Registered number:
FOR THE YEAR ENDED 31 MARCH 2023
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ATRATO GROUP LIMITED
COMPANY INFORMATION
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ATRATO GROUP LIMITED
CONTENTS
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ATRATO GROUP LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The principal activity of the Group is to identify exciting investment strategies to forge a sustainable future through offering best-in-class expertise in generating long-term asset backed inflation linked income. The Group provides corporate finance and investment advice to professional clients in relation to existing real estate property, new real estate developments and other real assets. Details of the Group’s subsidiary undertakings are detailed elsewhere in note 13 of the financial statements.
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ATRATO GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The year to 31 March 2023 represented another successful period for the Group.
Supermarket Income REIT Plc, for which Atrato Capital Limited is the Investment Advisor to, successfully raised over £300million through an oversubscribed equity issuance which closed in April 2022. Fees of £11.0million were earned in relation to Atrato Capital’s investment advisory services. Atrato Partners Limited continued to be engaged as Investment Advisor to Atrato Onsite Energy Plc, with investment advisory fees of £1.5million earned during the year. Atrato Partners also continued to earn capital raising fees in relation to the introduction of investors into fund raisings for Supermarket Income REIT Plc. These fees totalled £178k for the year. Atrato Partners had been exploring a Long Income business stream and had several employees who were dedicated to executing this strategy. The business strategy was reviewed during the year and, in the current economic environment, with a backdrop of increasing inflation and interest rates, it has become increasingly challenging to execute these transactions and no fees were earned in the year to 31 March 2023. As such, the decision was taken to discontinue this business stream. Atrato Partners continues to pursue new revenue streams whilst growing existing ones. During the year Atrato Partners was targeting the launch of a new listed vehicle, Independent Living REIT Plc, to invest in property assets in the UK in the Supported Housing sector. However, due to market conditions, the IPO did not proceed. Abort costs in relation to this recognised during the year totalled £303k. Atrato continues to pursue its investment strategy to address the structural undersupply of supported housing in the UK. The Group is also evaluating strategies focused on European supermarket assets in order to further diversify its revenue streams. Atrato Halliwell Limited is the Investment Adviser to the joint venture (“JV”) between Supermarket Income REIT Plc and British Airways Pension Trustees Limited ("BAPTL"). The company's investment in a limited partnership related to the JV represented a carried interest entitlement (the "Carry Partner") over the investment returns from the JV’s investments in grocery properties. Once the JV partners have received a stipulated return, the Carry Partner is entitled to share in any further cash returns to be distributed by the JV. In January 2023 Supermarket Income REIT Plc acquired BAPTL's 50% beneficial interest in the JV, which crystallised the Company’s entitlement to a distribution of £7.5million. Simultaneously the Company ceased to be a carry partner within the limited partnership and the remaining £7.5million return amount was recharacterized as a fee. This amount was recognised as a receivable at the year end and was settled in full during July 2023. The total return recognised during the year arising from Atrato Halliwell’s interest was £15million. Investment advisory fees earned by Atrato Halliwell during the year totalled £1.4million. Both Atrato Capital and Atrato Partners are UN Principles for Responsible Investment signatories and will report in accordance with the established framework in the next financial year. Both companies are also registered as signatories to The Net Zero Asset Managers Initiative (“NZAM”). During the year we have continued to develop our governance framework and to enhance our policies and procedures. We maintain robust governance arrangements through a clear organisational structure with well defined lines of responsibility. The established arrangements and systems, processes and mechanisms are comprehensive and proportionate to the nature, scale and complexity of our current and proposed activities. The balance sheet of the Group remains strong with net assets of £12.2 million and cash of £2.08 million
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ATRATO GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The Group is exposed through its operations to the following financial and non financial risks.
Personnel risk The Group recognises the need to develop, reward and retain key employees. Employee satisfaction is measured annually as part of a staff survey and changes to benefits have been made in response to this feedback. Regulation The Group is committed to regulatory compliance and has developed policies and procedures in order to stay abreast of regulatory developments. The Group balance sheet includes cash, debtors, creditors and accrued income that arise directly from its operations. These assets and liabilities expose the Group to a number of financial risks that could result in either a reduction in the Group’s net assets or a reduction in profits. These risks include, counterparty risk, credit risk and liquidity risk. Counterparty risk Counterparty risk is the risk that a client or counterparty fails to perform its contractual obligations and the Group suffers a loss as a result. The Group’s material counterparties are Supermarket Income REIT Plc and Atrato Onsite Energy Plc, the funds to which Atrato Capital and Atrato Partners act as investment advisor to respectively. The Group is therefore exposed to the risk of non-performance of those funds which results in them being unable to settle fees due under the terms of the Investment Advisory agreements. Credit risk The Group’s exposure to credit risk arises principally from its cash deposits. This risk is managed by holding cash only at institutions with a credit rating of A or higher (S&P Long Term). Liquidity risk This is the risk that the Group will encounter difficulties in meeting financial liabilities or regulatory capital requirements. The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to maintain surplus cash balances. The Group’s policy throughout the reporting period has been to achieve this objective through management’s day to day involvement in business decisions. The Group is also exposed to operational risk. The Group operates a risk register which is focussed on identifying and assessing operational risk inherent in activities, processes and systems. Identified risks are mitigated by updating business processes, ongoing monitoring programmes and operational frameworks. Risk management is functionally separate from operations of the business and is overseen by the Head of Compliance.
The Key financial metrics reviewed by management are set out below:
Net Assets £12,191,588 (2022: £709,127) EBITDA £15,477,601 (2022: £975,179) Profit/(loss) after tax £11,482,461 (2022: £(238,180))
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ATRATO GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The Group has a talented and committed team who operate within a high-performance and dynamic culture. The health and safety of the team is a high priority and details of support systems and processes in place for staff are outlined below. These are reviewed regularly and amendments are made in response to the annual staff survey.
• Professional development includes peer training, online learning and Corporate Criminal Offence training; we have now implemented a structured graduate analyst programme and a communications training programme for senior leaders • A well-documented performance management process • Employee engagement includes quarterly strategy meetings, weekly team meetings, and employee surveys • Staff are offered health insurance • Staff remuneration policy has been benchmarked by external consultants • Staff have access to a grievance process • Diversity and inclusion is actively supported and 40% of the senior management team are women • Staff can volunteer during work time to support a chosen cause • Health and safety policy was updated: no injuries were reported to staff during the period • Staff are offered the opportunity to work remotely and IT equipment is made available for this
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ATRATO GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The Directors of the Group must act in accordance with a set of general duties. These duties are detailed in section 172 of the UK Companies Act 2006 and include a duty to promote the success of the Group, which is summarised below.
The executive Directors meet regularly, and at least quarterly, to discuss their duties and they can and do access professional advice on these. This advice can be either through the Group or where necessary through independent third-party advisers. The Directors fulfil their duties partly through a well-documented governance framework that delegates day to day decision making to employees of the Group. This delegation is not restricted to financial authorities but includes empowering staff to input into the strategic direction of the business and to have responsibility for the teams that they manage. Our people We seek to create a working environment based on respect and inclusion, we encourage staff to operate in an open and honest manner and are committed to the highest ethical standards in all that we do. We strive to be the employer of choice for industry leaders and skilled professionals. Our clients We pride ourselves on being proactive and initiating new ideas that are in the best interests of our clients. We aim to be the adviser of choice for clients seeking exposure to alternative asset back investment income, often with inflation linkage. We look to develop and maintain strong client relationships. Sustainability Through the investment programme of its funds, the Group creates opportunities for people to work in their local areas, delivering a positive socioeconomic impact within those communities. This aligns with goals 8 and 0 of the UN Sustainable Development Goals (“SDGs”). The Group itself will continue to support the wellbeing and development of its own employees, through training, upskilling and consistent engagement. As the employee base grows, the Group commits to further investment in human capital development. The Group will look to provide active support to causes that facilitate the advancement of its ESG objectives and those of the funds it advises. It will seek to achieve this not only through donations, but additionally through fund raising and resource commitment.
This report was approved by the board and signed on its behalf.
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ATRATO GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present their report and the financial statements for the year ended 31 March 2023.
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £11,482,461 (2022 - loss £238,180).
The directors who served during the year were:
The Directors will look to grow the company's existing revenue streams whilst pursuing new ones.
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ATRATO GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Our people
We seek to create a working environment based on respect and inclusion, we encourage staff to operate in an open and honest manner and are committed to the highest ethical standards in all that we do. We strive to be the employer of choice for industry leaders and skilled professionals. Our clients We pride ourselves on being proactive and initiating new ideas that are in the best interests of our clients. We aim to be the adviser of choice for clients seeking exposure to alternative asset back investment income, often with inflation linkage. We look to develop and maintain strong client relationships. Sustainability Through the investment programme of its funds, the Group creates opportunities for people to work in their local areas, delivering a positive socioeconomic impact within those communities. This aligns with goals 8 and 0 of the UN Sustainable Development Goals (“SDGs”). The Group itself will continue to support the wellbeing and development of its own employees, through training, upskilling and consistent engagement. As the employee base grows, the Group commits to further investment in human capital development. The Group will look to provide active support to causes that facilitate the advancement of its sustanability objectives and those of the funds it advises. It will seek to achieve this not only through donations, but additionally through fund raising and resource commitment. With this aim, The Atrato Foundation was set up during the year and both Atrato Capital and Atrato Partners registered as signatories to The Net Zero Asset Managers Initiative (''NZAM''). Staff have also volunteered their time and raised money to support our charity partners.
The Group is committed to supporting charities via donations to The Atrato Foundation. The amounts will be at least £50,000 per annum and has not been provided for in the financial statements, but will be paid post year end.
The auditor, Hillier Hopkins LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
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ATRATO GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
This report was approved by the board and signed on its behalf.
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ATRATO GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ATRATO GROUP LIMITED
We have audited the financial statements of Atrato Group Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 March 2023, which comprise the Consolidated statement of comprehensive income, the Consolidated balance sheet, the Company balance sheet, the Consolidated statement of cash flows, the Consolidated statement of changes in equity, the Company statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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ATRATO GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ATRATO GROUP LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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ATRATO GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ATRATO GROUP LIMITED (CONTINUED)
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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙assess the nature of the industry and sector, control environment and business performance;
∙the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management. We consider the results of our enquiries of management, about their own identification and assessment of the risks of irregularities;
∙any matters we identified having obtained and reviewed the Company’s documentation of their policies and procedures relating to:
°identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
°detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
°the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations including those administered by the Financial Conduct Authority;
∙the matters discussed among the audit engagement team and involving relevant internal specialists, regarding how and where fraud might occur in the financial statements and any potential indicators of fraud
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's report.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
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ATRATO GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ATRATO GROUP LIMITED (CONTINUED)
for and on behalf of
Chartered Accountants
Statutory Auditor
Radius House
51 Clarendon Road
Hertfordshire
WD17 1HP
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ATRATO GROUP LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
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ATRATO GROUP LIMITED
REGISTERED NUMBER: 12333067
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2023
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ATRATO GROUP LIMITED
REGISTERED NUMBER: 12333067
CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 22 to 39 form part of these financial statements.
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ATRATO GROUP LIMITED
REGISTERED NUMBER: 12333067
COMPANY BALANCE SHEET
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 22 to 39 form part of these financial statements.
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ATRATO GROUP LIMITED
REGISTERED NUMBER: 12333067
COMPANY BALANCE SHEET (CONTINUED)
AS AT 31 MARCH 2023
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ATRATO GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
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ATRATO GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
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ATRATO GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
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ATRATO GROUP LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MARCH 2023
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Atrato Group Limited is a company limited by shares, incorporated in England and Wales.
The principal activity of the company is that of head office activities.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the Group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102.
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance sheet.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Group has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Financial instruments are recognised in the Group's Balance sheet when the Group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Trade debtors: The recoverability of trade debtors has been assessed as at the year end and up until the date of signing these financial statements. Management have based the decision to provide for any amounts based on their judgment of all the available information, and their experience of the specific nature of trade debtor in question. Valuation of interest in a limited partnership: the Group's investment in a limited partnership was included at cost less impairment. The investment related to a joint venture ("JV") arrangement between Supermarket Income REIT Plc and the British Airways Pension Trustees Limited ("BAPTL"). The investment represented a carried interest entitlement (the "Carry Partner") over the investment returns from the JV’s investments in grocery properties. Once the JV partners have received a stipulated return, the Carry Partner is entitled to share in any further cash returns to be distributed by the JV. In January 2023 Supermarket Income REIT Plc acquired BAPTL's 50% beneficial interest in the JV which crystallised the Group’s entitlement to a distribution of £7.5million. Simultaneously the Group ceased to be a carry partner within the limited partnership and the remaining £7.5million return amount was recharacterized as a fee. This amount was recognised as a receivable at the year end and was settled in full during July 2023. The total return recognised during the year arising from Group’s interest was £15million. Classification of preference shares between debt and equity: 100 preference shares of £0.01 each were issued by the company's subsidiary, Atrato Capital Limited ("ACL"), in 2017 for £1 and carry a fixed preference dividend based on fees payable to ACL. Since payment of the preference dividends is payable to the holder of the preference shares on a non-discretionary basis, the preference shares are considered to be, in substance, debt. The fair value of the liability component of the preference shares has not been included in the consolidated balance sheet as management consider that the fair value cannot be measured realiably and also may not be permitted under the Companies Act. Dividends payable to the preference shareholder are included in the consolidated statement of comprehensive income as interest payments. The preference shares do not carry voting rights except in the case of winding up of the company or varying any rights in respect of the preference shares or a reduction of the share capital. Fixed dividends equal to 10 per cent of the monthly manaement fees and semi-annual management fees less £37,500 per quarter are payable subject to the company having sufficient profits to lawfully pay dividends out of. The preference shares are irredeemable except on liquidation of the company when any dividends in arrears must be paid and 10% of any surplus assets as defined in the articles are payable to the preference shareholders. As stated, the cost of these preference shares has been recognised as debt. No adjustment has been made in respect of the liability element of the future fixed preference share dividends.
The whole of the turnover is attributable to the principal activity.
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 30
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 31
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
11.Taxation (continued)
On 3 March 2021 the Chancellor of the Exchequer announced an increase in the main rate of UK corporation tax to 25 per cent for businesses with profits greater than £250,000. Businesses with profits of £50,000 or less will continue to be taxed at 19% with marginal relief for profits up to £250,000. These changes were substantially enacted on 25 May 2021 and will take effect from 1 April 2023.
Atrato Services Limited had utilisable tax losses of £978,982 (2022: 1,579,931) carried forward. These have not been recognised as a deferred tax asset due to uncertainty around the timing of these being realised.
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
12.Tangible fixed assets (continued)
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 34
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 35
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 36
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 37
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
18.Provisions (continued)
Profit and loss account
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £236,668 (2022: £54,083). Contributions totalling £35,249 (2022: £8,877) were payable to the fund at the balance sheet date and are included in creditors.
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ATRATO GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
The directors do not consider there to be an ultimate controlling party.
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