The directors present the strategic report for the year ended 31 December 2024.
Principal activities
The principal activity of the company is providing investment advisory services to a Luxembourg close-ended Fund, Lendable MSME Fintech Credit Fund, a Luxembourg open-ended Fund, Lendable Master Impact Funds (“the Funds”), and the provision of non-binding investment advisory services to the Lendable Group.
The Lendable Group launched the Luxembourg domiciled Lendable MSME Fintech Credit Fund with first close on 6 August 2021. The Fund became operational on 1 October 2021. A further Fund, Lendable Master Impact Funds, was launched on 1 Feb 2023. Dynolabs Asset Management Ltd was appointed as Investment Advisor to both Funds.
Management is actively pursuing a risk-adjusted return plus the protection of capital for its client advised Funds while looking to grow the business and increase the client base and funds under advisory.
Further to this as of 29 March 2024 Dynolabs Asset Management Ltd has been appointed as Investment Advisor to Lendable SPC, a Cayman domiciled Segregated Portfolio company that invests solely in Lendable Opportunities Fund, a sub-Fund of Lendable Master Impact Funds SCSp that is domiciled in Luxembourg.
The Lendable group is in the process of launching two new Luxembourg domiciled Funds, one will be a follow on from our Credit Fund, Lendable MSME Fintech Credit Fund focusing on Financial Inclusion and the other Fund will focus on Sustainable Finance. Both will aim to provide debt to emerging market fintech companies. The intention is to appoint Dynolabs Asset Management Ltd as Investment Advisor to the Fund Manager.
Financial position at the reporting date
As of 31 December 2024, the company had net current assets of £1,629,685 (2023: £490,224 ) and total equity attributable to the shareholder of £1,680,320 (2023: £541,653).
The business was established in 2019 and became an investment Advisor to a Luxembourg domiciled Credit Fund in 2021 and another credit fund in 2023 from which it obtains monthly advisory fees. The AUM of the Funds continue to grow along with the AUM of the group as a whole. Risk adjusted returns remain positive for the year in a difficult environment however, the company believes it is in a good place with an experienced team with a solid platform for continued growth.
The company has sufficient retained liquid resources, growing Funds under advisory with significant diversification both in geography and assets and support from its parent, Lendable Inc. These factors offer the company, clients and creditors, protection in the event of unforeseen events.
On 24 February 2022, Russian troops invaded Ukraine. The ongoing invasion has led to significant casualties, dislocation of population, damage to infrastructure and disruption to economic activity in Ukraine. The war has also led to significant sanctions being imposed on Russia (and in some instances Belarus). The war in Ukraine and related events take place at a time of significant global economic uncertainty and volatility, and the effects are likely to interact with and exacerbate the effects of current market conditions driving further increases in commodity prices and increased raw material costs. Dynolabs Asset Management Ltd and the wider Lendable Group closely monitors these conditions but to date there has been no impact on active loans managed or advised by the Group.
Dynolabs Asset Management Ltd was licensed by the UK Financial Conduct Authority (FCA) as an exempt CAD firm up to 3 October 2021. On 4 October 2021 the company became licensed by the FCA as a BIPRU firm unable to carry on the MIFID investment service and activity of placing of financial instruments without a firm commitment basis. As at 29 March 2024, the company also became an Exempt Reporting Advisor registered with the Securities and Exchange Commission. All stakeholders are kept informed on any procedural changes related to Brexit, and any potential financial effect is being closely monitored by management.
The company’s financial statements are internally reviewed in detail on a monthly basis. Directors are satisfied with the company’s financials for the year to 31 December 2024
Investment performance
The company's success depends on delivering performance for the fund it advises. The company believes that investors expect investment returns over time that are attractive in relation to the risks associated with investment in general and to the investment objectives of the fund.
Investment Impact
The impact thesis for the company and the group as a whole is to provide fair access to finance for the un- and under-banked populations in emerging and frontier markets. The company aims to do this through the fund that it currently advises, which provides debt to fintech companies that facilitate consumer and MSME credit, productive asset finance, payments, remittances, and digital marketplaces.
Non-financial key performance indicators
Health and Safety is the company’s key non-financial performance indicator, and the company uses Accident reports to monitor its performance. For the year ended 31 December 2024, there were no accidents (2023: no accidents).
This statement contains an overview of how the directors have performed their duty to promote the success of the company as set out in section 172(1) of the UK's Companies Act 2006. The section requires the director of the company to act in a way that would most likely promote the success of the company for the benefit of its shareholders. In doing this, the director must have regard, amongst other matters, to:
the likely consequences of any decision in the long term
the interests of the company's employees
the need to foster the company's business relationships with investors, borrowers, and others
the impact of the company's operations on the community and the environment
the desirability of the company maintaining a reputation of high standards of business conduct and
the need to act fairly between members of the company.
Decision Making
The Directors understand our business and the markets within which we operate. By focusing on our purpose, the strategy set by the board is intended to ensure that we continue to deliver value to our stakeholders. All matters that, under the company's governance arrangements, are reserved for decision by the Directors are presented at senior management meetings. Directors are briefed on potential impacts and risks for our stakeholders and how these will be managed. The Directors consider these factors before making a final decision, which they believe is in the best interests of the company.
Employees
Employee engagement is a primary focus for the Directors of the company, empowering employees to contribute to improving business performance and creating an environment in which everyone can fulfil their potential. We keep the company's employees informed about what is happening across the company through email, and bi-weekly meetings. Moreover, we organize an annual offsite event, facilitating collaboration among our employees from various locations worldwide.
Fostering business relationships with Borrowers, Investors, and Others
The Directors recognise that fostering business relationships with key stakeholders, such as external clients, investors, and regulatory authorities, is essential to the company's success. As a subsidiary of a US entity, the company adheres to a group-wide Employee Handbook, which offers guidance to all employees within the Group on the fundamental principles they should uphold.
Impact on the Community and the Environment
The Directors recognise the importance of leading a company that generates value for stakeholders and contributes to wider society. The company is dedicated to promoting financial inclusion and empowerment in underserved regions like Africa, Latin America, and Asia by partnering with fintechs. Our efforts aim to generate a positive socio-economic impact, providing access to essential financial services and fostering sustainable development and equitable prosperity.
Maintaining a reputation for high standards of business conduct
The Directors consider it fundamental to maintain a culture focused on embedding responsible business behaviors. All employees of the company are expected to adhere to the requirements outlined in the Employee Handbook at all times.
The need to act fairly between members of the Company
The Directors recognise their responsibility in ensuring that all members of the company are treated fairly regardless of age, gender and orientation. The company has implemented a number of programs designated to celebrate the diversity that characterizes our organization.
The directors present their annual report and financial statements for the year ended 31 December 2024.
The profit for the year, after taxation, amounted to £638,667 (2023: £nil)
No dividends were paid in the year (2023: £nil)
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Management continually monitor the key financial risks facing the company together with the controls used for managing these risks.
The principal financial risks facing the company are as follows:
Credit risk covers default risk from counterparties where realisation of the value of the asset is dependent on the counterparty’s ability to perform.
The company’s exposure to credit risk is the risk that (i) investment advisory fees cannot be collected from the Luxembourg close-ended Funds, Lendable MSME Fintech Credit Fund and open-ended Lendable Master Impact Funds (ii) bank where the company’s deposits are held, fail.
The company’s credit risk is low and therefore it holds cash balances with a bank assigned a high credit rating, S&P A-1. The amount of credit exposure related to the company’s investment advisory clients is limited, as fees are drawn monthly or quarterly.
The company’s market risk is foreign exchange risk in respect of its debtors, investments and cash at bank held in currencies other than Pounds Sterling (£). The company earns its investment advisory fees in US Dollars and the wider Group’s operational currency is also US Dollars with the main source of income being asset management fees. The company has indirect market risk exposure through the support provided by the parent entity, Lendable Inc.
Currency forwards have been used to mitigate the risk of currency fluctuation.
Liquidity Risk is the risk that a company, although solvent as per the Statement of Financial Position, cannot maintain or generate sufficient resources to meet its payment obligations in full as they fall due, or can only do so at materially disadvantageous terms.
The company is responsible for maintaining liquid resources that are adequate in both amount and quality. While the company does generate its own revenue, the parent Lendable Inc, still supports the company and will continue to do so for at least another 12 months. Cash balances in the company are monitored on a regular basis and an annual stress test has been put in place to ensure adequate cash resources are available to meet obligations. The company is subject to Liquidity requirements under the new Investment Firm Prudential Review requirements.
Going Concern
Dynolabs Asset Management Ltd is the Investment Advisor to a) a Luxembourg close-ended Fund, Lendable MSME Fintech Credit Fund (LMFCF) that became operational on 1 October 2021 and b) a Luxembourg open-ended Fund, Lendable Master Impact Funds (LMIF) that became operational on 1 Feb 2023 and (c) a Cayman-based vehicle, Lendable SPC, from which it began earning Advisory and Performance fees as of 29 March 2024. Dynolabs Asset Management Ltd earns Advisory and Performance fees from LMFCF until May 2027 and ongoing fees from both LMIF and Lendable SPC. These fee streams are expected to be more than sufficient to cover the Company’s
projected ongoing costs. In addition, Lendable is currently raising two further funds, planned for launch in Q2 2025, for which Dynolabs Asset Management Ltd is expected to be appointed as Investment Advisor.
The Directors’ having reviewed the cash flow forecasts, projections and all available information both at Dynolabs Asset Management Ltd and at a group level have a reasonable expectation that there are adequate resources to continue in operational existence for the foreseeable future. Dynolabs Asset Management Ltd therefore continues to adopt the going concern basis in preparing its financial statements.
As permitted by Paragraph 1A of Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports) regulations 2008 certain matters which are required to be disclosed in the Directors’ Report have been omitted as they are included in the Strategic Report. These matters relate to the Business review, Future developments, Financial position at the reporting date, Principal risks and uncertainties, Financial key performance indicators and Non-financial key performance indicators.
Buzzacott LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
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:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and 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.
We have audited the financial statements of Dynolabs Asset Management Ltd (the ‘company’) for the year ended 31 December 2024 which comprise the Profit and Loss Account, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
Basis for 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
Opinions on other matters prescribed by the Companies Act 2006
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.
Auditor's responsibilities for the audit of the financial statements (continued)
We assessed the extent of compliance with the laws and regulations identified above through:
making enquiries of management;
reviewing legal expenditure throughout the year for any potential litigation or claims; and
considering the internal controls in place that are designed to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
determined the susceptibility of the company to management override of controls by checking the implementation of controls and enquiring of individuals involved in the financial reporting process;
reviewed journal entries to identify unusual transactions;
performed analytical procedures to identify any large, unusual or unexpected transactions and investigated any large variances from the prior year;
tested the occurrence of revenue by agreeing management fees to third party confirmations and investigated any material variances from expectations; and
carried out substantive testing to check the occurrence and cut-off of expenditure.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included:
agreeing financial statement disclosures to underlying supporting documentation; and
enquiring of management as to actual and potential litigation and claims.
There are inherent limitations in our audit procedures described above. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error as they may involve deliberate concealment or collusion. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the members and other management and the inspection of regulatory and legal correspondence, if any.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of the audit report
This report is made solely to the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an Auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
There was no other comprehensive income for 2024 or 2023.
Dynolabs Asset Management Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 20-22 Wenlock Road, London, England, N1 7GU.
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 £.
Other operating income
Other operating income consists of grant funding received from FSD Africa ("FSDA")”), a specialist development agency working to build and strengthen financial markets across sub-Saharan Africa, to cover eligible expenses incurred during the year.
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 assets and is credited or charged to profit or loss.
The company has taken an exemption from consolidation as the subsidiary's inclusion is not material for the purpose of giving a true and fair view of the accounts.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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.
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.
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, 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.
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.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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.
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.
The directors did not judge a bad debt provision was necessary as only intercompany balances outstanding at year end which are deemed to be fully recoverable.
An analysis of the company's turnover is as follows:
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The highest paid Director received remuneration of £275,103 (2023: £194,330).
The value of the company’s contributions paid to a defined contribution pension scheme in respect of the highest paid Director amounted to £1,321 (2023: £22,701).
The number of Directors to whom benefits were accrued under defined contribution pension schemes was 2 (2023:2).
Management does not consider there to be any key management personnel, as defined in FRS 102 Section 33 Related Party Disclosures, other than the Directors.
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 December 2024 are as follows:
The amounts due from group undertakings are unsecured and repayable on demand.
The amounts due to group undertakings are unsecured and repayable on demand.
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
At 31 December 2024 there is an amount of £5,992 (2023: £1,837) accrued on the balance sheet for contributions to be paid.
The company recognised revenue of £242,385 (2023: £1,254,557) with its parent company, Lendable Inc, in the year. As of 31 December 2024, there were £1,005,776 (2023: £409,950 payable) amounts receivable from Lendable Inc.
The company also recognised revenue of £139,637 (2023: £754,923) with its sister company Lendable Asset Management LLC. As of 31 December 2024, there were £3,031,489 (2023: £2,350,680) amounts payable to Lendable Asset Management LLC.
Dynolabs Limited, a sister company, owed £53,633 (2023: £21,041) to the Company.
A fixed floating charge over all assets of Dynolabs Asset Management Ltd was put in place with a negative pledge that prevents Dynolabs UK creating and security over its assets without the lender expressing consent, This was a result of a $2m loan facility put in place at the parent entity, Lendable, inc on 20 March 2022. As at 31 December 2024 the outstanding facility stood at £1,750,000.
In 2022, the Lendable Group put in place a long-term incentive scheme for some senior staff, running for 5 years from 1 March 2022 to 28 February 2027. Subject to the vesting conditions being met, payments would be due to employees in 3 equal instalments at the end of years 3,4, and 5.
Based on estimates as of 31 December 2024, those conditions for the first vesting period are likely to be met, and so a £257,663 valuation is currently included in the accruals balance. As at 31 December 2024, it is not likely that the conditions for the next two periods will be met. Therefore, a valuation of £nil is currently provided for those two vesting periods. Should the vesting conditions be met, the total outflows would be £525,326, payable in two instalments on 31 March 2026 and 31 March 2027.