The directors present the strategic report for Amati Global Holdings Limited ("the Company") and its subsidiary (together "the Group") for the year ended 31 December 2023.
The principal activity of the Group continued to be that of the provision of investment management services. The subsidiary, Amati Global Investors Limited (“AGI”), is authorised and regulated by the Financial Conduct Authority (FCA).
The Group continues to have a strong balance sheet with net assets of £4,813,318 (2022: £4,948,976).
The year to 31 December 2023 saw a decline in funds under management (“FUM”) from £986m to £731m. This decline was due to the knock on impacts on financial markets of significant events around the world such as war in Palestine, the ongoing war in Ukraine, high energy prices, inflation and increased interest rates. Additional issues facing the United Kingdom such as an upcoming UK general election with a likely change of government and cost of living impacts particularly affect UK companies where some of our funds have significant investments.
The Directors consider that the biggest risks to the Group are operational and business risks. These include: major falls in the UK stock market leading to contraction of our assets under management; poor investment performance or poor client servicing leading to outflows; failing to maintain compliance with all applicable regulations; loss of an investment management mandate; Amati AIM VCT failing to maintain its VCT status; and operational errors. The Group makes use of external consultants for monitoring and maintaining compliance with the UK legislation applicable to fund management businesses and the VCT legislation as it applies to Amati AIM VCT. The Group maintains a level of capital to protect against scenarios that would lead to reduced performance and future income flows.
It is the directors’ intention to grow the funds while maximising investment performance and consider opportunities as and when they arise.
In addition to monitoring funds under management which saw a 26% decrease in 2023, and the investment performance of all of our funds which is published monthly on our website, the Group monitors profit and its capital resources against its regulatory minimum requirement. Profit before tax decreased in 2023 by 36% from the previous year. The Group is comfortable that it continues to maintain a significant buffer to its minimum capital requirement.
The AGI shareholders’ agreement sets aside 10% of profit after tax to be paid to UK registered charities. During the year payments that totalled £275,932 (2022: £366,749) were paid to 137 charities.
The Directors have a duty to promote the success of the Group for the benefit of Shareholders as a whole and to describe how they have performed this duty having regard to matters set out in section 172(1) of the Companies Act 2006.
The likely consequences of long term decisions
AGI holds board meetings four times per annum. Its remuneration committee meets once per annum and its operational management team meets monthly. Shareholder representation is strong at all these meetings and the ongoing performance and future direction of the business is at the heart of discussions. Additionally, staff wellbeing and practical matters regarding the operational aspects of the business are considered and issues addressed.
Amati Global Holdings shareholders are employees or family members of employees, of AGI. Meetings take place as frequently as required, but at least once per annum, to discuss performance and future direction.
The interests of the Group’s employees
AGI's business relies completely on its staff so the calibre of employees and their wellbeing is extremely important. A performance appraisal process is in place to encourage conversation and the raising of concerns, and to consider training and support requirements. Meetings of all staff take place weekly and there are all employee events from time to time to foster team spirit and to celebrate success.
The need to foster good business relationships with suppliers, customers and others
AGI puts a great deal of effort into communications with investors in, and interested parties to, its funds. Factsheets are prepared and issued monthly and regular communication events such as seminars, webinars and podcasts are run.
AGI places great importance in its ongoing relationship with the Authorised Corporate Director of the WS Amati UK Listed Smaller Companies fund, the Board of Amati AIM VCT, and the other parties who provide support in many different ways to the running of the funds it manages.
The desirability of the Group maintaining a reputation for high standards of business conduct
The Board is committed to maintaining high standards of corporate governance in relation to business conduct. It monitors and expects good standards of companies in which AGI funds invest. Environmental, social and governmental considerations are part of the investment management decision making process and the managers take seriously their voting in investee companies.
The impact of the Group’s operations on the community and the environment
As well as understanding the importance of being a good corporate citizen AGI has a core value of sharing its profitability within the community. The AGI shareholders' agreement specifies that 10% of profits after tax are donated to UK registered charities to support charitable work in the UK and abroad.
The need to act fairly between members of the Group
Members of the Group are encouraged to contribute ideas and thoughts as to future strategy. The Board believes that consistent delivery of investor expectations in terms of returns and client servicing is the best way to grow funds under management and that new opportunities provide a platform for step change to the business, which benefits all and ensures the long term success of the business.
On behalf of the board
The directors present their annual report and financial statements for the Group for the year ended 31 December 2023.
The results for the year are set out on page 12.
Ordinary dividends were paid amounting to £770,000 (2022: £1,530,000).
Dividends paid outwith the group to the minority shareholder of AGI were £980,000 (2022: £1,470,000).
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group has chosen in accordance with Companies Act 2006, s.414C(11) to set out in the group's strategic report information required by Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has been done so in respect of future developments.
In accordance with the company's articles, a resolution proposing that Johnston Carmichael LLP be reappointed as auditor of the group will be put forward at a General Meeting.
The Group recognises that managing investments on behalf of clients necessarily involves taking into account a wide set of non-financial factors in seeking to maximise long-term returns for investors. The analysis of these factors will sometimes involve making complex ethical judgements and forming views about how legal frameworks are likely to evolve. The Group aims to be well-informed in making any such judgements and to be transparent about the positions it takes.
Industry practice in this area has been evolving rapidly and the group has been an active participant in seeking to define and strengthen its principles accordingly, whilst engaging in the wider industry discussion. This has involved integrating Environmental, Social and Governance (“ESG”) considerations (to which we also add Human Rights as a separate category) more explicitly into the investment managers’ decision-making process, and also signing up to major external bodies who are leading influencers in the formation of industry best practice.
Our engagements with investee companies are based on relationships with them. The results of these engagements are not necessarily measurable. Our interactions are led by fund managers and are focused on aspects we believe will make companies better investments, always encouraging company managers to set high standards for their businesses. We almost always engage directly with the company itself and our views are rarely mediated by a broker and never by an institutional proxy voting adviser.
Streamline Energy and Carbon Reporting (“SECR”)
AGI is a signatory to the UN-supported Principles for Responsible Investment (PRI), which works to support its international network of signatories in incorporating ESG factors into their investment and ownership decisions. The PRI acts in the long-term interests of its signatories, of the financial markets and economies in which they operate, and ultimately of the environment and society as a whole. AGI completed the 2023 PRI assessment and successfully retained its PRI signatory status having been awarded a 5-star rating in the category 'Direct - Listed Equity - Active Fundamental' which is the category specific to AGI's investment activities and is a measure of the incorporation of Environmental, Social and Governance factors into the investment process. AGI also achieved 4 out of 5 stars for the 'Public Governance and Strategy' and 'Confidence Building Measures' modules. Our full PRI Transparency Report 2023 is on our website https://www.amatiglobal.com/our-values .
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2023 UK Government’s Conversion Factors for Company Reporting.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per person employed, the recommended ratio for the sector.
AGI has a target of net zero greenhouse gas Scope 1 and 2 emissions for its operational business by 2030, whilst looking for actions that can be taken to limit areas of Scope 3 emissions too. AGI has established a working group to consider how it achieves decarbonisation through a mixture of reduced consumption and offsetting, assuming that genuine offsetting becomes possible over the next few years in the form of carbon capture and sequestration.
The directors have no reason to believe that a material uncertainty exists that may cast significant doubt on the ability of the company to continue as a going concern.
On the basis of their assessment of the company's financial position, the directors have a reasonable expectation that the company will be able to continue in operational existence for a period of at least 12 months from the date of approval of the financial statements.
We have audited the financial statements of Amati Global Holdings Limited (the 'parent company') and its subsidiary (the 'group') for the year ended 31 December 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
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 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 UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and 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.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of our knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement set out on page 7, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Extent to which the audit is considered capable of detecting irregularities, including fraud (continued)
We obtained an understanding of the legal and regulatory frameworks that are applicable to the company, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
UK Generally Accepted Accounting Practice;
Companies Act 2006;
UK tax legislation; and
Financial Services legislation.
We gained an understanding of how the group and parent company are complying with these laws and regulations by making enquiries of management. We corroborated these enquiries through our review of submitted returns, external inspections, relevant correspondence with regulatory bodies and board meeting minutes.
We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur, by meeting with management to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk. We identified a heightened fraud risk in relation to:
Management override of controls
In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;
Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;
Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias;
Completion of appropriate checklists and use of our experience to assess the Company's compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,015,800 (2022 - £1,529,994 profit).
Amati Global Holdings Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is 8 Coates Crescent, Edinburgh, United Kingdom, EH3 7AL.
The company was incorporated on 7 December 2018 with share capital of £1 and was acquired by Amati Global Partners LLP on 15 January 2019. The company was dormant until 13 June 2019, when the holding of 51% of Amati Global Investors Limited held by Amati Global Partners LLP was transferred to the company and its share capital was increased to £100,000. On 13 June 2019 the members of the LLP became shareholders in the company and the company became the ultimate parent undertaking of Amati Global Investors Limited.
As the above constitutes a group reconstruction and merger accounting has been applied, these group accounts are prepared on the basis that the group has always existed in its current form.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include certain items at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102 and has taken advantage of the exemption available from the requirement to present a company only cash flow statement and related notes and disclosures.
These financial statements have been prepared on a going concern basis.
Whilst there can be no absolute certainty, having considered the current results of the company and the group, including plausible downside scenarios impacting revenues, expenses and financial resilience, and the current liquidity and net assets of the company and the group, the directors are satisfied that it remains a reasonable assumption that the company and group should have sufficient resources to meet its working capital requirements for at least 12 months from the date of approval of these financial statements. Accordingly, the financial statements have been prepared on a going concern basis.
Turnover is derived primarily from business transacted in the UK and is recognised as follows:
i. Management fees (non-performance related) are recognised as the services are provided and measured at the fair value of the consideration received or receivable.
ii. Service fees (non-performance) related are recognised as the services are provided and measured at the fair value of the consideration received or receivable.
iii. All other fee income is recognised as the services are provided based on the fair value of the consideration received or receivable.
Interest income is recognised in the statement of comprehensive income as it accrues using the effective interest method.
The carrying values of the tangible fixed assets are reviewed at each reporting date or when events or changes in circumstances indicate the carrying values may not be recoverable.
Investments in quoted equity instruments and open-ended investment funds are measured at fair value. Changes in fair value are recognised in the statement of comprehensive income. Fair value is based on quoted market prices and published prices which are readily available.
Investments in subsidiary undertakings are stated at cost less impairment.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in the statement of comprehensive income.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Basic financial liabilities, including trade and other payables. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax is recognised in respect of all timing differences in the limited company subsidiary, that have originated but not reversed at the statement of financial position date, where transactions or events that result in an obligation to pay more or a right to pay less tax in the future have occurred by the statement of financial position date with certain limited exceptions. Where there is a deferred tax asset, this will only be recognised where there is a reasonable expectation that profits will be made by the company in the future.
Deferred tax is calculated on an undiscounted basis at the tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws enacted or substantively enacted at the statement of financial position date.
Short term employee benefits are recognised as an expense in the period in which they are incurred.
The cost of any unused holiday entitlement is recognised in the period in which the employer's services are received.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Management considers that there are no significant judgements, estimates or assumptions made which would have a material impact on these financial statements.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
During the year two directors accrued retirement benefits under a defined contribution pension scheme (2022: two).
Directors are paid through the subsidiary company, Amati Global Investors Limited.
Included above is £13,002 (2022: £11,820) in relation to remuneration paid to non-executive directors for services provided to the group.
Employer social security costs in respect of directors' remuneration are not included within the above.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiary at 31 December 2023 are as follows:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The group had pension contributions of £Nil (2022: £66,462) outstanding at the reporting date and included within creditors falling due within one year.
One share with a nominal value of £1 was allotted at par upon the company's incorporation on 7 December 2018. On 13 June 2019, 99,999 shares with a nominal value of £1 were allotted for a total consideration of £3,961,753, as part of a group reconstruction.
Share premium represents the excess consideration received over the par value of shares issued.
The merger reserve arises on the application of merger accounting when consolidating the company's shareholding in its subsidiary, Amati Global Investors Limited.
Profit and loss reserves represent accumulated comprehensive income or expenditure for the year and prior periods less dividends paid.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
During the year Amati Global Holdings Limited charged £2,468 (2022: £8,856) in relation to management charges to its subsidiary Amati Global Investors Limited. The subsidiary was charged £40,000 (2022: £40,000) by its associate company Mattioli Woods plc in relation to management charges.
The company received dividends of £1,020,000 (2022: 1,530,000) from Amati Global Investors Limited.
The subsidiary rents its office space from Mattioli Woods plc. It was charged £67,256 in rental costs during the year (2022: £64,931).
The subsidiary pays a service charge and other charges to Mattioli Woods plc. The service charge is a recharge of costs in relation to the office space. It incurred expenses of £11,135 in service and other charges during the year (2022: £12,976).
The subsidiary paid remuneration of £13,002 (2022: £11,820) to two non-executive directors, who are persons connected with Mattioli Woods plc.
The following amounts were outstanding at the reporting end date:
At the year-end the subsidiary company owed Amati Global Holdings £2,468 (2022: £4,292) and £3,333 (2022: £6,666) to Mattioli Woods plc in relation to management charges.
The subsidiary company owed Mattioli Woods plc £16,519 in relation to rent at year end (2022: £16,519).
The subsidiary company owed Mattioli Woods plc £1,298 in relation to service and other charges (2022: £11,685).