REG-Castelnau Group Ltd: Annual Report and Audited Financial Statements 2021
11/04/2022 07:15
Castelnau Group Limited
Annual Report and Audited Financial Statements 2021
LEI: 213800PED8RFUBMK1T64
(Classified Regulated Information, under DTR 6 Annex 1 section 1.1)
The Company has today, in accordance with DTR 6.3.5, released its Annual
Report and Audited Financial Statements for the year ended 31 December 2021.
The Report will shortly be available from the Company’s website:
https://www.castelnaugroup.com
Chair’s Statement
Listing Castelnau Group Limited (“CGL”) on the SFS (Specialist Fund
Segment) of the London Stock Exchange’s Main Market on 18 October 2021 was
an important step for the Company and our investors. CGL is an investment
company established to invest in public and private companies. The growth
potential of Castelnau’s traditional businesses and enabling companies is
hugely exciting. The Company’s investment objective is to compound
Shareholder’s capital at a higher rate of return than the FTSE All Share
Total Return Index over the long term by using the Investment Manager's
toolbox of modern techniques to transform old economy businesses into valuable
long-term winners.
The total number of Ordinary Shares in the Company in issue immediately
following Admission was 177,552,719. The existing clients of Phoenix Asset
Management Partners Ltd (“PAMP”) made up 70.1% of the issued shares, the
Offer for Subscription and the Placing Programme in aggregate made up 15.8%
and the investment from SPWOne 14.1%.
Subsequent to the Company’s initial admission, an additional two investors,
whose accounts are managed on a discretionary basis by the Company’s
investment manager, PAMP, entered into a share purchase agreement on 11
November 2021 in respect of the in-specie transfer of their shares in Dignity
plc ("Dignity"), Hornby plc ("Hornby"), and Phoenix SG Limited ("PSG") to the
Company, in exchange for newly issued Ordinary Shares.
The Investment Management Agreement with PAMP creates significant Shareholder
alignment, as PAMP does not earn a management fee but earns a performance fee
only. The performance fee period is three years and is equal to one-third of
the relative outperformance to the FTSE All share Total Return Index.
Performance Review:
The NAV total return for the year ended 31 December 2021, was -6.5%, versus
the benchmark FTSE All-Share Index (Total Return) of +2.5%, that’s a -9.0%
relative underperformance. The main contributors to the underperformance were
Dignity and Hornby. Dignity represents 35% of the portfolio and had a -14%
price movement. Hornby represents 22% of the portfolio and had a -1.2% price
movement.
The CGL share price traded at a premium to NAV throughout the period. The
Board, along with its Advisers, and the Investment Manager, monitor the
premium or discount on an ongoing basis. The premium to NAV as at 31 December
2021 is disclosed under results and performance.
At the heart of this is PAMP’s insight that there are businesses with a core
franchise that is suffering from the changes going on in commercial life (such
as the rise of e-commerce), which, if they could embrace the best of modern
techniques, would allow these businesses to thrive and ultimately deliver
value not recognised in their current valuations.
In addition, the Company will own businesses that are considered by PAMP to be
"enablers", and which can be used to enable the business transformations of
investee companies. Currently, these businesses are Rawnet Ltd ("Rawnet"), a
digital marketing and software development company, and Ocula Technologies
Holdings Ltd ("Ocula"), a data science company. These companies could
ultimately deliver value to Shareholders, both through the "enabling" process
with investee companies and through their own valuations as standalone
businesses.
Castelnau has been established to apply modern techniques to traditional
businesses, which it owns, controls and influences, with the intention of
creating sustainable long-term value for Shareholders. We appreciate that this
is a short period (for many of our shareholders) and hence look forward to
sharing our progress with you in the future, namely through the monthly
updates and also the Interim and Annual reports.
Joanne Peacegood
Chair
8 April 2022
Holdings as at 31 December 2021
Company Sector Holding Cost Valuation % of net assets
Dignity plc Specialised Consumer Services 10,255,153 70,139,747 60,505,403 35.2%
Hornby plc Leisure Products 91,336,047 38,639,781 37,904,460 22.0%
Phoenix S. G. Ltd Speciality Retail 7,610 18,577,646 18,156,159 10.5%
Rawnet Ltd IT Services 2,750,000 5,500,001 6,050,000 3.5%
Rawnet Ltd IT Services - Loan 1,111,795 1,111,795 1,111,795 0.6%
WLS International Ltd* Specialised Consumer Services 3,700 3,788,171 3,993,544 2.3%
Ocula Technologies Holdings Ltd IT Services - Loan 1,500,000 1,500,000 1,500,000 0.9%
Ocula Technologies Holdings Ltd IT Services 8,000 80 80 0.0%
Showpiece Technologies Ltd Internet Retail - Loan 750,000 750,000 750,000 0.4%
Showpiece Technologies Ltd Internet Retail 8,000 8,000 8,000 0.0%
Total Holdings 129,979,441 75.4%
Net current assets 42,147,344 24.6%
Net assets 172,126,785 100.0%
* WLS International Ltd is the holding company for Cambium Group.
Portfolio Analysis
75.7% of total holdings were listed companies and the remaining 24.3% were
unlisted. All companies are UK businesses.
Statement from the CIO of the Investment Manager
Dear Shareholders,
Welcome to the Castelnau Group. This is our first annual report. The
following commentary is an excerpt from our first quarterly report*.
Our principal objective that drives everything we do is to generate high,
risk-adjusted, long term returns on your capital and to compound those over
time. By “high” we mean materially higher than the returns of passively
holding all equities and by that we mean an excess return of 10% over the
relevant indices before fees. We are focused on absolute returns and
“high” to us means 20% per annum and above.
Returns of this magnitude are not easily achieved and writing them down might
look like an act of overconfident hubris, but they are a yardstick by which we
are asking you to judge us. We care about how we make those returns and will
apply the Phoenix Principles to the way we conduct ourselves. If we do that
consistently, then in time we will enhance the reputation of our assets.
Castelnau Group’s ‘Edge’
To achieve high returns over time requires some form of edge, some form of
competitive advantage and I will try to explain what we think ours will be.
Castelnau’s edge is a combination of factors working together. Here are six
of the more important factors.
1. Permanent Capital. Most investment capital is redeemable in some form or
has a time horizon attached to it; ours doesn’t. Should shareholders wish to
move on then they can do that by selling their shares in the market to another
buyer. That permanence of capital allows us to use investment strategies that
many can’t, where the short term may look poor and where liquidity may be
low. It allows a truly business-like approach to investment.
The Board or Shareholders collectively can of course still decide at any point
to wind up the business and redeem the capital. Permanent capital doesn’t
mean perpetuity; it means that we don’t have to operate under threat of a
redemption event.
2. Long Term Horizon. We assess opportunities with a very long-term timeframe
and will pursue investments that benefit from that. Most investment capital is
judged over the shorter term and held in forms with some exit in mind. When
you combine a very long-time horizon with permanent capital you have
opportunities that many can’t pursue. A long-term horizon means that the
first priority always has to be survival. It also means that we can afford to
be patient. It does not mean however that we don’t have urgency in pursuing
our goals.
3. Standing on the Shoulders of Giants. We don’t profess genius; we are
students of it. We draw upon the examples and teachings of some great
investors and businesspeople. We can however substitute genius for copying.
This might not seem like it should be an edge, surely everyone could do this,
but such is human nature that they don’t. Phoenix has been built upon the
teachings of great value investors and yet as an investment style it remains a
backwater.
4. Our People and our Network. Our greatest edge is probably the people I have
surrounded myself with. We have always taken recruitment very seriously at
Phoenix and have built a highly capable team organically. We are extending
that approach into our businesses and when we get that right so much of the
rest takes care of itself.
We also have the privilege of access to some great businesspeople and
investors who we are connected to through their businesses or because they are
investors in Phoenix. We draw upon this network in many ways, from the
informal through to our partnership with Sir Peter Wood and his team at
SPWOne. What we have found is that networks beget networks and good people
tend to know and work with good people.
Decades of seeking out the best companies and getting close to the best
managements along with attracting business-like investors to our investment
approach has gifted us a strong array of capable and knowledgeable people.
John Elkann’s EXOR is possibly the benchmark in this regard with its very
impressive Partners Council.
5. Culture. We have a way of operating that lends itself to learning by
thinking, doing, and observing. A confidence to try things in a thoughtful and
careful way and humility to spot and admit failures that can be utilised for
incremental learnings. It is a flat, self-organising culture that you need to
be inside to truly appreciate but it allows us to draw on the full breadth of
capability from many diverse and able brains and experiences.
6. The Castelnau Way & The Toolkit. At Castelnau we seek to turn knowledge
into a business craft whose output is long-term shareholder value. It is one
thing to draw upon knowledge in all its forms; analysis of facts, learning
from others, results of experiments, thinking and practice - but it is quite
another to apply that successfully. In Castelnau, just as we do and have done
for over 20 years at Phoenix, we do it by creating a framework that allows us
to build a way of working that accumulates lessons and continuously improves.
The Castelnau starting Line-Up
We own four principal businesses where we see the potential for greatness, but
which need the application of our tools and techniques and the assistance of
our enabling companies. They are all in different stages of that process and
as 3 of them are public companies we will have to be sensitive about what we
say so as not to disclose any price sensitive information.
General Attributes
All four businesses serve an emotional need of their customers and are
threatened by the changes brought about by the internet and digital
communication. Our businesses in weddings (The Cambium Group) and funerals
(Dignity) deal with life events whereas the other two deal with hobbies and
play (Hornby and Stanley Gibbons). Technology is changing the way that their
customers inform themselves and make their choices. We believe all of them can
create value by embracing and fully utilising technology and digital
communication. For each company we thus bring fresh perspective.
The Cambium Group
Cambium was a small failing company when we first took control in 2015. Our
experiences here are the basis of what we call The Castelnau Way and the
Toolkit.
Since the restrictions on weddings ended in July 2021, Cambium has surged back
to life. Even with less than half a year of trading in 2021, ‘product
pledge’ revenue was a third higher than the whole of 2019, the prior peak.
This surge in growth which, again, had a run rate over double the prior peak
combined with a workforce that had been reduced during the COVID-19
restructuring in 2020, has caused significant challenges for the company. To
add to that the supply chain problems experienced by suppliers are causing
them to disappoint lots of customers. This latter point is deeply distressing
to an organisation whose culture is focused on delighting couples. It is a
real test of the strength of the culture.
The run rate of new registrations and the pipeline of activity for 2022 looks
on course for very strong growth again; the business is targeting 70% growth
on 2019. By all measures it looks like Cambium with its portfolio of brands
has grown its leadership position in wedding gift lists.
The business model for the core gift list business involves negative working
capital, minimal stock, and no discounting. By merging with Prezola in 2019
and combining the fulfilment operations of all three businesses they own,
Cambium has now built the scale to operate profitably.
Cambium is preparing a launch this year into a new space which is an extension
of what it does, and we will report that when it happens.
As of the end the of December, the current valuation we have for the equity of
the Cambium business is £20.8m, of which you currently own 19.2% (i.e. your
share at the end of December was worth £3.99m, an increase of +5.6% in value
from when we floated). We expect that your share of the equity will increase
in the near future.
Dignity
Our biggest holding is Dignity where I am also currently CEO and have been now
for 9 months. We have been implementing the strategy I set out at the AGM to
invert the organisation, empower a customer focus, and make a virtue of being
a confederation of local businesses that are part of a national network.
We have spent six months employing a key part of our Castelnau approach; that
is, embedding a learning culture within. Using an approach from the Toolkit,
Dignity have been running an exercise to develop company principles which are
about to be published. When they are in the public domain, we will share them
with you. That marks the beginning of a process that never ends to make these
principles intrinsic to the way Dignity works so that ultimately, they become
its culture.
The commercial elements of our strategy will have to await Dignity’s own
announcements, but we are very much applying all that I have mentioned
previously to set Dignity on the path to being a great business. The early
years are the toughest when you are making such wholesale changes and so we
expect them to be here.
Hornby
Hornby has recently announced that it is looking for a new CEO and we see that
as an essential step before the work on forming company principles and
applying them to a cultural transformation.
Our data science company, Ocula, started to apply its proprietary technology
to the Scalextric website with favourable results. Rawnet (our Digital
Marketing company) is involved in the website development and digital
marketing.
Stanley Gibbons
We created a new business called Showpiece Technologies Ltd ("Showpiece") in
the quarter, which partnered with Stanley Gibbons to buy and sell off the
world’s most valuable asset by weight, the 1c Magenta, in fractional virtual
form. Having launched that successfully within two months of purchase,
Showpiece has now lined up its next asset which is a valuable rare coin. These
efforts are an attempt to bring the traditional worlds of stamp and coin
collecting into the modern era of digital virtual collecting and vice versa.
We plan to launch a platform to allow a secondary market in these assets and
to continue to bring new launches.
Ocula also started to apply its technology to the Stanley Gibbons website with
favourable results. Rawnet is also involved in the website development and
digital marketing.
Final thoughts
As the Nobel-Prize winning economist Daniel Kahneman and others have pointed
out, for true expertise to develop there needs to be a consistency of
approach, defined parameters, and a good feedback loop. Engineering teaches
that open-loop systems are unstable without feedback and learning. So too, in
business. That is what we are cultivating inside Castelnau. The longer we do
it, the more we learn from experience and the stronger this edge should
become.
The Castelnau Way is the approach we are adopting to achieving our goals, the
modus operandi we are developing and evolving through practice and experience.
By contrast the Castelnau Toolkit, as its name implies, is a very specific set
of tools and capabilities that we have been building and adding to.
These are “edges” which we believe we possess and will apply to the goal
of compounding capital at high risk-adjusted rates. The primary way in which
we will do that is by deploying your capital in businesses that themselves
have an edge: a moat, a defensible competitive advantage that allows them to
earn a high return on their capital and to re-invest at high marginal rates.
Such businesses, when their attributes are obvious to all, are usually not
available at prices that will generate high returns on your capital. So, our
primary strategy is to gain control and influence of businesses that have the
potential to be great and then to help them to realise that greatness. We want
to Build and Keep Great Companies.
In this overall context we believe Castelnau Group to be quite a unique
investment vehicle.
Gary Channon
CIO
8 April 2022
*Please see the entire report here:
https://www.castelnaugroup.com/application/files/1416/4382/9198/Castelnau_Group_Ltd_Q4_2021.pdf
Investment Manager’s Report
The Company launched on 18 October 2021 with an initial NAV of £177,512,718.
The seed assets comprised of; Dignity £63.9million, Hornby £34.3million,
Stanley Gibbons £17.5million and WLS International Ltd (the wedding list
business) £3.8million. CGL also acquired Rawnet (a digital and marketing
agency) and funded a start-up data science company; Ocula. These two companies
are an important tool within the Castelnau Toolkit and will enable the
portfolio companies in digital transformation. In addition to the seed assets
a total of £53million was raised where Sir Peter Wood, a cornerstone
investor, made up £25million via his investment vehicle; SPWOne. The Phoenix
and SPWOne teams are working together to find great businesses and apply the
transformational strategies to those businesses. It is a very exciting
partnership for Castelnau Group bringing the benefit from the outstanding
track record that Sir Peter and the SPWOne team have in building market
leading brands, transforming industries through digitisation, and creating
significant value. Post the listing, on 11 November 2021 the Company issued
6,443,339 new shares for the purposes of an in specie transfer of investments
from Phoenix asset management.
The NAV per Castelnau share for the period decreased by 6.5% and
underperformed the market which was up 2.5%. The main contributor to this
underperformance was Dignity. Dignity represents 35% of the portfolio and had
a -14% price movement, representing the majority of -6.5% performance in the
period. The Dignity share price remains volatile due to the strategic changes
being deliberately undertaken at that business. Whilst such volatility might
persist in the near-term, from a fundamental perspective our investment
premise has not changed.
At the time of writing this report, the latest NAV per share (31 March 2022)
was 84 pence, a 10.2% fall versus 31 December 2021. The majority of this
decrease is again due to the continued short-term volatility in the Dignity
share price. The Dignity share price has declined 14.4% year to date. Dignity
published its annual results on 23 March 2022.
Valuation methodology
Listed assets are priced using end of day market prices. For investments that
are not listed Phoenix has processes in place to ensure valuations provide an
objective, consistent and transparent basis for the fair value of unquoted
securities in accordance with International Financial Reporting Standards.
Phoenix creates individual valuation frameworks for all unlisted securities.
The final framework will vary depending on the characteristics of the holding
(for instance it may also incorporate a listed aspect or loan).
To ensure the unlisted valuation framework is robust Phoenix engages a
third-party valuation expert to review the framework for each new material
unlisted security. Then on at least a semi-annual basis the third-party
valuation expert will review and verify the framework and carry out an
independent valuation against which the Investment Managers valuation is
compared. Independent value verification may be more frequent depending on the
characteristics of each investment and the occurrence of a material change in
value. Although Phoenix is ultimately responsible for the final valuation, in
practice we would work with the third-party valuation expert to agree a
valuation. If Phoenix could not agree a final decision would be made at Board
level.
There may be circumstances for newly acquired investments, when Phoenix's best
estimate of fair value of an unlisted security is a close approximation to
cost. The valuation model at acquisition is calibrated and re-evaluated at the
valuation date and if there are no material changes to the business and the
model then the acquisition cost is used for the valuation (i.e., no material
changes to cash flow projections, no material change in the performance of the
company, and no transactions have taken place of the portfolio company shares
with other parties). In this scenario and when investments are deemed
immaterial in the context of their value relative to the total portfolio value
and there are no significant changes to the portfolio company from when it was
purchased then no third-party valuation review will be obtained.
Unlisted equities will be valued monthly by the Phoenix investment team. These
valuations will then be reviewed and approved by Phoenix’s business team who
are functionally separate from the investment team. Ultimate approval of the
valuation is from Phoenix’s COO. The Phoenix business team will liaise
directly with the third-party valuation expert who review PAMP’s valuation
methodology to ensure the framework and valuation is robust.
The Company increased its position in Hornby, Dignity, and Stanley Gibbons
during the period.
Post 31 December 2021, CGL purchased £40 million in UK Treasury Bills. There
has been no other investment activity to note.
We would like to extend a warm welcome to the other members of the Castelnau
Board; Joanne Peacegood (Independent Chair), Joanna Duquemin Nicolle
(Independent NED), Andrew Whittaker (Independent NED), David Stevenson
(Non-Independent NED). We look forward to working with the Board over the
coming years.
Lorraine Smyth
Partner; Phoenix Asset Management Partners Ltd.
8 April 2022
Governance
Board Members
Biographical details of the Directors are as follows:
Joanne Peacegood (aged 44) (Independent Chair)
Joanne has over 22 years of experience in the asset management sector across a
range of asset classes. Joanne is a Non-Executive Director across a number of
sectors / asset classes including Listed, Private Equity, Debt, Utilities,
Hedge, Real Estate and Asset Managers. Prior to becoming a non-executive
director, Joanne worked for PwC in the Channel Islands, UK and Canada and held
leadership roles in Audit, Controls Assurance, Risk & Quality and Innovation &
Technology.
Joanne is an FCA with the ICAEW, graduating with an Honours degree in
Accounting and holds the IOD Diploma. Joanne is the Chair of the Guernsey
Investment & Fund Association Executive Committee, is a member of the
Association of Investment Companies’ (AIC) Channel Islands Committee and
also sits on the Guernsey International Business Association Council. Joanne
resides in Guernsey.
Andrew Whittaker (aged 48) (Independent non-executive Director)
Andrew is an experienced director and currently sits on several investment
manager and investment fund boards specialising in debt, venture, renewables
and buyouts. Andrew has over 20 years of experience in the investment sector
and the funds industry.
Andrew is currently Managing Director of Aver Partners, having previously been
Managing Director at Ipes (Barings/Apex) and preceding that Managing Director
at Capita (Sinclair Henderson/Link). He has held senior management roles at
Moscow Narodny (VTB Capital), DML (Halliburton) and qualified whilst at
Midland (HSBC/Montagu).
Andrew graduated from Cardiff University and Aix-Marseille Université. He is
a Chartered Management Accountant and is a Member of the Chartered Institute
for Securities and Investment (CISI). Andrew is currently Chair of the British
Venture Capital Association (BVCA) Channel Islands Working Group and a member
of the Association of Investment Companies’ (AIC) Technical Committee. He is
a previous Chair of the Guernsey Investment Fund Association (GIFA), Council
member of Guernsey International Business Association (GIBA), member of the
Association of Real Estate Funds (AREF) Regulatory Committee and of Invest
Europe’s (formally European Venture Capital Association’s (EVCA))
Technical Group.
Joanna Duquemin Nicolle (aged 51) (Independent non-executive Director)
Joanna has over 30 years’ experience working in the finance industry in
Guernsey. Joanna is currently Chief Executive Officer of Elysium Fund
Management Limited, having previously been a Director and the Company
Secretary of Collins Stewart Fund Management Limited where she worked on, and
led, numerous corporate finance assignments and stock exchange listings in
addition to undertaking fund administration and company secretarial duties.
Joanna has extensive experience in the provision of best practice corporate
governance and company secretarial services to a diverse range of companies
traded on the AIM market of the London Stock Exchange, listed on the Main
Market of the London Stock Exchange, Euronext and The International Stock
Exchange. Joanna qualified as an associate of The Chartered Institute of
Secretaries and Administrators in 1994.
Lorraine Smyth (aged 39) (Non-Independent non-executive Director)
Lorraine has over 15 years’ experience working in the finance industry. This
includes working in the fund and investment accounting sectors for large banks
in Dublin and London. She also worked as a client operations manager for a
software vendor and has been involved in multiple accounting software
implementation projects.
Lorraine represents the Investment Manager on the boards of the Company,
Rawnet and Ocula. Lorraine holds a Bachelor (Hons) degree in Economics, from
University College Dublin.
David Stevenson (aged 55) (Non-Independent non-executive Director)
David Stevenson is a columnist for the Financial Times, Citywire and Money
Week and author of a number of books on investment matters. He was the
founding director of Rocket Science Group. Currently he is a director of
Aurora Investment Trust plc, Secured Income Fund plc, Gresham House Energy
Storage Fund plc and AltFi Limited and a strategy consultant to a number of
asset management firms and investment banks.
Disclosure of Directorships in Public Companies Listed on Recognised Exchanges
The following summarises the Directors’ directorships in other public listed
companies:
Company Name Stock Exchange
Joanne Peacegood (Chair) NextEnergy Solar Fund Limited London
David Stevenson (Non-Independent non-executive Director) Aurora Investment Trust plc London
Directors’ Report
The Directors present their Annual Report and Audited Financial Statements for
the year ended 31 December 2021.
The Company
Castelnau Group Limited (“the "Company" or "CGL"”) listed on the SFS
(Specialist Fund Segment) of the London Stock Exchange’s Main Market on 18
October 2021. CGL is an investment company established to invest in public and
private companies.
Investment Objective
The Company's investment objective is to compound Shareholder’s capital at a
higher rate of return than the FTSE All Share Total Return Index over the long
term.
Investment Policy
The Company will seek to achieve a high rate of compound return over the long
term by carefully selecting investments using a thorough and objective
research process and paying a price which provides a material margin of safety
against permanent loss of capital, but also a favourable range of outcomes.
The Company will follow a high conviction investment strategy. The expertise
and processes developed by the Investment Manager can be applied to all parts
of the capital structure of a business, both private and publicly quoted.
These positions could be represented by a minority stake, a control position
combined with operational involvement, full ownership of a company, a joint
venture, a loan or convertible instrument, a short position or any other
instrument which allows the Company to access value.
The Company may select investments from all asset classes, geographies and all
parts of the capital structure of a business. Both private and public markets
are within the scope of the Company’s investment policy. The constraints on
the Investment Manager lie in the high standards, strict hurdles and diligent
processes used to select investments. These constraints help to maximise
returns by reducing mistakes, enforcing a margin of safety and only accepting
investments with a favourable range of outcomes.
The Company expects to hold a concentrated portfolio of investments and the
Company will not seek to reduce concentration risk through diversification.
The opportunity set will dictate the number of holdings and the weighting of
investments in the Portfolio. The investments with the best return profiles
will receive the largest weightings. The Company will therefore have no set
diversification policies.
The volatility of mark-to-market prices does not affect the investment
process. It is likely that volatility in the market price of a listed
investment will provide attractive entry or exit points and so investors
should expect high volatility to sit alongside the high long-term compounding
rates that the Company is aiming to achieve.
The constituents of local indices, the weightings of investments in these
indices and the volatility of the indices relative to the Company will not
affect investment decisions. It is anticipated that agnosticism towards local
indices will help focus research efforts, decision making and ultimately
investment performance.
The Company may invest directly or through special purpose vehicles if
considered appropriate.
Dividend Policy
The Company has no stated dividend target. The Company’s investment
objective is one of capital growth and it is anticipated that returns for
Shareholders will derive primarily from capital gains. The Company will target
a Net Asset Value total return of 10-15% above the return on the FTSE
All-Share Total Return Index per annum and a minimum absolute Net Asset Value
total return of 20% per annum.
Investors should note that the target returns noted above are a target only
and not a profit forecast. There may be a number of factors that adversely
affect the Company’s ability to achieve the target returns and there can be
no assurance that the target will be met.
Borrowing Policy
There is no limit in the Articles on the level of gearing which the Company
can employ. Whilst the Company does not currently expect to have long-term
gearing as part of its strategy, any such gearing utilised would be expected
to be below 50% of the Company’s gross asset value (including undrawn
capital commitments), in each case measured at the time of investment. The
Board may, however, approve a higher level of gearing from time to time, in
circumstances where the Investment Manager recommends it should do so on an
opportunistic basis.
Shareholder Information
The total number of Ordinary Shares in the Company in issue immediately
following Admission was 177,552,719. The existing clients of Phoenix Asset
Management Partners Ltd (“PAMP”) made up 70.1% of the issued shares, the
Offer for Subscription and the Placing Programme in aggregate made up 15.8%
and the investment from SPWOne 14.1%.
Going Concern
The Directors believe that, having considered the Company’s investment
objective (see above), financial risk management (see note 2 to the Financial
Statements) and in view of the Company’s holdings in cash and cash
equivalents, the liquidity of investments and the income deriving from those
investments, the Company has adequate financial resources and suitable
management arrangements in place to continue as a going concern for at least
twelve months from the date of approval of the financial statements.
The Board continues to monitor the ongoing impacts of the COVID-19 pandemic
and has concluded that the biggest threat to the Company with regards to this
pandemic is the failure for a key service provider to maintain business
continuity and resiliency while maintaining work from home and social
distancing practices. The Board has assessed the measures in place by key
service providers to produce business continuity and so far has not identified
any significant issues that affect the Company. For these reasons, the Board
is confident that the outbreak of COVID-19 has not impacted the going concern
assessment of the Company.
The Alternative Investment Fund Manager (“AIFM”) and Investment Manager
Investment Manager
The Investment Management Agreement with PAMP creates significant Shareholder
alignment, as PAMP does not earn a management fee but earns a performance fee
only, which is paid in shares, and not in cash. The performance fee period is
three years and is equal to one-third of the relative outperformance to the
FTSE All share Total Return Index.
The Board considers that the interests of Shareholders, as a whole, are best
served by the ongoing appointment of the Investment Manager to achieve the
Company’s investment objectives.
Alternative Investment Fund Manager (“AIFM”)
The Investment Management Agreement dated 23 September 2021 between the
Company and the Investment Manager, pursuant to which the Investment Manager
is appointed to act as the Company’s alternative investment fund manager for
the purposes of the UK AIFM Regime, and accordingly the Investment Manager is
responsible for providing portfolio management and risk management services to
the Company, subject to the overall control and supervisions of the Directors.
The Investment Manager, in its capacity as the Company’s alternative
investment fund manager, will also make the relevant notifications for the
marketing of the Shares in the United Kingdom and elsewhere (if required).
PAMP has been investing in UK listed equities for 23 years using a "value
investing" approach to buy high-quality businesses at attractive prices. PAMP
has delivered excellent long-term investment returns since being set up by
Gary Channon in 1998.
Shareholders may be interested in reading the historic track record of the
Phoenix UK Fund since inception, which is an Appendix at the back of the
Annual Report and Audited Financial Statements.
PAMP’s investment process aims to identify great businesses and management
through intensive primary research. PAMP is known for the depth of its
research which can often last many years before making an investment. Once an
investment is made, the investment team maintains this intensive approach to
research through an ongoing, rigorous monitoring programme.
PAMP has an investment philosophy and approach that is inspired and influenced
by some of the great investors such as Warren Buffett, Phil Fisher, Charlie
Munger and John Maynard Keynes. These philosophies have been built into a
"Phoenix approach" found at https://www.phoenixassetmanagement.com/approach/,
which PAMP has continuously refined using experience of application and
analysis and learning. This has turned the philosophical approach into a
proprietary technical approach which have been applied to the investments
managed by PAMP and have helped to deliver long term outperformance.
Building on PAMP’s experience of investing in private companies and
companies where they have control or influence, and in particularly in respect
of what is now The Cambium Group, the Investment Manager has built a
"Castelnau Toolbox", essentially a way of standardising PAMP’s critical
knowledge and techniques that can be applied to a specific type of investee
company, which can be assessed and improved through application over time.
Results and Performance
The results for the year are set out in the Statement of Comprehensive Income.
Retained earnings remain negative and they include realised and unrealised
gains and losses on the Company's assets. Additional expenses have been
accrued during the year however the Company did not receive any income.
The Company’s loss before tax for the year amounted to £11,989,976 (2020:
Nil).
The benchmark is the FTSE All-Share Index (total return). The Company’s
performance since PAMP was appointed is shown below:
Period ended 31 December 2021* Change/return
pence %
NAV per Ordinary Share 93.55 (6.45)
Ordinary Share price 105.50 5.50
Benchmark return 2.50
The Ongoing Charge Ratio was as follows:
Period ended 31 December 2021*
%
Ongoing charge ratio** 0.32
* Performance assessed since the Company listed on the SFS (Specialist Fund
Segment) of the London
Stock Exchange’s Main Market on 18 October 2021
** These are Alternative Performance Measures (“APMs”)
Alternative Performance Measures (“APMs”)
The disclosures of Performance above are considered to represent the
Company’s APMs. An APM is a financial measure of historical or future
financial performance, financial position, or cash flows, other than a
financial measure defined or specified in the applicable financial reporting
framework. Definitions of these APMs together with how these measures have
been calculated can be found in the Alternative Performance Measures
(Unaudited) report.
Premium/Discount to NAV
The premium/discount of the Ordinary Share price to NAV per Ordinary Share is
closely monitored by the Board. The Ordinary Share price closed at a 12.77%
premium to the NAV per Ordinary Share as at 31 December 2021 (2020: N/A).
Control of the Level of Ongoing Charges
The Board monitors the Company’s operating costs carefully. Based on the
Company’s average net assets for the year ended 31 December 2021, the
Company’s ongoing charges figure calculated in accordance with the
Association of Investment Companies (AIC) methodology was 2.80% (2020: Nil).
As the size of the Company grows, the Board will manage expenses with the
intention of keeping costs down and reducing the ongoing charge ratio
accordingly.
Custodian and Depositary
Custody and Depositary services are provided by Northern Trust (Guernsey)
Limited (the “Depositary”). The Depositary was appointed on 18 October
2021. The terms of the Depositary agreement allow Northern Trust (Guernsey)
Limited to receive professional fees for services rendered. The Depositary
agreement includes custodian duties. For additional information refer to note
13 to the Financial Statements.
Directors
The Directors of the Company during the year and at the date of this Report
are set out in Company Information.
Directors' and Other Interests
The Directors of the Company held the following Ordinary Shares beneficially:
Number of ordinary shares % of issued share capital
Joanne Peacegood 10,000 0.01%
Andrew Whittaker 40,000 0.02%
Joanna Duquemin Nicolle 75,000 0.04%
David Stevenson - -
Lorraine Smyth - -
Corporate Governance
The Board is committed to high standards of corporate governance and has
implemented a framework for corporate governance which it considers to be
appropriate for an investment company in order to comply with the principles
of the UK Corporate Governance Code (the “UK Code”). The Company is also
required to comply with the Code of Corporate Governance (the “GFSC Code”)
issued by the Guernsey Financial Services Commission.
This Corporate Governance Statement, together with the Going Concern
Statement, Viability Statement and the Statement of Directors’
Responsibilities, indicates how the Company has complied with the principles
of good governance of the UK Code and its requirements on Internal Control.
The Company is a member of the AIC and by complying with the AIC Code of
Corporate Governance (the “AIC Code”) is deemed to comply with both the UK
Code and the GFSC Code.
The Board has considered the principles and recommendations of the AIC Code,
and considers that reporting against these will provide better information to
Shareholders. To ensure ongoing compliance with these principles, the Board
reviews a report from the Corporate Secretary at each quarterly meeting,
identifying how the Company is in compliance and identifying any changes that
might be necessary.
The AIC Code is available on the AIC’s website, www.theaic.co.uk. The UK
Code is available in the Financial Reporting Council’s website,
www.frc.org.uk.
Since listing on the SFS (Specialist Fund Segment) of the London Stock
Exchange’s Main Market on 18 October 2021, the Company has complied with the
recommendations of the AIC Code and thus the relevant provisions of the UK
Code, except as set out below.
The UK Code includes provisions relating to:
• the role of the Chief Executive;
• Executive Directors’ remuneration;
• Annually assessing the need for an internal audit
function;
• Senior Independent Director.
It is acknowledged in the UK Corporate Governance Code that some of its
provisions may not be relevant to externally managed investment companies
(such as the Company). The Board does not consider that the above provisions
are relevant to the Company. The Company will therefore not comply with these
provisions.
Whilst the Company will seek to comply with the AIC Code as far as practicable
it is likely that it will not be able to so comply with all of the AIC Code
requirements. In particular, in relation to the Director appointed by the
holder of the B Share, this Director will be appointed by the Investment
Manager and therefore will not be entirely independent of the Investment
Manager. Further, such Director will not be subject to annual re-election. In
addition, the holder of the B Share has the power to ensure that no Directors
are removed or appointed without its consent.
The GFSC’s Finance Sector Code of Corporate Governance (the “Code”)
applies to the Company. The GFSC has stated in the Code that companies which
report against the UK Corporate Governance Code or the AIC Code are deemed to
meet the requirements of the Code, and need take no further action.
Accordingly, as the Company will report against the AIC Code, it will be
deemed to meet the requirements of the Code.
Role, Composition and Independence of the Board
The Board is the Company’s governing body and has overall responsibility for
maximising the Company’s success by directing and supervising the affairs of
the business and meeting the appropriate interests of Shareholders and
relevant stakeholders, while enhancing the value of the Company and also
ensuring protection of investors. A summary of the Board’s responsibilities
is as follows:
• statutory obligations and public disclosure;
• strategic matters and financial reporting;
• risk assessment and management including reporting
compliance, governance, monitoring and control; and
• other matters having a material effect on the Company.
The Board’s responsibilities for the Annual Report and Audited Financial
Statements are set out in the Statement of Directors’ Responsibilities.
Biographies for all the Directors can be found in the Board Members section.
The Board consists of five non-executive Directors of which three are female
and two are male. Three of the five directors are considered to be independent
of the Investment Manager and as prescribed by the Listing Rules.
The Board does not consider it appropriate to appoint a Senior Independent
Director because a majority of the Directors are deemed to be independent by
the Company. The Board considers it has the appropriate balance of diverse
skills and experience, independence and knowledge of the Company and the wider
sector, to enable it to discharge its duties and responsibilities effectively
and that no individual or group of individuals dominates decision making. The
Chair is responsible for leadership of the Board and ensuring its
effectiveness. The Chair is Joanne Peacegood. The Chair of the Board must be,
and is considered to be, independent for the purposes of Chapter 15 of the
Listing Rules.
The Board needs to ensure that the Annual Report and Audited 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. In seeking to achieve
this, the Directors have set out the Company’s investment objective and
policy and have explained how the Board and its delegated Committees operate
and how the Directors review the risk environment within which the Company
operates and set appropriate risk controls. Furthermore, throughout the Annual
Report and Audited Financial Statements, the Board has sought to provide
further information to enable Shareholders to have a fair, balanced and
understandable view.
The Board has contractually delegated responsibility for the management of its
investment portfolio, the arrangement of custodial and depositary services and
the provision of administration, accounting, registrar and company secretarial
services including the independent calculation of the Company’s NAV and the
production of the Annual Report and Financial Statements which are
independently audited.
The Board is responsible for the appointment and monitoring of all service
providers to the Company.
The Directors are kept fully informed of investment and financial controls and
other matters by all services providers that are relevant to the business of
the Company and should be brought to the attention of the Directors.
The Nominations Committee shall regularly review the structure, size,
composition (including the skills, knowledge, experience and diversity) of the
Board as a whole and make recommendations to the Board with regard to any
changes.
The Board has a breadth of experience relevant to the Company and the
Directors believe that any changes to the Board’s composition can be managed
without undue disruption. With any new director appointment to the Board,
consideration will be given as to what induction process is appropriate.
Directors’ Attendance at Meetings
The Board holds quarterly Board meetings to discuss matters including:
portfolio performance, strategy, dividend policy, structure, finance,
corporate governance, marketing, risk management, liquidity, compliance, asset
allocation and gearing, contracts and Company performance. The quarterly Board
meetings are the principal source of regular information for the Board
enabling it to determine policy and to monitor performance, compliance and
controls but these meetings are also supplemented by communication and
discussions throughout the year.
A representative from each of the Investment Manager, AIFM, Administrator and
Corporate Broker attends each Board meeting either in person or by telephone
thus enabling the Board to fully discuss and review the Company’s operation
and performance. Each Director has direct access to the Portfolio Manager and
Company Secretary and may, at the expense of the Company, seek independent
professional advice on any matter. Both appointment and removal of these
parties is to be agreed by the Board as a whole.
The Audit Committee meets at least twice a year, the Management Engagement
Committee (“MEC”) and Remuneration and Nomination Committee meet at least
once a year. In addition, adhoc meetings of the Board to review specific items
between the regular scheduled quarterly meetings can be arranged. Between
formal meetings there is regular contact with the Portfolio Manager, AIFM,
Administrator, Custodian and Depositary and the Corporate Broker.
Although some of the Directors hold other listed Board positions, none of
these is for a trading company and the Board is satisfied that they have
sufficient time commitment to carry out their duties for the Company as
evidenced by their attendance at the Board and Audit Committee meetings during
the year.
At the Board meetings, the Directors review the management of the
Company’s assets and liabilities and all other significant matters so as to
ensure that the Directors maintain overall control and supervision of the
Company’s affairs.
Appointment and Retirement of Directors
Subject to the Companies Law and the Articles, the Directors shall have power
at any time, and from time to time, without sanction of the Company in general
meeting but subject to receiving the written consent of the holder of the B
Share, to appoint any person to be a Director, either to fill a casual vacancy
or as an additional Director. Any Director so appointed shall hold office only
until the next following annual general meeting and shall then be eligible for
re-appointment. Subject to the Companies Law and the Articles, the Company may
by ordinary resolution appoint any person as a Director; and remove any person
from office as a Director and there shall be no requirement for the
appointment or removal of two or more Directors to be considered separately. A
Director may resign from office as a Director by giving notice in writing to
that effect to the Company. There is no age limit at which a Director is
required to retire. At each annual general meeting of the Company, each
Director, other than the Director appointed by the holder of the B Share
pursuant to the Articles, shall retire from office and each Director may offer
themselves for election or re-election by the Shareholders.
Board Performance and Training
On appointment to the Board, Directors will be offered relevant training and
induction. Training is an on-going matter as is discussion on the overall
strategy of the Company. The Board will undertake an annual Board Evaluation
of performance. This exercise was completed in February 2022. The results of
the evaluation were satisfactory with no issues identified but future
evaluations will be more meaningful as it is very early in the Company’s
life to comment meaningfully.
On appointment to the Board, each Director considered the expected time needed
to discharge their responsibilities effectively. The Directors confirmed that
each had sufficient time to allocate and would inform the Board of any
subsequent changes. In accordance with the AIC Code, if and when any Director,
including the Chair, has been in office (or upon re-election would at the end
of that term, be in office) for more than nine years, the Board will consider
whether there is a risk that such Director might reasonably be deemed to have
lost independence through such long service.
In respect of the Criminal Finances Act 2017 which has introduced a new
corporate criminal offence (“CCO”) of ‘failing to take reasonable steps
to prevent the facilitation of tax evasion’, the Board confirms that they
are committed to zero tolerance towards the criminal facilitation of tax
evasion.
Board Diversity
When appointing new Directors and reviewing the Board composition, the Board
considers, amongst other factors, diversity, balance of skills, knowledge,
gender, social and ethnic background and experience. The Board, however, does
not consider it appropriate to establish targets or quotas in this regard. As
at 31 December 2021, the Board comprised of three female and two male
Directors. The Company has no employees.
Board Committees and their Activities
Terms of Reference
All Terms of Reference of the Board’s Committees are available from the
Administrator upon request.
Management Engagement Committee
In accordance with the AIC Code, the Company has established a Management
Engagement Committee which is chaired by Joanna Duquemin Nicolle and includes
Andrew Whittaker, Joanne Peacegood and David Stevenson. The Management
Engagement Committee will meet at least once a year or more often if required.
Its principal duties will be to consider the terms of appointment of the
Investment Manager and other service providers and it will annually review
those appointments and the terms of engagement.
Audit Committee
The Company’s Audit Committee is chaired by Andrew Whittaker and includes
Joanna Duquemin Nicolle and Joanne Peacegood. The Audit Committee will meet at
least three times a year. The Board considers that the members of the Audit
Committee have the requisite skills and sector experience to fulfil the
responsibilities of the Audit Committee. The Audit Committee will examine the
effectiveness of the Company’s control systems. It will review the
half-yearly and annual reports and also receive information from the
Investment Manager. It will also review the scope, results, cost
effectiveness, independence and objectivity of the external Auditor.
Further details on the Audit Committee can be found in the Audit Committee
Report.
Remuneration Committee
The Company’s Remuneration Committee consists of all of the Directors and is
chaired by Joanne Peacegood. The Remuneration Committee will meet at least
twice a year or more often if required. The Remuneration Committee’s main
functions include:
1. agreeing the policy for the remuneration of the Directors and reviewing any
proposed changes to the policy;
2. reviewing and considering ad hoc payment to the Directors in relation to
duties undertaken over and above normal business; and
3. appointing independent professional remuneration advice.
Nomination Committee
The Company’s Nomination Committee consists of all of the Directors and is
chaired by Andrew Whittaker. The Nomination Committee will meet at least once
a year or more often if required. Its principal duties will be to advise the
Board on succession planning bearing in mind the balance of skills, knowledge
and experience existing on the Board and will make recommendations to the
Board in this regard. The Nomination Committee advises the Board on its
balance of relevant skills, experience, gender, race, ages and length of
service of the Directors serving on the Board. All appointments to the Board
will be made in a formal and transparent matter.
For each Director, the tables below set out the number of Board and Audit
Committee meetings they were entitled to attend during the period ended 31
December 2021 and the number of such meetings attended by each Director.
Scheduled Board Meetings Held Attended
Joanne Peacegood 2 2
Andrew Whittaker 2 2
David Stevenson 2 2
Joanna Duquemin Nicolle 2 2
Lorraine Smyth 2 2
Audit Committee Meetings
Joanne Peacegood 1 1
Andrew Whittaker 1 1
Joanna Duquemin Nicolle 1 1
No other sub-committee meetings were held during the year.
Strategy
The Company will follow a high conviction investment strategy. The expertise
and processes developed by the Investment Manager can be applied to all parts
of the capital structure of a business, both private and publicly quoted.
These positions could be represented by a minority stake, a control position
combined with operational involvement, full ownership of a company, a joint
venture, a loan or convertible instrument, a short position or any other
instrument which allows the Company to access value.
Internal Controls
The Board is ultimately responsible for establishing and maintaining the
Company’s system of internal financial and operating control and for
maintaining and reviewing its effectiveness. The Company’s risk matrix
continues to be the core element of the Company’s risk management process in
establishing the Company’s system of internal financial and reporting
control. The risk matrix is prepared and maintained by the Board which
initially identifies the risks facing the Company and then collectively
assesses the likelihood of each risk, the impact of those risks and the
strength of the controls operating over each risk. The system of internal
financial and operating control is designed to manage rather than to eliminate
the risk of failure to achieve business objectives and by their nature can
only provide reasonable and not absolute assurance against misstatement and
loss.
These controls aim to ensure that assets of the Company are safeguarded,
proper accounting records are maintained and the financial information for
publication is reliable. The Board confirms that there is an ongoing process
for identifying, evaluating and managing the significant risks faced by the
Company.
This process has been in place for the year under review and up to the date of
approval of this Annual Report and Audited Financial Statements and is
reviewed by the Board and is in accordance with the AIC Code.
The AIC Code requires Directors to conduct at least annually a review of the
Company’s system of internal financial and operating control, covering all
controls, including financial, operational, compliance and risk management.
The Board has evaluated the systems of internal controls of the Company. In
particular, it has prepared a process for identifying and evaluating the
significant risks affecting the Company and the policies by which these risks
are managed. The Board also considers whether the appointment of an internal
auditor is required and has determined that there is no requirement for a
direct internal audit function.
The Board has delegated the day to day responsibilities for the management of
the Company’s investment portfolio, the provision of custodial and
depositary services and administration, accounting, registrar and company
secretarial functions including the independent calculation of the Company’s
NAV and the production of the Annual Report and Financial Statements which are
independently audited.
Formal contractual agreements have been put in place between the Company and
providers of these services. Even though the Board has delegated
responsibility for these functions, it retains accountability for these
functions and is responsible for the systems of internal control. At each
quarterly Board meeting, compliance reports are provided by the Administrator,
Company Secretary, Portfolio Manager, AIFM and Depositary. The Board also
receives confirmation from the Administrator of its accreditation under its
controls report.
Procedure for Identifying Risks
The procedures in place to identify emerging or principal risks are described
below.
The Audit Committee regularly reviews the Company’s risk matrix, focusing on
ensuring that the appropriate controls are in place to mitigate each risk. A
system has been established to identify emerging risks as they occur as
detailed below. The experience and knowledge of the Audit Committee and Board
is invaluable to these discussions, as is advice received from the Board’s
service providers, specifically the Investment Manager who is responsible for
all portfolio management services.
The market and operational risks and financial impact as a result of the
COVID-19 pandemic, and measures introduced to combat its spread, were
discussed by the Board, with updates on operational resilience received from
the Investment Manager, Administrator and other key service providers.
The following is a description of the role each service provider plays in the
identification of emerging risks.
I. Investment Manager: the Investment Manager advises the
Board at each meeting on world markets, stock market trends, information on
stock specific matters as well as regulatory, political and economic changes
likely to impact the Company’s portfolio;
II. Distributor and Broker: provides advice periodically
specific to the Board on the Company’s share register, sector, competitors
and the investment company market;
III. Company Secretary and Accounting Advisor: briefs the Board on
forthcoming legislation or regulatory changes that might impact the Company;
IV. AIC: The Company is a member of the AIC, which provides
regular technical updates as well as drawing members’ attention to
forthcoming industry and regulatory issues.
Procedure for Oversight of Risks
Audit Committee: The risk matrix is kept under review. This includes a review
of the risk procedures and controls in place at the key service providers to
ensure that emerging (as well as known) risks are adequately identified and
– so far as practicable – mitigated.
Experienced Non-Executive Directors on the Committee, each bringing external
knowledge of the investment trust (and financial services generally)
marketplace, trends, threats etc. as well as macro/strategic insight.
Principal Risks and Uncertainties
The principal risks faced by the Company, together with the approach taken by
the Board towards them, have been summarised below.
Valuation of investments
The Company’s investments had a total value of £129,979,441 as at 31
December 2021. The portfolio represents a substantial portion of net assets of
the Company. As such this is the largest factor in relation to the
consideration of the Financial Statements. These investments are valued in
accordance with the Accounting Policies set out in note 3 and note 4 to the
Financial Statements. The risks associated with valuation of investments are
managed by the Investment Manager and reviewed by the Board. The Board
considered the valuation of the investments held by the Company as at 31
December 2021 to be reasonable based on information provided by the Investment
Manager, AIFM, Administrator, Custodian and Depositary on their processes for
the valuation of these investments.
Some of the Company’s investments (including certain of the Target Assets)
will include securities and other interests that are very thinly traded, for
which no market exists or which are restricted as to their transferability
under applicable laws and/or the relevant investment documentation. Whilst the
valuations of the Company’s investments will be in compliance with IFRS,
some of the Company’s investments will be difficult to value accurately.
Such valuations may be conducted on an infrequent basis, are subject to a
range of uncertainties and will involve the Investment Manager and/or the
Audit Committee exercising judgement. Valuations made by or on behalf of the
Company may be made, in part, on valuation information provided by the
Investment Manager and/or third parties (including entities in which the
Company may directly or indirectly invest). The Company and the Investment
Manager may not be in a position to confirm the completeness, genuineness or
accuracy of such information or data. There can be no guarantee that the basis
of calculation of the value of the Company’s investments used in the
valuation process will reflect the actual value achievable on realisation of
those investments. This may lead to volatility in the valuation of the
Company’s portfolio and, as a result, volatility in the price of the Shares.
Market risk
As a result of investments in publicly traded Portfolio Companies, the Company
will be exposed to equity securities price risk. The market value of the
Company’s holdings in publicly traded Portfolio Companies could be affected
by a number of factors, including, but not limited to: a change in sentiment
in the market regarding such companies; the market’s appetite for specific
business sectors; and the financial or operational performance of the publicly
traded Portfolio Companies which may be driven by, amongst other things, the
cyclicality of some of the sectors in which some or all of the publicly traded
Portfolio Companies operate. Equity prices and returns from investing in
equity markets are sensitive to various factors, including but not limited to:
expectations of future dividends and profits; economic growth; exchange rates;
interest rates; and inflation. The value of any investment in equity markets
is therefore volatile and it is possible, even when an investment has been
held for a long time, that an investor may not get back the sum invested. Any
adverse effect on the value of any equities in which the Company invests from
time to time could have a material adverse effect on the Company’s financial
condition, business, prospects and results of operations and, consequently,
the Net Asset Value and/or the market price of the Shares.
The Board receives a quarterly update, or more frequently as required, from
the Investment Manager regarding investment performance.
Liquidity risk
Investments made by the Company may be illiquid and this may result in
delays/shortfall of expected cash flows to the Company.
The Company’s investments in private assets will not be liquid, which may
limit its ability to realise investments at short notice, at a fair value or
at all and may be subject to risks.
Investments in private assets (including private Portfolio Companies) are
highly illiquid and have no public market. There may not be a secondary market
for interests in private assets. Such illiquidity may affect the Company’s
ability to vary its portfolio or dispose of, or liquidate part of, its
portfolio, in a timely fashion (or at all) and at satisfactory prices in
response to changes in economic or other conditions.
If the Company were required to dispose of or liquidate an investment on
unsatisfactory terms, it may realise less than the value at which the
investment was previously recorded, which could result in a decrease in Net
Asset Value.
The performance of investments in private assets can also be volatile because
those assets may have limited product lines, markets or financial reserves, or
be more susceptible to major economic setbacks or downturns. Private assets
may be exposed to a variety of business risks including, but not limited to:
competition from larger, more established firms; advancement of incumbent
services and technologies; and the resistance of the market towards new
companies, services or technologies.
The crystallisation of any of these risks or a combination of these risks may
have a material adverse effect on the development and value of a Portfolio
Company and, consequently, on the portfolio and the Company’s financial
condition, results of operations and prospects, with a consequential adverse
effect on the Net Asset Value and/or the market price of the Shares.
Furthermore, repeated failures by Portfolio Companies to achieve success may
adversely affect the reputation of the Company or Investment Manager, which
may make it more challenging for the Company and the Investment Manager to
identify and exploit new opportunities and for other Portfolio Companies to
raise additional capital, which may therefore have a material adverse effect
on the portfolio and the Company’s financial condition, results of
operations and prospects, with a consequential adverse effect on the Net Asset
Value and/or the market price of the Shares.
The Board receives a quarterly update, or more frequently as required, from
the Investment Manager regarding investment performance.
Credit risk
Counterparties such as financial institutions may not meet their obligations
regarding foreign currency and cash balances. The Board ensures that
counterparties have an acceptable long and short term credit rating.
Concentration risk
The Company expects to hold a concentrated portfolio of investments and the
Company will not seek to reduce concentration risk through diversification.
The opportunity set will dictate the number of holdings and the weighting of
investments in the Portfolio. The investments with the best return profiles
will receive the largest weightings. The Company will therefore have no set
diversification policies.
Other Risks and Uncertainties
The other risks faced by the Company, together with the approach taken by the
Board towards them, have been summarised below:
COVID-19
Consideration of the impact of COVID-19 in the market and in regard to all
assets, but in particular the assets that constitute a higher risk due to
closure of this type of businesses for a longer period. The Investment Manager
is in constant communication with the Directors of each investment and has
mitigants in place for each investment.
Cyber risk
The Board ensures they have a sufficient understanding of cyber risk to enable
them to manage any potential unauthorised access into systems and identifying
passwords or deleting data. The Board discusses cyber risks at the quarterly
board meeting and also ensures they are continuing to keep themselves up to
date on the risks through attending professional seminars on the topic,
following good password practices and vigilance to any suspicious links or
attachments. The Company is exposed to the cyber risks of its third-party
service providers. The Audit Committee received the internal controls reports
of the relevant service providers, where available and was able to satisfy
itself that adequate controls and procedures were in place to limit the impact
to the Company’s operations.
Operational risk
The Company is exposed to the operational and cyber risks of its third-party
service providers and considered the risk and consequences in the event that
these systems failed during the year. The Investment Manager, Registrar,
Depositary, Administrator and Company Secretary each have comprehensive
business continuity plans which facilitate continued operation of the business
in the event of a service disruption or major disruption. The Audit Committee
received the internal controls reports of the relevant service providers,
where available and was able to satisfy itself that adequate controls and
procedures were in place to limit the impact to the Company’s operations,
particularly with regard to a financial loss. The performance of service
providers is reviewed annually via its Remuneration and Management Engagement
Committee. Each service provider’s contract defines the duties and
responsibilities of each and has safeguards in place including provisions for
the termination of each agreement in the event of a breach or under certain
circumstances. Each agreement also allows for the Board to terminate subject
to a stated notice period. During the year under review the Board undertook a
thorough review of each service provider and agreed that their continued
appointment remained appropriate and in the Company’s long term interest.
Regulatory risk
Poor governance, compliance or administration, including particularly the risk
of loss of investment trust status and the impact this may have on the Company
was considered by the Board. Having been provided with assurance from each of
the key service providers, the Board was satisfied that no such breach had
occurred.
Geopolitical risk
Russia’s invasion of Ukraine is a new emerging risk to the global economy.
The resulting imposition of international sanctions on Russia will have wider
global effect on the supply and prices of certain commodities and consequently
on inflation and general economic growth of the global economy and will have
the potential to delay the global economic recovery from COVID-19.
Viability Statement
Under the UK Corporate Governance Code (the “UK Code”) and the AIC Code of
Corporate Governance (the “AIC Code”), the Board is required to produce a
“viability statement” which considers the Company’s current position and
principal risks and uncertainties combined with an assessment of the prospects
of the Company in order to be able to state that they have a reasonable
expectation that the Company will be able to continue in operation over the
period of their assessment. The Board considers that five years is an
appropriate period to assess the viability of the Company. Whilst the Board
has no reason to believe that the Company will not be viable for a longer
period, it has chosen this period given the uncertainty of the investment
world and the strategy period. In selecting this period the Board considered
the environment within which the Company operates and the risks associated
with the Company.
The Company’s prospects are driven by its business model and strategy. The
Company’s investment objective is to compound Shareholder’s capital at a
higher rate of return than the FTSE All Share Total Return Index over the long
term. The Company will target a Net Asset Value total return of 10-15% above
the return on the FTSE All-Share Total Return Index per annum and a minimum
absolute Net Asset Value total return of 20% per annum.
The Board confirms they have performed a robust assessment of the principal
and emerging risks facing the Company and the Board’s assessment of the
Company over the five year period has been made with reference to the
Company’s current strategy, position and prospects and the Board’s risk
appetite having considered each of the Company’s Principal Risks and
Uncertainties summarised above.
The Board has also considered the Company’s cash flows and income flows. The
Company has no stated dividend target. The Company’s investment objective is
one of capital growth and it is anticipated that returns for Shareholders will
derive primarily from capital gains. The Company will target a Net Asset Value
total return of 10-15% above the return on the FTSE All-Share Total Return
Index per annum and a minimum absolute Net Asset Value total return of 20% per
annum.
Key assumptions considered by the Board in relation to the viability of the
Company are as follows and these are stressed in terms of liquidity of the
portfolio:
(i) investments are in line with the investment objective and investment
policy as set out in the Company's prospectus; and
(ii) the Company has the ability to meet running costs and standing expenses.
The Board has a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due over the
period of their assessment.
The Board having considered the analysis above, have a reasonable expectation
that the Company will remain viable over the five year period to 31 December
2026.
Report under Section 172 of the Companies Act 2006
Although the Company is domiciled in Guernsey, in accordance with the guidance
set out in the AIC Code, the Directors describe in the Annual Report how the
matters set out in Section 172 of the UK Companies Act 2006 have been
considered in their board discussions and decision making.
Directors’ duty to promote the success of the Company
The Board seeks to understand the views of the Company’s Shareholders and
its other key stakeholders as well as how their interests and the matters set
out in section 172 of the Companies Act 2006 in the UK ("Companies Act") have
been considered. 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 of their actions over the long-term
and on other key stakeholders.
(i) the Company’s investment objective and policy;
(ii) the main trends and factors likely to affect the future
development, performance and position of the Company’s business;
(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.
Identifying stakeholders
As an externally managed investment company, the Company’s operational
activities are all outsourced and therefore it does not have any employees.
The Board has identified its key stakeholders which include Shareholders,
investee companies, Investment Manager, financial advisers, the Company
Secretary, Administrator, Registrar, Lawyers, Depositary and Custodian. The
Board is aware of the need to foster the Company’s relationships with its
key stakeholders through its stakeholder management activities. The Board
provides oversight and challenge to the Investment Manager to ensure that the
Company meets its requirements to create and preserve Shareholder value.
Shareholder engagement
The Board welcomes Shareholders’ views and places great importance on
communication with its Shareholders. Shareholders wishing to meet with the
Chair and other Board members should contact the Company’s Administrator by
emailing Castelnau_group@ntrs.com.
On 10 September 2021, Shareholders had the opportunity to vote on the
resolutions as specified in the Notice of AGM. For subsequent AGMs, the Notice
of the AGM and the results will be released to the LSE in the form of an
announcement.
Environmental, Social and Governance (‘ESG’) matters
The Board recognises the importance of Environmental, Social and Governance
(“ESG”) factors in the investment management industry and the wider
economy as whole. The Company is a closed-ended investment company without
employees. As such, it is the view of the Board that the direct environmental
and social impact of the Company is limited and that ESG considerations are
most applicable in respect of the asset allocation decisions made for its
portfolio.
The Company has appointed the Investment Manager to advise it in relation to
all aspects relevant to the Investment Portfolio. The Investment Manager has a
formal ESG framework which incorporates ESG factors into its investment
process. The Board receives regular updates from the Investment Manager on its
ESG processes and assesses their suitability for the Company. ESG factors are
assessed by the Investment Manager for every transaction as part of their
investment process. Climate risks are incorporated in the ESG analysis under
environmental factors.
The Company does not have executive directors or employees. It has entered
into contractual arrangements with a network of third parties (the “Service
Providers”) who provide services to it. The Board, through the Management
Engagement Committee, undertakes annual due diligence on, and ongoing
monitoring of, all such Service Providers including obtaining a confirmation
that each such Service Provider complies with relevant laws regulations and
good practice and has ESG policies in place.
Key Service Providers
The Company does not have any employees and as such the Board delegates
responsibility for its day to day operations to a number of key service
providers. The activities delegated, service levels and other related reports
to the activities of each service provider (such as their own approach to such
matters as cyber risk and assessment of climate change risk to operations) are
closely monitored, where and as appropriate by the Board and they are required
to report to the Board at set intervals.
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, its investment activity and
sector diversity. In addition, the Investment Manager provides an overview of
engagement with the investee companies as well as potential investee
companies. The Board debates the Company’s portfolio and notable
acquisitions or disposals at each of its meetings and challenges stock
selection where deemed appropriate. In between meetings, the Investment
Manager and Board maintain contact through which they consider investment
ideas, further fundraising initiatives and market outlook and strategies to
consider adjusting the Company’s portfolio in line with the Company’s
investment policy. During the year the Board discussed the merits and
structure of The Castelnau Group, with the Investment Manager and advisers and
considered the long-term interests of the Company’s Shareholders during
those discussions.
In addition, the Board receives reports from the Financial Adviser on the
Company’s Shareholder base including any changes; its Secretary on latest
governance issues, legal or market announcements; and its Administrator on the
Company’s management accounts. Furthermore, the Board receives reports from
its Stockbroker on the performance of the Company’s peers and ad hoc reports
from its other key stakeholders as deemed appropriate.
On an annual basis, the Board will undertake a review of its stakeholders
which include a review of their control report 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 are in place and are adequate.
Boardroom Diversity
The Board currently comprises five non-executive Directors of which three are
female and two are male.
The Board considers its composition, including the balance of skills,
knowledge, diversity (including gender and race) and experience, amongst other
factors on an annual basis and when appointing new Directors. The Board has
considered the recommendations of the Davies and Parker review but does not
consider it appropriate to establish targets or quotas in this regard. Summary
biographical details of the Directors are set out in the Board Members
section.
Stewardship code
The Board and the Investment Manager support and have a strong commitment to
the UK Stewardship Code, the latest version of which was issued by FRC took
effect from 1 January 2020 and endorsed by the AIC which sets out the
principles of effective stewardship by institutional investors.
Modern slavery disclosure
Due to the nature of the Company’s business, being a company that does not
offer goods or services to consumers, the Board considers that it is not
within the scope of modern slavery. The Board considers the Company’s supply
chains, dealing predominately with professional advisers and service providers
in the financial service 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 their procedures and policies are in place.
Tax evasion
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 contractors and suppliers that they
maintain a zero-tolerance policy towards the provision of illegal services,
including the facilitation of tax evasion.
Significant Shareholdings
Shareholders with holdings of more than 5.0% of the Shares of the Company at
31 December 2022 were as follows:
Number of ordinary shares % of issued share capital
State Street Nominees Limited OM01 Acct 52,997,909 28.80%
Nortrust Nominees Limited 35,578,967 19.34%
Goldman Sachs Securities (Nominees) Limited ISLEG Acct 25,000,000 13.59%
Harewood Nominees Limited 4213100 Acct 24,563,184 13.35%
Those invested directly or indirectly in 5.0% or more of the issued share
capital of the Company will have the same voting rights as other holders of
the Shares.
Annual General Meeting (AGM)
The Company’s AGM will be held at 12.15pm on 6 September 2022 at the offices
of Northern Trust International Fund Administration Services (Guernsey)
Limited, Trafalgar Court, Les Banques, St Peter Port, Guernsey, Channel
Islands, GY1 3QL.
Should a Shareholder have a question that they would like to raise at the AGM,
the Board requests that they either ask the question in advance of the AGM by
sending it by email to Castelnau_group@ntrs.com. All questions raised,
together with the relevant answer, will be placed on the Company’s website
at www.castelnaugroup.com.
Independent Auditor
A resolution for the reappointment of Grant Thornton Limited (“Grant
Thornton”) as auditor to the Company will be proposed at the annual general
meeting. Grant Thornton have indicated their willingness to continue in
office.
Signed on behalf of the Board of Directors on 8 April 2022 by:
Joanna Duquemin Nicolle
Director
Andrew WhittakerDirector
Directors’ Remuneration Report
The Company is not required to present a Directors’ Remuneration Report, and
this report does not purport to meet all of the requirements of a typical
listed UK company’s Directors’ Remuneration Report, but has been provided
as the Directors believe that it may be useful of this annual report and
financial statements.
The aggregate amount of Directors’ fees should not exceed £250,000 per
annum to allow for the appointment of additional director(s) to allow for an
overlap in appointments thereby assisting with Board succession planning.
Remuneration Policy
The Company's policy in regard to Directors' remuneration is to ensure that
the Company maintains a competitive fee structure in order to recruit, retain
and motivate non-executive Directors of excellent quality in the overall
interests of Shareholders.
It is the responsibility of the Remuneration Committee to consider the
Directors' remuneration, however the Nomination Committee will review any
proposed changes. The Board ultimately receives the recommendations and
approves the Director’s Remuneration.
No element of the Directors' remuneration is performance related, nor does any
Director have any entitlement to pensions, share options or any long-term
incentive plans from the Company.
Directors are remunerated in the form of fees, payable annually, to the
Director personally. No Directors have been paid additional remuneration by
the Company outside their normal Directors’ fees and expenses.
Joanne Peacegood is entitled to an annual fee of £40,000. Andrew Whittaker is
entitled to an annual fee of £35,000. Joanna Duquemin Nicolle and David
Stevenson are entitled to an annual fee of £30,000. Lorraine Smyth has waived
her right to receive a Director fee. The Directors received the following pro
rata remuneration in the form of Directors’ fees relating to the year ended
31 December 2021:
Director fees
GBP
Joanne Peacegood 24,137
Andrew Whittaker 17,836
Joanna Duquemin Nicolle 11,219
David Stevenson 6,082
Lorraine Smyth -
59,274
Appropriate Directors' and Officers’ liability insurance cover is maintained
by the Company on behalf of the Directors.
Each Director’s appointment letter provides that, upon the termination of
his/her appointment, that he/she must resign in writing and all records remain
the property of the Company. The Directors’ appointments can be terminated
in accordance with the Articles and without compensation.
A Director may resign from office as a Director by giving notice in writing to
that effect to the Company. There is no age limit at which a Director is
required to retire. Notwithstanding the foregoing, all Directors have agreed
to stand for re-election annually and are re-elected by the Shareholders at
the AGM.
The amounts payable to Directors shown in note 6 to the Financial Statements
are for services as non-executive Directors. No Director has a service
contract with the Company, nor are any such contracts proposed.
Signed on behalf of the Board of Directors on 8 April 2022 by:
Joanna Duquemin Nicolle
Director
Andrew Whittaker
Director
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the Audited
Financial Statements in accordance with applicable Guernsey law and
regulations.
The Companies (Guernsey) Law, 2008 requires the Directors to prepare Financial
Statements for each financial year. Under that law they have elected to
prepare the Financial Statements in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board ("IASB") and applicable law.
The Financial Statements are required by law to give a true and fair view of
the state of affairs of the Company and of the profit or loss of the Company
for that period.
In preparing these Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable and
prudent;
• state whether applicable accounting standards have
been followed, subject to any material departures disclosed and explained in
the Financial Statements; and
• prepare the Financial Statements on the going concern
basis unless it is inappropriate to presume that the Company will continue in
business.
The Directors confirm that they have complied with these requirements in
preparing the Financial Statements.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and to enable them to ensure that the Financial Statements have been
properly prepared in accordance with The Companies (Guernsey) Law, 2008. They
have general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Company and to prevent and detect fraud
and other irregularities.
So far as each Director is aware, there is no relevant audit information of
which the Company’s auditor is unaware, and each Director has taken all the
steps that he or she ought to have taken as a Director in order to make
himself or herself aware of any relevant audit information and to establish
that the Company’s auditor is aware of that information.
The Directors are responsible for the oversight of the maintenance and
integrity of the corporate and financial information in relation to the
Company website; the work carried out by the auditor does not involve
consideration of these matters and, accordingly, the auditor accepts no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
The Directors are responsible for ensuring that the annual report and
financial statements include information requirements by the Disclosure
Guidance and Transparency Rules ("DTR") of the Financial Conduct Authority
("FCA") with regard to corporate governance, require the Company to disclose
how it has applied the principles, and complied with the provision of the
corporate governance code applicable to the Company.
The Directors confirm that to the best of their knowledge:
(a) The Financial Statements have been prepared in accordance
with IFRS and give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company as at and for the year ended 31
December 2021.
(b) The Annual Report includes information detailed in the
Chair’s Statement, Investment Manager’s Report, Directors’ Report,
Statement of Directors’ Responsibilities, Directors’ Remuneration Report
and Audit Committee Report and provides a fair review of the information
required by:
(i) DTR 4.1.8 and DTR 4.1.9 of the Disclosure Guidance and Transparency
Rules, being a fair review of the Company business and a description of the
principal risks and uncertainties facing the Company; and
(ii) DTR 4.1.11 of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred since the end of the
financial year and the likely future development of the Company.
In the opinion of the Board, the Financial Statements taken as a whole, are
fair, balanced and understandable and provide the information necessary to
assess the Company’s position and performance, business model and strategy.
By order of the Board,
Joanna Duquemin Nicolle
Director
Andrew Whittaker
Director
8 April 2022
Audit Committee Report
Below, we present the Audit Committee’s Report, setting out the
responsibilities of the Audit Committee and its key activities for the year
ended 31 December 2021.
The Audit Committee has scrutinised the appropriateness of the Company’s
system of risk management and internal financial and operating controls, the
robustness and integrity of the Company’s financial reporting, along with
the external audit process. The Audit Committee has devoted time to ensuring
that controls and processes have been properly established, documented and
implemented.
During the course of the year, the information that the Audit Committee has
received has been timely and clear and has enabled the Committee to discharge
its duties effectively.
Role and Responsibilities
The primary function of the Audit Committee is to assist the Board in
fulfilling its oversight responsibilities. This includes reviewing the
financial reports and other financial information and any significant
financial judgement contained therein, before publication.
In addition, the Audit Committee reviews the systems of internal financial and
operating controls on a continuing basis that the Administrator, Portfolio
Manager, AIFM, and Custodian and Depositary and the Board have established
with respect to finance, accounting, risk management, compliance, fraud and
audit. The Audit Committee also reviews the accounting and financial reporting
processes, along with reviewing the roles, independence and effectiveness of
the external auditor.
The ultimate responsibility for reviewing and approving the Annual and Interim
Financial Statements remain with the Board.
The Audit Committee's full terms of reference can be obtained by contacting
the Company's Administrator.
Risk Management and Internal Control
The Board, as a whole, considers the nature and extent of the Company’s risk
management framework and the risk profile that is acceptable in order to
achieve the Company’s strategic objectives. As a result, it is considered
that the Board has fulfilled its obligations under the AIC Code.
The Audit Committee continues to be responsible for reviewing the adequacy and
effectiveness of the Company’s on-going risk management systems and
processes. Its system of internal controls, along with its design and
operating effectiveness, is subject to review by the Audit Committee through
reports received from the Portfolio Manager, AIFM and Custodian and
Depositary, along with those from the Administrator and external auditor.
Fraud, Bribery and Corruption
The Board has relied on the overarching requirement placed on the service
providers under the relevant agreements to comply with applicable law,
including anti-bribery laws. A review of the service provider policies will
take place at the Management Engagement Committee Meetings. The Board receives
confirmation from all service providers that there has been no fraud, bribery
or corruption.
Financial Reporting and Significant Financial Issues
The Audit Committee assesses whether suitable accounting policies have been
adopted and whether the Portfolio Manager has made appropriate estimates and
judgements. The Audit Committee reviews accounting papers prepared by the
Portfolio Manager and Administrator which provides details on the main
financial reporting judgements.
The Audit Committee also reviews reports by the external auditors which
highlight any issues with respect to the work undertaken on the audit. The
Audit Committee is satisfied that the judgements made by the Investment
Manager and Administrator are reasonable, and that appropriate disclosures
have been included in the Financial Statements.
The significant issues considered during the year by the Audit Committee in
relation to the Financial Statements and how they were addressed are detailed
below:
Valuation of investments
Some of the Company’s investments (including certain of the Target Assets)
will include securities and other interests that are very thinly traded, for
which no market exists or which are restricted as to their transferability
under applicable laws and/or the relevant investment documentation. Whilst the
valuations of the Company’s investments will be in compliance with IFRS,
some of the Company’s investments will be difficult to value accurately.
Such valuations may be conducted on an infrequent basis, are subject to a
range of uncertainties and will involve the Investment Manager and/or the
Audit Committee exercising judgement. Valuations made by or on behalf of the
Company may be made, in part, on valuation information provided by the
Investment Manager and/or third parties (including entities in which the
Company may directly or indirectly invest). The Company and the Investment
Manager may not be in a position to confirm the completeness, genuineness or
accuracy of such information or data. There can be no guarantee that the basis
of calculation of the value of the Company’s investments used in the
valuation process will reflect the actual value achievable on realisation of
those investments. This may lead to volatility in the valuation of the
Company’s portfolio and, as a result, volatility in the price of the Shares.
Revenue
Proceeds from any disposal of the Company’s interests in Portfolio Companies
through liquidity events, including sales of equity following IPOs and trade
sales, may vary substantially from year to year. In addition, earnings
produced by Portfolio Companies are typically reinvested for the purpose of
growth, and payments of dividends by assets are often subject to milestones
which may not be achieved. This means the return received by the Company from
these sources may vary substantially from year to year. Notwithstanding that
the Company does not expect to receive much in the way of returns from
dividends, these variations in overall returns may have a material adverse
effect on the portfolio and on the Company’s financial condition, results of
operations and prospects, with a consequential adverse effect on the Net Asset
Value and/or the market price of the Shares.
External Auditor
The Audit Committee has responsibility for making a recommendation on the
appointment, re-appointment and removal of the external auditor. Grant
Thornton was appointed as the first auditor of the Company following a
competitive tender process. During the year the Audit Committee received and
reviewed audit plans and reports from the external auditor. It is standard
practice for the external auditor to meet privately with the Audit Committee
without the Investment Manager and other service providers being present at
each Audit Committee meeting.
To assess the effectiveness of the external audit process, the auditor was
asked to articulate the steps that they have taken to ensure objectivity and
independence, including where the auditor provides non-audit services. The
Audit Committee monitors the auditor’s performance, behaviour and
effectiveness during the exercise of their duties, which informs the decision
to recommend reappointment on an annual basis.
The Company does not utilise external auditor for internal audit purposes,
secondments, tax compliance, private letter rulings, accounting advice or
valuation advice. The Company's auditors performed the audit of the Company's
financial statements, prepared in accordance with IFRS as issued by the IASB,
in accordance with International Standards on Auditing (ISAs).
The audit engagement leader responsible for the audit, Mr Cyril Swale, will
rotate off CGL after having served five years.
The remuneration paid to Grant Thornton and to other Grant Thornton member
firms for audit and non-audit services in respect of the year ended 31
December 2021 was £43,000 (2020: N/A).
For any questions on the activities of the Audit Committee not addressed in
the foregoing, a member of the Audit Committee remains available to attend
each AGM to respond to such questions.
The Audit Committee Report was approved by the Audit Committee on 8 April 2022
and signed on behalf by:
Andrew Whittaker
Chair, Audit Committee
Independent Auditor’s Report to the Members of Castelnau Group Limited
Opinion
We have audited the financial statements of Castelnau Group Limited (the
“Company”), for the year ended 31 December 2021 which comprise the
Statement of Comprehensive Income, the Statement of Financial Position, the
Statement of Changes in Equity, the Statement of Cash Flow, and Notes to the
financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation
is applicable law and International Financial Reporting Standards (IFRSs) as
issued by the International Standards Board (IASB).
In our opinion, the accompanying financial statements:
* give a true and fair view of the state of the Company’s affairs as at 31
December 2021 and of its loss for the year then ended;
* have been properly prepared in accordance with IFRSs as issued by the
International Standards Board (IASB); and
* have been prepared in accordance with the Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(ISAs) and applicable law. Our responsibilities under those standards are
further described in the ‘Auditor’s responsibilities for the audit of the
financial statements’ section of our report. We are independent of the
Company in accordance with the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code), together with
the ethical requirements that are relevant to our audit of the financial
statements in Guernsey, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
The key audit matter How the matter was addressed in our audit
Valuation of unquoted investments Our audit procedures consisted of: Obtaining an understanding of management’s processes, policies and methodologies in relation to the valuation of the unquoted
(2021: £28.21m, and 2020: £nil) The valuation of unquoted investments, which comprised 22% of the total fair value of the Company’s investments, requires significant judgment, use of estimates, industry specialism and expertise and specific market consideration, as described in Notes 3b, 4.1 and 5 to the financial statements and in the Audit Committee Report. The fair value of unquoted investments might be misstated due to application of inappropriate methods (methodologies), assumptions or source data for estimates made and/or inappropriate underlying judgments made due to error or fraud. investments and confirm our understanding by performing walkthrough of relevant controls in the valuation process to confirm they are appropriately designed and
implemented; Obtaining and inspecting the valuation models prepared by the Investment Manager, and inspecting the supporting data to assess whether the data used is
appropriate and relevant;
Holding discussions with management to evaluate whether the fair value of unquoted investments is reasonably stated and corroborated those discussions with the supporting documents inspected, including challenging the assumptions made by management; Assessing whether the valuation of unquoted investments’ accounting policy is in line with the requirements of IFRS and consistently applied; Assessing the independence, competence and objectivity of management’s external valuation expert; Obtaining the valuations prepared by the management and the valuation report prepared by management’s external expert and challenged the valuation conducted by them through the following: Assessing whether the valuation model used by management to estimate the fair values of the unquoted investments are consistent with methods usually used by market
participants for similar types of instruments; Reviewing key assumptions considered within management’s external expert’s report and ensuring that these assumptions are reasonable and consistent with the requirements of the accounting standards; Testing key inputs/data used in the calculation of the fair value, such as discount rates, forecasts etc., through inspecting supporting documents and discussions with management; and Ensuring the estimates of fair value of management is within the range of values determined by management’s external expert.
Our results Based on the work performed, we are satisfied that the valuation of the Company’s investments are in accordance with IFRS and within our estimated valuation
range.
Other information
The Directors are responsible for the other information. The other information
comprises the information included in the Annual Report and Audited Financial
Statements, but does not include the financial statements and our auditor’s
report thereon.
Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to
which the Companies (Guernsey) Law, 2008 requires us to report to you if, in
our opinion:
* proper accounting records have not been kept by the Company; or
* the Company’s Financial Statements are not in agreement with the
accounting records; or
* we have not obtained all the information and explanations, which to the best
of our knowledge and belief, are necessary for the purposes of our audit.
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the
Directors are responsible for the preparation of the financial statements
which give a true and fair view in accordance with IFRSs as issued by the
International Standards Board (IASB), and for such internal control as the
Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the Directors are responsible for
assessing the Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Auditor’s responsibilities for the audit of the financial statements
(continued)
As part of an audit in accordance with ISAs, we exercise professional judgment
and maintain professional scepticism throughout the audit. We also:
* Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
* Obtain an understanding of internal control relevant to the audit in order
to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
* Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
Directors.
* Conclude on the appropriateness of the Directors’ use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events or conditions may cause
the Company to cease to continue as a going concern.
* Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves
fair presentation.
We communicate with the directors regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the directors, we determine those matters
that were of most significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with section 262 of the Companies (Guernsey) Law, 2008. Our audit
work has been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report, or for the opinions we
have formed.
Cyril Swale
For and on behalf of Grant Thornton Limited
Chartered Accountants
St Peter Port
Guernsey
Date: 8 April 2022
Financial Statements
Statement of Comprehensive Income
For the year ended 31 December 2021
31 December 2021 13 March 2020 to 31 December 2020
Total Total
Notes GBP GBP
Income - -
Total income - -
Expenses
Net losses on financial assets at fair value through profit or loss 5 (10,021,645) -
Other expenses 6 (1,968,331) -
Loss before tax (11,989,976) -
Tax - -
Total comprehensive loss for the year/period (11,989,976) -
Pence Pence
Loss per share – Basic and diluted 11 (6.57) -
All items in the above statement derive from continuing operations. No
operations were acquired or discontinued during the period. All revenue is
attributable to the equity holders of the Company.
The accompanying notes form an integral part of these financial statements.
Statement of Financial Position
As at 31 December 2021
31 December 2021 13 March 2020 to 31 December 2020
Notes GBP GBP
NON-CURRENT ASSETS
Investments- equity 5 126,617,646 -
Investments- loans 5 3,361,795 -
129,979,441 -
CURRENT ASSETS
Trade and other receivables 7 39,033 1
Cash and cash equivalents 44,497,139 -
44,536,172 1
TOTAL ASSETS 174,515,613 1
NON-CURRENT LIABILITIES
Earn out liability 8 1,283,333 -
CURRENT LIABILITIES
Earn out liability 8 916,667 -
Other payables 9 188,828 -
1,105,495 -
TOTAL LIABILITIES 2,388,828 -
NET ASSETS 172,126,785 1
EQUITY
Share capital 10 184,116,761 1
Retained deficit (11,989,976) -
TOTAL EQUITY 172,126,785 1
Number of Ordinary Shares in issue 10 183,996,059 -
NAV per Ordinary Share (pence) 12 93.55 -
The financial statements were approved and authorised for issue by the Board
of Directors on 8 April 2022 and signed on its behalf by:
Joanna Duquemin Nicolle Andrew Whittaker
Director
Director
The accompanying notes form an integral part of these financial statements.
Statement of Changes in Equity
For the year ended 31 December 2021
Note Share Capital Retained Deficit Total
GBP GBP GBP
Opening equity 1 - 1
Loss for the year - (11,989,976) (11,989,976)
Issue of new Ordinary Shares 10 184,116,760 - 184,116,760
Closing equity 184,116,761 (11,989,976) 172,126,785
For the period from 13 March 2020 to 31 December 2020
Share Capital Retained Earnings Total
GBP GBP GBP
Opening equity - - -
Profit for the period - - -
Issue of new Ordinary Shares 1 - 1
Closing equity 1 - 1
The accompanying notes form an integral part of these financial statements.
Statement of Cash Flows
For the year ended 31 December 2021
31 December 2021 13 March 2020 to 31 December 2020
Notes GBP GBP
Operating activities
Loss before tax (11,989,976) -
Net losses on financial assets at fair value through profit or loss 10,021,645 -
Increase in receivables 7 (39,032) (1)
Increase in provisions 8 2,200,000 -
Increase in payables 9 188,828 -
Net cash flow from/(used in) operating activities 381,465 (1)
Investing activities
Purchase of investments 5 (140,314,291) -
Loan repayment 5 313,205 -
Net cash used in investing activities (140,001,086) -
Financing activities
Issue of Ordinary Shares 10 184,116,760 1
Net cash flow from financing activities 184,116,760 1
Increase in cash and cash equivalents 44,497,139 -
Cash and cash equivalents at beginning of year/period - -
Cash and cash equivalents at end of year/period 44,497,139 -
The accompanying notes form an integral part of these financial statements.
Notes to the Financial Statements
For the year ended 31 December 2021
1. General information
Castelnau Group Limited (the “Company”), registration number 67529, is a
limited company incorporated and domiciled in Guernsey. The registered office
address of the Company is PO Box 255, Les Banques, Trafalgar Court, St. Peter
Port, Guernsey GY1 3QL. The Company was incorporated on 13 March 2020 and
listed on the Specialist Fund Segment (“SFS”) of the London Stock
Exchange’s Main Market on 18 October 2021.
The Company’s principal activity is to seek to achieve a high rate of
compound return over the long term by carefully selecting investments using a
thorough and objective research process and paying a price which provides a
material margin of safety against permanent loss of capital, but also a
favourable range of outcomes.
Details of the Directors, Investment Manager and Advisers can be found under
Company Information.
The financial statements of the Company are presented for the year ended 31
December 2021 and were authorised for issue by the Board on 8 April 2022.
2. Statement of compliance
a. Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”) and are in compliance with The
Companies (Guernsey) Law, 2008. The Company is subject also to the continuing
obligations imposed on all investment companies whose shares are admitted to
trading on the SFS of the Main Market.
These financial statements are presented in Sterling ("GBP or £"), which is
also the Company's functional currency (please see note 3d for further
details).
b. Going concern
The financial statements have been prepared on a going concern basis. In
forming this opinion, the Directors have considered any potential impact of
the COVID-19 pandemic on the going concern and viability of the Company.
The Board continues to monitor the ongoing impacts of the COVID-19 pandemic
and has concluded that the biggest threat to the Company with regards to this
pandemic is the failure for a key service provider to maintain business
continuity and resiliency while maintaining work from home and social
distancing practices. The Board has assessed the measures in place by key
service providers to produce business continuity and so far has not identified
any significant issues that affect the Company. For these reasons, the Board
is confident that the outbreak of COVID-19 has not impacted the going concern
assessment of the Company.
The Directors have a reasonable expectation that the Company has adequate
operational resources to continue in operational existence for at least twelve
months from the date of approval of these financial statements. Further
information on the Company’s going concern can be found in the Directors’
Report.
c. Basis of measurement
The financial statements have been prepared on a historical cost basis, except
for certain financial instruments, which are measured at fair value through
profit or loss.
3. Significant accounting policies
a. Adoption of new IFRS standards
A number of new standards, amendments to standards and interpretations are
effective for the annual periods beginning after 1 January 2021. None of these
are expected to have a significant effect on the measurement of the amounts
recognised in the financial statements of the Company.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that
are not mandatory for 31 December 2021 reporting periods and have not been
early adopted by the Company. These standards are not expected to have a
material impact on the entity in the current or future reporting periods and
on foreseeable future transactions.
IFRS 9 Financial Instruments (amendments resulting from Annual Improvements to IFRS Standards 2018-2020) 1 January 2022
IAS 1 Presentation of Financial Statements (amendments regarding the classification of liabilities and the disclosure of accounting policies) 1 January 2023
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (amendments regarding the definition of accounting estimates) 1 January 2023
IAS 37 Provisions, Contingent Liabilities and Contingent Assets (amendments regarding the costs to include when assessing whether a contract is onerous) 1 January 2022
b. Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Company
becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred. A financial liability
is derecognised when it is extinguished, discharged, cancelled or expires.
Financial assets
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing
component all financial assets are initially measured at fair value adjusted
for transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging
instruments, are classified into one of the following categories:
• amortised cost
• fair value through profit or loss (FVTPL), or
• fair value through other comprehensive income (FVOCI).
In the periods presented the Company does not have any financial assets
categorised as FVOCI.
The classification is determined by both:
• the entity’s business model for managing the financial asset, and
• the contractual cash flow characteristics of the financial asset.
Subsequent measurement of financial assets
a) Investments as FVTPL
Investments held at fair value through profit or loss are initially recognised
at fair value, being the consideration given and excluding transaction or
other dealing costs associated with the investment. Refer to note 4 and note 5
for judgements, estimations and assumptions made in relation to financial
instruments.
After initial recognition, investments are measured at fair value through
profit or loss. Gains or losses on investments measured at fair value through
profit or loss are included in the Statement of Comprehensive Income and
transaction costs on acquisition or disposal of investments are also included
in the Statement of Comprehensive Income.
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. Investments held at fair value through
profit or loss are initially recognised at fair value, being the consideration
given and excluding transaction or other dealing costs associated with the
investment.
Unquoted investments are measured at fair value, which is determined by the
Directors in accordance with the International Private Equity and Venture
Capital valuation guidelines and IFRS 13. Valuation reports provided by the
Investment Manager of the unquoted investments are used to calculate the fair
value where there is evidence that the valuation is derived using fair value
principles that are consistent with the Company’s accounting policies and
valuation methods. Such valuation reports may be adjusted to take account of
changes or events to the reporting date, or other facts and circumstances
which might impact the underlying value.
Upon the sale of an investment, in part or wholly, the fair value would be the
expected sale price where this is known or can be reliably estimated.
b) Financial assets at amortised cost
The Company’s financial assets at amortised cost are made up of loans to
investments and receivables.
Financial assets are measured at amortised cost if the assets meet the
following conditions (and are not designated as FVTPL):
• they are held within a business model whose objective is to hold the
financial assets and collect its contractual cash flows, and
• the contractual terms of the financial assets give rise to cash flows that
are solely payments of principal and interest on the principal amount
outstanding.
After initial recognition, these are measured at amortised cost using the
effective interest method.
Discounting is omitted where the effect of discounting is immaterial.
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.
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.
Impairment of financial assets
IFRS 9’s impairment requirements use forward-looking information to
recognise expected credit losses– the ‘expected credit loss (ECL)
model’. Instruments within the scope of the requirements included loans and
trade receivables.
The Company considers a broader range of information when assessing credit
risk and measuring expected credit losses, including past events, current
conditions, reasonable and supportable forecasts that affect the expected
collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
• financial instruments that have not deteriorated significantly in credit
quality since initial recognition or that have low credit risk (‘Stage 1’)
and
• financial instruments that have deteriorated significantly in credit
quality since initial recognition and whose credit risk is not low (‘Stage
2’).
‘Stage 3’ would cover financial assets that have objective evidence of
impairment at the reporting date.
‘12-month expected credit losses’ are recognised for the first category
(i.e. Stage 1) while ‘lifetime expected credit losses’ are recognised for
the second category (i.e. Stage 2).
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected life of the
financial instrument.
Receivables and prepayments
Other receivables are amounts due in the ordinary course of business. If
collection is expected in one year or less, they are classified as current
assets. If not, they are presented as non-current assets. Other receivables
are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest rate method, less provision for impairment
assessed using the simplified approach of expected credit loss model on
experience of previous losses and expectation of future losses.
Financial liabilities
Classification and measurement of financial liabilities
The Company’s financial liabilities are made up of trade and other payables.
Financial liabilities are initially measured at fair value, and, where
applicable, adjusted for transaction costs unless the Company designated a
financial liability at FVTPL.
Subsequently, financial liabilities are measured at amortised cost using the
effective interest method except for derivatives and financial liabilities
designated at FVTPL, which are carried subsequently at fair value with gains
or losses recognised in profit or loss (other than derivative financial
instruments that are designated and effective as hedging instruments). All
interest-related charges and, if applicable, changes in an instrument’s fair
value that are reported in profit or loss are included within finance costs or
finance income.
c. Income and expenses
All income and expenses are included in the Statement of Comprehensive Income
on an accruals basis and are recognised through profit or loss in the
Statement of Comprehensive Income.
d. Foreign currency
The currency of the primary economic environment in which the Company operates
(the functional currency) is pounds sterling (“sterling”), which is also
the presentational currency of the Company. Transactions involving currencies
other than sterling are recorded at the exchange rate ruling on the
transaction date. At each year end date, monetary items and non-monetary
assets and liabilities, which are fair valued, and which are denominated in
foreign currencies, are retranslated at the closing rates of exchange. Such
exchange differences are included in the Statement of Comprehensive Income and
allocated to capital if of a capital nature or to revenue if of a revenue
nature. Exchange differences allocated to capital are taken to gains on
disposal or investment holding losses, as appropriate.
e. Cash and cash equivalents
Cash and Cash Equivalents in the Cash Flow Statement comprise cash held at
bank.
f. Share capital
The Company's Ordinary Shares are classified as equity.
g. Taxation
The Company has been granted Exempt Status under the terms of The Income Tax
(Exempt Bodies) (Guernsey) Ordinance, 1989 to income tax in Guernsey. Its
liability for Guernsey taxation is limited to an annual fee of £1,200 (2020:
Nil). The activities of the Company do not constitute relevant activities as
defined by the Income Tax (Substance Requirements) (Implementation)
Regulations, 2018 (as amended) and as such the Company was out of scope.
h. Provisions, contingent assets and contingent liabilities
Provisions are measured at the estimated expenditure required to settle the
present obligation, based on the most reliable evidence available at the
reporting date, including the risks and uncertainties associated with the
present obligation. Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. Provisions are discounted to
their present values, where the time value of money is material.
No liability is recognised if an outflow of economic resources as a result of
present obligations is not probable. Such situations are disclosed as
contingent liabilities unless the outflow of resources is remote.
4. Judgements, estimations or assumptions
The Directors have reviewed matters requiring judgements, estimations or
assumptions. The preparation of the financial statements requires management
to make judgements, estimations or assumptions that affect the amounts
reported for assets and liabilities as at the year-end date and the amounts
reported for revenue and expenses during the year. However, the nature of the
estimation means that actual outcomes could differ from those estimates.
4.1 Investment valuation
The critical judgement, estimate or assumption that may have a significant
risk of causing a material adjustment to the Company’s NAV relates to the
valuation of the Company’s unquoted (Level 3) investments, which is
approximately 16% of the Company’s NAV.
The Level 3 holding is valued in line with accounting policy as disclosed in
Note 3(b).
Whilst the Board considers the methodologies and assumptions adopted in the
valuation of unquoted investments are reasonable and robust, because of the
inherent uncertainty of the valuation, the values used may differ
significantly from the values that would have been used had a ready market for
the investment existed and the differences could be significant. These values
may need to be revised as circumstances change and material adjustments may
still arise as a result of revaluation of the unquoted investments fair value
within the next year.
4.2 Earn-out liability
The total purchase price for Rawnet included both an up-front consideration as
well as an earn-out payment contingent on future performance of the business.
In addition to the valuation of the investment there was an assessment of the
fair value of the liability related to the potential future payment of the
earn-out (see note 8). The earn-out payment has been recognised at fair value
(taking into account the probability of payment and a discount rate). The
earn-out payment is considered to be additional purchase price and as such the
fair value of the earn-out payment has been recorded as a liability and the
fair value considered part of the purchase price. Subsequent remeasurement of
the liability is recognised in the Statement of Comprehensive Income as
"Change in fair value of contingent consideration".
4.3 Assessment as investment entity
Entities that meet the definition of an investment entity within IFRS 10 are
required to measure their subsidiaries at fair value through profit or loss
rather than consolidate them. The criteria which define an investment entity
are as follows:
(i) An entity that obtains funds from one or more investors for the purpose of
providing those investors with investment services;
(ii) An entity that commits to its investors that its business purpose is to
invest solely for returns from capital appreciation, investment income or
both; and
(iii) An entity that measures and evaluates the performance of substantially
all of its investments on a fair value basis.
The Company has several investors that have access to investment management
services and opportunities. In addition some of the investors are not related
parties of the Company or members of the group.
The Company’s objective to provide a “high rate of compound return” is
consistent with that of an investment entity. The Company has clearly defined
exit strategies for each of its investment classes, these strategies are again
consistent with an investment entity.
The Company uses a variety of methods or valuation techniques and makes
assumptions based on market conditions existing at each Statement of Financial
Position date to value financial assets at fair value through profit or loss
that are not traded in active markets. The valuation techniques have been
prepared with the goal that fair value measurements derived when using these
valuation techniques are compliant with IFRS.
The Directors, upon considering the above criteria, have concluded that the
Company meets the definition of an investment entity. Therefore, the Company
has classified its investments at fair value through profit or loss in the
Statement of Financial Position.
5. Investments
Investments in unconsolidated subsidiaries:
Name of investee company Date of acquisition Domicile Ownership
Rawnet Limited 12 February 2021 United Kingdom 100%
Ocula Technologies Holdings Limited 22 January 2021 United Kingdom 78%
Showpiece Technologies Limited 12 November 2021 United Kingdom 80%
WLS International Limited 14 October 2021 Cayman Islands 19%
Phoenix SG Limited 14 October 2021 Cayman Islands 55%
Equity Loans Total 13 March 2020 to 31 December 2020
31 December 2021 31 December 2021 31 December 2021
GBP GBP GBP GBP
INVESTMENTS
Opening portfolio cost - - - -
Purchases at cost 136,639,291 3,675,000 140,314,291 -
Loan repayment - (313,205) (313,205) -
136,639,291 3,361,795 140,001,086 -
Unrealised gains on investments 769,507 - 769,507 -
Unrealised losses on investments (10,791,152) - (10,791,152) -
Fair value 126,617,646 3,361,795 129,979,441 -
Movement in unrealised gains on investments 769,507 - 769,507 -
Movement in unrealised losses on investments (10,791,152) - (10,791,152) -
Net losses on financial assets (10,021,645) - (10,021,645) -
The transaction charges on the purchase and sale of investments during the
current year were £14,134 (2020: Nil) included in the Statement of
Comprehensive Income.
Loans
The Company has a loan facility of £3,000, 000 with Ocula Technologies
Holdings Limited as borrower. The termination date is 6 May 2024. No interest
shall accrue or be payable.
The Company has a loan facility of £1,000, 000 with Showpiece Technologies
Limited as borrower. The termination date is 19 November 2024. No interest
shall accrue or be payable.
The Company has a loan facility of £1,500, 000 with Rawnet Limited as
borrower. The termination date is 15 February 2022. No interest shall accrue
or be payable.
The utilised amounts on each facility are disclosed on the Portfolio Report.
31 December 2021 13 March 2020 to 31 December 2020
Classification GBP GBP
Level 1 98,409,862 -
Level 2 - -
Level 3 28,207,784 -
Total non-current investments held at ‘FVTPL’ 126,617,646 -
There were no transfers between levels during the year (2020: Nil).
Measurement of fair value of investments
Listed assets are priced using end of day market prices. For investments that
are not listed, Phoenix has processes in place to ensure valuations provide an
objective, consistent and transparent basis for the fair value of unquoted
securities in accordance with International Financial Reporting Standards.
Phoenix creates individual valuation frameworks for all unlisted securities.
The final framework will vary depending on the characteristics of the holding
(for instance it may also incorporate a listed aspect or loan).
To ensure the unlisted valuation framework is robust, Phoenix engages a
third-party valuation expert to review the methodologies and assumptions for
each new material unlisted security. Then on at least a semi-annual basis the
third-party valuation expert will review and verify the framework and carry
out an independent valuation against which the Investment Managers valuation
is compared. Independent value verification may be more frequent depending on
the characteristics of each investment and the occurrence of a material change
in value. Although Phoenix is ultimately responsible for the final valuation,
in practice we would work with the third-party valuation expert to agree a
valuation. If Phoenix could not agree a final decision would be made at Board
level.
There may be circumstances when Phoenix values an unlisted security at cost
when that represents Phoenix's best estimate of fair value. In this scenario
and when investments are deemed immaterial in the context of their value
relative to the total portfolio value and there are no significant changes to
the portfolio company from when it was purchased (i.e., no material changes to
cash flow projections, no material change in the performance of the company,
and no transactions have taken place of the portfolio company shares with
other parties) then no third-party valuation review will be obtained.
Unlisted equities will be valued monthly by the Phoenix investment team. These
valuations will then be reviewed and approved by Phoenix’s business team who
are functionally separate from the investment team. Ultimate approval of the
valuation is from Phoenix’s COO. The Phoenix business team will liaise
directly with the third-party valuation expert who review PAMP’s valuation
methodology to ensure the framework and valuation is robust.
The following valuation techniques are used for instruments categorised in
Level 3:
Investment in Rawnet- The fair value of this investment was determined using a
discounted cash flow model. This approach indicates fair value based on the
present value of the cash flows that a business (or security) is expected to
generate in the future. Fair value is estimated by discounting the expected
cash flows of a business to present value at a discount rate that reflects the
timing and risk of collecting the projected cash flows.
Investment in Phoenix S.G (“PSG”) – PSG is a company incorporated in the
Cayman Islands whose sole purpose was to make a number of investments in
Stanley Gibbons entities. The Company’s investment in PSG is valued by
utilising the Net Asset Value per share of PSG. The Net Asset Value of PSG
includes its shares in Stanley Gibbons and some other assets related to
Stanley Gibbons. The fair value of PSG was determined based on the sum of all
approach. The other assets include a loan to Stanley Gibbons and rights to
receivables in relation to the sale of stamp inventories.
Investment in WLS International (“WLS”) - WLS is a company incorporated in
the Cayman Islands whose sole purpose was to investment in WLS Holdings. The
Company’s investment in WLS is valued by utilising the Net Asset Value per
share of WLS. The fair value of WLS includes it’s 100% ownership of WLS
Holdings, now known as Cambium. The fair value of Cambium was determined using
a discounted cash flow model.
The following table provides information about sensitivity of the fair value
measurement to changes in the most significant inputs:
Description Significant unobservable input Estimate of the input Sensitivity of fair Value to changes in unobservable inputs
Investment in Phoenix S.G. (valuation of the rights to receivables in relation to the sale of stamp inventories)* Monthly sales rate -1.0% An increase to -0.9%/(decrease to -1.1%) would (decrease)/increase fair value by (-1.52%)/1.43%
Discount rate 5% An increase to 6%/(decrease to 4%) would (decrease)/increase fair value by (-4.19%)/4.46%
Sales premium to SGG valuation 98% An increase to 108%/(decrease to 88%) would increase/(decrease) fair value by 2.10%/(-1.72%)
Investment in Rawnet FY22-26 Compound sales Growth rate 18% An increase to 23%/(decrease to 13%) would increase/(decrease) fair value by 20%/(-18%)
Investment in WLS International Discount rate Growth rate 15% An increase to 16%/(decrease to 14%) would(decrease)/increase fair value by (-3.38%)/3.38%
* The sensitivity analysis for the stamp inventories has been calculated on a
weighted average basis.
6. Expenses
31 December 2021 13 March 2020 to 31 December 2020
Total Total
GBP GBP
Administrator's fee 50,821 -
Audit fees 43,000 -
Directors' fee 27,370 -
Legal and professional fees 47,856 -
Investment transaction charges 14,134 -
Change in fair value of contingent consideration (550,001) -
Set up costs 2,247,739 -
Sundry costs 72,324 -
Depositary fee 7,344 -
Trustee fee 7,344 -
Bank interest 400 -
1,968,331 -
Directors’ fees of £31,904 for the have been classed as set up costs.
7. Trade and other receivables
31 December 2021 13 March 2020 to 31 December 2020
GBP GBP
Prepayments 39,032 -
Other receivables 1 1
39,033 1
8. Earn-out liability
31 December 2021 13 March 2020 to 31 December 2020
GBP GBP
Earn-out liability- Non current 1,283,333 -
Earn-out liability -Current 916,667 -
2,200,000 -
The earn- out liability is the fair value of the liability related to the
potential future payment of the earn-out of Rawnet. The total earn-out payment
is to be paid over three different periods, with a maximum payment of
£916,667 at each payment date. The amount of the earn-out which will be paid
is conditional upon not only the performance of Rawnet itself, but also on the
growth and performance of its clients (other Castelnau portfolio companies).
It is considered likely that the earn-out will be paid in full based on
expectations as of the valuation date. While full payment of the first tranche
is effectively guaranteed, some uncertainty remains with regards to the second
two tranches.
9. Other payables
31 December 2021 13 March 2020 to 31 December 2020
GBP GBP
Other accrued expenses 188,828 -
188,828 -
10. Share capital
31 December 2021 13 March 2020 to 31 December 2020
Allotted, called up and fully paid Number 183,996,059 1
Ordinary Shares GBP 184,116,761 1
The Company did not purchase any of its own shares during the year ended 31
December 2021 or 2020. No shares were cancelled during either year.
No shares were held in Treasury or sold from Treasury during the year ended 31
December 2021 or 2020.
11. Loss per ordinary share
Loss per share is based on the loss of £11,989,976 (2020: Nil) attributable
to the weighted average of 182,573,503 (2020: 1) Ordinary Shares in issue
during the year.
There is no difference between the weighted average Ordinary diluted and
undiluted number of Shares. There is no difference between basic and diluted
earnings per share as there are no diluted instruments.
12. Net assets per ordinary share
The figure for net assets per Ordinary Share is based on £172,126,784
(2020:1) divided by 183,996,059 (2020: 1) voting Ordinary Shares in issue at
31 December 2021.
The table below is a reconciliation between the NAV per Ordinary share
announced on the London Stock Exchange and the NAV per Ordinary share
disclosed in these financial statements.
Net assets NAV per share
GBP pence
NAV as published on 31 December 2021 172,126,785 93.55
NAV as disclosed in these financial statements 172,126,785 93.55
13. Material agreements
Details of the management, administration and secretarial contracts can be
found in the Directors’ Report. There were no transactions with directors
other than disclosed in the Directors’ Remuneration Report. As at 31
December 2021 there were no fees payable to PAMP.
a) Investment Manager and Alternative Investment Fund Manager (“AIFM”)
The Investment Manager will not receive a management fee in respect of its
portfolio management services to the Company. The Investment Manager will
become entitled to a performance fee subject to meeting certain performance
thresholds.
The Performance Fee is equal to one third of the outperformance of the Net
Asset Value total return (on an undiluted basis and excluding any accrual or
payment of the Performance Fee) after adjustment for inflows and outflows
(such inflows and outflows including, for the avoidance of doubt, tender
payments and, buybacks), with dividends reinvested, over the FTSE All-Share
Total Return Index, for each Performance Period (or, where no performance fee
is payable in respect of a financial year, in the period since a Performance
Fee was last payable). The Net Asset Value total return is based on the
weighted number, and Net Asset Value, of the Ordinary Shares in issue over the
relevant Performance Period.
During the year, performance fee of Nil (2020: Nil) were charged to the
Company, of which Nil (2020: Nil) remained payable at the end of the year.
b) Administrator and Secretary
Northern Trust International Fund Administration Services (the
"Administrator") is entitled to: (i) an administration fee of 0.05% of the Net
Asset Value of the Company up to £200 million, 0.03% of the net asset value
of the Company between £200 million and £400 million, and 0.02% of the net
asset value of the Company over £400 million (subject to a minimum
administration fee of £60,000); (ii) a financial reporting fee of £10,000;
(iii) a company secretarial services fee of £10,000; and (iv) an additional
fee of £2,000 while the Administrator acts as the Company’s nominated firm
(as described in the FCA Handbook), in each case per annum (exclusive of VAT).
In addition, the Administrator is entitled to certain other fees for ad hoc
services rendered from time to time. During the year, administration and
secretarial fees of £50,821 (2020: Nil) were charged to the Company, of which
£18,361 (2020: Nil) remained payable at the end of the year.
c) Registrar
The Company utilises the services of Link Market Services (Guernsey) Limited
as Registrar in relation to the transfer and settlement of Ordinary Shares.
Under the terms of the Registrar Agreement, the Registrar is entitled to a fee
calculated on the basis of the number of Shareholders and the number of
transfers processed (exclusive of VAT). In addition, the Registrar is entitled
to certain other fees for ad hoc services rendered from time to time. During
the year, registrar fees of £4,219 (2020: Nil) were charged to the Company,
of which £4,219 (2020: Nil) remained payable at the end of the year.
d) Depositary
Northern Trust (Guernsey) Limited (the "Depositary") is entitled to: (i) a
custody fee of 0.02% of the net asset value of the Company (subject to a
minimum of £20,000); and (ii) a depositary services fee of 0.02% of the net
asset value of the Company up to £200 million, falling to 0.01% of the net
asset value of the Company over £200 million (subject to a minimum depositary
services fee of £20,000), in each case per annum (exclusive of VAT). In
addition, the Depositary is entitled to certain other fees for ad hoc services
rendered from time to time. During the year, depositary fees of £7,344 (2020:
Nil) were charged to the Company, of which £7,344 (2020: Nil) remained
payable at the end of the year.
14. Related parties
Directors’ remuneration & expenses
The Director’s fees are disclosed in the Director’s Remuneration Report.
No Directors’ fees were outstanding as at 31 December 2021 (2020: £Nil).
Shares held by related parties
The amount of ordinary shares held by the Directors are disclosed in the
Director’s Report. As at 31 December 2021, the Investment Manager held no
Shares (2020: no Shares) of the Issued Share Capital. Partners and none
employees of the Investment Manager held no Shares (2020: no Shares).
Gary Channon is CEO and CIO of Phoenix Asset Management Partners Limited, the
Investment Manager. Mr Channon is currently CEO of Dignity which is a
portfolio holding. Mr Channon became CEO on 22 April 2021.
Lorraine Smyth is a Director of the Company and an employee of Phoenix Asset
Management Partners Limited, the Investment Manager. Ms. Smyth is currently a
Director of Rawnet and Ocula which are portfolio holdings.
15. Financial instruments – 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:
1. Currency Risk
2. Interest Rate Risk and
3. Other Price Risk
b. Liquidity Risk
c. Credit Risk
d. Capital management policies and procedures
Each is considered in turn below:
A (i) Currency Risk
The portfolio as at 31 December 2021 was invested in sterling securities and
there was no 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 2021 or 31
December 2020 and no sensitivity analysis is presented for this risk.
A (ii) Interest Rate Risk
The Company did not hold fixed interest securities at 31 December 2021 or 31
December 2020.
With the exception of cash, no interest rate risks arise in respect of any
current asset. All cash 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 2021 or 31 December 2020.
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 in the Business Review,
the Company may maintain relatively strong concentrations in particular
sectors selected by the Investment Manager.
The effect on the portfolio of a 10.0% increase or decrease in market prices
would have resulted in an increase or decrease of £9,840,986 (2020: Nil) in
the investments held at fair value through profit or loss at the period end,
which is equivalent to 5.72% (2020: Nil) in the net assets attributable to
equity holders. This analysis assumes that all other variables remain
constant.
B Liquidity Risk
The following table analyses the Company’s liabilities into relevant
maturity groupings based on the maturities at the statement of financial
position date. The amounts in the table are the undiscounted net cash flows on
the financial liabilities:
Up to 1 month 1-6 months 6-12 months More than 12 months
Total
As at 31 December 2021
Earn-out liability 916,667 1,283,333 2,200,000
Other payables - - 188,828 - 188,828
- - 1,105,495 1,283,333 2,388,828
C Credit Risk
The Company invests in quoted equities and fixed interest securities which are
level 1 and level 3 investments. The majority of cash is currently placed with
The Northern Trust Company. The Company is subject to credit risk to the
extent that this institution may be unable to return this cash. The Northern
Trust Company is a wholly owned subsidiary of The Northern Trust Corporation.
The Northern Trust Corporation is publicly traded and a constituent of S&P
500. The Northern Trust Corporation has a credit rating of A+ from Standard &
Poor's and A2 from Moody's. At 31 December 2021, cash at bank comprised
£44,497,139 (2020: Nil) held by the Depository which is the maximum credit
risk that the Company is exposed to.
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 firms of the London Stock Exchange.
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 commensurately with the level of risk.
The Company monitors capital on the basis of the carrying amount of equity,
less cash and cash equivalents 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 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.
16. Post period end events
These financial statements were approved for issuance by the Board on 8 April
2022. Subsequent events have evaluated to this date.
On 11 March 2022, the Company entered into a loan agreement with The Cambium
Group UK Holdings Limited as the borrower. The total commitment was £2
million.
Russia’s invasion of Ukraine is a new emerging risk to the global economy.
The resulting imposition of international sanctions on Russia will have wider
global effect on the supply and prices of certain commodities and consequently
on inflation and general economic growth of the global economy and will have
the potential to delay the global economic recovery from COVID-19. There has
been no significant impact on business operations caused by this risk.
Alternative Performance Measures (Unaudited)
In accordance with ESMA Guidelines on Alternative Performance Measures
("APMs") the Board has considered what APMs are included in the Annual Report
and Audited Financial Statements which require further clarification. APMs are
defined as a financial measure of historical or future financial performance,
financial position or cash flows, other than a financial measure defined or
specified in the applicable financial reporting framework. The APMs included
in the annual report is unaudited and outside the scope of IFRS.
Discount/Premium
If the share price of an investment company is lower than the NAV per share,
the shares are said to be trading at a discount. The size of the discount is
calculated by subtracting the share price at year end (105.50p) from the NAV
per share at year end (93.55p) and is usually expressed as a percentage of the
NAV per share (12.77%). If the share price is higher than the NAV per share,
the shares are said to be trading at a premium.
Ongoing Charges
The ongoing charges represent the Company’s operating expenses, excluding
finance costs, expressed as a percentage of the average of the monthly net
assets during the year (see the Directors’ Report). The Board continues to
be conscious of expenses and works hard to maintain a sensible balance between
good quality service and cost.
Average NAV for the year (A) 171,343,518
Operating expenses (annualised) (B) 556,863
Ongoing charges (B/A) 0.32%
NAV Total Return
NAV total return is the percentage increase or decrease in NAV, inclusive of
dividends paid and reinvested, in the reporting period. It is calculated by
adding the increase or decrease in NAV per share with the dividend per share
when paid and reinvested back into the NAV, and dividing it by the NAV per
share at the start of the period.
Appendix (Unaudited)
Phoenix UK Fund Performance Table
The FTSE All-share index used is with dividends reinvested.
Year Investment Return (Gross) NAV Return (Net) All Share Index Share Price £
Launch 1,000.00
1998 (8 months) 17.6% 14.4% -3.3% 1,143.71
1999 -1.3% -4.6% 24.3% 1,090.75
2000 24.7% 23.0% -5.7% 1,341.46
2001 31.7% 26.0% -13.1% 1,690.09
2002 -17.8% -20.1% -22.6% 1,349.64
2003 51.5% 49.8% 20.9% 2,021.24
2004 14.1% 11.2% 12.8% 2,247.26
2005 1.4% 0.3% 22.0% 2,254.99
2006 9.5% 8.3% 16.8% 2,442.90
2007 3.4% 2.3% 5.3% 2,498.40
2008 -39.5% -40.2% -29.9% 1,494.31
2009 62.8% 59.7% 30.2% 2,386.48
2010 1.1% 0.0% 14.7% 2,386.37
2011 3.0% 1.9% -3.2% 2,430.75
2012 48.3% 42.2% 12.5% 3,456.27
2013 40.5% 31.3% 20.9% 4,539.47
2014 1.9% 0.1% 1.2% 4,544.25
2015 20.1% 14.7% 0.9% 5,211.13
2016 9.1% 7.6% 16.8% 5,605.58
2017 21.5% 16.3% 13.1% 6,518.69
2018 -13.6% -14.7% -9.5% 5,558.97
2019 30.3% 27.7% 19.1% 7,098.36
2020 -3.9% -4.9% -9.7% 6,748.66
2021 23.4% 18.7% 18.3% 8,011.17
2022 (to 28 February) 0.8% 0.6% -0.8% 8,061.03
Cumulative 1347.9% 706.1% 229.9%
Annualised Returns 11.9% 9.2% 5.1%
Company Information
Directors (all non-executive) Joanne Peacegood (Chair) Andrew Whittaker Joanna Duquemin Nicolle Lorraine Smyth David Stevenson Financial Adviser Liberum Capital Limited 25 Ropemaker Street London EC2Y 9LY
Registered Office PO Box 255 Trafalgar Court Les Banques St. Peter Port Guernsey Channel Islands GY1 3QL Solicitors to the Company as to English law Gowling WLG (UK) LLP 4 More London Riverside London SE1 2AU
AIFM and Investment Manager Phoenix Asset Management Partners Limited 64-66 Glentham Road London SW13 9JJ Solicitors to the Company as to Guernsey law Carey Olsen (Guernsey) LLP Carey House Les Banques Guernsey GY1 4BZ
Administrator and Company Secretary Northern Trust International Fund Administration Services (Guernsey) Limited PO Box 255 Trafalgar Court Les Banques St. Peter Port Guernsey Channel Islands GY1 3QL Registrar Link Market Services (Guernsey) Limited Mont Crevelt House Bulwer Avenue St Sampson Guernsey GY2 4LH
Independent Auditor Grant Thornton Limited P O Box 313 Lefebvre House Lefebvre Street St Peter Port Guernsey GY1 3TF Custodian and Depositary (appointed 18 October 2021) Nothern Trust (Guernsey) Limited PO Box 71 Trafalgar Court Les Banques St Peter Port Guernsey Channel Islands GY1 3DA
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