Introduction
On 1st June 2022, the board appointed Tim Mycock to join Astute Capital Plc to bolster the lending team in advance of raising further monies in accordance with the business plan, communicated to shareholders in early 2022. Tim has worked in real estate finance for the past 18 years and has previously led and grown real estate lending teams and therefore is an ideal candidate to join the board. Tim Mycock is responsible for establishing an institutional grade underwriting process and to focus on new deals going forwards.
In October 2022, Dave Symondson resigned from Astute Capital Plc and failed to serve out his agreed 3 month notice period. Dave was asked to produce a detailed report of the existing loans and to produce a detailed report to accompany this to allow a full handover to be conducted. The initial report received, lacked the level of detail required. When asked for this to be updated, a second spreadsheet was provided by Dave and his resignation immediately followed with legal letters not to contact him. The second spreadsheet also lacked the level of detail required, and therefore there was an incomplete handover.
It therefore led to a detailed review of each and every project to uncover what the latest position of each loan was, both from a financial and also a physical standpoint, which diverted resources away from achieving the businesses aims as previously communicated to shareholders.
Business model and risk management framework
Astute Capital Plc was established in 2016 to raise funds through a £500M secured limited recourse bond programme, listed on Euronext Dublin in August 2017, formerly the Irish Stock Exchange and the Vienna and Frankfurt Stock Exchanges from September 2020. In March 2022 the company completed a debt-to-equity restructuring to enable it to reposition itself in the new post Covid economic environment, to provide senior debt development loans to the real estate market. Since the restructuring and the events outlined in the introduction above, significant resources have had to be focused on the existing loan book and in particular litigation. Resource has also had to be focused on dealing with a number of UK authorities following complaints from a small number of shareholders.
Every effort has been made to admit the business on to a stock exchange. Our listing agent and solicitors have worked tirelessly alongside the Directors of the business to achieve a listing as quickly as possible, however, the delays have predominantly been down to issues faced by the stock exchange post Brexit. The Directors are very hopeful these will be resolved in the short to medium term. Upon listing, the business will then seek to raise fresh capital in line with the business plan previously communicated to shareholders.
The company has a number of milestones it needs to achieve prior to fulfilling the new business plan, which includes listing and the successful recovery of loans currently going through litigation. Once achieved, it is anticipated that the board will review the current financial business plan at that time alongside market conditions. It is currently envisaged that loans will focus on senior real estate debt opportunities up to 70% LTV as well as real estate development loans up to 65% LTGDV/ 80% LTC. These loans will be for experienced investors, developers and property companies who focus on either traditional build-to-sell or build-to-rent exit routes or for the development/ investment of other property income producing assets, such as purpose-built student accommodation (PBSA) or hotels.
There is an experienced management team together with a well-respected advisory board made up of individuals who will act as its credit committee. Independent RICS valuations will be carried out on all loans using our panel of chartered surveyors, who will be experienced in valuing the type of assets being offered as security by borrowers.
Loan Book
The net book value owed to Astute Capital PLC ("PLC") by Astute Capital Advisors ("ACA") as at 31st March 2023 is £1.01m and the restructuring of bondholders debt into equity, together with the loan book value now provides net assets of £0.677m. This will provide a stable platform to be able to raise fresh capital and secure institutional funding. This in turn will enable the delivery of the company’s new strategy that will result in shareholders achieving a competitive return on their capital, subject to the points made earlier in this report. The loan book has experienced significant impairment in the recent period.
The company forecasts that it will have facilities drawn down of £490m by the end of year 3, rising to £1,270m in year 5. Astute Capital PLC acquired the entire share capital of ACA on 31st March 2023 in order to take full control of the business and in turn its loan book.
Credit risk of related parties
The proceeds raised by the PLC through its bond issuance programme have been used by ACA to fund its lending activities with a focus on providing funding to third party borrowers with credit risk inherent to its lending activities.
The company will look to operate through PLC solely, no collateral manager being required within the new business model. The collateral management agreement was terminated on the 31st March 2023.
The principal risk management exercise is to ensure that the credit quality of asset loans is equal to or better than market standards whilst ensuring our security and legal structure of each asset loan provides maximum protection.
All ACA underlying borrowers that met the criteria required by collateral manager at the time loans were made have undergone a detailed review. This review concluded that our loan book would suffer some impairment and a write down be included within our accounts. After the write down the loan book value is £1.01m. ACA continues to provide close oversight of the assets and is maintained, right up to redemption of the facility.
The funding structure is described in greater detail in the business model and risk management framework section on page 1.
Possible exposure to fraud
ACA is exposed to possible fraud by borrowers, their professional advisers, as well as by employees. ACA is required to provide experienced individuals who will adopt processes and procedures to counter fraud.
With any form of litigation there is no certainty of a positive outcome until judgement is passed. We have sought legal counsel and advice in order to advise the board to mitigate this risk.
Liquidity Risk
Factors that could affect the company’s ability to raise fresh capital or secure institutional funding would create a significant liquidity risk for the company. Further adverse changes to market conditions could also affect the value of secured assets and impact the company’s loan book.
Interest Rate Risks
Rising interest rates have a significant impact to the UK economy, which is acutely felt in real estate. Fortunately, as per the business plan, all rate increases would be passed on to borrowers from our institutional financing. We aim to provide a competitive offering to the market, but there is a risk that if base rate/ SONIA increases too high that the real estate industry will simply stall as real estate schemes will become financially unviable. Interest rate risks could also impact our loan book whereby debt has been secured from 3rd party lenders.
UK property market
It is the company’s belief that, due to the current high inflation, there are severe pressures on businesses and occupiers to keep costs down including property costs and there must be a knock-on effect on occupational demand. Weakening demand is likely to impact on property values in most sectors.
On 2nd August 2023 the Bank of England’s Monetary Policy Committee (MPC) increased the base rate to 5.25%. This is the highest rate for 14 years. Global growth is expected to be stronger than projected in the February Monetary Policy Report, and core consumer price inflation in advanced economies has remained elevated. Wholesale gas futures and oil prices have fallen materially. The MPC will adjust Bank Rate as necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit.
There have been large and volatile moves in global financial markets, in particular since the failure of Silicon Valley Bank and in the run-up to UBS’s purchase of Credit Suisse and reflecting market concerns about the possible broader impact of these events. Overall, government bond yields are broadly unchanged and risky asset prices are somewhat lower than at the time of the Committee’s previous meeting.
The Bank of England’s Financial Policy Committee (FPC) has briefed the MPC about recent global banking sector developments. The FPC judges that the UK banking system maintains robust capital and strong liquidity positions and is well placed to continue supporting the economy in a wide range of economic scenarios, including in a period of higher interest rates. Therefore, the company’s assessment is that the UK banking system remains resilient.
Reflecting these developments, bank wholesale funding costs have risen in the United Kingdom and other advanced economies. The MPC will continue to monitor closely any effects on the credit conditions faced by households and businesses, and hence the impact on the macroeconomic and inflation outlook.
Likely future developments in the business of the Company
The company must now reach important milestones before it can commence its senior debt lending activities as per the new business model. These milestones include but are not limited to:
1. The listing/ admitting of the business on a Stock Exchange
2. Successful outcomes of its current legal proceedings
3. Procuring institutional funding and further fresh equity into the business
On behalf of the board
Astute Capital Plc was incorporated in England on 3 October 2016 as a Private Limited Company and converted to a Public Limited Company on 16th March 2017 and is therefore a Public Limited Company under the Companies Act 2006.
The financial statements have been prepared for the accounting period 1 April 2022 to 31st March 2023.
On 6 May 2021 the FCA posted an alert on its website which although only stated that Astute Capital Plc was not regulated, affected the company’s ability to raise capital and operate normally. Following the debt-to-equity restructure, PLC wrote to the FCA to update it and provide all information relating to the restructure and its new business model. On 2 August 2022 the FCA confirmed that after a thorough analysis of all the information provided it was satisfied that Astute was not in breach of its regulations and removed the alert.
An impairment review of the loan book in Astute Capital Advisors Ltd (ACA) has led to a charge in the profit and loss account of £1.35m.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Liquidity risk arises from the Company's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due.
The Board receives rolling 12-month cash flow projections on a regular basis as well as information regarding cash balances. At the end of the financial period, these projections indicated that the Company expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.
Credit risk is the risk of financial loss to the Company if a borrower or counterparty to a financial instrument and/or loan fails to meet its contractual obligations. Borrower loans will broadly fall into two categories: (a) secured loans to companies for the purpose of commercial property acquisition or refinance or development and (b) secured loans to small and medium sized companies for business purposes. There has been one new loan during the period by Astute Capital Plc, which has been repaid in full.
ACA provided funding to borrowers from time to time in accordance with its existing lending criteria. The strategy moving forward is to secure an institutional funding line to provide senior debt development loans so that we can take advantage of the pipeline of senior debt loans currently secured.
The board is made up of individuals who will act as its credit committee. Independent valuations will be provided by our panel of RICS valuers who will be experienced in valuing the type of assets being offered as security by borrowers together with institutional grade solicitors and RICS quantity surveyors to also provide independent professional advice.
It is the company’s belief that, due to the current high inflation, there are severe pressures on businesses and occupiers to keep costs down including property costs and there must be a knock-on effect on occupational demand. Weakening demand is likely to impact on property values in most sectors.
On 2nd August 2023 the Bank of England’s Monetary Policy Committee (MPC) increased the base rate to 5.25%. This is the highest rate for 14 years. Global growth is expected to be stronger than projected in the February Monetary Policy Report, and core consumer price inflation in advanced economies has remained elevated. Wholesale gas futures and oil prices have fallen materially. The MPC will adjust Bank Rate as necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit.
There have been large and volatile moves in global financial markets, in particular since the failure of Silicon Valley Bank and in the run-up to UBS’s purchase of Credit Suisse and reflecting market concerns about the possible broader impact of these events. Overall, government bond yields are broadly unchanged and risky asset prices are somewhat lower than at the time of the Committee’s previous meeting.
The Bank of England’s Financial Policy Committee (FPC) has briefed the MPC about recent global banking sector developments. The FPC judges that the UK banking system maintains robust capital and strong liquidity positions and is well placed to continue supporting the economy in a wide range of economic scenarios, including in a period of higher interest rates. Therefore, the company’s assessment is that the UK banking system remains resilient.
Reflecting these developments, bank wholesale funding costs have risen in the United Kingdom and other advanced economies. The MPC will continue to monitor closely any effects on the credit conditions faced by households and businesses, and hence the impact on the macroeconomic and inflation outlook.
Astute are currently working with its professional advisors on the listing of its shares on the Cyprus Stock Exchange.
In September 2023 Astute Capital Plc along with Astute capital Advisors partially settled its High Court claims and litigation (settled with 2 of 5 defendants) for sums received by Country large 444 Ltd in part redemption of Astute’s loan to Finlaw Property Ltd. This settlement amounts to £750k. Astute Capital Plc along with Astute capital Advisors continue to pursue its claims against Finlaw Property Ltd and its two directors (for full loan amount plus interest and costs) with a 7 day trial now listed to start in a 5 day window from 18 November 2024.
Information on likely future developments in the business of the Company has been included in the Strategic Report.
The Directors of the Company are listed above. The Directors are responsible for the day-to-day management of the Company and are responsible for the financial control, management, accounting and reporting functions of the Company.
The Company recognises the importance of and is committed to high standard of corporate governance. As a Company that is not yet listed the Company is not required to comply with the provisions of the UK Corporate Governance Code. However, in the interests of observing best practice on corporate governance, the Company on listing will observe the requirements of the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”), insofar as is appropriate having regard to the size and nature of the Company and the composition of the Board. A copy of the QCA Code is available at qca.com.
The board of the Company meet regularly to direct the overall strategy and operations of the Company with the aim of delivering shareholder value. Board meetings cover key areas of the Company’s affairs including overall strategy, approval of budgets, major capital expenditure and significant transactions and financing issues. The board is responsible for the effectiveness of the Company’s risk management and internal control systems. The board believes these are working effectively, but recognises the ongoing need for identification, evaluation and management of significant risks.
Outside of the scheduled meetings, the Directors maintain frequent contact with each other to discuss any issues of concern they may have relating to the Company or their areas of responsibility, and to keep them fully briefed on the Company’s operations.
The Company does not have a Nomination Committee at present. The appointment of new Directors is made by the board as a whole. This is considered reasonable for a Company of this size. The requirement for a Nomination Committee will be considered on an ongoing basis.
The Company has not adopted a formal policy on diversity; however, it is committed to a culture of equal opportunities for all, regardless of age, race or gender.
There is currently no internal audit function within the Company. The Directors consider this is appropriate of a Company of this size. An audit committee will be implemented upon listing and the appointment of an auditor is made by the board as a whole.
Following the sudden resignation of the Managing Director, Adrian David Symondson (Dave Symondson), from the business in October 2022, the remaining Directors and management team, commenced an immediate review of all existing loans that fell under Dave Symondson’s responsibility. Due to his failure to provide the board with adequate reporting and a formal handover of his responsibilities upon exit, all resources were diverted to focusing on the existing loan book.
The current position of the review of the existing loan book confirms the reason for multiple loans becoming litigious and, in some cases, severely or totally impaired was predominantly due to mismanagement. Whilst an enormous amount of work has gone into this review to date, this is still ongoing, due to the comprehensive and complex nature of these loans.
As part of our going concern review, we have 2 main factors affecting cash inflows over the next 12 months, these are:
1. Litigation in relation to the loan to Finlaw Property Ltd
2. The receipts of proceeds from a non-performing loan
Astute instructed top 10 UK&I chartered accountancy firm, PKF, to carry out a thorough and independent review of our business model and provide a market valuation of our business based on this revised model. After this robust review, PKF Accountants valued the business at £55m as at 31 March 2022 as well as projected values of £87.5m in year 3, £122.5m in year 4 and £145m in year 5.
Due to the restructure, we now have a positive balance sheet which will be the platform to assist us in securing institutional funding for which we have already instructed Cambridge Wilkinson, a leading global investment bank based in New York, to act on our behalf to secure the required funding.
On 2 August 2022 the FCA confirmed that after a thorough analysis of all the information provided it was satisfied that Astute was not in breach of its regulations and removed the alert. Between September and November 2022, the UK economy suffered a significant financial downturn as well as the Bank of England increasing its base rate at the highest rate increase in over 30 years. Astute Capital Plc restructured its business and proposed a new business model in March 2022 due to both its own financial circumstances and UK and Global economic instability. It was clear some form of a downturn was approaching in the UK but impossible to know when, however, the restructuring was based on it happening within the next 12 months. The new business model and forecasts used by PKF for the independent valuation clearly show no income in the year ending March 2023 as PLC forecasted a worst-case scenario of launching its new senior debt business model in April 2023.
The Company incurred a loss of £1,599,738 in the year, and based on forecasted cash inflows resulting from loan repayments, the management expect that the company will continue as a going concern for the next 12 months. However, the Board acknowledges that there is a material uncertainty which could give rise to significant doubt over the Company’s ability to continue as a going concern as the timing of these cash receipts is uncertain.
In conclusion, despite material uncertainty, based on all the above we are satisfied that the entity is a going concern.
Dividends
No dividends were declared or paid in the year (2022 - £69,182).
Independent Auditors
All the Directors as at the date of this report have taken all the necessary steps to make themselves aware of any relevant audit information, and to establish that the auditor is aware of that information. The Directors are not aware of any relevant audit information of which the Company's auditor is unaware. The auditors, MHA, have indicated their willingness to continue in office and a resolution concerning their re-appointment will be proposed at the Annual General Meeting.
We have audited the financial statements of Astute Capital Plc (the “Company”) for the year ended 31 March 2023, which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Accounting Standards as adopted by the United Kingdom (“UK adopted IFRSs”).
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.
Material uncertainty relating to going concern
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.
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.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received by branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors’ responsibilities statement set out on page xx, 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.
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.
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 is detailed below:
Obtaining an understanding of the legal and regulatory frameworks that the Company operates in, focusing on those laws and regulations that had a direct effect on the financial statements.
Enquiry of management to identify any instances of non-compliance with laws and regulations.
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
Enquiry of management around actual and potential litigation and claims.
Enquiry of management to identify any instances of known or suspected instances of fraud.
Discussing among the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
Reviewing minutes of meetings of those charged with governance.
Reviewing the control systems in place and testing the design and implementation of the controls.
Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business, and reviewing accounting estimates for bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance our engagement letter. 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 income statement has been prepared on the basis that all operations are continuing operations.
The notes on pages 16 to 30 form part of these financial statements.
The notes on pages 16 to 30 form part of these financial statements.
The notes on pages 16 to 30 form part of these financial statements.
The notes on pages 16 to 30 form part of these financial statements.
Astute Capital Plc is a public Company limited by shares and incorporated in England, United Kingdom. The address of the registered office is given on the Company information page and the nature of the Company's operations and its principal activities are set out in the strategic report.
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 thousand.
The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.
Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.
Following the sudden resignation of the Managing Director, Adrian David Symondson (Dave Symondson), from the business in October 2022, the remaining Directors and management team, commenced an immediate review of all existing loans that fell under Dave Symondson’s responsibility. Due to his failure to provide the board with adequate reporting and a formal handover of his responsibilities upon exit, all resources were diverted to focusing on the existing loan book.
The current position of the review of the existing loan book confirms the reason for multiple loans becoming litigious and, in some cases, severely or totally impaired was predominantly due to mismanagement. Whilst an enormous amount of work has gone into this review to date, this is still ongoing, due to the comprehensive and complex nature of these loans.
As part of our going concern review, we have 2 main factors affecting cash inflows over the next 12 months, these are:
1. Litigation in relation to the loan to Finlaw Property Ltd
2. The receipts of proceeds from a non-performing loan
Astute instructed top 10 UK&I chartered accountancy firm, PKF, to carry out a thorough and independent review of our business model and provide a market valuation of our business based on this revised model. After this robust review, PKF Accountants valued the business at £55m as at 31 March 2022 as well as projected values of £87.5m in year 3, £122.5m in year 4 and £145m in year 5.
Due to the restructure, we now have a positive balance sheet which will be the platform to assist us in securing institutional funding for which we have already instructed Cambridge Wilkinson, a leading global investment bank based in New York, to act on our behalf to secure the required funding.
On 2 August 2022 the FCA confirmed that after a thorough analysis of all the information provided it was satisfied that Astute was not in breach of its regulations and removed the alert. Between September and November 2022, the UK economy suffered a significant financial downturn as well as the Bank of England increasing its base rate at the highest rate increase in over 30 years. Astute Capital Plc restructured its business and proposed a new business model in March 2022 due to both its own financial circumstances and UK and Global economic instability. It was clear some form of a downturn was approaching in the UK but impossible to know when, however, the restructuring was based on it happening within the next 12 months. The new business model and forecasts used by PKF for the independent valuation clearly show no income in the year ending March 2023 as PLC forecasted a worst-case scenario of launching its new senior debt business model in April 2023.
In conclusion, and in conjunction with the audit opinion, based on all the above we are satisfied that the entity is a going concern.
The Company incurred a loss in the year of £1,599,738, and based on forecasted cash inflows resulting from loan repayments, the management expect that the company will continue as a going concern for the next 12 months. However, the Board acknowledges that there is a material uncertainty which could give rise to significant doubt over the Company’s ability to continue as a going concern as the timing of these cash receipts is uncertain.
The company recognises revenue from the following major sources:
Interest income
The nature, timing of satisfaction of performance obligations and significant payment terms of the company's major sources of revenue are as follows:
Interest income is recognised in the Statement of comprehensive income using the effective interest method.
Interest income is recognised when it is probable the economic benefits will flow to the Company and the amount of the revenue can be measured reliably. Interest income is accrued on a lime basis, by reference to the principal outstanding and at the effective rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
The tax expense represents the sum of the tax currently payable and deferred tax.
In the current year, the following new and revised Standards and Interpretations have been adopted by the company and have an effect on the current period or a prior period or may have an effect on future periods:
At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted):
The Directors have assessed the impact of these accounting changes on the company. To the extent that they may be applicable, the Directors have concluded that none of these pronouncements will cause material adjustments to the company's Financial Statements.
There are no other UK adopted international accounting standards (IFRSs) that are effective for the first time in this financial year that would be expected to have a material impact on 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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
An analysis of the company's revenue is as follows:
The amount represents interest received and accrued under the Collateral Management Agreement on funds advanced of £2.365m (2022 - £21,173k) at a fixed interest rate of 11.75% (2022 – 11.75%).
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
Directors
Adrian Bloomfield received Directors consultancy fees totaling £48,103 (2022 - £41,078) in the year and Adrian Symondson received Directors consultancy fees of £8,333 (2022 - £45,833) through Jellicoe Ltd. Timothy Mycock received Directors consultancy fees totaling £31,000 (2022 - £nil).
The charge for the year can be reconciled to the loss per the income statement as follows:
Basic loss per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares outstanding during the year.
There was a share split that happened in 2022 prompting the units from 50,000 to 16,999,684.
Amounts owed by related parties comprise of loans to the collateral manager of £1,014k (2022 - £2,090k)
(see note 16 for further details).
Loans to the collateral manager represent were contractually due for repayment one month prior to the relevant bond series redemption date. The bonds, with accrued interest relating to the bonds have now been converted to shares, which means they no longer have a redemption date.
Collateral interest owed by the collateral manager is interest accrued on the loans advanced to the Collateral Manager under the CMA. The collateral agreement was terminated by both parties on the 31 March 2023. Astute Capital PLC acquired 100% of the shares in Astute Capital Advisors Ltd on the 31st March 2023.
£1,351m of loans to Astute Capital Advisors Ltd, the collateral manager, were impaired in the year.
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
No significant receivable balances are impaired at the reporting end date.
The directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 196 days. For most suppliers no interest is charged on amounts payable for the first 30 days after the date of the invoice. Thereafter, interest is charged at various rates. The company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
The directors consider that the carrying amount of trade payables approximates to their fair value.
The shares have been paid up to the amount of £12.5k with each share paid up to the amount of 25p with 75p outstanding. All shares carry equal voting, capital repayment and dividend distribution rights.
The new ordinary shares have a nominal value of £0.0029412 and are called up and fully paid. They carry voting, capital repayment and dividend distribution rights.
On 31 March 2022 the 50,000 Ordinary shares of £1 each were sub-divided into 16,999,864 Ordinary shares of £0.0029412 each.
Preference shares were issued in prior year and the current financial year which do not carry voting rights, but carry a liquidation priority in the event of liquidation or sale of the company.
These preference shares are held by the original bondholders as well as new investors as part of the restructuring of bondholders debt into equity.
On the 31st March 2022 28,020,321 preference shares were allocated (bondholders conversion) at £0.0029412 each. During this financial year, 316,070 preference share were issued at £0.0029412 each.
The B shares do not carry voting rights, but carry liquidation priority in the event of liquidation or sale of the company.
The company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The capital structure of the company consists of debt, cash and cash equivalents and equity comprising share capital, reserves and retained earnings. The company reviews the capital structure annually and as part of this review considers that cost of capital and the risks associated with each class of capital.
In April 2023, the classes of shares changed names from Ordinary to Ordinary B and Ordinary B to Ordinary A.
Astute are currently working with its professional advisors on the listing of its shares on the Cyprus Stock Exchange.
In September 2023 Astute Capital Plc along with Astute Capital Advisors partially settles its High Court claims and litigation (settles with 2 of 5 defendants) for sums received by Country Large 444 Ltd in part redemption of Astute's loan to Finlaw Property Ltd. This settlement amounts to £750k. Astute Capital Plc along with Astute Capital Advisors continue to pursue its claims against Finlaw Property Ltd and its two directors (for loan amount plus interest and costs) with a 7 day trial now listed to start in a 5 day window from 18 November 2024.
Astute Capital Advisors Limited (formerly TAR Asset Management)- collateral manager
Astute Capital PLC was established to raise funds through a £500m secured limited recourse bond programme. listed on the Irish Stock Exchange. The funds raised by the issuer will be lent to Astute Capital Advisors under a collateral management agreement under which Astute Capital Advisors Limited will deal with loan origination, approve and enter into borrower loans on behalf of Astute Capital Plc.
Astute Capital Advisors Limited was established in order to act as collateral manager on behalf of Astute Capital Plc and is incorporated in the United Kingdom with its registered office at Salisbury House, London Wall, London, EC2M 5PS. The management of Astute Capital Advisors Limited initially included both Directors of Astute Capital Plc until their resignation in July 2017. The Directors of Astute Capital Plc were also shareholders of Astute Capital Advisors Limited until March 2017. One of the Directors of Astute Capital PLC continues to exercise significant control over Astute Capital Advisors Limited through their close cooperation with the Directors of Astute Capital Advisors Ltd around the nature of the collateral agreement.
In addition, Astute Capital Advisors Limited will assume the obligations of the Company in respect of office costs, staff employment and introducer payments and commissions for funds raised.
Astute Capital Advisors Limited will pay a fixed rate of interest of 11.75% (2022 – 11.16%) to Astute Capital Plc in respect of funds provided for the purpose of entering into borrower loans on behalf of the Company up to the termination of the collateral management agreement on the 31st March 2023.
The amounts owed from Astute Capital Advisors Ltd at the year-end consisted of £1.7m (2022 - £1.2m) of monies lent to it under the CMA and associated interest on those funds. These figures include amounts relating to expenditure incurred by the Astute Capital Plc on Astute Capital Advisors Lid's behalf.
Other related party transactions
Within administration costs there Adrian Bloomfield received Directors consultancy fees totaling £48,103 (2022 - £41,078) in the year and Adrian Symondson received consultancy fees of £8,333 (2022 – £45,833) through Jellicoe Ltd. Timothy Mycock received consultancy fees of £31,000 (2022 - £nil). There are fees of £20,000 (2022 - £nil) paid to Asset Securities, a company owned by Richard Symonds.
Details of the company's subsidiaries at 31 March 2023 are as follows:
During the year, Astute Capital PLC acquired a 100% shareholding in Astute Capital Advisors Limited on the 31st March 2023.
The investments in subsidiaries are all stated at cost, totalling £3.
The controlling party was until 28 March 2022, the charitable trust, established by the deed dated 27th July 2017, called Astute Capital Charitable Trust, who were gifted 100% of the shares of the Company. Druces LLP were the ultimate controlling party of D&A Nominees Ltd, the trustees of the charity until they were replaced by Adrian Bloomfield and Richard Symonds.
From 28 March 2022 control changed to the Trustees of the RSMB Trust Fund after they acquired the shares from the trust. Upon consent to the debt to equity conversion by the Bondholders on 31 March 2022 the Trustees of the RSMB Trust Fund remained the controlling party with more than 50% of the voting rights of the company with no other party with more than 5% of voting rights.