Limited Liability Partnership registration number SO306589 (Scotland)
Social Growth Fund 2 LLP
Annual report and financial statements
For the year ended 31 March 2024
Social Growth Fund 2 LLP
Limited liability partnership information
Designated members
Social Investment Scotland
SIS (Community Finance) Limited
LLP registration number
SO306589
Registered office
3rd Floor
27 George Street
Edinburgh
EH2 2PA
Auditor
Henderson Loggie LLP
11-15 Thistle Street
Edinburgh
EH2 1DF
Solicitors
Morton Fraser MacRoberts LLP
2 Lister Square
Quartermile Two
Simpson Loan
Edinburgh
EH3 9GL
Social Growth Fund 2 LLP
Contents
Page
Members' report
1
Members' responsibilities statement
2
Independent auditor's report
3 - 5
Statement of comprehensive income
6
Balance sheet
7
Statement of changes in equity
8
Notes to the financial statements
9 - 13
Social Growth Fund 2 LLP
Members' report
for the year ended 31 March 2024
- 1 -

The members present their annual report and financial statements for the year ended 31 March 2024.

Principal activities

The principal activity of the limited liability partnership continued to be that of providing loan finance to social sector organisations based or operating in Scotland.

Members capital and interests

Each member's subscription to the capital of the LLP is determined by their share of the profit and is repayable following retirement from the LLP.

Details of changes in members' capital in the year ended 31 March 2024 are set out in the financial statements.

Designated members

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

Social Investment Scotland
SIS (Community Finance) Limited
Auditor

The auditor, Henderson Loggie LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Statement of disclosure to auditor

Each of the members in office at the date of approval of this annual report confirms that:

 

Approved by the members on 12 October 2024 and signed on their behalf by:
2024-10-12
Social Investment Scotland
Designated Member
Social Growth Fund 2 LLP
Members' responsibilities statement
for the year ended 31 March 2024
- 2 -

The members are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) requires the members to prepare financial statements for each financial year. Under that law the members have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. Under company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) the members 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 limited liability partnership and of the profit or loss of the limited liability partnership for that period. In preparing these financial statements, the members are required to:

 

 

The members are responsible for keeping adequate accounting records that are sufficient to show and explain the limited liability partnership’s transactions and disclose with reasonable accuracy at any time the financial position of the limited liability partnership and enable them to ensure that the financial statements comply with the Companies Act 2006 (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008). They are also responsible for safeguarding the assets of the limited liability partnership and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Social Growth Fund 2 LLP
Independent auditor's report
to the members of Social Growth Fund 2 LLP
- 3 -
Opinion

We have audited the financial statements of Social Growth Fund 2 LLP (the 'limited liability partnership') for the year ended 31 March 2024 which comprise the statement of comprehensive income, the balance sheet, 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 limited liability partnership 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 members' 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 limited liability partnership’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 members 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 members 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.

Social Growth Fund 2 LLP
Independent auditor's report (continued)
to the members of Social Growth Fund 2 LLP
- 4 -
Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 as applied to limited liability partnerships requires us to report to you if, in our opinion:

 

Responsibilities of members

As explained more fully in the members' responsibilities statement, the members 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 members 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 members are responsible for assessing the limited liability partnership'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 members either intend to liquidate the limited liability partnership 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

As part of our planning process:

 

The key procedures we undertook to detect irregularities including fraud during the course of the audit included:

Social Growth Fund 2 LLP
Independent auditor's report (continued)
to the members of Social Growth Fund 2 LLP
- 5 -

Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.

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 limited liability partnership's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 as applied by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008. Our audit work has been undertaken so that we might state to the limited liability partnership's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the limited liability partnership and the limited liability partnership's members as a body, for our audit work, for this report, or for the opinions we have formed.

Diana Penny
Senior Statutory Auditor
For and on behalf of Henderson Loggie LLP
15 October 2024
Chartered Accountants
Statutory Auditor
11-15 Thistle Street
Edinburgh
EH2 1DF
Social Growth Fund 2 LLP
Statement of comprehensive income
for the year ended 31 March 2024
- 6 -
2024
2023
Notes
£
£
Turnover
3
538,693
275,621
Administrative expenses
(691,846)
(388,250)
Operating loss
(153,153)
(112,629)
Interest receivable and similar income
6
2,893
-
Loss for the financial year before members' remuneration and profit shares available for discretionary division among members
(150,260)
(112,629)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

Social Growth Fund 2 LLP
Balance sheet
as at 31 March 2024
- 7 -
2024
2023
Notes
£
£
£
£
Current assets
Debtors falling due after more than one year
7
7,351,055
4,197,365
Debtors falling due within one year
7
707,698
292,789
Cash at bank and in hand
3,534,927
3,118,282
11,593,680
7,608,436
Creditors: amounts falling due within one year
8
(105,468)
(168,781)
Net current assets and net assets attributable to members
11,488,212
7,439,655
Represented by:
Members' other interests
Members' capital classified as equity
13,000,001
8,801,184
Other reserves classified as equity
(1,511,789)
(1,361,529)
11,488,212
7,439,655
The financial statements were approved by the members and authorised for issue on 12 October 2024 and are signed on their behalf by:
12 October 2024
Social Investment Scotland
Designated member
Limited Liability Partnership Registration No. SO306589
Social Growth Fund 2 LLP
Statement of changes in equity
for the year ended 31 March 2024
- 8 -
Members' capital
Other reserves
Total
Notes
£
£
£
Balance at 1 April 2022
5,311,184
(1,248,900)
4,062,284
Year ended 31 March 2023:
Loss and total comprehensive income for the year
-
(112,629)
(112,629)
Members' capital introduced
3,490,000
-
3,490,000
Balance at 31 March 2023
8,801,184
(1,361,529)
7,439,655
Year ended 31 March 2024:
Loss and total comprehensive income for the year
-
(150,260)
(150,260)
Members' capital introduced
4,198,817
-
4,198,817
Balance at 31 March 2024
13,000,001
(1,511,789)
11,488,212
Social Growth Fund 2 LLP
Notes to the financial statements
for the year ended 31 March 2024
- 9 -
1
Accounting policies
Limited liability partnership information

Social Growth Fund 2 LLP is a limited liability partnership incorporated in Scotland. The registered office is 3rd Floor, 27 George Street, Edinburgh, EH2 2PA.

 

The limited liability partnership's principal activities are disclosed in the Members' Report.

1.1
Accounting convention

These financial statements have been prepared in accordance with the Statement of Recommended Practice "Accounting by Limited Liability Partnerships" issued in December 2021, together 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 limited liability partnership. 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 limited liability partnership 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 limited liability partnership, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The limited liability partnership has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the company are consolidated in the financial statements of Social Investment Scotland for the year ended 31 March 2024. These consolidated financial statements are available from its registered office, 3rd Floor, 27 George Street, Edinburgh, EH2 2PA.

1.2
Going concern

The members are of the opinion that the limited liability partnership can meet its obligations as they fall due for the foreseeable future. The members' agreement in place allows the Fund to draw down up to £12,999,990 from Social Investment Scotland, Better Society Capital and University of Edinburgh. The operational model is such that funds are only drawn down if there is capacity to repay. Therefore the financial statement have been prepared on a going concern basis.

1.3
Turnover

The turnover shown in the statement of comprehensive income represents amounts receivable during the period in respect of the limited liability partnership's principal activity of the provision of loan finance to social economy organisations based or operating in Scotland.

1.4
Members' remuneration

A member's shares in the profit and loss for the year is accounted for as an allocation of profits. Unallocated profits and losses are included within "other reserves."

Social Growth Fund 2 LLP
Notes to the financial statements (continued)
for the year ended 31 March 2024
1
Accounting policies (continued)
- 10 -

All amounts due to members that are classified as liabilities are presented within 'Loans and other debts due to members' and, where such an amount relates to current year profits, they are recognised within ‘Members' remuneration charged as an expense’ in arriving at the relevant year’s result. Undivided amounts that are classified as equity are shown within ‘Members' other interests’. Amounts recoverable from members are presented as debtors and shown as amounts due from members within members’ interests.

 

Where there exists an asset and liability component in respect of an individual member’s participation rights, they are presented on a gross basis unless the LLP has both a legally enforceable right to set off the recognised amounts, and it intends either to settle on a net basis or to settle and realise these amounts simultaneously, in which case they are presented net.

Once an unavoidable obligation has been created in favour of members through allocation of profits or other means, any undrawn profits remaining at the reporting date are shown as ‘Loans and other debts due to members’ to the extent they exceed debts due from a specific member.

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 limited liability partnership 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.

 

The LLP only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and amounts due to members.

1.7
Provisions

Specific provisions against advances are recognised when risk of non-recoverability is identified, as a result of regular monitoring and review by the credit committee. Provisions made during the year, less amounts released, are charged to the Statement of income and retained earnings and are netted off against advances reported in the balance sheet.

1.8

Concessionary loans

The loans to be issued by Social Growth Fund 2 LLP, as a member of a public benefit entity group, are deemed to be concessionary loans. Concessionary loans are initially measured at the amount paid. Subsequent to initial recognition, the carrying amount of concessionary loans at the reporting date is adjusted to reflect any repayments, accrued interest and impairments.

Social Growth Fund 2 LLP
Notes to the financial statements (continued)
for the year ended 31 March 2024
- 11 -
2
Judgements and key sources of estimation uncertainty

In the application of the limited liability partnership's accounting policies, the members 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. Revision 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.

 

The only accounting judgement or significant estimate deemed to be required in preparing these accounts, relates to the recognition of provisions against concessionary loans as discussed above. The members are satisfied that accounting policies are appropriate and applied correctly.

3
Turnover

An analysis of the limited liability partnership's turnover is as follows:

2024
2023
£
£
Turnover analysed by class of business
Interest on loans
495,643
261,524
Arrangement fees
43,050
14,097
538,693
275,621
4
Auditor's remuneration
2024
2023
Fees payable to the LLP's auditor and associates:
£
£
For audit services
Audit of the financial statements of the LLP
7,260
6,930
For other services
Taxation compliance services
696
600

 

In common with many other businesses of our size and nature we use our auditor to prepare and submit returns to the tax authorities and assist with the preparation of the financial statements.

 

The auditor's remuneration is settled by Social Investment Scotland, the ultimate controlling party.

5
Employees

The LLP had no employees during the period (2023: nil).

Social Growth Fund 2 LLP
Notes to the financial statements (continued)
for the year ended 31 March 2024
- 12 -
6
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
2,893
-
7
Debtors
2024
2023
Amounts falling due within one year:
£
£
Concessionary loans
287,358
133,493
Other debtors
420,340
159,296
707,698
292,789
2024
2023
Amounts falling due after more than one year:
£
£
Concessionary loans
7,351,055
4,197,365
Total debtors
8,058,753
4,490,154

Interest is charged on concessionary loans at a rate of 6% - 10%. Security is held over certain loans by way of a floating charge over assets of the relevant entity.

 

A provision of £699,032 (2023: £365,729) has been recognised against concessionary loans.

8
Creditors: amounts falling due within one year
2024
2023
£
£
Trade creditors
840
1,895
Amounts owed to group undertakings
115
79,648
Other creditors
1,533
-
Accruals and deferred income
102,980
87,238
105,468
168,781
9
Financial commitments, guarantees and contingent liabilities

At 31 March 2024, the limited liability partnership had financial commitments in relation to concessionary loans of £2,750,000 (2023: £3,689,425).

Social Growth Fund 2 LLP
Notes to the financial statements (continued)
for the year ended 31 March 2024
- 13 -
10
Members' transactions

Social Investment Scotland and Better Society Capital each made a contributions of £1,937,962 (2023: £1,642,352) and repayments of £nil (2023: £nil) in the period. A total of £6,000,000 (2023: £4,062,038) was owed to each of these members at the end of the period. University of Edinburgh made a contribution of £322,994 (2023: £205,294). A total of £1,000,000 (2023: £677,006) was owed to this member at the end of the period. Per the members agreement the Fund can draw down a total of £12,999,900 from Social Investment Scotland, Better Society Capital and University of Edinburgh. The loans will not be repaid until Social Growth Fund LLP's customers have paid back more of their loans and at such times that the Fund Board determines.

 

Equity capital was contributed by the two designated members upon incorporation of the limited liability partnership in 2018 - £100 by Social Investment Scotland and £1 by SIS Community Finance.

 

A management charge of £380,000 (2023: £380,000), payable to Social Investment Scotland, was paid by the limited liability partnership in the year under the terms of the partnership agreement. The balance owed at the end of the period was £15 (2023: £79,648).

11
Ultimate controlling party

In the opinion of the members there is no ultimate controlling party as defined by Financial Reporting Standard 102.

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