Company Registration No. 08660879 (England and Wales)
Sustainalytics UK Limited
Annual report and financial statements
for the year ended 31 December 2023
Sustainalytics UK Limited
Company information
Directors
Ronald John Bundy
(Appointed 30 June 2023)
Patrick John Fay
(Appointed 2 October 2023)
Company number
08660879
Registered office
71 Queen Victoria Street
London
EC4V 4BE
Independent auditor
Saffery LLP
71 Queen Victoria Street
London
EC4V 4BE
Sustainalytics UK Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 9
Statement of comprehensive income
10
Statement of financial position
11
Statement of changes in equity
12
Notes to the financial statements
13 - 23
Sustainalytics UK Limited
Strategic report
For the year ended 31 December 2023
1

The directors present the strategic report for the year ended 31 December 2023.

 

As used in the annual report, "the Group” and "Morningstar" refer to Morningstar, Inc. and its subsidiary including joint ventures and associates. "The Company" and "SUK" refer to Sustainalytics UK Ltd.

Review of the business

Morningstar, Inc., the ultimate parent company, is a leading provider of independent investment research in North America, Europe, Australasia, and Asia, offering an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. Morningstar serves advisors, asset managers, fixed-income security issuers and arrangers, private market/venture capital investors, workplace/retirement plan providers and individual investors. Morningstar also acquired Sustainalytics on 2 July 2020 leveraging its resources to support the integration of ESG data, research, and insights into products and services across Morningstar.

 

Morningstar Sustainalytics provides ESG data, research, analysis, and insights to institutional investors globally, covering equity, fixed income, and sovereign asset classes. Our flagship ESG Risk Rating allows investors to assess financially material ESG risks that could affect the long-term performance of their investments. Morningstar Sustainalytics also serves corporate issuers and banking institutions through its corporate solutions products and is a leading provider of green bond Second Party Opinions.

 

In addition to our risk management products, Morningstar Sustainalytics provides a range of sustainable-investing solutions for investors and financial professionals. We offer products such as our European Union Taxonomy solution, which are designed to enable investors to respond to emerging regulation surrounding sustainability reporting. Our data allows values-based investors to limit their exposure to controversial areas by applying exclusions to personalize their portfolios. Our active ownership data allows investors to understand if their sustainability funds are voting assets under management towards sustainability issues and whether a non-ESG fund is advancing other resolutions.

 

We’ve also expanded our data coverage and ratings to address specific sustainability themes. In 2023, we launched a Low-Carbon Transition Rating (LCTR) which provides a forward-looking, science-based evaluation of a company’s alignment with a net-zero pathway. The rating examines a firm's current management practices and answers the question: to what degree would the world warm if all companies behaved like the company examined?

 

In 2023, Morningstar announced a new strategic structure that more tightly connects the index capabilities of Morningstar Indexes with the ESG data, ratings, and research of Morningstar Sustainalytics.

 

Morningstar Sustainalytics operates on a subscription-based pricing model for its ESG research products, which supports a recurring revenue model. The corporate solutions unit deploys a model that combines one-time revenue with subscription-based recurring licensing revenue.

 

 

2023

2022

Revenue (£'000)

12,407

11,082

Revenue growth (%)

12%

28%

 

Sustainalytics UK Limited
Strategic report (continued)
For the year ended 31 December 2023
2
Principal risks and uncertainties

The Company views the changing regulatory environment and increased scrutiny facing the financial services industry, as a revenue generating opportunity to offer solutions and meet client needs. However, it is important that the Company understands these changes and incorporates them in their latest product offerings.

 

Given market innovation within our industry, we are aware of the risks associated with competitor advancements. We continue to monitor market trends with regards to new technologies and product development and feel confident that we will invest as needed to keep advancing our offerings within this fast paced industry.

Key performance indicators

Revenue for the year increased from prior year to £12.4m (2022: £11.1m). At year end, the company had cash at bank of £8.9m (2022: 8.1m) and net assets of £2.9m (2022: £1.4m).

On behalf of the board

Ronald John Bundy
Director
15 September 2024
Sustainalytics UK Limited
Directors' report
For the year ended 31 December 2023
3

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the Company is that of support activities.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Diederik Timmer
(Resigned 30 June 2023)
Ronald John Bundy
(Appointed 30 June 2023)
Patrick John Fay
(Appointed 2 October 2023)
Results and dividends

The results for the year are set out on page 10.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Financial instruments
Liquidity risk

The Company does not have a significant exposure to market or liquidity risk given the nature of the financial instruments currently held.

Interest rate risk

The Company is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. The Company uses interest rate derivatives to manage the mix of fixed and variable rate debt so as to reduce its exposure to changes in interest rates.

Foreign currency risk

The Company’s principal foreign currency exposures arise from trading with overseas companies. Company policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling. This hedging activity involves the use of foreign exchange forward contracts.

Credit risk

The Company is exposed to credit risk from other group entities and external debtors because any transactions with Group companies will be between entities which are 100% owned by Morningstar, Inc. the directors feel that risks are negligible.

 

Risk from external debtors is managed through regular credit control and review of debts with management. All clients are well established, and bad debts are minimal. No bad debt provision is recorded on 31 December 2023 (2022: 152k GBP (1.35% of revenue)).

Post reporting date events

There have been no events of significant affecting the Company since the year end date.

Sustainalytics UK Limited
Directors' report (continued)
For the year ended 31 December 2023
4
Future developments

Sustainalytics UK Ltd (‘SUK’) has a clear strategic focus on servicing financial advisers with high quality investment solutions. The strategy across the global group continues to be aligned, with our robust valuation driven long term investment process being at the heart of everything we do.

 

In 2023 we delivered consistent returns with the industry and consequently protected capital for clients in very challenging market and economic conditions. These returns were the product of our disciplined investment approach supported by Morningstar’s global research capability. These returns coupled with our ongoing support for advisers and end-investors have led to increased capital flows into our funds and managed portfolios.

 

The Morningstar group has made ESG (Environmental, Social and Governance) a priority for considering in our processes and propositions.

Auditor

Saffery LLP have expressed their willingness to continue in office.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the Company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the Company’s auditor is aware of that information.

On behalf of the board
Ronald John Bundy
Patrick John Fay
Director
Director
15 September 2024
Sustainalytics UK Limited
Directors' responsibilities statement
For the year ended 31 December 2023
5

The directors are responsible for preparing the annual 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 the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 these financial statements, the directors are required to:

 

 

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 also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Sustainalytics UK Limited
Independent auditor's report
To the member of Sustainalytics UK Limited
6
Opinion

We have audited the financial statements of Sustainalytics UK Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity 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).

In our opinion the financial statements:

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's 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 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 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.

Sustainalytics UK Limited
Independent auditor's report (continued)
To the member of Sustainalytics UK Limited
7

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

 

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:

 

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, 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.

Auditor's 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 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.

Sustainalytics UK Limited
Independent auditor's report (continued)
To the member of Sustainalytics UK Limited
8

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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

 

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with directors and by updating our understanding of the sector in which the company operates.

 

Laws and regulations of direct significance in the context of the company include The Companies Act 2006 and UK Tax legislation.

 

Audit response to risks identified:

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

There are inherent limitations in the audit procedures described above 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 would become aware of it. Also, 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 deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.

Sustainalytics UK Limited
Independent auditor's report (continued)
To the member of Sustainalytics UK Limited
9
Alistair Hunt FCA
Senior Statutory Auditor
For and on behalf of Saffery LLP
17 September 2024
Statutory Auditors
71 Queen Victoria Street
London
EC4V 4BE
Sustainalytics UK Limited
Statement of comprehensive income
For the year ended 31 December 2023
10
2023
2022
Notes
£
£
Turnover
3
12,407,658
11,082,390
Administrative expenses
(11,067,598)
(10,129,515)
Operating profit
1,340,060
952,875
Interest receivable and similar income
5
161,175
(4,342)
Interest payable and similar expenses
6
-
0
(1,802)
Profit before taxation
1,501,235
946,731
Tax on profit
7
(19,333)
(179,101)
Profit for the financial year
1,481,902
767,630

The income statement has been prepared on the basis that all operations are continuing operations.

Sustainalytics UK Limited
Statement of financial position
As at 31 December 2023
11
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
8
6,245
24,090
Current assets
Debtors
9
3,340,961
5,184,467
Cash at bank and in hand
8,855,171
8,129,292
12,196,132
13,313,759
Creditors: amounts falling due within one year
10
(9,325,338)
(11,942,712)
Net current assets
2,870,794
1,371,047
Net assets
2,877,039
1,395,137
Capital and reserves
Called up share capital
14
1
1
Other reserves
14
-
0
251,157
Profit and loss reserves
2,877,038
1,143,979
Total equity
2,877,039
1,395,137
The financial statements were approved by the board of directors and authorised for issue on 15 September 2024 and are signed on its behalf by:
Ronald John Bundy
Patrick John Fay
Director
Director
Company Registration No. 08660879
Sustainalytics UK Limited
Statement of changes in equity
For the year ended 31 December 2023
12
Notes
Share capital
Other reserves
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2022
1
251,157
376,349
627,507
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
767,630
767,630
Balance at 31 December 2022
1
251,157
1,143,979
1,395,137
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
1,481,902
1,481,902
Transfers
14
-
(251,157)
251,157
-
Balance at 31 December 2023
1
-
2,877,038
2,877,039
Sustainalytics UK Limited
Notes to the financial statements
For the year ended 31 December 2023
13
1
Accounting policies
Company information

Sustainalytics UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is 71 Queen Victoria Street, London, EC4V 4BE.

1.1
Accounting convention

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. The principal accounting policies adopted are set out below.

This Company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The Company has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the Company are consolidated in the financial statements of Morningstar Inc. The consolidated financial statements of Morningstar Inc are available from 22 West Washington Street, Chicago, Illinois, United States, 60602.

1.2
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the trueCompany has adequate resources to continue in operational existence for the foreseeable future. Forecast's prepared by management indicate that the Company will continue to have the ability to meet its liabilities as they fall due for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT and other sales related taxes.

Where contracts are performed for standalone engagements ("one-off contracts"), revenue is recognised at the point of providing the service.

Sustainalytics UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
14

Where contracts are performed for services provided over a period of time ("recurring contracts"), revenue is recognised on a straight-line basis over the term of the contract.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Computer equipment
3 years straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.5
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.6
Financial instruments

The Company 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 Company's statement of financial position when the Company 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 debtors, 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 classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Sustainalytics UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
15
Impairment of financial assets

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 profit or loss.

 

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. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

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

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Sustainalytics UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
16
Derecognition of financial liabilities

Financial liabilities are derecognised when the Company’s contractual obligations expire or are discharged or cancelled.

1.7
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.8
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end 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 is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.9
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

1.10
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

Sustainalytics UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
17
2
Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company’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.

 

There are no critical accounting judgements or sources of estimation uncertainty.

3
Turnover

An analysis of the Company's turnover is as follows:

2023
2022
£
£
Turnover analysed by geographical market
North America
(1,659)
1,800
Europe
85,999
7,253
United Kingdom
12,254,148
11,061,680
Africa
69,170
11,657
12,407,658
11,082,390
4
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

 

 

2023
2022
Number
Number
-
0
3

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
122,610
557,129
Social security costs
-
38,605
Pension costs
-
0
12,721
122,610
608,455
Sustainalytics UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
4
Employees (continued)
18

In the prior year, all employees were transferred to Morningstar UK Limited and Morningstar Europe Limited.

 

Wages and salaries in the current year relate to temporary staff costs.

5
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
161,175
(4,342)
6
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
-
1,802
7
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
22,616
181,051
Deferred tax
Origination and reversal of timing differences
(3,283)
(1,950)
Total tax charge
19,333
179,101
Sustainalytics UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
7
Taxation (continued)
19

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:

2023
2022
£
£
Profit before taxation
1,501,235
946,731
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
353,090
179,879
Tax effect of expenses that are not deductible in determining taxable profit
319
31
Effect of change in corporation tax rate
-
0
(468)
Group relief
(352,561)
-
0
Permanent capital allowances in excess of depreciation
(194)
(341)
Other adjustments
18,679
-
0
Taxation charge for the year
19,333
179,101

In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% (rather than remaining at 19%, as previously enacted). This new law was substantively enacted on 24 May 2021. For the financial year ended 31 December 2023, the current weighted averaged tax rate was 23.52%.

 

Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.

In October 2021, the Organization for Economic Co-operation and Development (OECD) agreed to a two-pillar approach to global taxation focusing on global profit allocation (Pillar One) and a global minimum tax rate (Pillar Two). In December 2022, the EU member states agreed to implement the OECD’s global corporate minimum tax rate of 15% under Pillar Two which is effective from 1 January 2024. Consequently, on 11 July 2023, Finance (No. 2) Act 2023 was enacted in the UK, introducing a global minimum effective tax rate of 15%. The legislation implements a domestic top-up tax and a multinational top-up tax, effective for accounting period starting on or after 31 December 2023. This legislation represents a significant change in the international tax regime and could result in increases to the Company’s effective tax rate as a result of the imposition of minimum taxes. The Company is one of several UK affiliates under common ownership of Morningstar, Inc; the ultimate parent based in the United States (the ‘Group’). The Company and Group are continuing to monitor developments and further administrative guidance by OECD and the United Kingdom in addition to evaluating the potential impact of the Pillar Two tax rules on the financial statements of the Company for future periods.

Sustainalytics UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
20
8
Tangible fixed assets
Computer equipment
£
Cost
At 1 January 2023 and 31 December 2023
62,626
Depreciation and impairment
At 1 January 2023
38,536
Depreciation charged in the year
17,845
At 31 December 2023
56,381
Carrying amount
At 31 December 2023
6,245
At 31 December 2022
24,090
9
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,141,650
3,808,051
Corporation tax recoverable
150,000
-
0
Amounts owed by group undertakings
-
0
1,226,609
Other debtors
43,998
147,795
Prepayments and accrued income
1,503
1,485
3,337,151
5,183,940
2023
2022
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 11)
3,810
527
Total debtors
3,340,961
5,184,467
Sustainalytics UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
21
10
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Trade creditors
7,740
22,841
Amounts owed to group undertakings
4,640,379
6,388,593
Corporation tax
-
0
181,051
Other taxation and social security
142,887
217,092
Deferred income
12
4,494,772
5,087,720
Accruals
39,560
45,415
9,325,338
11,942,712
11
Deferred taxation

The following are the deferred tax liabilities and assets recognised by the Company and movements thereon:

Assets
Assets
2023
2022
Balances:
£
£
Accelerated capital allowances
3,810
527
2023
Movements in the year:
£
Asset at 1 January 2023
(527)
Credit to profit or loss
(3,283)
Asset at 31 December 2023
(3,810)
12
Deferred income
2023
2022
£
£
Arising from services provided over time
4,494,772
5,087,720
13
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
-
12,721
Sustainalytics UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
22
14
Share capital and reserves
2023
2022
£
£
Ordinary share capital
Issued and fully paid
1 ordinary share of £1 each
1
1

The shares have attached to them full voting, dividend and capital distribution (including on winding up) rights; they do not confer any rights of redemption.

Transfers from other reserves to profit and loss reserves are related to share options that were settled in 2020.

15
Claims of a legal nature (including estimated value)

Sustainalytics UK Limited may be involved from time to time in commercial disputes and legal proceedings that arise in the normal course of its business. While it is difficult to predict the outcome of any particular dispute or proceeding, Sustainalytics UK Limited does not believe the result of any of these matters will have a material adverse effect on its business, operating results, or financial position.

Sustainalytics UK Limited
Notes to the financial statements (continued)
For the year ended 31 December 2023
23
16
Related party transactions
Transactions with related parties

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due to related parties
£
£
Entities with control, joint control or significant influence over the Company
4,640,379
6,388,593

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due from related parties
£
£
Entities with control, joint control or significant influence over the company
-
1,226,609
17
Ultimate controlling party

The Company is wholly owned subsidiary of Sustainalytics BV, a company registered in The Netherlands. The director considers that the ultimate parent company is Morningstar Inc, a company registered in the United States, following the acquisition of Sustainalytics Holding BV on 2 July 2020. There is no ultimate controlling party.

 

Copies of the accounts of Morningstar Inc are available from 22 West Washington Street, Chicago, Illinois, United States, 60602.

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