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Annual report and financial statements
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For the year ended 31 December 2023
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Registered number: 11580482
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Aranci Advisors Ltd.
Company Information
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Francisco Felix Rodriguez
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Alexander Tsai-Yen Morley
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Aranci Advisors Ltd.
Contents
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Independent Auditors' Report
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Statement of Comprehensive Income
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Statement of Financial Position
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Statement of Changes in Equity
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Notes to the Financial Statements
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Aranci Advisors Ltd.
Strategic Report
For the year ended 31 December 2023
The Directors present their strategic report and audited financial statements for Aranci Advisors Ltd. ("the Company") for the year ended 31 December 2023.
The Company's principal activity is the provision of investment management, non-discretionary advisory and operational consulting services. The Company is authorised and regulated by the Financial Conduct Authority ("FCA").
For the year under review, the Company had investment management agreements with the Galaxy Opportunities Fund (“Galaxy”), the Insparo Emerging Markets Credit Fund (“EMC”) and two separately managed accounts. It also provided limited non-discretionary advisory and operations consulting services to one client. The investment management agreement with EMC was terminated on 31 May 2023 with Management co-ordinating the wind-down of that fund which was completed in February 2024.
Financial key performance indicators
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The Directors realise the importance of KPIs in the management of business, and are continually monitoring the development, performance and position of the business. The KPIs are:
Turnover - £2,202,533 (2022 - £2,161,673).
Profit before tax - £15,081 (2022 - profit of £260,456).
Principal risks and uncertainties
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The Company's turnover is a function of the amount of assets under management and the performance of those assets, as well as other fees as specified in the investment management and consulting agreements, which include fixed fees. The principal risk facing the business is concentration risk of client assets.
Directors' statement of compliance with duty to promote the success of the Company
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Section 172 ("s.172") of the Companies Act 2006 requires a director of an entity to act in the way he or she considers, in good faith, would be most likely to promote the success of the entity for the benefit of its members as a whole. As part of the entity's deliberations and decision making process, the directors also consider the following:
(i) likely consequences of any decision in the long term;
(ii) the interests of the entity's employees;
(iii) the need to foster the entity's business relationships with suppliers, customers and others;
(iv) the impact of the entity's operations on the community and the environment;
(v) the desirability of the entity maintaining a reputation for high standards of business conduct; and
(vi) the need to act fairly between members of the Company
The Directors consider stakeholders of the Company to be, amongst others, its employees, customers, suppliers, communities, and shareholders as well as its regulators. During 2023, the Directors gave careful consideration to the factors set out above in discharging their duties under s.172. The directors recognise that building strong relationships with the stakeholders will help deliver the Company's strategy in line with its long-term values. The Directors are committed to effective engagement with all of the stakeholders. Depending on the nature of the issue in question, the relevance of each stakeholder group may differ and, as such, as part of the Company's engagement with stakeholders, the Directors seeks to understand the relative interests and priorities of each group and to have regard to these, as appropriate, in their decision making. The Directors also ensure that all stakeholder interests are considered in the day to day management and operations of the Company.
Page 1
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Aranci Advisors Ltd.
Strategic Report (continued)
For the year ended 31 December 2023
As a result, the Directors believe they have demonstrated compliance with their legal duty under s.172 of the Companies Act 2006.
Interest rates and foreign exchange risk
Throughout 2023 the UK base rate set by the Bank of England has steadily increased in a response to rising inflation in the UK. Although global economic environment has faced uncertainty, significantly influenced by the Russian invasion of Ukraine, these events have led to notable fluctuations in exchange rates between major foreign currencies, affecting markets worldwide. The Company does not directly conduct business with entities in Russia, and as such is not impacted.
The Company has not entered into any interest bearing financial instruments in the year and as such has minimal exposure to the impact of the changing interest rates. The Company's foreign exchange risk arises with respect to its debtors, investment management fees receivable, creditors and cash balances held in currencies other than GBP which are monitored on a regular basis and reported to senior management.
This report was approved by the board and signed on its behalf.
Page 2
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Aranci Advisors Ltd.
Directors' Report
For the year ended 31 December 2023
The Directors present their report and the financial statements for the year ended 31 December 2023.
The Directors who served during the year were:
Francisco Felix Rodriguez
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The profit for the year after taxation, amounted to £11,529 (2022 - £208,061).
The Directors did not recommend payment of a dividend during the year (2022 - nil).
Directors' responsibilities statement
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The Directors are responsible for preparing the Strategic Report, Directors' Report and the 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 they have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the UK.
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 of the profit or loss of the Company for that period.
In preparing the financial statements, the Directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgments and estimates that are reasonable and prudent;
∙state whether they have been prepared in accordance with IFRS as adopted by the UK, subject to any material departures disclosed and explained in the financial statements;
∙assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
∙use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
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 enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
The Directors are content with the results for the year and anticipate continued growth which is dependent on market conditions and business performance.
Page 3
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Aranci Advisors Ltd.
Directors' Report (continued)
For the year ended 31 December 2023
Disclosure of information to auditors
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Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware, and
∙the Director has taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
In the opinion of the Directors, there have been no significant events affecting the Company since the year end.
Under section 487(2) of the Companies Act 2006, Haysmacintyre LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board and signed on its behalf.
Page 4
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Independent Auditors' Report to the Members of Aranci Advisors Ltd.
For the year ended 31 December 2023
We have audited the financial statements of Aranci Advisors Ltd. for the year ended 31 December 2023 which comprise the Statement of Profit or Loss, the Statement of Financial Position, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policies set out on pages 13 - 16. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom.
In our opinion the financial statements:
∙give a true and fair view of the state of the Company's affairs as at 31 December 2023 and of its profit for the year then ended;
∙have been properly prepared in accordance with IFRSs as adopted by the United Kingdom; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
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 auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company 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.
Conclusions relating to going concern
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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 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.
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
Page 5
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Independent Auditors' Report to the Members of Aranci Advisors Ltd. (continued)
For the year ended 31 December 2023
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the 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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or 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, or returns adequate for our audit have not been received from branches not visited by us; or
∙the 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.
Responsibilities of directors
As explained more fully in the Directors' responsibilities statement on page 35, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditors' responsibilities for the audit of the financial statements
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 auditors' 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.
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:
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud.
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to regulatory requirements for the investment advisory business and FCA regulations, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, FCA regulations, income tax, payroll tax and sales tax.
Page 6
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Independent Auditors' Report to the Members of Aranci Advisors Ltd. (continued)
For the year ended 31 December 2023
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting inappropriate journal entries to revenue and management bias in accounting estimates. Audit procedures performed by the engagement team included:
∙inspecting correspondence with regulators and tax authorities;
∙discussions with management including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;
∙evaluating management’s controls designed to prevent and detect irregularities;
∙identifying and testing journals, in particular journal entries, which had a significant impact on profit and journal postings with unusual descriptions; and
∙challenging assumptions and judgements made by management in their critical accounting estimates
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities 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 auditors' 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 auditors' 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.
Bernadette King (Senior Statutory Auditor)
for and on behalf of Haysmacintyre LLP, Statutory Auditors
10 Queen Street Place
London
EC4R 1AG
23 April 2024
Page 7
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Aranci Advisors Ltd.
Statement of Comprehensive Income
For the year ended 31 December 2023
Profit for the financial year
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All results in the current period derive from continuing operations and are attributable to the equity holders.
No separate statement of comprehensive income has been presented as no such gains or losses arose in the current or previous period.
The notes on pages 13 to 31 form part of these financial statements.
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Page 8
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Aranci Advisors Ltd. - Registered number: 11580482
Statement of Financial Position
As at 31 December 2023
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Property, plant and equipment
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Trade and other receivables
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Trade and other receivables
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Cash and cash equivalents
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Trade and other liabilities
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Issued capital and reserves
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Page 9
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Aranci Advisors Ltd. - Registered number: 11580482
Statement of Financial Position (continued)
As at 31 December 2023
The financial statements on pages 8 to 31 were approved and authorised for issue by the board of Directors and were signed on its behalf by:
The notes on pages 13 to 31 form part of these financial statements.
Page 10
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Aranci Advisors Ltd.
Statement of Changes in Equity
For the year ended 31 December 2023
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Comprehensive income for the year
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Total comprehensive income for the year
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 13 to 31 form part of these financial statements.
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Page 11
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Aranci Advisors Ltd.
Statement of Cash Flows
For the year ended 31 December 2023
Cash flows from operating activities
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Depreciation of property, plant and equipment
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Movements in working capital:
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Decrease/(increase) in trade and other receivables
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Increase/(decrease) in trade and other payables
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Cash generated from operations
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Cash flows from investing activities
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Purchases of property, plant and equipment
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Net cash from/(used in) investing activities
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Cash flows from financing activities
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Interest paid on convertible loan notes
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Payment of lease liabilities
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Net cash used in financing activities
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Net increase in cash and cash equivalents
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Cash and cash equivalents at the beginning of year
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Cash and cash equivalents at the end of the year
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The notes on pages 13 to 31 form part of these financial statements.
Page 12
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
1.Significant accounting policies
No material uncertainties that may cast significant doubt about the ability of the Company to continue as a going concern have been identified by the Directors.
The Directors anticipate profits in future years and have prepared forecasts which include cashflows for twelve months from the date of approval of these financial statements which support this. The financial statements have therefore been prepared on a going concern basis.
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognises revenue when it transfers control over a product or service to a customer.
The Company does not expect to have any contracts where the period between the transfer of the promised services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Company assesses whether a contract is or contains a lease, at inception of a contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low-value assets. For these leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise:
∙fixed lease payments (including in-substance fixed payments), less any lease incentives;
The lease liability is included in the 'Loans and borrowings' line in the Statement of Financial Position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
∙the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised discount rate.
Page 13
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
1.Significant accounting policies (continued)
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The Company as a lessee (continued)
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∙the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).
∙a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The Company did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are included in the 'Property, Plant and Equipment' and 'Investment Property' lines, as applicable, in the Statement of Financial Position.
The Company applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in Note 1.7.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has used this practical expedient.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Page 14
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
1.Significant accounting policies (continued)
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(i) Retirement benefit costs and termination benefits
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Payments to defined contribution retirement benefit plans are recognised as an expense when employees have
rendered service entitling them to the contributions.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the
offer of the termination benefit and when the entity recognises any related restructuring costs.
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(ii) Short-term employee benefits
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A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates applicable for that period.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit and is accounted for using the Statement of Financial Position liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the Statement of Financial Position date.
Page 15
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
1.Significant accounting policies (continued)
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the Statement of Financial Position date, to recover or to settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity or other comprehensive income, in which case the tax is also recognised directly in equity or other comprehensive income, as appropriate.
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Property, plant and equipment
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Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
Depreciation is provided on all other items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following range:
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Long-term leasehold property
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Cash and cash equivalents
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Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 90 days from the date of acquisition that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Page 16
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Aranci Advisors Ltd. is a limited company incorporated in England and Wales. The Company's registered office and principal place of business is at 18-19 Albemarle Street, London, United Kingdom, W1S 4HR. The Company's principal activity is the provision of investment management services.
The financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations as adopted by the UK (collectively IFRSs). They were authorised for issue by the Company's board of directors on 23 April 2024.
Details of the Company's accounting policies, including changes during the year, are included in note 1.
In preparing these financial statements, management has made judgments, estimates and assumptions that affect the application of the Company accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
The areas where judgments and estimates have been made in preparing the financial statements and their effects are disclosed in note 5.
The financial statements have been prepared on the historical cost basis except for the following items, which are measured on an alternative basis on each reporting date.
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3.2 Changes in accounting policies
i) New standards, interpretations and amendments effective from 1 January 2023
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Heading 1
The Company has applied the following standards and amendments for the first time for its annual reporting period commencing 1 January 2023:
• IFRS 17 Insurance Contracts
• Definition of Accounting Estimates – amendments to IAS 8
• International Tax Reform – Pillar Two Model Rules – amendments to IAS 12
The Company also elected to adopt the following amendments early.
• Amendments to IAS 1 – Classification of Liabilities as Current or Non-current and Amendments to IAS 1 –Non-
current Liabilities with Covenants.
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
Page 17
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
3.Basis of preparation (continued)
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New standards, interpretations and amendments not yet effective
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Certain amendments to accounting standards have been published that are not mandatory for 31 December 2023 reporting periods and have not been early adopted by the group. These amendments are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions.
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Functional and presentation currency
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These financial statements are presented in pound sterling, which is the Company's functional currency. All amounts have been rounded to the nearest pound, unless otherwise indicated.
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Accounting estimates and judgments
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The preparation of financial instruments in conformity with IFRS requires the use of certain critical accounting estimates and judgements. In the process of applying the company's accounting policies, management has not made any critical accounting estimates but did make the following critical accounting judgements:
IFRS 16 Discount Rate
IFRS 16 requires the use of discount rate that represents the interest rate implicit in the lease or the lessee's incremental borrowing rate. Management have used the latter and have made a judgement as to what this should be. The rate was determined in accordance with the method as outlined in the standard and used judgements in determining the risk-free rate that would best apply to the Company, the rate at which this needed to be adjusted to factor in the Company's credit risk, as this was not readily available. This was further adjusted by lease specific factors as judged by Management. These included property gains based on the location of the rented premises.
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The following is an analysis of the Company's revenue for the year from continuing operations:
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Page 18
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
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The operating profit is stated after charging/(crediting):
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Admin - difference on foreign exchange
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Other employee welfare expenses
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Recharge of office operating costs
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Recharge of fund expenses
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Page 19
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
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During the year, the Company obtained the following services from the Company's auditors:
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Staff costs and average number of employees
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Defined contribution pension cost
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The monthly average number of persons, including the Directors, employed by the Company during the year was as follows:
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Employees (including Directors)
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Only one Director was remunerated by the Company during the year (2022 - 1).
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Page 20
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
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Finance income and expense
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Recognised in profit or loss
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Interest on lease liabilities
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Net finance expense recognised in profit or loss
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Page 21
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
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14.1 Income tax recognised in profit or loss
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Current tax on profits for the year
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Adjustments in respect of prior years
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Origination and reversal of timing differences
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Recognition of previously unrecognised deferred tax assets
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The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to profits for the year are as follows:
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Tax using the Company's domestic tax rate of 19% (2022:19%)
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Expenses not deductible for tax purposes, other than goodwill, amortisation and impairment
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Depreciation > Capital Allowances
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Adjustments to tax charge in respect of prior periods
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Deferred tax charged/(credited)
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Changes in tax rates and factors affecting the future tax charges
The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the
United Kingdom would increase from 19% to 25%. Companies with profits of £50,000 or less would continue to be
taxed at 19%, which was a new small profits rate. Where taxable profits were between £50,000 and £250,000, the
higher 25% would apply but with a marginal relief applying as profits increased.
Page 22
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
14.Tax expense (continued)
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14.2 Current tax assets and liabilities
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14.3 Deferred tax balances
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The following is the analysis of deferred tax assets/(liabilities) presented in the statement of financial position:
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Recognised in profit or loss
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Fixed asset timing differences
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Short term timing differences
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Page 23
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
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Property, plant and equipment
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Charge owned for the year
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Charged financed for the year
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Charge owned for the year
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Charged financed for the year
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Page 24
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
15.Property, plant and equipment (continued)
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15.1. Assets held under leases
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The net book value of owned and leased assets included as "Property, plant and equipment" in the Statement of Financial Position is as follows:
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Property, plant and equipment owned
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Right-of-use assets, excluding investment property
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Information about right-of-use assets is summarised below:
Net book value
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Depreciation charge for the year ended
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Page 25
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
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Trade and other receivables
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Total non-current trade and other receivables
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Prepayments and accrued income
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Total current trade and other receivables
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Other payables - tax and social security payments
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Total current trade and other payables
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Total loans and borrowings
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Page 26
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
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Share capital shares of £1.00 each
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Share capital shares of £1.00 each
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At 1 January and 31 December
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Share premium
100 shares issued at a premium of £19 (£1,900) and 100 shares issued at a premium of £3,600 (£360,000) giving a total share premium value of £361,900.
Page 27
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
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The Company leases office space. Information about leases for which the Company is a lessee is presented below:
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Lease liabilities are due as follows:
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Contractual undiscounted cash flows due
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Lease liabilities included in the Statement of Financial Position at 31 December
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Financial instruments - fair values and risk management
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22.1 Financial risk management objectives
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The Company is exposed through its operations to the following financial risks:
- Market risk
- Foreign currency risk management
- Credit risk
- Liquidity risk
The Company has only indirect market risk exposure through its foreign exchange risk that would only arise in respect of its debtors, investment management fees receivable and creditors as well as cash balances held in currencies other than pound sterling.
No specific strategies are adopted in order to mitigate the risk of currency fluctuations.
Positions in foreign currencies are monitored on a regular basis and reported to Management via the management accounts.
Page 28
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
22.Financial instruments - fair values and risk management (continued)
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22.3 Foreign currency risk management
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The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising spot rates.
The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
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22.4 Credit risk management
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Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company's receivables from customers and deposits with financial institutions.
The Company has limited credit risk as it is primarily only exposed to the fees paid to the Company as set out in its investment management, non-discretionary advisory and operational consulting agreements.
No amounts have been written off during the year and all funds receivable at year end have been received post year end.
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22.5 Liquidity risk management
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Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Company's approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or
damage to the Company's reputation.
The directors manage liquidity risk by regularly reviewing cash requirements by reference to short term cash
flow forecasts and medium-term working capital projections prepared by management as well as the rules
relating to liquidity as prescribed by the FCA.
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Page 29
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
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Related party transactions
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Details of transactions between the Company and its related parties are disclosed below.
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23.1 Trading transactions
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During the year, the Company entered into the following trading transactions with related parties:
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Canepa Management (Suisse) SA
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lnsparo Emerging Markets Credit Fund
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Galaxy Opportunities Limited
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Advisory and consulting client
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The following balances were outstanding at the end of the reporting period:
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Amounts owed by related parties
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Amounts owed to related parties
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Insparo Emerging Markets Credit Fund
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Galaxy Opportunities Limited
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Advisory and consulting client
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No expense has been recognised in the current or prior years for bad or doubtful debts in respect of the amounts owed by related parties. No guarantees have been given or received.
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Page 30
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Aranci Advisors Ltd.
Notes to the Financial Statements
For the year ended 31 December 2023
Raices International SPF S.A.R.L and A. Cohen both hold 50% of the share capital.
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Notes supporting statement of cash flows
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Cash at bank available on demand
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Cash and cash equivalents in the Statement of Financial Position
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Cash and cash equivalents in the statement of cash flows
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Events after the reporting date
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There are no significant events subsequent to the period end that are deemed necessary to be adjusted or disclosed in the financial statements.
Page 31
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