Company registration number: OC302881
FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2022
31 December 2022
DG PARTNERS LLP
DG PARTNERS LLP
INFORMATION
Designated Members
DM Gorton
DG Partners Services Limited
LLP registered number
OC302881
Registered office
55 Baker Street London
W1U 7EU
Independent auditors
BDO LLP
Statutory Auditor 55 Baker Street London
W1U 7EU
Bankers
Barclays Bank Plc 1 Churchill Place London
E14 5HP
Solicitors
Travers Smith LLP 10 Snow Hill London
EC1A 2AL
DG PARTNERS LLP
CONTENTS
Page
1 - 3
Members' Report
4
Members' Responsibilities Statement
Independent Auditors' Report
5 - 8
Statement of Comprehensive Income
9
Statement of Financial Position
10 - 11
Reconciliation of Members' Interests
12
Statement of Cash Flows
13
Notes to the Financial Statements
14 - 23
DG PARTNERS LLP
MEMBERS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The members present their annual report together with the audited financial statements of DG Partners LLP (the "LLP") for the year ended 31 December 2022.
Principal activities and review of business
The principal activity of the LLP in the year under review was that of providing investment management services to certain funds and managed accounts for which it acts as investment manager.
DG Partners Services Limited acts as a service company to the LLP and is also a member of the LLP.
Since October 2010, a number of members of the LLP have also been appointed as members of BH-DG Systematic Trading LLP ("BHDG"). Although the LLP manages some of its funds using the same systematic trading models as BHDG, the members are of the opinion that this does not constitute a conflict of interest.
The LLP shares a wide range of resources with BHDG, these being primarily staff and technology. Costs associated with these resources are shared between the two entities and are spilt on a percentage usage basis.
The members do not anticipate any change in the overall nature of the LLP's principal activity in the foreseeable future. Please refer to the section entitled "Principal Risks and Uncertainties" below in relation to inflation, Ukraine-Russia conflict and catastrophic events related disclosures.
Results and allocation to members
The results for the year are shown in the Statement of Comprehensive Income on page 9. The LLP allocated £nil (2021: £nil) of its profits to its members. The Statement of Financial Position as detailed on page 10 shows a satisfactory position. Members' total interests amount to £9,593,954 (2021: £3,714,028).
Any profits that have been shared amongst the members are decided by the Board, and governed by the Partnership Agreement dated 4 November 2019.
Policy for members' drawings, subscriptions and repayments of members' capital
Policies for members' drawings, subscriptions and repayment of members' capital are governed by the Limited Liability Partnership Agreement. In summary, the capital is contributed by each member upon admission to the Partnership and shall be repayable only at the absolute discretion of the Board. The Board also has sole discretion to determine and vary the level of each member's drawings.
Financial risk management
The key business risks and uncertainties affecting the business relate to the performance and level of assets under management.
The members consider that the LLP has sufficient capital and other resources to continue in operation as a going concern for at least 12 months from the date of these accounts.
The LLP is not exposed to any material cashflow, price, liquidity or credit risks.
Page 1
DG PARTNERS LLP
MEMBERS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Members
The members of the LLP during the year and up to the date of this report were as follows:
D M Gorton*
DG Partners Services Limited*
U M Aziz
M B Corden
I M Nazir (appointed 1 January 2022)
S Radu
D F Rix
D J Seaton
M A Turnbull
DG Systematic Holdings Limited
*denotes designated member
Statement of disclosure of information to auditors
So far as each person who was a designated member at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report of which the auditor is unaware. Having made enquiries of fellow members, each member has taken all the steps that they are obliged to take as a member in order to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.
Going concern
The LLP is a regulated entity. As such, the LLP is required to maintain sufficient capital under the regulations of the Financial Conduct Authority, which it continues to do. The LLP believes it is appropriate to prepare the financial statements on a going concern basis because it is the intention to continue to run the business as such, there are financial plans for a period including twelve months from the date of the approval of these financial statements that indicate the LLP will continue to operate as a going concern and a reasonable expectation that those plans can be implemented. Please refer to the section entitled "Principal Risks and Uncertainties" below in relation to inflation, Ukraine-Russia conflict and catastrophic events related disclosures.
Principal risks and uncertainties
Catastrophic Events
Catastrophes that result in disrupted markets and/or interrupt the expected course of events, such as health crises, pandemics and epidemic diseases, as well as other natural disasters, war or civil disturbance, strike action affecting critical infrastructure and services, acts of terrorism, power outages and other unforeseeable and external events, and public response to or fear of such crises or events, may have an adverse effect on the operations of the firm and investments for clients.
For example, any preventative or protective actions taken by governments in response to such crises or events may result in periods of business disruption either in specific countries or worldwide. Such actions may significantly reduce, delay, suspend or otherwise disrupt the operations of the firm, clients and service providers to the foregoing. Further, the occurrence and duration of such crises or events could adversely affect economies and financial markets either in specific countries or worldwide.
The impact of such crises or events could lead to negative consequences for the firm's clients, including, without limitation, significant reduction in the net asset value of clients, reduced liquidity of investments, restrictions on the ability of clients to value investments and the potential suspension of the calculation of net asset value and hence the suspension of issues, redemption and exchanges of shares.
Page 2
DG PARTNERS LLP
MEMBERS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Ukraine-Russia conflict
Following the Russian invasion of Ukraine in February 2022, various countries have imposed sanctions upon Russia and connected persons and entities. The firm's client's exposure to Russia, Belarus and Ukraine is very limited and the various sanctions have not been applicable to our activities thus far.
Where the firm has identified operational risks relating to the conflict (e.g. due to service providers connected to Ukraine), this has been monitored and where mitigation is required, appropriate courses of action will be pursued. The firm continues to monitor the situation as well as any potential widening of the conflict zone beyond Ukraine.
Inflation
Inflation continues to persist at high levels and as a result the Firm has seen increases in service provider costs generally. Where possible, the Firm has sought to mitigate these rises by way of negotiation. However, in reality the impact of inflation is a market wide phenomenon beyond the Firm's control and therefore an expected cost of doing business.
AIFMD and MIFIDPRU Disclosure
In accordance with the rules of the Financial Conduct Authority, the LLP has published its risk management objectives and policies on its regulatory capital requirements resources. This information can be found on the LLP's website at http://dgpartners.co.uk/ and is not audited.
Remuneration code disclosures
The remuneration code disclosures of the LLP as required by the FCA Prudential Sourcebook for Banks, Building Societies and Investment Firms (MIFIDPRU) 8.6 and SYSC 19A - Disclosure obligations in relation to the remuneration of code staff can be found on the LLP's website at http://dgpartners.co.uk/ and are not audited.
UK Stewardship code disclosures
The remuneration code disclosures of the LLP as required by the FCA Prudential Sourcebook for Banks, Building Societies and Investment Firms (BIPRU) COBS 2.2.3 - Disclosure of commitments to the Financial Reporting Council's Stewardship Code are available on the LLP's website at http://www.dgpartners.co.uk/.
Auditors
The auditors, BDO LLP have indicated their willingness to continue in office and a resolution concerning their reappointment will be proposed at the members' meeting held to approve these financial statements
This report was approved by the members and signed on their behalf by:
DM Gorton
Designated member
Date: 28 April 2023
Page 3
DG PARTNERS LLP
MEMBERS' RESPONSIBILITIES STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2022
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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law, as applied to LLPs, 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 LLP and of the profit or loss of the LLP for that period.
In preparing these financial statements, the members are required to:
select suitable accounting policies for the LLP's financial statements and then apply them consistently;
make judgments 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 entity will continue in business.
The members are responsible for keeping adequate accounting records that are sufficient to show and explain the LLP's transactions and disclose with reasonable accuracy at any time the financial position of the LLP and to enable them to ensure that the financial statements comply with the Limited Liability Partnerships (Accounts and Audit) (Application of the Companies Act 2006) Regulations 2008. They are also responsible for safeguarding the assets of the LLP and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Page 4
DG PARTNERS LLP
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DG PARTNERS LLP
Opinion
In our opinion the financial statements:
give a true and fair view of the state of the Limited Liability Partnership's affairs as at 31 December 2022 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006, as applied to limited liability partnerships by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008.
We have audited the financial statements of DG Partners LLP (“the Limited Liability Partnership”) for the year ended 31 December 2022 which comprise the Statement of comprehensive income, Statement of financial position, Reconciliation of members' interests, 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 Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
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 Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
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.
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.
Page 5
DG PARTNERS LLP
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DG PARTNERS LLP (CONTINUED)
Other information
The Members are responsible for the other information. The other information comprises the information included in the report and accounts, other than the financial statements and our Auditors' Report thereon. 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.
Other Companies Act 2006 reporting as applied to limited liability partnerships
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:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
we have not received all the information and explanations we require for our audit.
Responsibilities of members
As explained more fully in the Members' Responsibilities Statement on page 4, 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.
Page 6
DG PARTNERS LLP
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DG PARTNERS LLP (CONTINUED)
Auditors' 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 Auditors' 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.
Extent to which the audit was capable of detecting irregularities, including fraud
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 extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We gained an understanding of the legal and regulatory framework applicable to the Company and the industry in which it operates, and considered the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud. These included but were not limited to compliance with Companies Act 2006 and the accounting standards.
We focused on laws and regulations that could give rise to a material misstatement in the financial statements. Our tests included, but were not limited to:
•
agreement of the financial statement disclosures to underlying supporting documentation;
•
enquiries of management; and
•
review of minutes of board meetings throughout the period.
We also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
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 Auditors' Report.
Use of our report
This report is made solely to the Limited Liability Parthership'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) (Applications of Companies Act 2006) Regulations 2008. Our audit work has been undertaken so that we might state to the Limited Liability Parthership's members those matters we are required to state to them in an Auditors' 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 Parthership and the Limited Liability Parthership's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Page 7
DG PARTNERS LLP
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DG PARTNERS LLP (CONTINUED)
Elizabeth Hooper (Senior Statutory Auditor)
for and on behalf of
BDO LLP
Statutory Auditor
55 Baker Street London
W1U 7EU
Date: 29 April 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)
Page 8
DG PARTNERS LLP
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022
2022
2021
£
£
Turnover
Management and performance fees
9,048,288
16,088,119
1,215,149
1,314,750
Other income
10,263,437
17,402,869
Cost of sales
Fees payable
(5,685,178)
(4,812,239)
Gross profit
5,451,198
11,717,691
(3,016,293)
Administrative expenses
(2,506,821)
(2,008,095)
(1,223,637)
Expenses reimbursement to DG Partners Services Limited
16
Operating profit
1,720,740
6,693,303
5
32
5,308
Interest receivable and similar income
306,547
46,225
Net foreign exchange gains
1,766,997
7,005,158
Profit for the year before members' remuneration and profit shares
1,766,997
Profit for the year before members' remuneration and profit shares
7,005,158
6
Members' remuneration charged as an expense
(677,206)
(1,046,857)
1,720,740
6,327,952
Profit for the financial year available for discretionary division among
members
There was no other comprehensive income for 2022 (2021: £NIL).
The notes on pages 13 to 23 form part of these financial statements.
Page 9
DG PARTNERS LLP
REGISTERED NUMBER:OC302881
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2022
31 December 2022
2022
2021
£
£
Fixed assets
334,094
577,674
Intangible assets
7
377
Tangible assets
8
334,094
578,051
Current assets
Debtors: amounts falling due after more than one year*
9
73,720
Debtors: amounts falling due within one year*
9
11,288,355
5,081,980
6,558,087
1,844,452
Cash and cash equivalents
10
17,920,162
6,926,432
(4,978,090)
(939,870)
Creditors: Amounts Falling Due Within One Year
11
12,942,072
5,986,562
Net current assets
Total assets less current liabilities
13,276,166
6,564,613
Creditors: amounts falling due after more than one year
12
(202,500)
13,276,166
6,362,113
13,276,166
6,362,113
Net assets attributable to members
Represented by:
Loans and other debts due to members within one year
994,701
409,600
Loans and other debtors due to members
13
409,600
994,701
Members' other interests
Members' capital classified as equity
7,009,816
7,008,816
Members' other interests - other reserves
5,271,649
(1,056,303)
classified as equity
12,281,465
5,952,513
13,276,166
6,362,113
Total members' interests
Amounts due from members (included in
9
debtors)
(3,682,212)
(2,648,085)
13
Loans and other debts due to members
994,701
409,600
Members' other interests
12,281,465
5,952,513
3,714,028
9,593,954
Page 10
DG PARTNERS LLP
REGISTERED NUMBER:OC302881
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the members and were signed on their behalf by:
DM Gorton
Designated member Date: 28 April 2023
The notes on pages 14 to 23 form part of these financial statements.
Page 11
DG PARTNERS LLP
RECONCILIATION OF MEMBERS' INTERESTS FOR THE YEAR ENDED 31 DECEMBER 2022
Total members'
EQUITY
DEBT
interests
Members' other interests
Loans
and
Members'
other
capital
amounts
due
(classified as
Other reserves
to/(from) members
equity)
Total
Total
Total
£
£
£
£
£
£
7,006,816
3,725,020
(1,776,443)
(1,505,353)
5,230,373
(1,505,353)
Balance at 1 January 2021
Profit for the year before members' remuneration charged as an expense
-
1,766,997
-
1,766,997
-
1,766,997
Members' remuneration charged as an expense
-
1,046,857
(1,046,857)
1,046,857
(1,046,857)
-
-
2,000
1,000
(1,000)
(1,000)
2,000
Capital introduced
Drawings on account and distribution
of profit
-
-
(1,550,860)
-
(1,550,860)
(1,550,860)
(228,129)
(228,129)
-
(228,129)
-
-
Other movements
5,952,513
(1,056,303)
Balance at 31 December 2021
(2,238,485)
7,008,816
(2,238,485)
3,714,028
Members' remuneration charged as an expense
-
-
-
677,206
677,206
677,206
Profit for the year available for
discretionary division among members
-
-
6,327,952
6,327,952
6,327,952
-
Members' interests after profit for
the year
3,725,020
(1,505,353)
(1,505,353)
7,008,816
(1,776,443)
5,230,373
585,101
-
Amounts introduced by members
585,101
586,101
1,000
1,000
Drawings on account and distribution
of profit
(1,711,333)
-
-
(1,711,333)
-
(1,711,333)
12,281,465
Balance at 31 December 2022
(2,687,511)
9,593,954
(2,687,511)
5,271,649
7,009,816
2022
2021
£
£
994,701
409,600
Amounts due to members
(2,238,485)
(3,682,212)
Amounts due from members
(2,687,511)
(2,238,485)
There are no existing restrictions or limitations which impact the ability of the members of the LLP to reduce the amount of Members' other interests.
Page 12
DG PARTNERS LLP
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
2022
2021
£
£
Cash flows from operating activities
Profit for the financial year
6,327,952
720,140
Adjustments for:
Amortisation of intangible assets
305,538
325,352
Depreciation of tangible assets
377
2,680
Loss on disposal of tangible assets
38,664
-
Interest received
(5,308)
(32)
(Increase)/decrease in debtors
(5,245,968)
120,739
Increase/(decrease) in creditors
3,835,720
(1,263,400)
Foreign exchange gains
(306,547)
(46,225)
Payments to members
(1,711,333)
(1,550,860)
Other transactions with members
585,101
(228,129)
Members' remuneration charged as an expense
677,206
1,046,857
Net cash generated from/(used in) operating activities
4,462,738
(834,214)
Cash flows used in investing activities
Purchase of intangible fixed assets
(61,958)
-
Purchase of tangible fixed assets
-
(789,001)
Interest received
5,308
32
(56,650)
(788,969)
Net cash used in investing activities
Cash flows used in financing activities
1,000
1,000
Members' capital contributed
1,000
Net cash used in financing activities
1,000
Net increase/(decrease) in cash and cash equivalents
4,407,088
(1,622,183)
Cash and cash equivalents at beginning of year
1,844,452
3,420,410
Foreign exchange gains
306,547
46,225
Cash and cash equivalents at the end of year
6,558,087
1,844,452
Cash and cash equivalents at the end of year comprise:
6,558,087
1,844,452
Cash at bank
6,558,087
1,844,452
The notes on pages 14 to 23 form part of these financial statements. The net debt for the year ended 31 December 2022 comprises amounts due to members, see net debt reconciliation (note 14).
Page 13
DG PARTNERS LLP
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
1.
General information
DG Partners LLP ("the LLP") is a limited liability partnership registered in England and Wales. The registered office is 55 Baker Street, London, W1U 7EU.
Certain presentations of prior year figures in the balance sheet and notes to the financial statements have been changed to ensure that the prior year presentation is in line with the current year presentation. These changes have been highlighted in the balance sheet and notes to the financial statements by use of an asterisk.
2.
Accounting policies
2.1
Basis of preparation of financial statements
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006 and the requirements of the Statement of Recommended Practice "Accounting by Limited Liability Partnerships" issued in December 2021.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the LLP's accounting policies (see note 3).
The following principal accounting policies have been applied:
2.2
Going concern
The LLP is a regulated entity. As such, the LLP is required to maintain sufficient capital under the regulations of the Financial Conduct Authority, which it continues to do. In the "Principal Risks and Uncertainties" section of the Members' report the members have considered the impact that catastophic events, the Ukraine-Russia conflict, and inflation could have on the LLP through various stress test scenarios.
The LLP believes it is appropriate to prepare the financial statements on a going concern basis because it is the intention to continue to run the business as such, there are financial plans for a period including twelve months from the date of the approval of these financial statements that indicate the LLP will continue to operate as a going concern and a reasonable expectation that those plans can be implemented.
2.3
Turnover
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the LLP and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received, excluding discounts, rebates, value added tax and other sales taxes.
Turnover represents fees for investment management and advisory services provided during the year and facility recharges. Management fees and facility recharges are recognised on an accruals basis and performance fees are accrued when they crystallise. All turnover in the year arose from continuing activities performed in the United Kingdom, being the supply of fund management services to offshore funds and facilities recharges to BH-DG Systematic Trading LLP ("BHDG").
Turnover also includes other income which comprises recharges for costs incurred by the LLP on behalf of other entities, accounted for on an accruals basis.
2.4
Cost of sales
Cost of sales, which is stated net of value added tax, is recognised on an accrual basis.
Page 14
DG PARTNERS LLP
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
2.
Accounting policies (continued)
2.5
Interest income
Interest income is recognised in the statement of comprehensive income.
2.6
Taxation
No provision has been made for taxation in the financial statements. Each member is exclusively liable for any tax liabilities arising out of their interest in the LLP. Tax is assessed on the individual members and not on the LLP.
2.7
Operating leases
Rentals paid under operating leases are charged to the statement of comprehensive income on a straight-line basis over the lease term. The value of any rent-free periods are amortised over the life of the lease.
2.8
Intangible assets
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
2.9
Tangible fixed assets
Tangible fixed assets are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
The LLP adds to the carrying amount of an item of tangible fixed assets the cost of replacing part of such an item when that cost is incurred. If the replacement part is expected to provide incremental future benefits to the LLP the carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
The estimated useful lives range as follows:
over the term of the lease
-
Leasehold improvements
Computer equipment
over three years
-
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Cash and cash equivalents
2.10
Cash is represented by cash and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.
Page 15
DG PARTNERS LLP
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
2.
Accounting policies (continued)
2.11
Debtors
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment, except where repayable on demand.
2.12
Creditors
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
2.13
Foreign currency translation
Functional and presentation currency
The LLP's functional and presentational currency is pound sterling.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non- monetary items measured at fair value are measured using the exchange rate when fair value was determined.
2.14
Members' participation rights
Members' participation rights are the rights of a member against the LLP that arise under the LLP Agreement dated 4 November 2019. 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 'Liabilities and Equity'. A member's participation right results in a liability where there is a contractual obligation on the part of the LLP to deliver cash, or other financial assets, to the member. Amounts subscribed or otherwise contributed by members, for instance members' capital, are classified as equity where the LLP has an unconditional right to avoid delivering cash or other assets to the member (i.e. the right to any payment or repayment is discretionary on the part of the LLP). If the LLP does not have such an unconditional right, such amounts are classified as liabilities.
Page 16
DG PARTNERS LLP
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
3.
Judgments in applying accounting policies and key sources of estimation uncertainty
In applying the LLP's accounting policies, the members are required to make judgements, estimates and assumptions in determining the carrying amounts of assets and liabilities. The members' judgements, estimates and assumptions are based on historical experience and other factors that are considered to be applicable. Due to the inherent subjectivity involved in making such judgements, estimates and assumptions, the actual results and outcomes may differ.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised, if the revision affects only that year or in the year of the revision and future years, if the revision affects both current and future years.
(a)
Critical accounting estimates and assumptions
The LLP makes estimates and assumptions concerning the future. The resulting accounting estimates will by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
Useful economic lives of non-financial assets
The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 8 for the carrying amount of the tangible fixed assets, and note 2.9 for the useful economic lives for each class of assets.
(b)
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Recoverability of accrued income
When assessing recoverability, the members consider factors such as aging of the debtors and past experience of recoverability. On the basis of this assessment, the amount £112,462 (2021: £394,750) included in accrued income has been considered fully recoverable.
4.
Cost of sales
Cost of sales represents fees for investment management and advisory services incurred during the year. Management fees payable are recognised on an accruals basis and performance fees payable are accrued when the underlying income crystallises. All cost of sales in the year arose from continuing activities performed in the United Kingdom, being the receipt of fund management services to offshore funds by BHDG.
Page 17
DG PARTNERS LLP
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
5.
Operating profit
The operating profit is stated after charging:
2022
2021
£
£
305,538
325,352
Amortisation (note 7)
377
2,680
Depreciation (note 8)
-
38,664
Loss on disposal of fixed assets
292,759
118,791
Other operating lease rentals
Auditors' remuneration:
41,000
29,702
Auditors' remuneration
16,687
22,338
Auditors' remuneration - non-audit
6.
Members' remuneration
A member's share in the profit or loss for the year is accounted for as an allocation of profits or losses. Any unallocated losses are distributed amongst the founder members in accordance with the LLP Agreement.
Amounts due to members in respect of equity participation rights, following a discretionary division of profits, are debited to equity and credited to members' current accounts in the year when the allocation occurs. Unallocated profits and losses are included within 'other reserves' and are included in equity. Any drawings paid in respect of these unallocated profits are included within debtors.
2022
2021
No.
No.
8
10
The average number of members during the year was
2022
2021
£
£
Profit for the financial year before members' remuneration and profit share and available for division among members
7,005,158
1,766,997
(677,206)
(1,046,857)
Members' remuneration charged as an expense
6,327,952
720,140*
During the year profit allocation of £nil was made (2021: £nil), with the total profit attributable to the member with the largest entitlement, including members' remuneration charged as an expense, being £500,000 (2021:
£589,357).
Page 18
DG PARTNERS LLP
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
7.
Intangible assets
Computer software
£
Cost
3,054,027
At 1 January 2022
61,958
Additions
3,115,985
At 31 December 2022
Amortisation
2,476,353
At 1 January 2022
305,538
Charge for the year on owned assets
2,781,891
At 31 December 2022
Net book value
334,094
At 31 December 2022
At 31 December 2021
577,674
Page 19
DG PARTNERS LLP
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
8.
Tangible fixed assets
Computer equipment
£
Cost or valuation
129,734
At 1 January 2022
(1,071)
Write off
128,663
At 31 December 2022
Depreciation
129,357
At 1 January 2022
377
Charge for the year on owned assets
(1,071)
Write off
128,663
At 31 December 2022
Net book value
-
At 31 December 2022
At 31 December 2021
377
9.
Debtors
2022
2021
£
£
Due after more than one year
73,720
-
Other debtors*
73,720
-
2022
2021
£
£
Due within one year
7,193,772
1,820,634
Trade debtors
3,682,212
2,648,085
Amounts due from members
1,254
1,127
Amounts due from related parties (note 16)
144,642
160,632
Other debtors*
266,475
451,502
Prepayments and accrued income
11,288,355
5,081,980
Page 20
DG PARTNERS LLP
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
10.
Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following balances:
2022
2021
£
£
6,558,087
1,844,452
Cash at bank
6,558,087
1,844,452
11.
Creditors: Amounts falling due within one year
2021
2022
£
£
68,516
644,252
Trade creditors
270,000
313,911
Other creditors
312,996
3,802,213
Amounts due to related parties (note 16)
288,358
217,714
Accruals and deferred income
939,870
4,978,090
12.
Creditors: Amounts falling due after more than one year
2021
2022
£
£
Other creditors
202,500
-
202,500
-
13.
Loans and other debts due to members
2022
2021
£
£
994,701
409,600
Other amounts due to members (note 16)
994,701
409,600
Loans and other debts due to members rank equally with debts due to unsecured creditors in the event of a winding up. All amounts due to members are interest free and repayable on demand.
Page 21
DG PARTNERS LLP
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
14.
Analysis of Net Debt
Exchange
At 31
At 1 January
Arising from
rate
December
2022
cash flows
movements
2022
£
£
£
£
1,844,452
4,407,088
306,547
6,558,087
Cash at bank
1,844,452
4,407,088
306,547
6,558,087
Net debt (before members' debt)
Loans and other debts due to members
(7,009,816)
(7,008,816)
Members' capital
-
(1,000)
Other amounts due to members
(994,701)
-
(409,600)
(585,101)
Net debt
(5,573,964)
3,820,987
306,547
(1,446,430)
15.
Commitments under operating leases
At 31 December 2022 the LLP had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
2022
2021
£
£
680,818
218,700
Within one year
330,825
-
Later than 1 year and not later than 5 years
1,011,643
218,700
Page 22
DG PARTNERS LLP
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
16.
Related party transactions
During the year, the LLP reimbursed expenses of £2,008,095 (2021: £1,223,637) to DG Partners Services Limited ("DGP LTD"), a designated member of the LLP. During the year, DGP LTD made disbursement payments of £1,693 (2021: £3,036) on behalf of the LLP. The LLP received £20,313 (2021: £14,198) during the year on behalf of DGP LTD and made payments of £1,445,000 (2021: £1,470,000) to DGP LTD. At 31 December 2022, £994,701 (2021: £409,600) was due to DGP Ltd and is included within amounts due to members.
DGP LLC is a US based company which is a wholly owned subsidiary of DG Partners International Limited, the ultimate controlling party of DGP LTD. During the year, the amount owed to the LLP increased by £127 through foreign exchange differences. At 31 December 2022, £1,254 (2021: £1,127) was due from DGP LLC which is included within debtors.
David Gorton, a designated member of the LLP, is also a member of BHDG. During the year, the LLP charged BHDG facility charges of £930,578 (2021: £749,492) and incurred facility charges from BHDG of £1,471,096 (2021:
£1,105,325). In addition, the LLP is the manager and AIFM of BHST and ERISA, as mentioned in the Members' Report. The LLP passed on management and performance fees of £5,601,158 (2021: £4,619,446) to BHDG, which is recognised in cost of sales. At 31 December 2022, a net amount of £3,802,213 (2021: £312,996) was due to BHDG which is included within creditors.
Key management personnel are considered to be the members of the LLP and the cost to the LLP has been disclosed in the reconciliation of members' interests and the members' remuneration note (note 6).
During the year, 5 (2021: 3) members of the LLP were also members of BHDG and they received £1,830,750 (2021: £2,328,527) remuneration from BHDG.
17.
Controlling party
The ultimate controlling party is considered to be DM Gorton.
Page 23
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