withholding tax with the tax

incurred presented as part of the taxation charge.

The charge for the year can be reconciled to the profit per the income statement as follows:

29.27(b)

29.27(a)

2015 2014

Income tax:

Profit before tax 52,392,455 34,067,515

Tax at the UK income tax rate of 20% (2014: 21%) 10,478,491 7,154,178

Tax effect of expenses not deductible in determining taxable profit (6,398,657) (6,529,370)

Tax expense – effective tax rate for the year 4,079,834 624,808



Reference:

8.4(c)

11.41(a)

SI 2008/410

Sch. 1.55(2)(b)

SI 2008/410

Sch. 1.34(3)

SI 2008/410

Sch. 1.58(3)

9. Investments9.1 Financial assets at fair value through profit or loss

2015 2014

Equity securities 799,343,341 388,802,458

Derivatives 25,698,458 61,598,139

Government bonds 207,802,426 70,293,735

Total 1,032,844,225 520,694,332

Net gain/(loss) from financial assets at fair value recognised in profit or loss

42,273,372 21,632,490

The carrying amount that would have been recognised had the financial assets at fair value through profit or loss been carried under the historic cost model would have been:

Cost 985,570,622 480,061,754

Impairment (3,298,847) (1,548,316)

Net book value 982,271,775 478,513,438

11.41(d)

SI 2008/410

Sch. 1.55(2)(b)

9.2 Financial liabilities at fair value through profit or loss

2015 2014

Equity securities sold short 282,229,400 347,765,497

Derivatives 246,234,037 77,822,348

Total 528,463,437 425,587,845

Net gain/(loss) from financial liabilities at fair value recognised in profit or loss

(1,230,698) (263,489)

11.43

11.46

Of the total investment assets, the fair value of US$773,198,503 (2014: US$453,434,162) were determined

based on the quoted market price. Of the remainder the fair value of assets measured at US$245,525,691

(2014: US$52,476,616) have been determined by quoted market prices adjusted for illiquidity using available

market data and assets valued at US$14,120,031 (2014: US$14,783,554) have been valued using a discounted

cash flow model on the basis of a weighted average cost of capital of 10% which, in the directors’ opinion, is

reflective of the returns required on any third party financing.

The derivative financial assets held by the Company are all traded options which have been valued based on

their quoted market price.

Investment assets of US$282,229,400 (2014: US$347,765,497) have been pledged as collateral against short

sold securities and derivative instruments standing at a loss. The agreement with the custodian, MSCUST Ltd

provides a lien to them over the assets of the Company up to 115% (2014: 115%) of the liability position

generated by the investment positions standing at a loss.

The financial liabilities held by the Company consist of equity securities sold short and traded options. The fair

values of equity securities sold short totalling US$282,229,400 (2014: US$347,765,497) were derived from the

contract value and the quoted price of the underlying securities. The fair values of the traded options were

determined based on their quoted market prices.



Reference:

8.4(c)10. Trade Receivables

2015 2014

Amounts due from brokers 23,732,686 58,578,970

Other receivables 48,406,289 26,432,451

Amounts due from related parties 321,654 569,823

72,460,629 85,581,244

8.4(c)

SI 2008/410

Sch. 1

11. Accruals and other payables

2015 2014

Accruals 1,359,842 864,156

Other payables 3,225,067 261,259

Taxation payable 57,362 34,952

Amounts due to related parties - -

4,642,271 1,160,367

4.12

8.4(c)

4.12(a)(ii)

4.12(a)(iv)

12. Redeemable shares12.1 Issued and fully paid up redeemable shares

Shares issued and fully paid: Class A Class B Total

At 1 January 2014 189,000,000 500,000 189,500,000

Redeemable shares issued 299,327,680 – 299,327,680

Redeemable shares redeemed (49,575,284) – (49,575,284)

As at 31 December 2014 438,752,396 500,000 439,252,396

Redeemable shares issued 565,188,866 – 565,188,866

Redeemable shares redeemed (95,351,674) – (95,351,674)

As at 31 December 2015 908,589,588 500,000 909,089,588

4.12(a)(iii)

4.12(a)(v)

The redeemable shares have a par value of US$0.5 per share. The redeemable shares are issued as Class A and

Class B shares which carry equal voting rights and are entitled to the same dividends and share of the net assets

attributable to the holders of redeemable shares.

The redeemable shares are subject to minimum holding and subscription levels and are redeemable at the option

of the shareholder in accordance with the articles of association of the Company.

33.9

8.4(c)13. Related partiesMSIM (the ‘Investment Manager’); MSADMIN (the ‘Administrative Agent’); MSCUST (the ‘Custodian’), who are

fellow subsidiaries, and the Directors are considered by management to be the related parties of the company

due to direct or indirect control.



Reference: The related party transactions undertaken during the year and the outstanding balances at the reporting date

are summarised below:

8.4(c) 13.1 Investment managerThe Company appointed MSIM Ltd, an investment management company incorporated in MS Island to

implement the investment strategies set out in the prospectus. Under the investment management agreement,

the investment manager receives an annual management fee of 1.5% of the net assets attributable to the Class

A redeemable shares calculated on a daily basis.

Investment management fees of US$6,712,779 (2014: US$3,432,865) were paid during the year. As at

31 December 2015 fees of US$321,654 (2014: US$569,823) were payable to the investment manager.

13.2 Administrative AgentThe Company appointed MSADMIN Ltd, a fund administration company incorporated in MS Island to provide

administration and accounting services. Under the administration agreement, the administrative agent receives

an annual administration fee of 0.2% of the net assets attributable to redeemable shareholders which is

calculated on a daily basis.

During the year administration fees of US$895,037 (2014: US$457,715) were paid to the administrative agent.

As at 31 December 2014 fees of US$nil (2014: US$52,643) were payable to MSADMIN.

13.3 CustodianThe Company appointed MSCUST Ltd, a custodian company incorporated in MS Island to provide custodian

services. Under the custodian agreement, the custodian receives an annual administration fee of 0.03% of the

net assets attributable to redeemable shareholders, which is calculated on a daily basis.

During the year custodian fees of US$134,256 (2014: US$68,657) were paid to the custodian. As at

31 December 2014 fees of US$nil (2014: US$nil) were payable to MSADMIN.

13.4 DirectorsRemuneration paid to the director’s during the year amounted to US$30,635 (2014: US$25,058) and consisted

solely of directors’ fees.

The directors additionally hold all the Class B redeemable shares (2014: 100%).

32.10 14. Events after the end of the reporting periodFollowing the end of the reporting period the investment manager was replaced by MSIM LLP, a company

incorporated in MSLand, as a result of a reorganisation in the wider group. In the opinion of the directors, this is

not considered to have any financial implications for the Company.

33.5 15. Ultimate controlling partyIn the opinion of the directors the immediate parent company and ultimate controlling party of the Company is

MS Holdings Ltd, a company resident, domiciled and incorporated in MS Island.

32.9 16. Approval of financial statementsThese financial statements were approved by the board of directors on 18 March 2016.


23Appendix 1

Appendix I – Transition to FRS 102

On transition to FRS 102 the following amendment will be required in the basis of preparation, along with the additional disclosures required

by Section 35 of FRS 102. In summary, Section 35 requires:

1) an explanation of how transition has affected the reported financial position and financial performance of the entity;

2) a description of the change to each accounting policy made as a result of FRS 102;

3) a reconciliation of equity, both at the date of transition (in these accounts 1 January 2014) and at the end of the latest reporting period

presented under the previous GAAP (in this case 31 December 2014), and

4) a reconciliation of profit and loss, again both at the date of transition and at the end of the latest reporting period presented.

Reference:

3.3

8.4(a)

2.1 Basis of preparationThese consolidated financial statements have been prepared in accordance with the Financial Reporting

Standard 102 issued by the Financial Reporting Council. They are presented in United States Dollars.

Before 2014 the consolidated financial statements were prepared in accordance with UK GAAP applicable prior

to the adoption of FRS 102, as issued by the Financial Reporting Council, and referred to below as ‘previous UK

GAAP’. The financial effects of the transition to FRS 102 are set out in note 3 below.

3. Transition to FRS 102These consolidated financial statements for the year ended 31 December 2015 are the company’s first financial

statements that comply with the FRS 102. The company’s date of transition to FRS 102 is 1 January 2014. The

company’s last financial statements prepared in accordance with previous UK GAAP were for the year ended

31 December 2014.

The transition to FRS 102 has resulted in a number of changes in the entity’s accounting policies compared to

those used when applying previous UK GAAP.

The following explanatory notes to the consolidated financial statements describe the differences between the

equity and profit or loss presented under the previous UK GAAP and the newly presented amounts under FRS

102 for the reporting period ended at 31 December 2014 (ie comparative information), as well as the equity

presented in the opening statement of financial position (ie at 1 January 2014). It also describes the changes in

accounting policies made on first-time adoption of FRS 102.

In the table below, equity determined in accordance with the FRS 102 is reconciled to equity determined

in accordance with previous UK GAAP at both 1 January 2014 (the date of transition to FRS 102) and

31 December 2015.

The nature and extent of the explanatory notes will depend heavily on the accounting policies previously adopted by the transitioning entity.

Given the significant number of possible changes on transition to this FRS, below have been noted only a selection of the most likely and

significant changes to accounting policies that may arise. In addition to this, example wording for a change in investment property

accounting policy, and the required reconciliation tables have been provided:


24 Appendix 1

Possible significant changes to accounting policy1) The amortisation period of goodwill and other intangible assets (presumed period reduced from 20 years to 5 years).

2) Treatment of deferred tax (DT to be recognised on revalued assets and business combinations and can no longer be discounted).

3) Measurement of investment properties (may be at cost or fair value, with fair value movements taken to profit or loss and may include

property let to other group companies).

4) Recognition and measurement of financial instruments.

5) Lease incentives (measured over the lease period under FRS 102 rather than to the first market rent review).

6) Changes to the measurement of employee benefits, (for instance the treatment of group defined benefit pension plans may now be as a

defined contribution scheme as opposed to a defined benefit one).

7) The treatment of foreign currency transactions.

3.1 Investment properties (EXAMPLE)In accordance with previous UK GAAP a property, owned by the company and leased to a fellow subsidiary, was

not recognised as an investment property and has been held at cost and depreciated. In accordance with FRS

102 this property is an investment property and is measured at its fair value at each period end. Consequently, in

its opening statement of financial position at 1 January 2014 the entity reclassified the property value of

£##,000 from property, plant and equipment to investment properties and increased its carrying amount by

£###,000.

The positive fair value movement of £##,000 at the end of 2014 is recognised in profit or loss.

In accordance with previous UK GAAP an investment property owned by the company was revalued to its fair

value at each period end with the resulting movement being taken to the statement of recognised gains and

losses. In accordance with FRS 102 this movement is taken to profit or loss. Consequently in its opening

statement of financial position at 1 January 2014 the entity reclassified its revaluation reserve, reducing the

reserve by £###,000, in to the profit or loss reserve, increasing this reserve by £###,000. There was no

movement in the fair value of this investment property in the period to 2014.


25Appendix 1

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26

Reconciliation of consolidated profit or loss for the year ended 31 December 2014:

NotePrevious

UK GAAP

Previous UK GAAP restated

Effect of transition

FRS 102

Revenue:

Interest income

Dividend income

Net foreign currency gain/(loss)17

Net gain/(loss) from financial assets and liabilities at fair value through profit or loss

Expenses:

Management fees

Custodian fees

Administration fees

Directors’ fees

Performance fees

Legal and professional fees

Other expenses

Total operating expenses

Profit or loss before tax

Withholding taxes

Profit or loss

Appendix 1

17 The net foreign currency gains and losses presented do not include those arising on financial instruments measured at fair value through profit and loss in accordance with Section 30.25(a).


27

About Moore Stephens

Moore StephensMoore Stephens International Limited is

one of the world’s leading accounting

and consulting networks, generating

worldwide revenues of US$2.7 billion.

With 626 offices of independent member

and correspondent firms in 103 countries,

clients can be confident that we have

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Our philosophy has been to develop the

firm to be large enough to cater for our

clients’ needs wherever required, but not to

grow for the sake of size alone.

Our objective is to service our clients’

needs in the most effective and cost-

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The essence of the Moore Stephens

operation is to provide each client with full

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They are supported by partners and staff

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that they comply with the numerous rules

and regulations.

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illustrative frs 102 financial statements 2015

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