REG - Aurora UK Alpha PLC - Final Results
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RNS Number : 7010Y Aurora UK Alpha PLC 31 March 2026
Aurora UK Alpha plc
LEI: 2138007OUWIZFMAGO575
Annual Report for the year ended 31 December 2025
.
Strategic Report
Company Performance
As at For the year ended
31 December 2025
31 December 2025
Net Asset Value ("NAV") per share(1) 299.2p (2024: 256.17p) NAV per share total return(1) 16.8% (2024: -4.3%)
Share price 272.00p (2024: 227.00p) Share price total return(1) 19.8% (2024: -5.5%)
Share price discount to NAV per share(1) 9.1% (2024: 11.4%) FTSE All-Share Index total return ("Benchmark") 23.9% (2024: 9.5%)
Active Share ratio(1) 95.9% (2024: 95.9%) Dividend per share 4.70p (2024: 3.00p)
Net Assets £329.2m (2024: £293.5m) Ongoing charges(1) 0.35% (2024: 0.45%)
(1) Definitions of these Alternative Performance Measures ("APMs") together
with how these have been calculated can be found on pages 101 to 104.
Five Year Summary
As at 31 December 2025 2024 2023 2022 2021
Share price 272.00p 227.00p 247.00p 194.50p 234.50p
NAV per share 299.22p 256.17p 274.34p 203.45p 253.78p(#)
Share price discount to NAV per share (9.1)% (11.4)% (10.0)% (4.4)% (7.6)%
Year ended 31 December
Share price total return 19.8% (5.7)% 28.8% (16.3)% 13.5%
NAV per share total return 16.8% (4.3)% 36.3% (19.1)% 17.1%
FTSE All-Share Index total return 23.9% 9.5% 7.9% 0.3% 18.3%
Dividends per share 4.70p 3.00p 3.45p 2.97p 1.84p
(#) Before 2022 the NAV per share was not adjusted for IFRS2.
Cumulative return since appointment of the Investment Manager
The Company's performance in absolute terms and relative to the FTSE All-Share
Index (total return) benchmark since Phoenix was appointed as Investment
Manager on 28 January 2016 is shown below:
Cumulative total return %
Share price (total return) 102.4
NAV per share (total return) 117.0
Benchmark (total return) 134.0
.
Chair's Statement
I am pleased to present the Aurora UK Alpha plc annual report for the year
ended 31 December 2025.
Performance
Performance for the year to 31 December 2025 was a welcome improvement on
2024, though lagging the FTSE All-Share Index. The NAV per share total return*
for the year was 16.8% (2024: -4.3%) and, with the discount of the share price
to the NAV having narrowed, the share price total return* was 19.8% (2024:
-5.5%). The benchmark FTSE All-Share Index total return was 23.9% (2024:
9.5%). With a concentrated portfolio and a focus on identifying out of favour
names the portfolio diverges significantly from the benchmark, as reflected
in its active share ratio* of 96%. It is therefore expected for performance to
diverge over shorter periods, but the strategy is targeted at outperforming
the index over the long-term and we remain confident that it can.
Top positive contributors in the year were Ryanair, Lloyds Banking Group,
Frasers Group and Burberry. Barratt Redrow was the most significant
detractor.
For further details on the portfolio and performance, please see the
Investment Manager's Report on pages 22 to 25.
*Alternative Performance Measure (see page 102)
Cancellation of Share Premium Account
In short, this will give the Board greater flexibility to return capital to
shareholders in future, including through buybacks.
The Company has built up a substantial share premium account through historic
share issuances, augmented by the large share issuance made in connection with
the combination with Artemis Alpha Trust plc ("ATS") in 2024. The share
premium account is non-distributable.
The Companies Act 2006 and the Companies (Reduction of Share Capital) Order
2008 permit the Company, with the sanction of a special resolution of its
shareholders and the confirmation of the High Court of Justice in England and
Wales (the "Court"), to cancel the amount standing to the credit of its share
premium account and apply the amount to create distributable reserves. The
creation of a distributable reserve in this manner will provide a significant
pool of reserves which can be used, if required, to fund share buybacks or
other distributions/returns of capital to shareholders in accordance with
applicable law. The cancellation will therefore provide the Company with more
flexibility in how capital may be managed in the future.
Accordingly, the Board is proposing special resolution (Resolution 13) at the
forthcoming AGM, which seeks shareholder approval to cancel the entire amount
standing to the credit of the Company's share premium account, following which
the Company will make an application to the Court to obtain its confirmation
of the cancellation. Subject to confirmation by the Court and the
cancellation of the share premium account taking effect, the amount so
cancelled will be credited to a distributable reserve.
The Investment Manager and Performance Fees
Phoenix has managed the Company's portfolio since January 2016 and throughout
their appointment the team has employed a focused and patient investment
approach.
Phoenix earns no ongoing annual management fee, and instead is paid an annual
performance fee, equal to one third of any outperformance of the Company's NAV
against its benchmark, the FTSE All-Share Index (total return).
The performance fee is paid by issuance of the Company's ordinary shares,
which are subject to a fixed three-year clawback period. This means issued
shares will be returned by the Investment Manager in the event that
outperformance versus the index reverses on the third-year anniversary. If
outperformance fully reverses, the Investment Manager receives nothing. No
performance fee was earned in the year to 31 December 2025 (2024: £nil).
Share Price Discount
The Board closely monitors the discount to NAV at which the Company's shares
trade. During 2025 the discount narrowed from 11.4% at the end of 2024 to 9.1%
at the end of 2025. This narrowing is welcome and closing the discount
continues to be one of the Board's key objectives. To encourage demand for the
Company's shares, which should tend to increase their price and narrow the
discount, Phoenix, Deutsche Numis, and Frostrow Capital promote the Company
proactively.
Additionally, on 11 February 2025 the Board announced the commencement of a
discretionary share buyback programme and the Company undertook its first
share buyback on 6 June 2025. Up to 31 December 2025 the Company bought back
into treasury 4,538,824 shares, at an average price of 252.0p per share. These
buybacks are aimed at helping to provide market liquidity when it is lacking
and also demonstrate the Board's faith in the value of the portfolio. The
activity seems to have helped to stabilise the discount, while also being
accretive to remaining shareholders.
The Board is seeking to renew the power granted to it by shareholders to buy
back shares at the forthcoming annual general meeting. The Board will also
seek to renew its powers to issue new shares and sell shares from treasury in
order to be able to issue shares to investors should the shares return to a
premium, as well as to enable the issue of shares to the Investment Manager in
respect of performance fees earned.
Annual General Meeting ("AGM") and separate Investment Manager presentation
event
Consistent with the Company's recent practice, this year's AGM will not
include an Investment Manager presentation. The AGM will be held at the
Company's registered office, 25 Southampton Buildings, London WC2A 1AL, on 10
June 2026 at 1 p.m. to consider the business set out in the Notice of Meeting
on pages 106 to 108.
A separate investor event will be held at 4 p.m. on 14 October 2026 at the
Chartered Accountants Hall, 1 Moorgate Place, London EC2R 6EA. This event has
been well attended in previous years and is intended to be of interest to both
existing and prospective Aurora shareholders. It will include multiple
speakers from the Investment Manager and is intended to be recorded and made
available afterwards on the Company's website.
With respect to the AGM, the Board strongly encourages shareholders to
register their votes online in advance of the meeting by visiting
https://uk.investorcentre.mpms.mufg.com/login and following the instructions
on the site. Appointing a proxy online will not restrict shareholders from
attending the meeting in person should they wish to do so and will ensure
their votes are counted if they are not able to attend. Shareholders are
invited to send any questions they may have to the Company Secretary by email
to info@frostrow.com ahead of the meeting.
Ongoing Charges
It is pleasing that the ongoing charges have reduced from 0.45% to 0.35%. This
follows the ATS transaction in 2024, which increased the asset base and
reduced the fixed charges on a per share basis. As a reminder, shareholders
pay the Investment Manager no annual management fee, as outlined above and on
pages 41 and 42.
Dividend
The Board's policy on dividends is to pay out substantially all of the
Company's net revenue earned in the year. Accordingly, the Board is
recommending a final dividend of 4.70p per ordinary share in respect of the
year ended 31 December 2025. If approved by shareholders at the AGM the
dividend will be paid on 25 June 2026 to shareholders who appear on the share
register as at 15 May 2026, with an ex-dividend date of 14 May 2026. Last year
no final dividend was paid. Instead, an interim dividend of 3.0p per share
was declared in advance of the ATS combination and paid to shareholders on
6 December 2024. Dividends in respect of the last five years are shown on
page 5. Revenue earnings are not a key objective of the Company and dividends
are expected to vary each year.
Lord Howard Flight
It is with sadness that I report the passing of Lord Howard Flight, who served
as Company Chair from July 2011 to June 2022. Howard was instrumental in
Aurora moving to Phoenix as its Investment Manager in 2016 and during his
tenure the Company grew from £35 million to £194 million. Howard had a long
and illustrious career in fi nance and politics.
From a personal perspective, Howard invited me onto the Board in 2019, when my
profile was far from typical for an investment trust director. That decision,
like his earlier support for Phoenix's management of Aurora, reflected
something characteristic of him: a willingness to look beyond convention and
back people he believed in. I am deeply grateful for the trust he placed in
me.
On behalf of the Board, I thank Howard for his many contributions, and our
thoughts are with his family.
Outlook
Markets are volatile with many uncertainties globally, not least the war in
Iran, and for patient, long-term investors, periods like this have
historically set the foundations for strong future returns. This is backed up
by Phoenix's estimate of the portfolio's intrinsic value which stands at a
substantial premium to the current NAV. The buyback programme underscores the
Board's confidence in the portfolio's value, and the narrowing of the
discount during the year is encouraging. The Company offers a differentiated,
deeply researched portfolio with genuine alignment of interests through
Phoenix's fee structure. We remain confident that, over time, this approach
will greatly reward shareholders.
Lucy Walker
Chair
30 March 2026
.
Investment Objective and Policy
Investment objective
The Company's investment objective is to provide shareholders with long-term
total returns by investing predominantly in a portfolio of UK listed
companies.
Investment policy
The Company seeks to achieve its investment objective by investing
predominantly in a portfolio of UK listed companies. The Company may from
time to time also invest in companies listed outside the UK and unlisted
securities. The investment policy is subject to the following restrictions,
all of which are at the time of investment:
• The maximum permitted investment in companies listed outside the UK
at cost price is 20% of the Company's gross assets;
• The maximum permitted investment in unlisted securities at cost
price is 10% of the Company's gross assets;
• There are no pre-defined maximum or minimum sector exposure levels
but these sector exposures are reported to and monitored by the Board in order
to ensure that adequate diversification is achieved;
• The Company's policy is not to invest more than 15% of its gross
assets in any one underlying issuer (measured at the time of investment)
including in respect of any indirect exposure through Castelnau Group Limited
("Castelnau");
• The Company may from time to time invest in other UK listed
investment companies, but the Company will not invest more than 10% in
aggregate of the gross assets of the Company in other listed closed-ended
investment funds; and
• Save for Castelnau Group Limited, the Company will not invest in any
other fund managed by the Investment Manager.
While there is a comparable index for the purposes of measuring performance
over material periods, no attention is paid to the composition of this index
when constructing the portfolio and the composition of the portfolio is likely
to vary substantially from it. The portfolio will be relatively concentrated.
The exact number of individual holdings will vary over time but typically the
portfolio will include core holdings in 15 to 20 companies. The Company may
use derivatives and similar instruments for the purposes of capital
preservation.
The Company does not currently intend to use gearing. However, if the Board
did decide to utilise gearing the aggregate borrowings of the company would be
restricted to 30% of the aggregate of the paid-up nominal capital plus the
capital and revenue reserves.
Any material change to the investment policy of the Company will only be made
with the approval of shareholders at a general meeting. In the event of a
breach of the Company's investment policy, the Directors will announce through
a Regulatory Information Service the actions which will be taken to rectify
the breach.
Dividend Policy
The Company does not have a fixed dividend policy. However, the Board expects
to distribute substantially all of the net revenue arising from the investment
portfolio. Accordingly, the Company is expected to pay an annual dividend that
may vary each year.
Borrowing Policy
The Company is not prohibited from incurring borrowings for working capital
purposes, however the Board has no current intention to utilise borrowings.
Whilst the use of borrowings should enhance the total return on the Company's
shares where the return on the underlying assets is rising and exceeds the
cost of borrowing, it will have the opposite effect where the underlying
return is falling, further reducing the total return on the shares. As a
result, the use of borrowings by the Company may increase the volatility of
the NAV per share.
The Company has a policy not to invest more than 10% of its gross assets in
other UK listed investment companies. As a consequence of its investments, the
Company may therefore itself be indirectly exposed to gearing through the
borrowings from time to time of these underlying investment companies.
Company Purpose and Key Performance Indicators
Company purpose and strategy
The Company's purpose is encapsulated in its investment objective, which is to
provide shareholders with long-term total returns by investing predominantly
in a portfolio of UK listed companies.
To achieve the investment objective, the Board has agreed an investment
policy, as set out on page 9) and has delegated its implementation to Phoenix
Asset Management Partners Ltd ("Phoenix" or "the Investment Manager").
As an externally managed investment trust, all of the Company's day-to-day
management and administrative functions are outsourced to third party service
providers. As a result, the Company has no executive directors, employees or
internal operations.
However, the Board remains responsible for all aspects of the Company's
affairs, including monitoring the investment strategy and the review of
investment performance. It also has responsibility for all strategic policy
issues, including share issuance and buy backs, share price and
discount/premium monitoring, corporate governance matters, investor relations,
dividends and gearing.
Key performance indicators "KPI's"
The Board measures the Company's success in attaining its objective by
reference to KPI's as follows:
a. To make an absolute total return for shareholders on a long-term
basis;
b. To make a relative total return for shareholders on a long-term
basis, as measured against the Company's benchmark, the FTSE All-Share Index
(total return);
c. The Board seeks to ensure that the operating expenses of running
the Company as a proportion of NAV (the Ongoing Charges Ratio) are kept to a
minimum; and
d. The discount/premium to NAV per share at which the Company's shares
trade is also closely monitored in view of its effect on shareholder returns.
These are alternative performance measures ("APMs"). Whereas the Financial
Statements (on pages 76 to 100) set out the required statutory reporting
measures of the Company's financial performance, the Board additionally
assesses the Company's performance against these APMs, which are viewed as
being particularly relevant for the Company. These APMs are widely used within
the investment company sector and the Directors believe they enhance the
comparability of information and assist investors in understanding the
Company's performance. Further information on each of the KPI's is set out
below. Definitions of the APMs and the basis of their calculation are set out
on pages 101 and 102.
The Chair's Statement on pages 6 to 8 incorporates a review of the highlights
during the year.
The Investment Manager's Report on pages 22 to 25 gives further details on the
portfolio and how performance has been achieved.
Performance (KPIs a and b)
The Directors regard the Company's share price total return to be the overall
measure of performance over the long term, since it approximates the return in
the hands of shareholders. It combines the change in the share price with the
dividends paid to shareholders, which are added back as though reinvested at
the ex-dividend date.
The Directors consider the Company's NAV per share total return to be a key
indicator of the Investment Manager's performance. The NAV per share total
return is the change in the Company's NAV per share with distributions to
shareholders added back.
The Board monitors these against the Company's benchmark, the FTSE All-Share
index (total return), outperformance of which drives the remuneration of the
Investment Manager.
Shareholder return (share price total return) for the year ended 31 December Share price total return relative over/(under) performance against the FTSE
2025 19.8% (2024: -5.5%) All-Share index (total return) benchmark for the year ended 31 December 2025
(4.1)% (2024: -15.0%)
NAV per share total return for the year ended 31 December 2025 16.8% (2024: NAV per share total return relative over/(under) performance against the FTSE
-4.3%) All-Share index (total return) benchmark for the year ended 31 December 2025
(7.1)% (2024: -13.8%)
The Company delivered positive performance in 2025 under both of these total
return measures, so the absolute return target was achieved in the year, but
performance fell short of the return posted by the benchmark index.
Longer term, the Company's cumulative return since Phoenix was appointed has
been positive, achieving the absolute return objective. However, long term
performance against the benchmark has been mixed, with a cumulative shortfall
since appointment.
Cumulative shareholder return, including dividends, since the appointment of Cumulative shareholder return over/(under) performance against the benchmark
Phoenix as Investment Manager, from 28 January 2016 to 31 December 2025 from 28 January 2016 to 31 December 2025 (31.6)%
102.4%
Cumulative NAV per share total return, including dividends, since the Cumulative NAV per share total return over/(under) performance against the
appointment of Phoenix as Investment Manager, from 28 January 2016 to 31 benchmark from 28 January 2016 to 31 December 2025 (17.0)%
December 2025 117.0%
Ongoing charges Premium/Discount to NAV
(KPI c)
(KPI d)
Ongoing charges represent the costs that shareholders can reasonably expect The discount of the price at which the Company's shares trade to the NAV per
the Company to pay from one year to the next under normal circumstances, share is considered a key indicator of performance as it impacts the share
excluding performance fees and taxation. price total return and can provide an indication of how investors view the
Company's performance and its investment objective. Accordingly, it is closely
Phoenix does not earn an ongoing annual management fee, but instead is paid an monitored by the Board.
annual performance fee, only if the benchmark is outperformed, equal to one
third of the outperformance of the Company's NAV against its FTSE All-Share
Index (total return) benchmark.
The Board monitors the Company's other operating costs carefully and aims to
maintain a sensible balance between good quality services and costs. As the
size of the Company grows the ongoing charge figure is expected to reduce.
Ongoing charge 2025 0.35% Discount at 31 December 2025 9.1%
Based on the Company's average net assets for the year ended 31 December 2025, The share price closed at a discount of 9.1% to the NAV per share as at
the Company's ongoing charge figure calculated in accordance with the 31 December 2025 (2024: 11.4% discount). During the course of the year, based
Association of Investment Companies ("AIC") methodology was 0.35% (2024: on the daily published NAVs per share (which are not adjusted to comply with
0.45%). IFRS 2 (see page 15)), the Company's shares traded at a discount of between
7.3% and 13.2%, with an average discount of 10.2% (2024: the Company's shares
The ongoing charge has shown a welcome reduction following the Company's traded at a discount of between 3.6% and 15.5% to NAV per share, with an
combination with Artemis Alpha Trust plc in November 2024. average discount of 9.4%).
Other Performance Indicators
Given their contribution to total returns, the Board also closely monitors the
Revenue Result and Dividend.
Revenue Result and Dividend
The Company's revenue after tax for the year ended 31 December 2025 was
£5,176,000 (2024: £2,556,000). The Board is recommending a final dividend
of 4.70p per share, to be paid on 25 June 2026 to shareholders on the register
on 15 May 2026 (2024: interim dividend 3.0p).
Our registrar, MUFG Corporate Markets ("MUFG"), administers a Dividend
Re-Investment Plan ("DRIP") on behalf of the Company whereby direct
shareholders resident in the United Kingdom can choose for MUFG to apply their
cash dividend to buy further shares in the market. Details about the DRIP,
including the terms and conditions and how to join or exit the DRIP are
available at https://uk.investorcentre.mpms.mufg.com/login or by calling MUFG
on +44 (0)371 664 0300. Calls are charged at the standard geographic rate and
will vary by provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 9.00 a.m. and
5.30 p.m., Monday to Friday, excluding public holidays in England and Wales.
Elections for the DRIP to be applied in respect of the 2025 dividend must be
received by the registrar by 4 June 2026.
Net Asset Value per Share (NAV per share)
The Company recognises performance fees and clawbacks on fees paid in prior
performance periods under IFRS 2 - Share-based Payment in its annual and half
year financial statements. However, for the purposes of the Company's NAVs
that are announced daily to the London stock exchange and other regulatory
information services, the current performance fee and any clawback on fees
paid in prior performance periods are recognised on a liability basis, which
diverges from the Company's accounting policy.
The table below is a reconciliation between the NAV per share as at
31 December 2025 announced on the London Stock Exchange on 2 January 2026
and the NAV per share disclosed in these financial statements. The difference
is principally the result of amortising performance fees over the vesting
period in accordance with IFRS 2 - Share-based Payment in these financial
statements, whereas the NAV per share as at 31 December 2025 published on
2 January 2026 treated the performance fees as earned on 31 December 2025,
in accordance with the investment management agreement. The remaining
reconciling balances relate to adjustment of the unquoted investment
valuations and expenses, due to timing lag.
NAV per
share
NAV
p
£'000
NAV as published on 2 January 2026 329,582 299.53
Reversal of performance fee clawback accounted for under non-IFRS 2 approach (561) (0.51)
Adjustments on final valuation of unquoted investments and expenses 226 0.20
NAV as disclosed in these financial statements 329,247 299.22
NAVs and performance quoted on the Company's website, other than within the
Interim and Annual Reports, are based on the unaudited daily NAVs.
.
Portfolio
Top Holdings
as at 31 December 2025
Company Sector Holding Valuation Percentage Date Average Share Market
in Company
£'000
of net assets
of first
cost per
price
capitalisation
%
purchase
share*
Million
Castelnau Group Limited# Financial 51,877,587 48,506 14.7 Oct-21 £0.92 £0.94 £314
Frasers Group Plc Retail 7,120,364 48,276 14.7 Jun-07 £4.36 £6.78 £3,051
Barratt Redrow Plc Construction 11,558,366 44,026 13.4 Nov-18 £4.55 £3.81 £5,437
Lloyds Banking Group Plc Financial 39,857,700 39,156 11.9 Sep-08 £0.54 £0.98 £57,849
Ryanair Holdings Plc Leisure 1,447,150 37,301 11.3 May-19 €13.28 €29.52 €30,996
Burberry Group Plc Retail 1,123,025 14,251 4.3 Jan-24 £6.20 £12.69 £4,581
Other holdings (less than 3%) 95,720 29.1
Total holdings 327,236 99.4
Other current assets and liabilities 2,011 0.6
Net assets 329,247 100.0
* Average net cost including sales.
# Castelnau is a multi-sector financial holding company, listed on the
Specialist Fund Segment of the London Stock Exchange. Castelnau is also
managed by Phoenix and its value is excluded from the Company's net assets
when calculating performance fees earned by Phoenix to avoid double charging.
As at 31 December 2025, the Company held 15.6% of the issued share capital of
Castelnau (2024: 15.8%).
The AIC SORP recommends disclosure of the ten largest portfolio holdings. The
Company has instead chosen to disclose all holdings representing more than 3%
of the portfolio, consistent with the Investment Manager's longstanding
approach to portfolio reporting. The Board considers this threshold to be in
the best interests of shareholders, as disclosure of smaller positions, which
are typically less liquid and may represent holdings in the course of being
built or realised, could allow other market participants to anticipate the
Company's trading activity to the detriment of existing shareholders.
Given the highly concentrated nature of the portfolio, disclosure on this
basis captures a substantial proportion of total assets, in many cases a
larger share than would result from a mechanical top ten disclosure applied to
a more diversifi ed portfolio. As at the year end, six holdings exceeded the
3% threshold and these have been presented, representing the substantial
majority of the portfolio by value.
.
Portfolio Analysis
as at 31 December 2025
Sector Percentage of Net
Assets
%
Financial* 30.4
Retail 25.6
Leisure 17.5
Construction 16.4
Other sectors (less than 3%) 9.5
Other current assets and liabilities 0.6
Total 100.0
* Castelnau is included in the Financial classification as it is a
multi-sector financial holding company.
.
Statement from the Chief Investment Officer of the Investment Manager
The outbreak of conflict in Iran in recent weeks has generated significant
news flow and, with it, triggered the natural human impulse to shorten one's
time horizon in response to threat. We think this instinct is worth resisting.
Geopolitical shocks of this kind, however alarming in the moment, rarely alter
the long-term economics of well-run businesses in a fundamental way.
A more consequential force, in our view, is the profound shift underway in
artificial intelligence. The internet created and destroyed more value than
any recession in living memory. AI has the potential to do the same, rewriting
competitive dynamics, changing human behaviour and rendering some business
models obsolete while creating new ones that are difficult to imagine today.
We have thought carefully about what this means for each business we own. For
a funeral home, a housebuilder or an airline, the scope for AI to
fundamentally disrupt the underlying economics is limited. Where we believe
disruption is possible, we are careful to invest with management teams that
are genuinely alert to it.
Periods of profound uncertainty tend to produce overreactions in both
directions. The opportunity, as ever, lies in knowing what something is worth
when the price alone is all anyone can see. If we navigate the uncertainty
clearly and think carefully through what it means for each business, we
believe we will find ourselves well positioned to act when the opportunities
are most compelling.
We recognise that a decade is a period long enough to be a fair judge of any
investment manager and over that time frame, our returns have fallen short of
what we set out to achieve and what our investors deserved. We examined that
record honestly in the Company's September 2025 Factsheet, which we encourage
investors interested in the findings to read (it can be found at
www.auroraukalpha.com in the Investor Centre). The process is stronger as a
result, and what the analysis also made clear is that the core investment
engine, applied to its intended purpose, has not only been performing well but
getting better throughout.
Today, the portfolio on our own measures of value is more attractively priced
than it has been for some time. Historically, it is from precisely these
conditions, when value is abundant and patience is tested, that our best
returns have come. We do not know when that value will be recognised, but we
are confident that it will be.
The Investment Manager's Report that follows is written by Kartik Kumar and
covers the portfolio positions and activity in detail.
Gary Channon
Chief Investment Officer
Phoenix Asset Management Partners
30 March 2026
.
Investment Manager's Report
The Phoenix Approach
At Phoenix, we seek to deliver high returns with low risk.
We aim to do so by identifying exceptional businesses, waiting patiently for a
compelling opportunity to invest, and then holding until the underlying
economics of the business is recognised in dividends and share prices.
Stocks, unlike most investments, have no maturity date and can be held
indefinitely. Yet their immediate liquidity tempts most investors to behave
as though they do, often creating mis-pricings that we seek to exploit. We aim
to invest with a long-term mindset that the market in aggregate rarely seems
to apply.
Our portfolios are deliberately focused with typically no more than 15 to 20
core holdings, each the product of intensive and often years-long research.
Our primary protection against risk is knowledge and understanding, rather
than the number of investments we hold. We diversify only to the degree
necessary to protect against our own mistakes.
What we have described is value investing, a well-established philosophy that
is simple to understand but genuinely difficult to apply. In investing, we
are often our own worst enemy as human nature itself works against us. For
that reason, we draw on behavioural psychology in our approach with the aim of
fostering clear thinking.
Since our founding in 1998, we have applied both disciplines with the same
consistency, embedding the lessons of our mistakes into our framework along
the way. The result over that extended period has been significant long-term
outperformance, although we are conscious that past success is no guarantee of
future wisdom.
Performance
Our performance is best understood alongside three points of context.
Share prices in the short term are driven by sentiment and narrative rather
than fundamentals. The cash flows that ultimately determine the value of a
business change far more slowly than prices suggest. We are therefore
reluctant to place too much weight on any single period's movements. It is a
little like explaining the weather when what matters is the climate.
We own a concentrated portfolio of typically no more than 15 to 20 core
holdings against an index of hundreds. That concentration means our
performance will deviate meaningfully from the index in any given period:
sometimes in our favour, sometimes not. Over the long term, we expect that
deviation to be significantly in our favour.
Our fee structure is straightforward and we believe genuinely unusual. We
charge no management fee. We earn a performance fee from the Company only when
we outperform the index, paid entirely in the Company's shares rather than
cash. Those shares are subject to a three-year clawback, so if the
outperformance that generated the fee subsequently reverses, we return them.
If it fully reverses, we receive nothing. We think that is the right way to
align our interests with shareholders.
Over the year to 31 December 2025, NAV per share increased by 16.8% and the
share price rose by 19.8%, against a FTSE All-Share total return of 23.9%.
Given the underperformance relative to the benchmark in 2025, no performance
fee was earned. Since Phoenix assumed management of the Trust in January 2016,
NAV has risen 117.0% against the index's 134.0% (figures all total returns,
including dividends reinvested).
The largest contributors to performance during the year were Lloyds Banking
Group, Ryanair and Frasers Group, adding 7.5%, 5.1% and 1.7% respectively.
Burberry contributed a further 1.7%. Barratt Redrow detracted 1.7%.
Portfolio Overview
The portfolio is best understood not as a collection of share prices but as a
collection of businesses, each at a different stage of its journey. What
follows is a summary of where we stand in our largest holdings, how our
positioning changed during the period, and the aggregate opportunity we see
across the portfolio.
Castelnau is an investment trust managed by Phoenix whose primary asset is
Dignity, the UK's leading funeral services business. Funerals are an
attractive market. Demand is steady, predictable and grows gradually over
time. Dignity is well placed to serve it, owning funeral homes, crematoria and
a pre-paid funeral planning business. After a difficult period under
previous management, the business is in the midst of a comprehensive
turnaround. The opportunity is significant. Small improvements in revenue
from growth flow through to large increases in value.
In the last year, the company's management team restructured operations,
launched a probate service, which is a large neighbouring market Dignity is
well placed to enter, and introduced a more accessible pre-paid funeral
product. The business also repaid a significant amount of debt,
strengthening its financial position. What is being built here is a
significantly more valuable business, and the foundations are stronger than
they have been in years.
Frasers Group was founded by Mike Ashley from a single sports shop in
Maidenhead and has grown into one of the UK's leading retailers, spanning
sporting goods and premium lifestyle brands. What makes the business
exceptional is the combination of a low-cost retail operation and a growing
portfolio of owned and partner brands, which together generate persistently
high returns. The management team has built a culture that thrives and adapts
in one of the most unforgiving industries in the world, with a consistent
ability to invest money wisely and at the right moment.
The past year demonstrated the resilience of the business in a difficult
trading environment, with strong cash generation supported by the completion
of warehouse automation. The company continued to invest selectively,
acquiring strategic stakes in brands and retailers, expanding its UK property
portfolio and growing its overseas presence. The business ends the year with
more opportunities than it started with, and that is a pattern that has
repeated itself year after year.
Barratt Redrow is the UK's leading housebuilder. Housing is a fundamental
human need. Demand is driven by demographics and changes slowly and
predictably. In the UK, decades of underbuilding have created a shortage that
successive governments have struggled to address. No new housebuilder of scale
has entered the market since 1974, a testament to how difficult it is to
establish a new business in this industry. Beneath an appearance of
cyclicality, the economics are consistently attractive: when costs and prices
fluctuate, the adjustment is largely absorbed by landowners rather than the
builder, leaving cash returns high and stable.
The past year saw volume expectations trimmed as planning delays slowed the
pace at which Barratt could open new sites. The company also increased its
provisions for building safety remediation, a legacy issue that continues to
affect the wider industry. In a market where overall volumes remain
suppressed, the underlying demand is nonetheless there. People still need
homes, and that need does not disappear because it is delayed. Meanwhile, the
underlying economics of the market continue to improve quietly as land is
replenished at today's prices. Our view of the significant long-term value of
the business is unchanged.
Lloyds is the UK's largest retail bank, with a dominant share of the nation's
current accounts and mortgages. Banking is a heavily regulated industry with
high barriers to entry, which protects established players from new
competition. Its customers rarely switch, and it is that inertia that allows
Lloyds to set its own terms, providing a stable and low-cost source of funds.
As the lowest cost operator in the market, Lloyds is well placed to grow its
share over time.
Lloyds delivered strong earnings, with bad debts remaining low and the
benefit of prior years' rate rises continuing to feed through its business.
The Supreme Court judgment and subsequent FCA redress scheme brought greater
certainty to the motor fi nance issue that had cast a shadow since 2023, with
worst-case outcomes now firmly off the table. The business is also investing
heavily in artificial intelligence across its operations, from mortgage
applications to customer service, with early results suggesting meaningful
improvements in both efficiency and customer experience. The underlying
franchise is in good health.
Ryanair was founded in 1984 as a small Irish carrier and has grown into
Europe's largest airline carrying over 200 million passengers a year. Its
success rests on a single idea, brilliantly executed by Michael O'Leary over
four decades: be the lowest cost operator in the market and offer prices that
no competitor can match. The result is an airline that consistently takes
market share, using periods of industry weakness both to push out weaker
competitors and to invest counter-cyclically in its own future.
Profitability improved meaningfully during the year as fares recovered,
supported by a shortage of new aircraft and engine issues across the industry
that kept capacity constrained and pricing fi rm. Ryanair continued to
demonstrate strong cost discipline throughout. The business ended the period
in a net cash position with a largely unencumbered fleet, leaving it well
placed to invest and withstand shocks.
During the period, we added to our positions in Barratt Redrow and Burberry at
points of price weakness, reflecting our confidence in the long-term value of
both businesses. We exited our positions in RHI Magnesita, following a change
in our assessment of the business, and Bellway, following a change in
management. We also trimmed our position in Lloyds and initiated three new
holdings, which we will disclose once they reach 3% of the portfolio.
The weighted average holding period for our 16 core positions is currently 6.5
years. That is not a target but a natural consequence of owning exceptional
businesses and giving them the time they need to fulfil their potential. In
truth, our ideal holding period is forever. In practice, we sell when the
price has fully reflected the value we saw, when we find a more compelling
opportunity elsewhere, or when we recognise that we were wrong in our
thinking.
For each business we own, we maintain an estimate of what we believe it is
truly worth, independent of its share price, that we call intrinsic value. At
the year end, our estimate stood at approximately 710p per share against a NAV
of 300p. Since then, NAV has declined to 278p while our estimate of intrinsic
value has remained broadly stable at 715p, making the opportunity more
attractive still. In simple terms, we believe that for every £1 invested
today, there is approximately £2.57 of intrinsic value.
We have applied the same disciplined approach to this calculation for nearly
30 years, and we are under no illusion that it is a precise science. What we
have found is that over time, upside to intrinsic value is our most reliable
guide to future returns, and that the greater the gap, the more powerful the
force that closes it.
Kartik Kumar
Portfolio Manager
Phoenix Asset Management Partners
30 March 2026
.
Report under Section 172 of the Companies Act 2006
Directors' duty to promote the success of the Company
Section 172 of the Companies Act 2006 requires the Directors to seek to
promote the success of the Company for the benefit of its members as a whole,
having regard to the likely consequences of any decision in the long term, the
need to foster the Company's business relationships with suppliers and others,
the impact of the Company's operations on the community and the environment,
the desirability of the company maintaining a reputation for high standards of
business conduct, and the need to act fairly as between members of the
Company.
The Board seeks to understand the views of the Company's shareholders and
their interests, and those of its other key stakeholders, and to consider
these, together with the other matters set out in section 172, in Board
discussions and decision-making. The Board keeps engagement mechanisms under
review so that they remain effective and in fulfilling their duties the
Directors carefully consider the likely consequences of their actions over the
long term.
The following describes how the Directors have had regard to the views of the
Company's stakeholders in their decision-making.
Shareholders
The Investment Manager regularly meets the largest shareholders and
beneficial owners and reports back to the Board on those meetings. The
Company's corporate broker, Deutsche Numis, and Frostrow Capital LLP
("Frostrow"), in its capacity as the Company's investor relations &
marketing adviser, also meet with investors and seek to understand their
views, which they relay to the Board. Additionally, the Company Chair is
available to meet with investors on request and did engage with shareholders
during the year. Through these interactions and other communications, the
Board and the Investment Manager seek to promote a supportive investor base
of long-term investors.
The Board communicates with investors twice a year via the Annual Report and
Half-yearly Report and more frequently via the Company's website which hosts
various information, including news reports, video presentations by the
Investment Manager and monthly factsheets. Additionally, the NAV per share is
announced daily via a regulatory information service.
Shareholders may attend the Company's AGM, at which the Directors are
available in person to meet with shareholders and to answer their questions.
However, consistent with the Company's practice in recent years, the AGM will
not include a presentation from the Investment Manager. Instead, a separate
Investment Manager presentation and Q&A event, which the Directors will
also attend, will be held at 4 p.m. on 14 October 2026 at the Chartered
Accountants Hall, 1 Moorgate Place, London EC2R 6EA. This event is intended
to be of interest to both existing and prospective Aurora shareholders and
will include multiple speakers from the Investment Manager. It is intended
for this event to be recorded and made available afterwards on the Company's
website.
The Notice of Meeting on pages 106 to 108 sets out the business of the AGM and
each resolution is explained in Explanatory Notes to the Resolutions, which
follow the Notice, starting on page 113. Separate resolutions are proposed for
each substantive issue. The Company Chair, and where relevant, each Committee
Chair, welcomes engagement with the Company's shareholders (and the Company's
other key stakeholders) on significant issues raised by them at the AGM or at
other times. Details of the votes cast on each resolution will be announced
via a regulatory information service shortly after the AGM and published on
the Company's website.
At each of its regular meetings the Board tracks shareholder changes and
monitors the evolving shareholder profile. A list of the largest shareholders
in the Company can be found on page 44.
Other stakeholders
operational activities are outsourced to third party service providers. These
include the Investment Manager, the Company Secretary and Administrator, the
Registrar, the Depositary, the Custodian, lawyers and financial advisers. The
Board has identified these service providers to be key stakeholders in the
Company, together with its shareholders and investee companies. The Board is
aware of the need to foster the Company's relationships with its key
stakeholders through its stakeholder management activities.
As part of the Board and stakeholder evaluation processes that are undertaken
annually, the Board reviews its engagement mechanisms to ensure they remain
effective.
In fulfilling their duties, the Directors carefully consider the likely
consequences, for stakeholders and otherwise, of their actions over the long
term.
During the Board's quarterly meetings the Directors consider and are mindful
of:
i. the Company's investment objective and policy;
ii. the main trends and factors likely to affect the future development,
performance and financial position of the Company;
iii. the Company's key performance indicators;
iv. the Company's peers;
v. the Company's overall strategy; and
vi. the Company's core values, which are integrity, accountability,
transparency and commitment.
The service provider most fundamental to the Company's long-term success is
the Investment Manager, and the Board provides oversight and challenge to the
Investment Manager at all Board meetings to ensure that the portfolio is
managed in line with the Company's published investment policy.
A description of key service providers' roles together with the terms of their
engagement can be found on pages 41 to 43. The Management Engagement
Committee, on behalf of the Board, reviews the performance and terms of
engagement of each of the Company's key service providers annually to ensure
each remains competitive and to consider the quality of the services they
provide.
Environmental, Social and Governance ('ESG') Matters
The Board expects companies in which the Company invests to have good
governance standards and satisfies itself that the Investment Manager
consistently and proactively engages with them on this basis.
All shareholdings are voted at listed company meetings worldwide where
practicable in accordance with the Investment Manager's own corporate
governance policies.
Further details of the Investment Manager's approach to ESG within its
investment framework can be found on its website at
www.phoenixassetmanagement.com (http://www.phoenixassetmanagement.com/) .
(http://www.phoenixassetmanagement.com/)
Monitoring of Key Decisions and the outcome of those decisions
The Board meets at least quarterly and at such other times as deemed
appropriate. During these meetings, the Board considers reports from the
Investment Manager on the Company's portfolio, investment activity and sector
diversification. In addition, the Investment Manager provides an overview of
engagement with current and potential investee companies. The Board discusses
the Company's portfolio and notable acquisitions or disposals at each of its
meetings and challenges stock selection where deemed appropriate.
The Board receives reports from Frostrow, in its capacity as Company
Secretary, Administrator and Investor Relations & Marketing Adviser,
respectively, on the latest governance, legal and investment trust sector
issues, the Company's management accounts and, together with the Company's
corporate stockbroker, on the Company's shareholder base, including changes
thereto. The Depositary provides oversight reports and the Company's corporate
stockbroker also reports on performance relative to the Company's peers and
the market liquidity of the Company's shares. Contact with shareholders by the
Investment Manager, Frostrow and the Company's corporate stockbroker is also
relayed to the Board who consider these discussions at their quarterly
meetings.
During the year, in addition to regular interactions, the Management
Engagement Committee on behalf of the Board reviewed the performance and terms
of engagement of each of the Company's key service providers, which included a
review of their control reports and policies, such as whistleblowing,
anti-bribery, anti-money laundering and corruption, cyber security, data
protection policies and each entity's business continuity arrangements to
ensure they were in place and were adequate. Additionally, for the third
consecutive year, service providers were asked to participate in
a 360 degree review whereby they provided comments on their interactions
with the Board and each other.
In relation to engagement with shareholders, the Board decided in 2023 to
decouple the Investment Manager's presentation from the AGM and hold
a separate Manager presentation event in October, where Directors were also
available to interact. This was repeated in 2024 and 2025. It seems to be a
successful formula for increasing engagement, with good attendances each year,
and will be continued in 2026 as mentioned above.
Particular decisions during the year included the change of the Company's
corporate broker to Deutsche Numis following a review. The Company also
implemented a discretionary share buyback programme in the year, aimed at
helping to provide market liquidity when it is lacking. This appears to have
helped to stabilise the discount, while being accretive to remaining
shareholders. The Board has also been active in seeking to enhance the
Company's profile, including a restyle of this annual report. In relation to
costs, the Board has negotiated an improved fee with the Company's
administrator, Frostrow Capital LLP, as shown on pages 42 and 43, and
continues to keep costs under review generally.
Principal Risks and Risk Management
The Board is responsible for the identification, evaluation and management of
the risks facing the Company. Risk is a key element of all the Board's
deliberations. Additionally, the Board has delegated to the Audit Committee
the formal regular review of these risks, together with their mitigation and
the discerning of emerging risks, on its behalf. This process accords with the
UK Corporate Governance Code and the FRC's Guidance on Risk Management,
Internal Control and Related Financial and Business Reporting.
The Audit Committee, on behalf of the Board, has carried out a robust
assessment of the emerging and principal risks facing the Company, including
those that would threaten its business model, future performance, solvency and
liquidity.
The Board's policy on risk management has not materially changed during the
course of the reporting period and up to the date of this report.
The Audit Committee maintains a framework of the key risks and the policies
and processes in place to monitor, manage and mitigate them where possible.
This risk map is reviewed regularly by the Audit Committee, as set out in the
Audit Committee Report starting on page 62.
The Audit Committee and the Board consider that the risks, and the
uncertainties inherent therefrom, that are summarised below are the principal
risks currently facing the Company. It is not an exhaustive list of all risks
faced by the Company. The assessment of the risks outlined below did not
change significantly over the course of the year.
Principal Risks and Uncertainties
Geopolitical and economic risks
The Company and its portfolio are exposed to risks arising from economic and The opportunity for the Board to mitigate such macro risks is somewhat
market conditions such as from rising interest rates; inflation; recession; limited. However, mitigations applied include that the Board has appointed an
local and global politics; and disruptive local and global events. These can experienced Investment Manager, regularly reviews the portfolio, the Company's
disrupt trade and supply chains and cause increased market volatility, which macro risk exposures, including to emerging risks, and receives updates from
could substantially and adversely affect the Company's prospects and the the Investment Manager and other advisers. The Investment Manager monitors the
market prices of its investments. Increased interest rates, inflation and the Company's investment positions closely and provides updates to the Board at
threat of recession continue to be contemporary areas of concern, together all Board meetings, together with relevant market, economic and political
with the conflicts in Ukraine and the Middle East. developments. The Company's portfolio, although concentrated, is diversified
across a range of sectors, the Company has no leverage and a net cash balance,
and the Board receives monthly reports on compliance with the Company's
investment objective and policy.
Investment objective and strategy risks
The Company's investment objective is to provide shareholders with long-term The Board reviews performance at every Board meeting and challenges the
total returns by investing predominantly in a portfolio of UK listed Investment Manager on stock selection and diversification.
companies. It is not assured that the objective will be met or that it will
continue to meet investors' needs. Poor performance or the investment The Board also seeks to understand shareholder sentiment with respect to the
objective losing its attractiveness to shareholders could result in investment objective and the strategy being followed with the help of the
reputational damage and a widening discount. Company's Investment Manager, corporate broker and investor relations &
marketing adviser.
Shareholders are provided with an opportunity to vote on the Company's
continuation every three years. The continuation vote provides a gauge of the
attractiveness of the Company to its shareholders. The next opportunity to
vote on the Company's continuation will be at the AGM in 2028. The last
continuation vote took place at the Company's AGM on 11 June 2025 and was
successfully passed with overwhelming support from shareholders (99% of votes
cast were in favour).
Risks related to the Investment Manager
The Company's success is closely dependent on the performance of the The Investment Manager has a well-defined investment strategy, a proven
Investment Manager. In addition to the performance of the portfolio, the process and an extensive track record. The performance and the terms of
Company is also exposed to any potential loss of key personnel from, and the engagement of the Investment Manager are reviewed annually by the Management
reputation of, the Investment Manager. Engagement Committee on behalf of the Board, in addition to the Board's
ongoing communications, monitoring and challenge. The Investment Manager also
reports regularly to the Board on personnel changes and other developments.
Discount risk
The Board specifically recognises the risk that the price of the Company's The Board, along with its advisers and the Investment Manager, monitors the
shares may not reflect their underlying net asset value, which could discount closely and seeks to enhance share price performance through
compromise shareholders' returns. effective marketing. The Board also seeks authority from shareholders each
year to buy back shares and instigated buybacks during the last year.
Operational risks
Operational risks incorporate, amongst other things, the potential for errors The Audit Committee has received internal controls reports from the relevant
or irregularities in published information, cyber risks, business continuity service providers, where available, and has satisfied itself that adequate
risks, and regulatory risks. controls and procedures are in place to limit any impact on the Company's
operations, particularly with regard to a financial loss. It has also
satisfied itself that they have appropriate business continuity plans in
place. The performance of service providers is reviewed annually by the
Management Engagement Committee. Each service provider's contract defines
their duties and responsibilities and has safeguards in place including
provisions for termination in the event of a breach or under certain
circumstances.
ESG risks
The Board recognises the risks posed by environmental, social and governance Investment companies are currently exempt from reporting under the Task Force
("ESG") factors, particularly with respect to portfolio risks and potential on Climate-Related Financial Disclosures ("TCFD") and the Company has not
reputational risk should the Company not meet investor expectations in voluntarily adopted the requirements, but considers ESG factors that might
relation to ESG. affect portfolio companies to be an emerging risk area for the Company. The
Board and Investment Manager also recognise the potential opportunity afforded
by attention to the wider climate change agenda. ESG risk assessment is
embedded in the Investment Manager's due diligence and decision-making process
when investing in new companies and monitored thereafter. However, the Company
does not have explicit sustainability investment objectives or policies and
accordingly has not adopted a sustainability label under the FCA's UK
Sustainability Disclosure Requirements and investment labels regime ("SDR").
Financial risks
The Company is exposed to liquidity risk and credit risk arising from the use The Board reviews the services provided by the Depositary and the internal
of counterparties. If a counterparty were to fail it could adversely affect controls report of the Custodian to ensure that the security of the Company's
the Company through either delay in settlement or loss of assets. The most custodial assets is maintained.
significant counterparty to which the Company is exposed is the Depositary,
which is responsible for the safekeeping of the Company's custodial assets. The Investment Manager is responsible for undertaking reviews of the
creditworthiness of the counterparties that it uses.
Further details on the Company's financial risks are included in Note 13 to
the financial statements starting on page 96.
Viability Statement
In accordance with the UK Corporate Governance Code, the Directors have
carefully assessed the Company's position and prospects as well as the
principal risks and have formed a reasonable expectation that the Company will
be able to continue in operation and meet its liabilities as they fall due
over the next five financial years to 31 December 2030.
The Board has chosen a five-year horizon in view of the long-term nature and
outlook adopted by the Investment Manager when making investment decisions.
After making enquiries, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence and meet
its liabilities as they fall due for at least five years to 31 December 2030.
A continuation vote, as required by the Company's Articles, was held on 11
June 2025 and passed with overwhelming support from shareholders. The next
vote will take place at the Company's AGM in 2028. The Board has received no
indication that this will not also pass.
In reaching their conclusion, the Directors have considered each of the
principal risks and uncertainties set out above as well as the following
assumptions in assessing the Company's viability:
• there will continue to be demand for investment trusts;
• the Board and Investment Manager will continue to adopt a
long-term view when making investments;
• the Company invests principally in the securities of UK listed
companies to which investors will wish to continue to have exposure; and
• regulation will not increase to a level that makes running the
Company uneconomical.
Factors including higher interest rates, inflation and the conflicts in
Ukraine and the Middle East were also incorporated into the key assumptions.
As part of this process the Board considered the impact of severe but
plausible adverse scenarios, including the impact of significant market
movements, on the Company's liquidity and solvency, its income and expenses
profile and that (although not utilised) gearing is an instrument permitted
by the Company's investment policy. A significant proportion of the Company's
investments comprise readily realisable securities which could, if necessary,
be sold to meet the Company's cash requirements. The financial considerations
were based on the going concern assessment, discussed on pages 44 and 45,
extended to cover the five-year period from the date of approval of this
annual report.
The Board aspires for the Company to continue to grow and keeps its potential
for doing so under review. Portfolio changes and market developments are also
discussed at quarterly Board meetings.
The internal control framework of the Company is subject to formal review on
at least an annual basis and this includes consideration of the operational
resilience of the Company's service providers.
Boardroom Diversity
The Board supports the principle of Boardroom diversity. The Board currently
comprises four non-executive Directors of which three are female and one male.
One Director is from a minority ethnic background. The Board considers its
composition, including the balance of skills, knowledge, diversity (including
gender and ethnicity) and experience, amongst other factors on an annual basis
and when appointing new Directors. The Board has considered the requirements
under the FCA's Listing Rule UKLR 6.6.6R (10) in relation to target reporting,
and has provided full details in the Corporate Governance Statement section on
pages 47 and 48. Summary biographical details of the Directors are set out on
pages 36 and 37.
Stewardship code
The Board and the Investment Manager support and have a strong commitment to
the FRC's 2020 UK Stewardship Code, which is endorsed by the AIC and sets out
principles of effective stewardship by institutional investors. Whilst the
Investment Manager is not a formal signatory to the Stewardship Code, it has
chosen to adhere to the 12 principles as closely as possible. Further details
of the Investment Manager's approach to the Stewardship code can be found on
the Investment Manager's website at www.phoenixassetmanagement.com
(http://www.phoenixassetmanagement.com/) .
(http://www.phoenixassetmanagement.com/)
Modern slavery disclosure
Due to the nature of the Company's business, being a company that does not
have employees and does not offer goods or services to consumers, the Board
considers that the Company falls outside of the scope of the Modern Slavery
Act 2015 and is not required to issue a slavery and human trafficking
statement. The Board considers the Company's supply chains, since it deals
predominantly with professional advisers and service providers in the UK
financial services industry, to be low risk in this matter.
Anti-bribery and corruption
It is the Company's policy to conduct all of its business in an honest and
ethical manner. The Company takes a zero-tolerance approach to bribery and
corruption and is committed to acting professionally, fairly and with
integrity in all its business dealings and relationships wherever it operates.
The Company's policy and the procedures that implement it are designed to
support that commitment. The Board has made enquiries of its third-party
service providers to ensure they have procedures and policies in place.
Criminal Finances Act 2017
The Company maintains a zero-tolerance policy towards the provision of illegal
services, including the facilitation of tax evasion. The Company has received
assurances from the Company's main service providers that they maintain a
zero-tolerance policy towards the provision of illegal services, including the
facilitation of tax evasion.
Outlook
The outlook for the Company is discussed in the Chair's Statement on page 8.
This Strategic Report was approved by the Board on 30 March 2026.
Lucy Walker
Chair of the Board of Directors
.
Statement of Directors' Responsibilities for the Annual Report
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the financial
statements in accordance with UK-adopted International Accounting Standards
and in accordance with those parts of the Companies Act 2006 that apply to
companies reporting under UK-adopted International Accounting Standards.
Under company law, Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for that
period. In preparing the financial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable UK-adopted International Accounting
Standards have been followed, subject to any material departures disclosed and
explained in the financial statements;
• make judgements and accounting estimates that are reasonable and
prudent; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
Under applicable law and regulations, the Directors are responsible for
preparing a Strategic Report, a Directors' Report, a Corporate Governance
Statement and a Directors' Remuneration Report which comply with that law and
those regulations.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements and the Remuneration
Report comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The Directors have delegated responsibility to the Investment Manager for the
maintenance and integrity of the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Directors' confirmations
The Directors consider that the Annual Report and financial statements, taken
as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's position and performance,
business model and strategy. Each of the Directors, whose names and functions
are listed on pages 36 and 37 confirm that, to the best of their knowledge:
• the Company's financial statements, which have been prepared
in accordance with UK-adopted international accounting standards and in
accordance with those parts of the Companies Act 2006 that apply to those
companies reporting under UK-adopted international accounting standards, give
a true and fair view of the assets, liabilities, financial position and net
return of the Company; and
• the Strategic Report includes a fair review of the development
and performance of the business and the position of the Company, together with
a description of the principal risks and uncertainties that it faces.
For and on behalf of the Board
Lucy Walker
Chair of the Board of Directors
30 March 2026
.
Financial Statements
.
Income Statement
Year ended Year ended
31 December 2025
31 December 2024
Notes Revenue Capital Total Revenue Capital Total
£'000
£'000
£'000
£'000
£'000
£'000
Gains/(losses) on investments 2 - 42,141 42,141 - (13,648) (13,648)
(Losses)/gains on currency - (28) (28) - 202 202
Income 3 6,496 - 6,496 3,568 - 3,568
Gross return/(loss) 6,496 42,113 48,609 3,568 (13,446) (9,878)
Investment performance fee clawback 4 - - - - 166 166
Other expenses 4 (1,141) (32) (1,173) (966) 14 (952)
Net return/(loss) before tax 5,355 42,081 47,436 2,602 (13,266) (10,710)
Tax 5 (179) - (179) (46) - (46)
Net return/(loss) for the year 5,176 42,081 47,257 2,556 (13,016) (10,460)
Return/(loss) per share - basic and diluted 8 4.59p 37.30p 41.89p 3.22p (16.40)p (13.18)p
The total column represents the Income Statement of the Company, prepared in
accordance with International Financial Reporting Standards ("IFRSs") as
adopted by the United Kingdom.
The revenue and capital columns, including the revenue and capital earnings
per ordinary share data, are supplementary information prepared under guidance
published by the AIC.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the period.
The Company does not have any other comprehensive income. Therefore, no
separate Statement of Comprehensive Income has been presented.
The notes on pages 81 to 100 form part of these accounts.
.
Statement of Financial Position
Notes 31 December 31 December
2025
2024
£'000
£'000
NON-CURRENT ASSETS
Investments held at fair value through profit or loss 2 327,236 276,922
CURRENT ASSETS
Trade and other receivables 6 1,137 1,109
Cash and cash equivalents 13 1,090 17,076
2,227 18,185
TOTAL ASSETS 329,463 295,107
CURRENT LIABILITIES
Other payable (216) (1,606)
(216) (1,606)
NET ASSETS 329,247 293,501
EQUITY
Called up share capital 9 28,643 28,665
Share premium account 202,665 202,665
Capital redemption reserve 312 312
Treasury shares - (22)
Other reserve 9 (559) (559)
Capital reserve 9 92,104 61,534
Revenue reserve 6,082 906
TOTAL EQUITY 329,247 293,501
Number of voting shares in issue 9 110,033,918 114,572,742
NAV per share 10 299.22p 256.17p
Approved by the Board of Directors on 30 March 2026 and signed on its behalf
by:
Lucy Walker
Chair of the Board
Company no. 03300814
The notes on pages 81 to 100 form part of these accounts.
.
Statement of Changes in Equity
Year to 31 December 2025
Notes Called up share capital Share premium account Capital redemption reserve Treasury shares Other reserve Capital reserve Revenue Total
£'000
£'000
£'000
£'000
£'000
£'000
reserve
£'000
£'000
Opening equity 28,665 202,665 312 (22) (559) 61,534 906 293,501
Net return for the year - - - - - 42,081 5,176 47,257
Shares bought back and held in treasury 9 - - - - - (11,511) - (11,511)-
Share cancellation in relation to 2021 performance fee 4 (22) - - 22 - - - -
Closing equity 28,643 202,665 312 - (559) 92,104 6,082 329,247
The notes on pages 81 to 100 form part of these accounts.
Statement of Changes in Equity
Year to 31 December 2024
Notes Called up share capital Share premium account Capital redemption reserve Treasury shares Other reserve Share-based payment reserve £,000 Capital reserve Revenue Total
£'000
£'000
£'000
£'000
£'000
£'000
reserve
£'000
£'000
Opening equity 19,019 111,166 312 - (219) 166 74,999 3,271 208,714
Net return for the year - - - - - - (13,432) 2,556 (10,876)
Share-based payment credit 9 - - - - - (166) 166 - -
Performance fee clawback in relation to performance year 2021 4 - - - (22) 221 - (199) - -
Share issuance in relation to 2023 performance fee 4 54 507 - - (561) - - - -
Dividends paid 7 - - - - - - - (4,921) (4,921)
Issue of new Ordinary Shares on the combination with Artemis Alpha Trust plc 9,592 90,992 - - - - - - 100,584
Closing equity 28,665 202,665 312 (22) (559) - 61,534 906 293,501
The notes on pages 81 to 100 form part of these accounts.
.
Cash Flow Statement
Note Year to Year to
31 December
31 December
2025
2024
£'000
£'000
Net cash inflow from operating activities 11 3,812 3,324
Investing activities
Payments to acquire non-current asset investments 2 (41,232) (29,265)
Receipts on disposal of non-current asset investments 2 32,973 41,488
Net cash (outflow)/inflow from investing activities (8,259) 12,223
Financing activities
Purchase of shares held in treasury 9 (11,511) -
Dividends paid 7 - (4,921)
Net cash outflow from financing activities (11,511) (4,921)
(Decrease)/increase in cash and cash equivalents 15,958 10,626
Cash and cash equivalents at beginning of year 17,076 6,248
(Losses)/gains on currency (28) 202
Cash and cash equivalents at the end of the year 1,090 17,076
The notes pages 81 to 100 form part of these accounts.
.
Notes to the Financial Statements
1. Reporting entity
The Company is a closed-ended investment company, registered in England and
Wales on 10 January 1997 with Company number 03300814. The Company's
registered office is 25 Southampton Buildings, London WC2A 1AL.
Details of the Directors, Investment Manager and Advisers can be found on
pages 36 to 38.
Basis of Accounting
The financial statements of the Company have been prepared in accordance with UK-adopted International Accounting Standards ("IFRS") and the applicable legal requirements of the Companies Act 2006.
The annual financial statements have also been prepared in accordance with the Association of Investment Companies ("AIC") Statement of Recommended Practice ("SORP") for the financial statements of investment trust companies and venture capital trusts, except to any extent where it is not consistent with the requirements of IFRS, then this will be noted and explained.
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been prepared alongside the Income Statement.
The functional currency of the Company is Sterling because this is the currency of the primary economic environment in which the Company operates. The financial statements are presented in Sterling rounded to the nearest thousand, except where otherwise indicated.
Going concern
The financial statements have been prepared on the going concern basis. The
Directors have a reasonable expectation, after making enquiries, that the
Company has adequate resources to continue in existence for at least 12 months
from the date of approval of this Annual Report.
In reaching this conclusion, the Directors have considered the liquidity of
the Company's portfolio of investments as well as its latest financial
position and forecast of income and expenses.
As at 31 December 2025, the Company held £1,090,000 (2024: £17,076,000) in
cash and cash equivalents, £317,945,000 (2024: £272,105,000) in quoted
investments and £9,291,000 (2024: £4,817,000) in unquoted investments. The
total ongoing operating expenses for the year ended 31 December 2025 were
£1,093,000 (2024: £966,000). It is estimated that 46.7% of the Company's
latest portfolio could be liquidated in a non-market impacting way within
seven days, using 25% of historic three-month average daily volume. This
approach is considered conservative as it does not include the Company's
ability to access liquidity through block trades.
The Company's going concern status has been assessed under stress scenarios,
which incorporated key assumptions such as significant falls in the Company's
investment portfolio value and investment income. These scenario tests
encompassed possible impacts from factors such as the existing and potential
further risks arising from the conflicts in Ukraine and the Middle East. A
prolonged and deep market decline could lead to falling investment values or
interruptions to cash flow, however the Company currently has more than
sufficient liquidity to meet any liabilities when they fall due in the
foreseeable future. The Board is keeping the development of external risk
factors under close scrutiny and does not believe that these will have any
impact on the Company's going concern status.
At the date of approval of this Annual Report, the aggregate value of the
Company's cash and cash equivalents and its investments is well in excess of
the estimated level of liabilities, and the Company has substantial operating
expenses cover.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment being an investment business in accordance with its Investment
Objective and Policy.
Material accounting policies
The material accounting policies adopted are described below:
a. Accounting Convention
The accounts are prepared under the historical cost basis, except for the
measurement at fair value of investments and measurement of performance fees
awarded.
b. Issue of Shares Pursuant to the Combination of Artemis Alpha Trust plc ("ATS") with the Company
On 29 November 2024, the Company issued new shares to shareholders of ATS in
consideration for the receipt by the Company of assets pursuant to the
combination with ATS. The cost to acquire the assets and liabilities of ATS
was allocated between the acquired identifiable assets and liabilities based
on their relative fair values on the acquisition date without attributing any
amount to goodwill or to deferred taxes. Investments, cash and other assets
were transferred from ATS. All assets were acquired at their fair value. The
value of the assets received, in exchange for shares issued by the Company,
were recognised in share capital and share premium, as shown in the Statement
of Changes in Equity. Listing costs in respect of the shares issued were
recognised in share premium, whereas other costs in relation to the
combination were recognised through capital in the Income Statement.
c. Investments
Investments are measured at fair value through profit or loss ("FVTPL").
Gains or losses on investments and transaction costs on acquisition or
disposal of investments are included in the Income Statement as a capital
item.
For investments that are actively traded in organised financial markets, fair
value is determined by reference to stock exchange quoted market bid prices at
the close of business on the year-end date. All purchases and sales of
investments are recognised on the trade date, i.e. the date that the Company
commits to purchase or sell an asset.
Unquoted investments are measured at fair value in accordance with the
International Private Equity and Venture Capital ("IPEV") valuation guidelines
and IFRS 13. Further details on the valuation of unquoted investments may be
found in Notes 1(i) and 13.
d. Income from Investments
Special Dividends are assessed on their individual merits and are credited to
the capital column of the Income Statement if the substance of the payment is
a return of capital. All other investment income is taken to the revenue
column of the Income Statement.
e. Share Capital and Reserves
The share capital represents the nominal value of equity shares.
The share premium account represents the accumulated premium paid for shares
issued above their nominal value less issue expenses. This reserve is not
distributable.
The capital redemption reserve arises when shares are bought back by the
Company or returned by the Investment Manager under the performance fee
clawback arrangement, and subsequently cancelled, at which point an amount
equal to the par value of the shares is transferred from share capital to this
reserve. This reserve is not distributable.
Other reserve represents the restricted shares issued in settlement of
performance fees that are still within a lock-in period. This reserve is not
distributable.
The share-based payment reserve represents the cumulative share-based payment
expenses in relation to performance fees earned. Upon vesting, the relevant
share-based payment reserve balance will be transferred to the realised
capital reserve. This reserve is not distributable.
The capital reserve represents realised and unrealised capital and exchange
gains and losses on the disposal and revaluation of investments and of foreign
currency items. In addition, performance fee costs are allocated to the
capital reserve. The amount within the capital reserve less unrealised gains
(those on investments not readily convertible to cash) is available for
distribution. The realised gains within the capital reserve amounted to
£44,497,000 as at 31 December 2025 (2024: £56,397,000). The Company may use
this reserve for share buybacks, but otherwise has no current intention to
make distributions out of its capital reserve.
The revenue reserve represents the surplus of accumulated revenue profits,
being the excess of income derived from holding investments less the costs
associated with running the Company. This reserve may be distributed by way of
dividends, to the extent realised.
f. Expenses
All expenses are charged through the revenue column of the Income Statement
except the following:
• expenses that are incidental to the acquisition or disposal of an
investment are charged to the capital column of the Income Statement; and
• expenses are charged to the capital column of the Income Statement
where a connection with the maintenance or enhancement of the value of the
investments can be demonstrated. In this respect, performance fees are charged
to the Income Statement in line with the Board's expected long-term returns,
in the form of capital gains, from the Company's portfolio.
g. Equity dividends payable
Equity dividends payable are recognised when the shareholders' right to
receive payment is established. For interim dividends this is when they are
paid and for final dividends this is when they are approved by shareholders.
h. Performance Fees
Performance fees are calculated based on the Company's net asset value ("NAV")
outperformance against its benchmark, in accordance with the terms of the
Investment Management Agreement.
Performance fees, if earned, are settled by the issue of shares in the
Company. Such shares are subject to a fixed three-year clawback period, under
which the Company is entitled to recover and cancel shares should the
outperformance versus the benchmark reverse over that period.
The performance fee is accounted for as a share-based payment in accordance
with IFRS 2, as it is settled by the issue of a variable number of shares
based on a fixed monetary amount. The arrangement contains a non-market
performance condition, being the outperformance of the Company's NAV against
its benchmark.
The performance fee is recognised as an expense in the Income Statement on a
straight-line basis over the relevant service period, based on the outcome of
the performance fee calculation. This amount excludes any projection of
potential clawback at the end of the performance period.
The expense recognised is adjusted at each reporting date to reflect
management's estimate of the number of shares expected to ultimately vest.
Where appropriate, adjustments arising from changes in these estimates are
recognised in the Income Statement.
i. Critical Judgements, Estimations or Assumptions
Performance fees
The Board has determined that the appropriate service period over which the
performance fee should be recognised comprises the current year of service
together with the subsequent three-year clawback period.
Judgement has also been applied in determining that the performance condition
attached to the performance fee is a non-market performance condition under
IFRS 2, as it is based on the Company's NAV outperformance relative to its
benchmark.
Estimation is required in assessing the number of shares expected to
ultimately vest, including consideration of whether clawback conditions are
likely to be triggered over the clawback period. These estimates are reviewed
at each reporting date and may result in adjustments to the performance fee
charge recognised in the Income Statement.
Due to the nature of the arrangement, the cumulative expense recognised over
the service period will equal either the amount initially calculated where
performance conditions are met in full, or a lower amount where clawback is
expected to apply.
The Board considers the assumptions and judgements applied to be reasonable
and supportable; however, different assumptions regarding performance outcomes
or clawback expectations could result in materially different timing of
expense recognition within the service period.
The Investment Manager earned a performance fee of £560,903 in 2023 and this
was settled by the issuance of 214,264 shares in 2024. As at 31 December 2025,
based on estimates produced by the Company's in-house assessment model, it is
expected that no shares issued in relation to 2023 will ultimately vest at the
end of the clawback period on 31 December 2026, and therefore no IFRS 2
expenses have been charged in the Income Statement.
No performance fee was earned during 2024 or 2025 and the fee assessment
period has been extended to 2026.
Valuation of Unquoted Investments
The Company has seven unquoted investments, two of which are nil valued. These
are classified as Level 3 investments under the fair value hierarchy, please
refer to Note 13 for definitions of fair value hierarchy. Their fair value as
at 31 December 2025 is £9,291,000 or 2.8% of NAV (2024: £4,817,000 or 1.6%
of NAV).
The investments are valued in accordance with the Company's accounting policy
set out in 1c. In estimating the fair value of unquoted investments, the AIFM
and Board apply valuation techniques which are appropriate in light of the
nature, facts and circumstances of the investment, and use reasonable current
market data and inputs combined with judgement and assumptions and apply these
consistently. For each unlisted investment, one or more of the following
valuation techniques is used:
Market Approach (Multiples and Benchmarks): Based on reference to prices and
financial information generated by market transactions involving similar
assets or investments. Where relevant and reliable data exists, comparable
company multiples (e.g., EV/EBITDA, EV/Revenue) and available market prices
from recent transactions in comparable unlisted entities are applied, adjusted
for differences in size, growth prospects, and liquidity.
Income Approach (Discounted Cash Flow): Based on discounting projected future
cash flows of the investee to their present value using risk‑adjusted
discount rates that reflect market participant assumptions. Projections are
based on latest financial forecasts, and terminal value assumptions are
included where appropriate.
Cost/Replacement Approach (Net Asset/Cost Approach): Based on the current
replacement cost of the underlying assets, less adjustments for functional and
economic obsolescence.
The IPEV guidelines also allow for Other Relevant Information to be used as
a starting point for estimating fair value, however, this will also be
evaluated using one of the above techniques.
Observable market data is preferred when assessing the appropriate
methodology.
Unquoted companies are held at 'fair value' i.e. the price that would be paid
in an open market transaction. Valuations are adjusted both during regular
valuation cycles (at interim and year end), and on an ad hoc basis in response
to 'trigger events'. Our valuation process ensures that unquoted companies are
valued in both a fair and timely manner.
In making the judgment that the valuation method is appropriate, the Board
considers additional information, including an independent valuation review
report produced by Kroll Advisory Ltd where available, and published
financial statements.
A sensitivity analysis of the unquoted investments can be found in Note 13 a
(iii) Other Price Risk Sensitivity.
2. Investments held at Fair Value Through Profit or Loss
Year to Year to
31 December
31 December
2025
2024
£'000
£'000
Listed securities 317,945 272,105
Unquoted securities 9,291 4,817
Total non-current investments held at fair value through profit or loss 327,236 276,922
Movements during the year:
Opening balance of investments, at cost 271,951 170,145
Additions, at cost 41,232 129,849
Disposals - proceeds received or receivable* (33,059) (41,488)
- realised (losses)/profits (495) 13,445
- at cost (33,554) (28,043)
Cost of investments held at fair value through profit or loss at 31 December 279,629 271,951
Revaluation of investments to market value:
Opening balance 4,971 32,064
Unrealised gains/(losses) 42,636 (27,093)
Balance at 31 December 47,607 4,971
Market value of non-current investments held at fair value through profit or 327,236 276,922
loss at 31 December
* These investments have been revalued over time and until they were sold any
unrealised gains/losses were included in the fair value of the investments.
Gains/(losses) on investments Year to Year to
31 December
31 December
2025
2024
£'000
£'000
Realised (losses)/gains on disposal of investments 13,445 13,445
Movement in unrealised gains/(losses) on investments held (27,093) (27,093)
Total gains/(losses) on investments (13,648) (13,648)
Transaction costs on investment purchases and sales for the year ended 31
December 2025 are disclosed in the following table.
Transaction costs Year to Year to
31 December
31 December
2025
2024
£'000
£'000
Transaction costs on purchases of investments 205 127
Transaction costs on disposals of investments 25 21
Total transaction costs included in gains or losses on investments at fair 230 148
value through profit or loss
3. Income
Year to Year to
31 December
31 December
2025
2024
£'000
£'000
Income from investments:
UK dividends 4,553 2,396
Overseas dividends 1,792 695
Other income:
Deposit interest 151 477
Total income 6,496 3,568
4. Investment Management Performance Fees and Other Expenses
Year ended 31 December 2025 Year ended 31 December 2024
Revenue* Capital Total Revenue* Capital Total
£'000
£'000
£'000
£'000
£'000
£'000
Investment management performance fee clawback - - - - (166) (166)
Administration fees 483 - 483 350 - 350
Depositary and Custody fees 122 - 122 74 - 74
Registrar's fees 42 - 42 43 - 43
Directors' fees 145 - 145 140 - 140
Audit fees** 79 - 79 84 - 84
Printing 20 - 20 16 - 16
Broker's fees 67 - 67 48 - 48
Professional fees 76 - 76 90 - 90
Consultancy fees 13 - 13 13 - 13
Miscellaneous expenses*** 94 32 126 108 - 108
Combination related expenses*** - - - - (14) (14)
Total other expenses 1,141 32 1,173 966 (180) 786
* All expenses include any relevant irrecoverable VAT.
** The amounts excluding VAT paid or accrued for the audit of the Company are
£63,000 (2024: £70,000).
*** As part of the combination between the Company and Artemis Alpha Trust plc
that took place on 29 November 2024, the Company incurred £735,000 of costs
which have been charged to capital. Within the terms of the combination,
Phoenix will contribute £750,000 towards the offsetting of the direct costs
related to the transaction. The contribution will be made by way of a
reduction in the performance fee payable to Phoenix by the Company in respect
of the financial years ending 31 December 2024, 31 December 2025 and 31
December 2026. The fee reduction will constitute a waiver of the performance
fee of £750,000. As no performance fee was earned in relation to 2024 or
2025, a £750,000 receivable has been recognised as at 31 December 2024 and
31 December 2025 (see Note 6).
Investment Management Performance Fees
The Company's Investment Manager does not earn an ongoing annual management
fee, but will be paid a performance fee equal to one third of any
outperformance of the Company's NAV per share total return (including
dividends and adjusted for the impact of share buybacks and the issue of new
shares) over the FTSE All-Share Index (total return) for each financial year
or, if applicable, extended performance period.
The total annual performance fee is capped at 4% per annum of the NAV of the
Company at the end of the relevant financial year, in the event that the NAV
per Share has increased in absolute terms over the period, and 2% in the event
that the NAV per Share has decreased in absolute terms over the period. Any
outperformance that exceeds these caps will be carried forward and only paid
if the Company outperforms, and the annual cap is not exceeded, in subsequent
years.
The performance fee is subject to a high-water mark so that no fee will be
payable in any following year until all underperformance of the Company's NAV
since the last performance fee was paid has been made up.
Performance fees are settled by issuance of new shares. Such shares are issued
at the NAV per share prevailing at the date of issue, so that the then current
value of the shares equates in terms of NAV to the performance fees calculated
at the end of the relevant financial period.
Any part of the performance fee that relates to the performance of Phoenix SG
will be accrued but will not be paid until such time as the Company's
investment in Phoenix SG has been realised or is capable of realisation. The
position will be reviewed at that time by reference to the realised proceeds
of sale or the fully realisable value of Phoenix SG as compared to the
original cost of acquisition.
Performance fees are calculated annually and, if earned, settled by way of
share issuance by the Company. 80% is settled shortly after the year end date
and the remaining 20% is settled upon approval of the Company's Annual
Report. Shares issued to the Investment Manager are subject to a three-year
clawback period, during which the Investment Manager is not entitled to sell,
pledge or transfer the shares, but is entitled to dividends and voting rights.
If the Company's NAV underperforms its benchmark index on a total return basis
over the clawback period, shares issued to the Investment Manager will be
proportionally or entirely clawed back and cancelled by the Company. Any
dividends that were paid on the shares are not clawed back.
Share-based Payment
The performance fee arrangement is recognised as an equity-settled share-based
payment under IFRS 2, and the related expenses are charged or credited in the
Income Statement on a straight-line basis over a vesting period of the
performance fee calculation period followed by three years of clawback period.
At the end of each reporting period, the Company reviews cumulative total
returns between the Company's NAV and its benchmark index in relation to each
performance year in which a performance fee was earned and adjusts the
cumulative charges of share-based payment expenses accordingly.
No share-based payment charge/clawback was recognised in the Company's Income
Statement for the year ended 31 December 2025 (2024: clawback of £166,000).
Performance Fees Shares Vesting Vesting status Year to Year to
year
earned
issued
period
31 December 2025
31 December 2024
(£)
(Number of)
(Years)
Income
Income
Statement
Statement
credit
credit
(£)
(£)
2021 222,195 89,096 4 Fully clawed back on (165,896) (165,896)
31 December 2024
2022* - - n/a n/a n/a n/a
2023 560,903 172,373 5 Vesting period ends on - -
31 December 2026
2024** - - n/a n/a n/a n/a
2025*** - - n/a n/a n/a n/a
* No performance fee was earned during 2022 and the fee assessment period was
extended to 2023.
** No performance fee was earned during 2024 and the fee assessment period was
extended to 2025.
*** No performance fee was earned during 2025 and the fee assessment period
has been extended to 2026.
Share-based Payment Sensitivity Analysis
The performance fee clawback period for the years ended 31 December 2022 and
31 December 2023 ends on 31 December 2026. As at 31 December 2025, the
Company is underperforming the benchmark, as per below
As at 31 December 2025 %
Company cumulative NAV returns a 13.5
Cumulative index returns b 47.0
Underperformance (1+a)/(1+b)-1 (22.8)
If the Company's underperformance changed by +10%/-10% there would be no
impact on the Company's profit after tax for the year ended 31 December 2025.
5. Taxation
Year ended 31 December 2025 Year ended 31 December 2024
Revenue Capital Total Revenue Capital Total
£'000
£'000
£'000
£'000
£'000
£'000
Corporation tax - - - - - -
Overseas withholding tax 179 - 179 46 - 46
Tax charge in respect of the current year 179 - 179 46 - 46
Current taxation
The taxation charge for the year is different from the standard rate of
corporation tax in the UK of 25.0% (2024: 25.0%). The differences are
explained below:
Year to Year to
31 December
31 December
2025
2024
£'000
£'000
Net return before (loss)/ tax 47,436 (10,664)
Theoretical tax at UK corporation tax rate of 25.0% (2025: 25.0%) 11,859 (2,666)
Effects of:
Capital (gains)/losses that are not taxable (10,535) 3,412
UK dividends which are not taxable (1,138) (599)
Overseas withholding tax 179 46
Overseas dividends that are not taxable (488) (174)
Excess management expenses 262 27
Tax charge in respect of the current year 179 46
Due to the Company's status as an investment trust and its intention to
continue meeting the conditions required to maintain its status in the
foreseeable future, the Company has not provided deferred tax on any capital
gains and losses arising on the revaluation or disposal of investments.
Deferred Tax
The Company has £15,823,000 (2024: £14,681,000) in respect of excess
unutilised management expenses, equivalent to a potential tax saving of
£3,960,000 (2024: £3,670,000) at the prospective tax rate of 25% (2024: 25%)
and £1,491,000 (2024: £1,491,000) in respect of loan interest, equivalent to
a potential tax saving of £373,000 (2024: £373,000) at the prospective tax
rate of 25% (2024: 25%).
These amounts could be utilised to the extent that the Company has sufficient
future taxable revenue. A deferred tax asset has not been recognised in
respect of these expenses.
6. Trade and other receivables
At At
31 December
31 December
2025
2024
Phoenix contribution receivable 750 -
Other receivables 359 372
Total trade and other receivables 1,109 372
The £750,000 contribution receivable (2023: £nil) from Phoenix Asset
Management Partners Limited ("Phoenix"), relates to the Manager's contribution
towards offsetting the costs directly related to the ATS combination during
the period. Please refer to Note 4 for further detail.
7. Ordinary Dividends
Year to Year to
31 December
31 December
2024
2023
£'000
£'000
Dividends reflected in the financial statements:
No final dividend for the year ended 31 December 2024 (2023: 3.45p per share) - 2,632
No interim dividend paid for the year ended 31 December 2025 (2024: 3.00p) - 2,289
Dividends not reflected in the financial statements:
Final dividend for the year ended 31 December 2025 at 4.70p per share 5,176 -
8. Earnings Per Share
Earnings per share ("EPS") are based on the profit of £47,257,000 (2024:
loss of £10,710,000) attributable to the weighted average of 112,803,770
(2024: 79,368,511) voting shares in issue during the year, excluding shares
that are considered to not be outstanding in accordance with IAS 33.
Supplementary information is provided as follows: revenue earnings per share
are based on the revenue profit of £5,176,000 (2024: profit of
£2,556,000); capital earnings per share are based on the net capital profit
of £42,081,000 (2024: loss of £13,266,000), attributable to the weighted
average of 112,803,770 (2024: 79,368,511) voting shares. Shares issued in
relation to the performance fee are subject to a three-year clawback
mechanism. While legally issued, these shares are contingently returnable and
are therefore not treated as outstanding for the purposes of basic EPS. For
the purposes of diluted EPS, shares subject to the performance fee clawback
are treated as contingently issuable shares, and only included within the
calculation when the relevant performance conditions have been satisfied.
Accordingly, such shares have been excluded from the weighted average number
of shares used in the calculation of basic and diluted EPS.
9. Share Capital and Reserves
At At
31 December
31 December
2025
2024
Ordinary Shares of 25p allotted, called up and fully paid (£'000) 28,643 28,665
(Number) 114,572,742 114,661,838
Shares in issue with full voting rights: Year ended Year ended
31 December
31 December
2025
2024
(Number)
(Number)
Opening 114,572,742 76,078,460
Shares issued - 38,583,378
Shares clawed back into treasury - (89,096)
Shares purchased into treasury (4,538,824) -
Closing shares in issue with full voting rights 110,033,918 114,572,742
Treasury Shares: Year ended Year ended
31 December
31 December
2025
2024
(Number)
(Number)
Opening 89,096 -
Shares clawed back into treasury - 89,096
Shares purchased into treasury 4,538,824 -
Shares cancelled from treasury (89,096) -
Closing shares held in treasury 4,538,824 89,096
The Company has a single share class, being ordinary shares that each have a
nominal value of 25p, and has not issued any other forms of security.
The Company has a Block Listing Facility which was last renewed on 17 April
2020. As at 31 December 2025, 14,245,062 shares remained unallotted under the
facility (2024: 14,245,062 shares).
No shares were issued under the Block Listing Facility, or otherwise, during
the year ended 31 December 2025. During the year ended 31 December 2024 the
Company issued 214,264 shares at an average price of 261.78p per share to the
Company's Investment Manager, representing the performance fee earned for the
year ended 31 December 2023. These are subject to a three-year lock-in and
clawback period from the date of their issue.
On 29 November 2024 the Company issued 38,369,114 shares to holders of Artemis
Alpha Trust plc ("ATS") shares, at a deemed price of 262.58p per share, in
consideration for the transfer to the Company of approximately £101 million
of net assets from ATS.
During the year ended 31 December 2025 the Company bought back into treasury
4,538,824 shares, at an average price (excluding ancillary charges) of
252.16p per share. The Company did not purchase any of its own shares during
the year ended 31 December 2024. Since the year end, up to 27 March 2026, the
Company has bought back into treasury a further 422,526 shares, at an average
price of 248.5p per share.
The clawback period on restricted shares issued to the Investment Manager in
relation to the performance period ended 31 December 2021 finished on 31
December 2024 and 89,096 shares originally issued to the Investment Manager
were clawed back. These were cancelled in January 2025.
Other Reserve
The other reserve balance represents the restricted shares issued in
settlement of performance fees that are still within a lock-in period.
The clawback period for the performance fee earned during the year ended
31 December 2021 ended on 31 December 2024. The Company's cumulative NAV
total return underperformed that of the benchmark index over the vesting
period. As a result, the 89,096 restricted shares originally issued in
settlement of the £221,219 performance fee earned were clawed back as at 31
December 2024.
Share-based Payment Reserve
The share-based payment reserve represents the cumulative share-based payment
expenses in relation to performance fees earned. A share-based payment
clawback of £166,000 in relation to the 2021 performance fee crystallised on
31 December 2024, resulting in a nil balance at that year end. No share-based
payment expenses have been charged subsequently as no shares issued in
settlement of the fee earned in the performance fee period ended 31 December
2023 are expected to ultimately vest based on the estimates produced by the
Company's in-house model and no performance fee was earned in the subsequent
period to 31 December 2025. This is subject to review and change at the
Company's future reporting dates. Further details can be found in Note 4.
10. Net Assets Per Share
The figure for Net Assets per Share is based on Net Assets of £329,247,000
(2024: £293,501,000) divided by 110,033,918 voting shares in issue at
31 December 2025 (2024: 114,572,742).
11. Reconciliation of Net Cash Flow from Operating
Activities
Year to Year to
31 December
31 December
2025
2024
£'000
£'000
Net returns after tax 47,257 (10,710)
(Gains)/losses on investments (42,113) 13,446
Decrease/(increase) in trade and other receivables 58 (737)
(Decrease)/increase in other payables (1,390) 1,491
Investment performance fee clawback - (166)
Tax charge 179 46
Operating cash inflow before tax paid 3,991 3,370
Tax paid (179) (46)
Net cash inflow from operating activities 3,812 3,324
12. Transactions with Related Parties
The Board of Directors is defi ned as a related party. Under the FCA Listing
Rules, the Manager is also defi ned as a related party. However, under the
AIC SORP, in accordance with which these financial statements are prepared,
the Manager is not considered to be a related party.
There were no transactions with Directors other than as disclosed in the
Directors' Remuneration Report on pages 55 to 57 and in Note 4 on page 89. No
fees payable to the Directors were outstanding as at 31 December 2025.
13. Financial Instruments
Investments are carried in the balance sheet at fair value. For other
financial assets and financial liabilities, the balance sheet value is
considered to be a reasonable approximation of fair value.
Financial assets
The Company's financial assets may include equity investments, fixed
interest securities, short-term receivables and cash and cash equivalents
balances. The currency and cash-flow profile of those financial assets was:
2025 2024
Interest Non- Total Interest Non- Total
bearing
interest
£'000
bearing
interest
£'000
£'000
bearing
£'000
bearing
£'000
£'000
Non-current equity investments at fair value through profit or loss:
£ sterling denominated security holdings - 250,734 250,734 - 228,871 228,871
€ euro denominated security holdings - 51,491 51,491 - 25,492 25,492
$ usd denominated security holdings - 25,011 25,011 - 22,511 22,511
kr sek denominated security holdings - - - - 48 48
- 327,236 327,236 - 276,922 276,922
Cash at bank and cash equivalents:
Floating rate - £ sterling 1,090 - 1,090 17,156 - 17,156
Floating rate - € euro - - - (80) - (80)
1,090 - 1,090 17,076 - 17,076
Current assets:
Receivables - 1,137 1,137 - 1,109 1,109
1,090 328,373 329,463 17,076 278,031 295,107
The cash and equivalents balance comprises cash at bank of £1,090,000 (2024:
£9,169,000) held by the Company's Depositary, Northern Trust Investor
Services Ltd, and no UK Treasury Bills (2024: £7,907,000).
Financial liabilities
The Company fi nances its investment activities through its ordinary share
capital and reserves. It does not currently use borrowing for such purposes.
The Company's financial liabilities comprise short-term trade payables.
Foreign currency balances are stated in the accounts in sterling at the
exchange rate as at the Balance Sheet date.
There were no short-term trade payables (other than accrued expenses).
Fair Value Hierarchy
Under IFRS 13 investment companies are required to disclose the fair value
hierarchy that classifies financial instruments measured at fair value at
one of three levels according to the relative reliability of the inputs used
to estimate the fair values.
Classification Input
Level 1 Valued using quoted prices in active markets for identical assets
Level 2 Valued by reference to valuation techniques using observable inputs other than
quoted prices included within Level 1
Level 3 Valued by reference to valuation techniques using inputs that are not based on
observable market data
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset.
Classification Year to Year to
31 December
31 December
2025
2024
£'000
£'000
Level 1 317,945 272,105
Level 2 - -
Level 3 9,291 4,817
Total non-current investments held at 'FVTPL' 327,236 276,922
During the year, £4,840,000 of Level 1 assets (2024: nil) were delisted and
transferred to Level 3.
The movement on the Level 3 unquoted investments during the year is shown
below:
Year to Year to
31 December
31 December
2025
2024
£'000
£'000
Opening balance 4,817 1,476
Additions during the year* - 4,681
Unrealised losses (369) (1,340)
Transfer from Level 1 to Level 3** 4,843 -
Closing balance 9,291 4,817
* Additions to the Level 3 unquoted investments during 2024 related to the ATS
combination. No other unquoted assets were acquired during the year.
** Hornby transferred from Level 1 to Level 3 during the year (2024: none).
The Level 3 unquoted investment balance represents the Company's investment in
seven unquoted investments, two of which are valued at nil value. Valuation
reports prepared by the Investment Manager are used as an input into the
Company's fair value assessment. These valuations are evaluated to ensure the
methodologies applied are consistent with fair value principles and market
participant assumptions, in line with the Company's accounting policies and
valuation methods set out in Note 1(g) for unquoted investments.
Risk Analysis
The general risk analysis undertaken by the Board and its overall policy
approach to risk management are set out in the Strategic Report. Issues
associated with portfolio distribution and concentration risk are discussed in
the Investment Policy section of the Strategic Report. This note, which is
incorporated in accordance with accounting standard IFRS 7, examines in
greater detail the identification, measurement and management of risks
potentially affecting the value of financial instruments and how those risks
potentially affect the performance and financial position of the Company.
The risks concerned are categorised as follows:
a. Potential Market Risks, which are principally:
i. Currency Risk
ii. Interest Rate Risk and
iii. Other Price Risk.
b. Liquidity Risk
c. Credit Risk
Each is considered in turn below:
A (i) Currency Risk
The portfolio as at 31 December 2025 was invested predominantly in sterling
denominated securities and there was limited currency risk arising from the
possibility of a fall in the value of sterling impacting upon the value of
investments or income.
The Company had no foreign currency borrowings at 31 December 2025 or
31 December 2024.
The Company does not hedge its currency exposures currently, but under its
investment policy and restrictions, derivative or similar financial
instruments can be employed if considered necessary for the purpose of capital
preservation.
Currency sensitivity
The table below shows the impact on the Company's profit after taxation for
the year ended and net assets as at 31 December 2025, if sterling had
strengthened/weakened by 10% against Euro, USD and SEK.
2025 2024
£'000
£'000
Euro (4,681)/5,721 (2,310)/2,824
USD (2,274)/2,779 (2,046)/2,501
SEK -/- (4)/5
A (ii) Interest Rate Risk
The Company held no UK Treasury Bills at 31 December 2025 (31 December 2024:
£7,907,000).
With the exception of cash and cash equivalents, no interest rate risks arise
in respect of any current asset. All cash and cash equivalents held as a
current asset is sterling denominated, earning interest at the bank's or
custodian's variable interest rates.
The Company had no borrowings at 31 December 2025 or 31 December 2024..
A (iii) Other Price Risk
The principal price risk for the Company is the price volatility of shares
that are owned by the Company. As described in the Investment Manager's
Review, the Company spreads its investments across different sectors and
geographies, but as shown by the Portfolio Analysis on page 20, the Company
may maintain relatively strong concentrations in particular sectors selected
by the Investment Manager.
The Board manages these risks through the use of investment limits and
guidelines as set out in the Company's investment policy and restrictions, and
monitors the risks through regular financial and compliance reports provided
by the Company's key service providers.
The effect on the portfolio of a 10.0% increase or decrease in market prices
would have resulted in an increase or decrease of £32,724,000 (2024:
£27,692,000) in the investments held at fair value through profit or loss at
the period end, which is equivalent to 9.9% (2024: 9.4%) in the net assets
attributable to equity holders. This analysis assumes that all other variables
remain constant.
The significant unobservable inputs used in fair value measurement
categorised within Level 3 of the fair value hierarchy, together with a
quantitative sensitivity, as at 31 December 2025 are shown below, with the
exception of the Market Value approach as it does not involve significant
subjectivity:
As at 31 December 2025 Fair value of Key Estimate Sensitivity of fair value
investments
unobservable
of input
to changes in
£'000
inputs
unobservable inputs
Sum of Parts, Market Value 4,840 Third Party Offers, Delisting Price n/a n/a
Market approach using comparable trading multiples 3,818 Multiple to NAV 1.3x An increase to 1.4x/(decrease to 1.2x) would increase/(decrease) fair value by
+8%/(-8%)
Discounted cash flow 329 Discount rate 15%,25% An increase of
1%
in discount rates/ (decrease of 1% in discount rates) would
increase/(decrease) fair value by +8%/(-7%)
Market Value 300 Par value of debt n/a n/a
B Liquidity Risk
Liquidity Risk is considered to be low, because most of the portfolio is
invested in readily realisable securities. As a consequence, cash flow risks
are also considered to be low. The Investment Manager estimates that, under
normal market conditions and without causing excessive disturbance to the
prices of the securities concerned, 46.7% (2024: 39.0%) of the portfolio could
be liquidated within seven days, based on 25% of average daily volume. This is
conservative as it does not include the ability to access liquidity through
block trades.
C Credit Risk
The Company invests in quoted and unquoted equities in line with its
investment objective and policy. The Company's investments are held by
Northern Trust Investor Services Ltd ("the Depositary"), which is a large and
reputable international banking institution. The Company's normal practice is
to remain fully invested at most times and not to hold large quantities of
cash. At 31 December 2025, cash at bank comprised £1,090,000 (2024:
£9,242,000) held by the Depositary, and no UK Treasury Bills (2024:
£7,907,000).
Credit Risk arising on transactions with brokers relates to transactions
awaiting settlement. This risk is considered to be very low because
transactions are almost always undertaken on a delivery versus payment basis
with member fi rms of the London Stock Exchange.
A credit risk also arises due to the £750,000 payable from Phoenix in
relation to the combination expenses costs, as detailed in Notes 4 and 6. The
credit risk associated with this receivable is considered to be low because
the amount is contractually due from the Investment Manager under the terms of
the Investment Management Agreement. Phoenix is a regulated financial
institution with a strong credit profile and a long‑standing operational
relationship with the Company, further reducing the likelihood of default.
D Capital management policies and procedures
The Company's capital management objectives are:
• to ensure the Company's ability to continue as a going concern;
and
• to provide an adequate return to shareholders
by pursuing investment policies commensurate with the level of risk.
The Company considers its capital to be issued share capital and reserves, and
monitors capital on the basis of the carrying amount of equity, less cash as
presented on the face of the statement of financial position.
The Company sets the amount of capital in proportion to its overall financing
structure, i.e. equity and financial liabilities. The Company does not
currently intend to use gearing, but as set out in its investment objective
and policy, borrowings of up to 30% of the aggregate of the paid-up nominal
capital plus the capital and revenue reserves are permitted.
The Company manages the capital structure and makes adjustments to it in the
light of changes in economic conditions and the risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the
Company may adjust the amount of dividends paid to shareholders (within the
statutory limits applying to investment trusts), return capital to
shareholders, issue new shares, or sell assets.
14. Post Year End Events
No post balance sheet events have occurred since 31 December 2025.
.
The figures and financial information for 202 are extracted from the published
Annual Report for the year ended 31 December 2024 and do not constitute the
statutory accounts for that year. The Annual Report for the year ended 31
December 2024 has been delivered to the Registrar of Companies and included an
Independent Auditor's Report which was unqualified and did not contain a
statement under either section 498(2) or section 498(3) of the Companies Act
2006.
The figures and financial information for 2025 are extracted from the Annual
Report and financial statements for the year ended 31 December 2025 and do not
constitute the statutory accounts for the year. The Annual Report for the year
ended 31 December 2025 includes an Independent Auditor's Report which is
unqualified and does not contain a statement under either section 498(2) or
section 498(3) of the Companies Act 2006. The Annual Report and financial
statements have not yet been delivered to the Registrar of Companies.
The Annual Report will be posted to shareholders shortly. Copies may be
obtained by writing to the Company Secretary, Frostrow Capital LLP at 25
Southampton Buildings, London WC2A 1AL, or from the Company's website -
www.auroraukalpha.com (http://www.auroraukalpha.com) - where up to date
information on the Company, including daily NAVs, share prices and fact
sheets, can also be found.
A copy of the Annual Report will be submitted to the National Storage
Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
Frostrow Capital LLP
Company Secretary
020 3709 8733
30 March 2026
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