Profit allocation and distributions
Profits are divided among the members based on the profit shares as set out in the LLP Agreement at such times and in such amounts as deemed appropriate by the Designated Members following completion of an investment series.
Profits are divided and distributed in the following order and priority:
- first, to the General Members until the General Members have received an amount equal to the Capital Contribution made by them in the relevant Investment Series;
- second, 10% to the capital account of the Corporate Member and 90% to the Members in proportion to their respective Percentage Interests in such Investment Series.
Going concern
In accordance with the requirements of FRS102, the valuations at the date of the statement of financial position reflect the economic conditions in existence at that date. The most recent valuation, carried out as of 31 December 2025, shows a decrease in the overall value of the investments held. The next date at which a valuation of unquoted investments will be performed will be as of 30 June 2026. The LLP has sufficient cash balances to cover its liabilities as they fall due for at least twelve months from the approval of the accounts and on this basis the members consider it appropriate for the accounts to be prepared on a going concern basis.
Members' participation rights
Members' participation rights are the rights of a member against the LLP that arise under the members' agreement (for example, in respect of amounts subscribed or otherwise contributed, remuneration and profits).
Members' participation rights in the earnings or assets of the LLP are analysed between those that are, from the LLP's perspective, either a financial liability or equity, in accordance with Section 22 of FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland', and the requirements of the Statement of Recommended Practice 'Accounting by Limited Liability Partnerships'. A member's participation right results in a liability unless the right to any payment is discretionary on the part of the LLP.
Amounts subscribed or otherwise contributed by members, for example members' capital, are classed as equity if the LLP has an unconditional right to refuse payment to members. If the LLP does not have such an unconditional right, such amounts are classified as liabilities.
Where profits are automatically divided as they arise, so the LLP does not have an unconditional right to refuse payment, the amounts arising that are due to members are in the nature of liabilities. They are therefore treated as an expense in the statement of comprehensive income in the relevant year. To the extent that they remain unpaid at the year end, they are shown as liabilities in the statement of financial position.
Conversely, where profits are divided only after a decision by the LLP or its representative, so that the LLP has an unconditional right to refuse payment, such profits are classed as an appropriation of equity rather than as an expense. They are therefore shown as a residual amount available for discretionary division among members in the statement of comprehensive income and are equity appropriations in the statement of financial position.
Other amounts applied to members, for example remuneration paid under an employment contract and interest on capital balances, are treated in the same way as all other divisions of profits, as described above, according to whether the LLP has, in each case, an unconditional right to refuse payment.
All amounts due to members that are classified as liabilities are presented in the statement of financial position within 'Loans and other debts due to members' and are charged to the statement of comprehensive income within 'Members' remuneration charged as an expense'. Amounts due to members that are classified as equity are shown in the statement of financial position within 'Members' other interests'.
Other Investments
Other investments are recorded at fair value. Fair value is the estimated amount that would be received to sell the portfolio investment in an orderly transaction between market participants at the measurement date. In determining fair value of Investments made in connection with participation in an accelerator program, the LLP considers several factors including, cost, stage of investee company, management team, geography, and the overall inherent value created from participation in the mentorship driven accelerator program and network.
The LLP also reconsiders an investment's fair value in connection with each material equity financing. The value of the last round of financing is a factor in determining fair value, but it is not the only factor. A subsequent equity financing that includes substantially the same group of investors as the prior financing is considered in valuing prior investments unless it can be demonstrated that the financing no longer represents fair value.
Occasionally a round of financing includes a significant investment from a strategic investor paying a premium due to benefits accruing uniquely to itself. The LLP evaluates whether such a premium is representative of what the most likely buyers of the investee company would also pay upon exit, and therefore, whether the price paid by the strategic investor is deemed to be the exit price (fair value) expected from market participants.
After some period of time, cost or the latest round of financing becomes less reliable as an approximation of fair value. The LLP assesses whether fair value has changed even though there has not been a new round of financing. Examples of changes in circumstances which may indicate a change in fair value include, but are not limited to, the following:
(a) The current performance of the investee company is significantly above or below the expectations at the time of the original investment. Potential indicators of this situation will include evaluation of the investee company's success or failure in attaining certain milestones, achieving technology breakthroughs, developing proprietary technology or significantly exceeding or failing to meet targets.
(b) Market, economic or investee company specific conditions have significantly improved or deteriorated since the time of the original investment. Potential indicators of this situation will include evaluation of broad changes in the economic climate, changes in the financing markets, changes in the legal or regulatory environment in which the investee company operates, changes in the investee company's cost structure, increased or decreased risk factors faced by the investee company, or significant fluctuations in share prices of quoted investee companies operating in the same or a related industry.
(c) Substantial decreases in the value of quoted, more senior securities of the investee company, defaults on any obligations of the investee company, a bankruptcy filing, significant ownership dilution caused by recapitalization of the investee company, or liquidity concerns that are expected to be more than short term in nature are circumstances which indicate a potential impairment in value.
Financial instruments
Basic financial assets and liabilities including, including trade and other receivables, cash and bank balances, trade and other payables are initially recognised at transaction price, 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. Such instruments are subsequently carried at amortised cost using the effective interest method.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Valuation of unquoted investments
The principal area of estimation uncertainty relates to the valuation of unquoted investments. In determining fair value, the members consider factors including recent investment or financing transactions, the investee company's financial performance and progress against key milestones, market and economic conditions, comparable company information, the rights attaching to the securities held and the prospects for a future realisation.
The valuation of early-stage investments is inherently subjective and may be affected by changes in assumptions, market conditions or the future performance of the investee companies. Consequently, the amounts ultimately realised on disposal may differ from the values recognised in the financial statements. The carrying value of unquoted investments at the reporting date was £10,970,661.