REG - Oryx Int. Growth Fnd - Annual Financial Report
08/07/2022 07:00
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RNS Number : 7462R Oryx International Growth Fund Ld 08 July 2022
7 JULY 2022
FOR IMMEDIATE RELEASE
RELEASED BY BNP PARIBAS SECURITIES SERVICES S.C.A., GUERNSEY BRANCH FINAL
RESULTS ANNOUNCEMENT
THE BOARD OF DIRECTORS OF ORYX INTERNATIONAL GROWTH FUND LIMITED ANNOUNCE
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2022
A copy of the Company's Annual Report and Financial Statements will be
available via the following link:
www.oryxinternationalgrowthfund.co.uk
(http://www.oryxinternationalgrowthfund.co.uk/)
STRATEGIC REPORT
COMPANY OVERVIEW
Key Figures
(£ in millions, except per share data) At 31 March 2022 At 31 March 2021
Net Asset Value ("NAV") attributable to shareholders
- Ordinary Shares 219.41 230.31
Investments 208.89 225.87
Cash and cash equivalents 10.62 5.78
NAV per share attributable to shareholders
- Ordinary Shares 15.67 16.42
Share Price 14.80 14.90
Discount to NAV (5.55%) (9.26)%
(Loss)/earnings per share (0.75) 7.60
CHAIRMAN'S STATEMENT
After last year's excellent result with the NAV increasing 86.59% to £16.42,
it was inevitable that markets would see a correction, particularly in the
light of the investment headwinds that we saw in the last six months of the
financial year which included rising inflation, a correction in the bond
markets and the Ukrainian war. I am therefore pleased to report that the fall
in NAV was limited to 4.57%, with the year end NAV amounting to £15.67 per
share. As Harwood Capital Management (Gibraltar) Limited LLP's (the
"Investment Manager") report highlights, this was exacerbated by a
post-Covid-19 correction in biotech and healthcare stocks.
As can be seen from the Investment Manager's report and the descriptions
attached to the top ten holdings supports, the company holds a number of
positions in companies across a wide range of activities which position it in
good stead in these rapidly changing times. The focus on only investing in
companies that have good balance sheets, excellent prospects and experienced
management has seen us through turbulent stock market conditions in the past
and I am certain that this time will be no different.
While the Oryx International Growth Fund Limited (the "Company") used the
authority to buy back shares during the year sparingly, we intend to renew it
for a further year at the AGM to assist, if appropriate, in the management of
the discount and to enhance shareholder value.
In line with our stated policy, the Board do not intend to pay a dividend.
In view of the positioning of the portfolio in the market, your Board remain
confident that the strategy pursued by the Investment Manager and the team led
by Mr Christopher Mills will continue to deliver, over the long term,
favourable returns to the shareholders.
Nigel Cayzer
Chairman
7 July 2022
INVESTMENT ADVISER'S REPORT
The Company's NAV per share shrunk by 4.57% in a disappointing year, with the
portfolio primarily hampered by a reversal in the bond market sentiment
towards the biotech and healthcare sectors, which had driven much of the
outperformance in 2021. It is unfortunate to announce a loss of value for
shareholders, though important to note the relative positive result against
the comparable indexes which fell well over 10%.
The current market faces several challenges. The war in Ukraine has created a
socio-political European conflict not seen since World War II. Global supply
chain issues, rising inflation and interest rates have all contributed to
declines in every sector outside of financials and mining/oil and gas related
companies. Additionally, mutual funds are facing heavy redemptions from
investors, creating forced sellers in the market that further damage share
prices.
As ever, we are grateful for the closed-ended nature of our Company. This has
allowed preservation of capital and ample liquidity to target companies that
have valuations well below their fundamental operating strength. Many
businesses in our portfolio have gone from strength to strength in the last
year and have not been rewarded with appropriate share price appreciation.
Market timing has never been an exact science and we remain extremely cautious
in attitude towards allocating capital given the global backdrop. That said,
our deep understanding of the businesses we own and close relationship with
management teams will provide fantastic opportunities to buy additional shares
at significant discounts to fair value. It is important to note we remain
averse to investing in companies that trade on high multiples relative to
sales or profit, focussing instead on cash flow generated per share. Growth
and technology sectors have seen investment at any cost in recent years and we
are now seeing that come back down to earth.
The Company has rowed through stormy and tranquil seas since its inception in
1995 and though the short-term outlook does not contain many positives, we
remain confident that our portfolio will continue to outperform the broader
market and generate positive returns for shareholders.
Quoted equities:
The leading performers in the Company were Avingtrans Plc, Hargreaves Services
Plc, Circassia Plc and Centaur Media Plc. Most of this strong performance was
achieved through improved operations within each business that boosted
profitability through sales growth and cost minimization. Hargreaves Services
is perhaps the outlier, with skyrocketing raw materials prices driving 'super
profits' in its German joint venture, though the other divisions have also
performed extremely well. Centaur and Avingtrans continue to generate
substantial cash flow and have generated significant value for their
shareholders, with the latter company now the largest investment in the
Company. Circassia has continued to beat market expectations and is now
profitable for the first time in its history in the wake of expert management
from the executive team.
The primary underperformers of our significant holdings were EKF Diagnostics,
Renalytix AI, MJ Gleeson, Redcentric and Tribal Group. EKF Diagnostics has
suffered from the market not appreciating the strength of the core business.
The outperformance in 2021 was driven by investor sentiment around its
Covid-19 related products, but the soaring share price has now been brought
back down to earth as the pandemic eases. The core business continues to
deliver, with £16 million of Earnings Before Interest, Taxes, Depreciation
and Amortisation ("EBITDA") anticipated this year, growing to £25 million by
the end of 2024. The current valuation is low for a high-quality diagnostics
business and with time, we hope the market will recognize this. Renalytix AI,
the worst performing company in the portfolio, has suffered alongside the
broader biotech sell off in the markets. The underlying business is well
capitalized and has continued to deliver a pipeline of contracts with major
institutions. Additional contracts as well as the still-awaited grant of
Medicaid/Medicare should allow this company to stand head and shoulders above
its peers, but patience from investors will be needed. Tribal Group has faced
Covid-19 headwinds and broader market pressure on its share price, but the
business is in good shape and remains well funded.
Over the course of the year, several new positions were built in the
portfolio. Kitwave Group Plc, a United Kingdom ("UK") wholesale distribution
business, generates significant cash that it uses for bolt-on Mergers and
Acquisitions ("M&A") and an ample dividend. Importantly, its energy costs
are fixed at a much lower rate than current prices until 2025, limiting cost
inflation. Northbridge Industrial Plc is another new investment. The company
has recently divested its non-core assets and is now focussed on the load bank
business, where it is a market leader, selling into multiple areas including
data centres. We believe the new, streamlined business that operates in
attractive growth markets will be an attractive asset to a potential buyer.
AssetCo has been created out of a cash shell and developed into an asset
management business headed by Martin Gilbert, formerly of Aberdeen Asset
Management. The company recently announced its intentions to acquire River
& Mercantile and we await the conclusion of those negotiations. The share
price appreciation of +432% over the course of the year reflects investor
enthusiasm towards this scalable model and talented management team.
Unquoted equities:
It was a successful year in the unquoted portfolio. Viking was exited in
January and a takeover of Antler Holdco was agreed, and subsequently completed
post the financial year-end, both at good premiums to the March 2021
valuation. Moxico performed well as a result of an oversubscribed placing and
is expected to go public this year at a further uplift. Tradewise had to be
written off following further disappointing trading although the loss
attributed to fiscal 2022 was modest.
Outlook:
At the year end March 2022, the global economic picture has arguably rarely
looked more uncertain. The positives of the world gradually moving on from
Covid-19 were undone as global supply chains struggle, inflation soars,
interest rates increase and worst of all, Russia breaking its global ties by
invading Ukraine.
Multiple 'Black Swan' events have rocked global equities markets and
particular damage has been inflicted on growth and technology companies that
have traded at historically high multiples. Though the Company has not been
immune to negative market forces, we have successfully navigated the worst of
the sell-off by our stated mandate to invest in stable, cash generating
businesses that can survive negative market forces.
We are also identifying catalysts in many of our investments which will
hopefully continue to drive the net asset value upwards even if market
conditions remain difficult. Finally, the Company has ample liquidity to
invest in new opportunities as they arrive.
Harwood Capital Management (Gibraltar) Limited
7 July 2022
TEN LARGEST HOLDINGS
As at 31 March 2022 As at 31 March 2021
Holding Cost Fair Value % of NAV Holding Cost Fair Value % of NAV
Units Units
Avingtrans Plc 4,000,000 10,785,350 18,600,000 8.48% 4,000,000 10,785,350 12,960,000 5.63%
Centaur Media Plc 35,000,000 12,166,100 16,100,000 7.34% 25,000,000 6,647,256 9,500,000 4.12%
EKF Diagnostics Holdings Plc 35,362,500 4,690,119 15,276,600 6.96% 37,963,591 5,035,101 29,611,601 12.86%
Circassia Group Plc 40,000,000 7,715,505 14,400,000 6.56% 40,000,000 7,715,505 11,180,000 4.85%
Hargreaves Services Plc 2,450,000 7,912,696 13,818,000 6.30% 2,500,000 8,074,180 8,000,000 3.47%
Curtis Banks Group Plc 4,225,000 9,717,500 10,985,000 5.01% - - - -
Redcentric Plc 9,500,000 8,883,066 10,687,500 4.87% 10,000,000 9,350,596 12,500,000 5.43%
Sureserve Group Plc 10,000,000 3,376,149 8,100,000 3.69% 10,000,000 3,376,149 7,500,000 3.26%
Renalytix AI Plc 2,767,206 1,386,009 7,471,456 3.41% 2,780,000 1,392,417 25,020,000 10.86%
Tribal Group Plc 8,250,000 6,727,335 7,012,500 3.20% 6,750,000 4,055,781 6,952,500 3.02%
Avingtrans Plc
Avingtrans is a buy and build strategy business that operates in the
engineering markets. The company's self-branded 'Pinpoint - Invest - Exit' has
consistently delivered high returns for shareholders and the current portfolio
contains some high value assets which are supported by further investment in
the medical and industrial imaging space.
The company aims to exit at least one mature business next year which will
provide material uplift to the cash balance if successful. Cash has been
deployed into increasing equity share of the medical businesses Adaptix and
Magnetica, the latter of which hopes to have Food and Drug Administration
("FDA") approval in calendar 2023. We anticipate a spin out for the Adaptix
business onto Alternative Investment Market or National Association of
Securities Dealers Automated Quotations should market conditions improve. The
balance sheet remains well capitalized with circa £18.2 million of net cash
excluding International Financial Reporting Standard ("IFRS") 16 leases.
Centaur Media Plc
Centaur Media is an international provider of business information, training,
and specialist consultancy across its Xeim and The Lawyer business units. The
company is actively engaged in the marketing and legal sectors, offering a
wide range of products that add value to their customer base.
Over the last few years Centaur has refocused its business from seven sectors
to just two in 2021. The shift from print to digital is largely complete, with
just 2% of company revenue remaining in the print business. This has led to
improved subscriptions and increased profitability, with a 23% EBITDA margin
targeted by 2023. The company continues to generate cash and strengthen its
balance sheet.
EKF Diagnostics Holdings Plc
EKF Diagnostics is a global integrated market leader in the medical
diagnostics business, offering a large range of hemoglobin and hematocrit
point of care tests. The business also has a clinical laboratory division
where its liquid reagents can be used widely in analyzers found in hospital
laboratories.
The company had a strong performance during the year, with sales growing to
£83 million from £65 million and Adjusted EBITDA of £26.5 million. Sales
will normalize in 2022 as the uplift from pandemic related sales declines
materially. The core business continues to perform well, with £16 million of
EBITDA anticipated in 2022 as global healthcare systems come back online. The
company has deployed capital with the acquisition of ADL Health, a United
States ("US") Clinical Laboratory Improvement Amendments certified laboratory
as well as a new strategic partnership with Yourgene Plc to broaden the
product offering. The business is well capitalized and has net liquidity of
circa £17 million.
Circassia Group Plc
Circassia is a commercial-stage specialty pharmaceutical company focused on
respiratory diseases. Its gold standard core NIOX product provides a
diagnostic Fractional Exhaled Nitric-Oxide test in asthma to international
markets.
The company's management team continued to deliver on the stated strategy of
taking cost out of the business while driving sales through its international
distributor-led model. The company is now profitable for the first time and
expects to generate at least £4.1 million of EBITDA in 2022, a remarkable
achievement given the group had lost £25 million of EBITDA as recently as
2019. The balance sheet is robust with circa £13.5 million net cash and
management have expressed confidence in Circassia's ability to outperform
market expectations.
Hargreaves Services Plc
Hargreaves Services aims to deliver returns in two key asset classes:
industrials and property. The business has evolved from a traditional model of
industrial services and logistics to incorporate renewable energy, civil
engineering, land restoration and remediation. The company has developed a
pipeline of opportunities with a land bank of 18,000 acres across the UK,
which will have a mixed-use purpose of residential, commercial property and
industrial use.
The company has had a remarkable year in 2022, with seven profit upgrades over
the course of twelve months leading to substantial share price improvement in
a difficult market. The vast proportion of these upgrades were derived from
its HRMS business, a joint venture selling and trading raw materials in
Germany. The prices of pig iron and zinc have increased further against the
backdrop of the Russia-Ukraine conflict, but management remain extremely
cautious in profit estimates going forward given the opaque nature of
commodities pricing.
The management team recently presented the renewable opportunity at its
capital markets day and highlighted assets not yet accommodated for in a
sum-of parts valuation. The Hatfield site has an opportunity to partner with
an energy provider in developing a windfarm, battery storage and hydrogen
site. It is too early to tell whether this will be successful (if there is
enough wind for example) but it is encouraging to see the company exploring
opportunities in lucrative areas.
Curtis Banks Group Plc
Curtis Banks Group is engaged in the provision of pension administration
services, primarily for self-invested personal pension schemes ("SIPPs"). It
is one of the largest providers in the UK with circa £37.4 billion of assets
under management.
The company faced Covid-19 related headwinds to core businesses during the
year but should benefit from rising interest rates. The increased income
should largely become evident in 2023 and the company will continue to manage
its cost base against rising inflation. Recent deal activity in this sector
suggests the attractive nature of SIPP related businesses and Curtis Banks
offers an intriguing asset to an overseas buyer looking to gain share in the
UK.
Redcentric Plc
The company is a leading UK Information Technology ("IT") managed services
business that provides IT and cloud services to meet its customer and client's
needs. The group benefits from an established reputation as an end-to-end
managed service provider delivering innovative technology to improve business
productivity and efficiency.
Redcentric has resumed trading near historical pre-Covid-19 levels and large
projects are gradually coming online with orders significantly improved. The
company has faced certain difficulties with component shortages derived from
global supply chain issues and higher electricity costs, but strong cost
management allowed the business to deliver £24 million of EBITDA in line with
management expectations. The company deployed £9.5 million of cash acquiring
MSP Piksel Industry Solutions, a provider of IT modernization and digital
transformation services, in line with its growth through acquisition strategy.
The board reversed its decision to sell the company and decided to scale up
the business via acquisition of asset light businesses.
Sureserve Group Plc
Sureserve Group provides Compliance and Energy services to customers in the
outsourced public and regulated services sectors in the UK. It is the market
leader in social housing gas compliance and its markets are driven by
government policy.
The company appointed a new Chief Executive Officer who has planned two asset
disposals and acquired one business, with future M&A ambitions firmly
stated. The order book has grown to £512 million from £341 million which
covers 96% of anticipated 2022 sales. Cost increases have been largely
mitigated by management actions to pass through price increases to customers
in 2023. The group is targeting asset light companies that enhance both
earnings and services and has plenty of dry powder with circa £11.8 million
of net cash.
Renalytix AI Plc
Renalytix AI was spun out of EKF Diagnostics in 2018. The company manufactures
artificial intelligence-enabled diagnostics for kidney disease, serving
patients on a global scale. The company recently raised $26.8 million in gross
equity and a convertible bond issue to shore up the balance sheet and drive
commercialization as FDA approval and Medicaid/care coverage continue to take
time. It is important to note that no negative information has been returned,
but the approval pipeline remains clogged in the wake of the global pandemic.
Insurance coverage continued to expand, with 22 private insurance coverage
contracts and 31 state Medicaid programs. The company secured major contracts
with the Veterans Health Administration (0.5 - 1 million patients) and Atrium
Health (7 million patients), underpinning the value placed KidneyIntelX by the
healthcare community. Cash and deposits stand at around $40 million, providing
scope for additional product marketing and commercial rollout.
Tribal Group Plc
Tribal Group is a provider of technology products and services to the
education, learning and training markets in the UK and overseas. It is active
in administrative functions in three fields: student management services,
professional services and analytics, and quality assurance.
Trading in the group has recovered as Covid-19 gradually enters the rear-view
mirror in global economies. The Cloud and Edge businesses were particularly
strong and overall group annual recurring revenue grew to £50.3 million.
Generated cash flow from operations stood at £15.5 million which has provided
the company with ample liquidity to develop better infrastructure to support
organic growth.
INVESTMENT SCHEDULE
as at 31 March 2022
Holding Fair Value Proportion of Net Assets
Units
LISTED INVESTMENTS £ %
Great Britain - Equities (88.13%, 2021: 88.37%)
4Global Plc 549,450 450,549 0.21
Assetco Plc 300,000 3,960,000 1.80
Avingtrans Plc 4,000,000 18,600,000 8.48
Benchmark Holdings Plc 9,000,000 4,392,000 2.00
Bigblu Broadband Plc 6,500,000 4,680,000 2.13
Carrs Group Plc 1,100,000 1,650,000 0.75
Catalyst Media Group Plc 3,125,000 1,781,250 0.81
Centaur Media Plc 35,000,000 16,100,000 7.34
Circassia Group Plc 40,000,000 14,400,000 6.56
Curtis Banks Group Plc 4,225,000 10,985,000 5.01
Eckoh Plc 6,000,000 2,220,000 1.01
EKF Diagnostics Holdings Plc 35,362,500 15,276,600 6.96
Esken Ltd 15,000,000 1,644,000 0.76
Facilities by ADF Plc 1,000,000 680,000 0.31
Flowtech Fluidpower Plc 1,500,000 2,002,500 0.91
Fulcrum Utility Services Plc 14,250,000 1,068,750 0.49
Hargreaves Services Plc 2,450,000 13,818,000 6.30
Induction Healthcare Group Plc 4,500,000 1,710,000 0.78
Kitwave Group Plc 4,000,000 5,760,000 2.63
Maintel Holdings Plc 1,100,000 3,520,000 1.60
Mj Gleeson Plc 1,000,000 5,860,000 2.67
Nahl Group Plc 9,000,000 3,870,000 1.76
Northbridge Industrial Services Plc 2,903,500 4,790,775 2.18
Onthemarket Plc 1,359,263 1,223,337 0.56
Pendragon Plc 6,000,000 1,686,000 0.77
Redcentric Plc 9,500,000 10,687,500 4.87
Renalytix AI Plc 2,767,206 7,471,456 3.41
Shearwater Group Plc 250,000 255,000 0.12
Silence Therapeutics Plc 189,841 2,739,475 1.25
Silver Bullet Data Services Plc 267,000 467,250 0.21
Sourcebio International Plc 2,500,000 2,750,000 1.25
Sureserve Group Plc 10,000,000 8,100,000 3.69
The Fulham Shore Plc 5,000,000 750,000 0.34
Tissue Regenix Group Plc 750,000,000 3,300,000 1.50
Totally Plc 5,115,000 1,841,400 0.84
Trellus Health Plc 5,000,000 950,000 0.43
Tribal Group Plc 8,250,000 7,012,500 3.20
Verici Dx Plc 6,214,286 1,988,571 0.91
Wandisco Plc 1,000,000 2,930,000 1.33
193,371,913 88.13
Spain - Equities (1.30%, 2021: 3.13%)
GYG Plc 9,500,000 2,850,000 1.30
2,850,000 1.30
Bermuda Islands - Equities (1.29%, 2021: 1.48%)
Randall + Quilter Investment Holdings Ltd 2,000,000 2,820,000 1.29
2,820,000 1.29
USA - Equities (0.23%, 2021: 0.35%)
Spectra Systems Corp 350,000 511,000 0.23
511,000 0.23
Total listed investments 199,552,913 90.95
UNLISTED INVESTMENTS
Great Britain - Equities (2.89%, 2021: 1.47%)
Antler Holdco Limited 5,853 4,038,570 1.84
IPT Group Limited 112,498 - -
Moxico Resources Plc 4,000,000 2,000,000 0.91
Prefcap Ltd 305,210 - -
Sinav Limited 437,033 165,962 0.08
Studio Retail Group Plc 250,000 - -
Tradewise Group of Companies Limited 1,094,528 - -
Urban Exposure Plc 2,700,000 135,000 0.06
6,339,532 2.89
Great Britain - Limited Partnership Interest (0.00%, 2021: 0.36%)
BDB1 LLP (Rileys/Indicant) 1,258 - -
- -
USA - Equities (0.41%, 2021: 0.27%)
Jaguar Holdings Limited 665,761 910,154 0.41
910,154 0.41
USA - Debt (0.66%, 2021: 0.60%)
Jaguar Holdings Limited 665,761 1,441,076 0.66
1,441,076 0.66
British Virgin Islands - Equities (0.29%, 2021: 1.35%)
Minds + Machines Group Limited 6,442,008 644,201 0.29
644,201 0.29
Total unlisted investments 9,334,963 4.25
Total investments 208,887,876 95.21
Cash 10,624,762 4.84
Net current liabilities (103,616) (0.05)
Total net assets 219,409,022 100.00
Refer to note 15 for further information on Segment Information.
Principal Activities and Business Review
The principal activity of the Company is to carry out business as an
investment Company. The Directors do not envisage any changes in this activity
for the foreseeable future.
Structure
The Company is a Guernsey Authorised Closed-Ended Collective Investment Scheme
pursuant to the Protection of Investors (Bailiwick of Guernsey) Law 2020, as
amended, and the Authorised Closed Ended Investment Scheme Rules 2021 issued
by the Guernsey Financial Services Commission ("GFSC"). It was incorporated
and registered with limited liability in Guernsey on 2 December 1994, with
registration number 28917. The Company has a premium listing on the Main
Market of the London Stock Exchange.
Purpose
The purpose of the Company is to generate above-market returns, as measured
against the appropriate index, over the medium and long term through
investment in small and medium size companies.
Investment Policy
The Company principally invests in small and mid-size quoted and unquoted
companies in the UK and US. The Investment Manager targets companies that have
fundamentally strong business models but where there may be specific factors
which are constraining the maximisation or realisation of shareholder value,
which may be realised through the pursuit of an activist shareholder agenda by
the Investment Manager. Dividend income is a secondary consideration when
making investment decisions.
Achieving the Investment Policy
The investment approach of the Investment Manager is characterised by a
rigorous focus on research and financial analysis of potential investee
companies so that a thorough understanding of their business models is gained
prior to investment. Comprehensive due diligence, including one or more
meetings with management, as well as site visits, are standard procedures
before shares are acquired.
Typically the portfolio will comprise of 40 to 60 holdings (but without
restricting the Company from holding a more or less concentrated portfolio in
the future).
The Company may invest in derivatives, financial instruments, money market
instruments and currencies solely for the purpose of efficient portfolio
management (i.e. solely for the purpose of reducing, transferring or
eliminating investment risk in the Company's investments, including any
technique or instrument used to provide protection against exchange and credit
risks).
The Investment Manager expects that the Company's assets will normally be
fully invested. During periods in which changes in economic conditions or
other factors so warrant, the Company may reduce its exposure to securities
and increase its position in cash and money market instruments.
A detailed description of the key risk controls employed by the Investment
Manager is disclosed in note 16 of the financial statements. An analysis of
the Company's portfolio is disclosed on above including a description of the
ten largest equity investments. At the year end, the Company's portfolio
consisted of 54 holdings (2021: 58 holdings). The top 10 holdings represented
55.81% (2021: 61.33%) of total net assets.
The Board is responsible for determining the gearing strategy for the Company.
Gearing is used selectively to leverage the Company's portfolio in order to
enhance returns where, and to the extent this is considered appropriate, to do
so. Borrowings are short term and particular care is taken to ensure that any
bank covenants permit maximum flexibility of the investment policy. The
Company does not currently have any borrowings.
The Company may only make material changes to its investment policy with the
approval of shareholders (in the form of an ordinary resolution).
Investment Restrictions
The Company has adopted the following policies:
(a) it will not invest in securities carrying unlimited liability;
(b) short selling for the purpose of efficient portfolio management
will be permitted provided that the aggregate value of the securities subject
to a contract for sale that has not been settled and which are not owned by
the Company shall not exceed 20 percent of the NAV. In addition, the Company
may engage in uncollateralised stock lending on normal commercial terms with
counterparties whose ordinary business includes uncollateralised stock lending
provided that the aggregate exposure of the Company to any single counterparty
shall not exceed 20 percent of the NAV;
(c) it will not take legal or management control of investments in its
portfolio;
(d) it will not buy or sell commodities or commodity contracts or real
estate or interests in real estate although it may purchase and sell
securities which are secured by real estate or commodities and securities of
companies which invest in or deal in real estate commodities;
(e) it will not invest or lend more than 20 percent of its assets in
securities of any one Company or single issuer;
(f) it will not invest more than 35 percent of its assets in
securities not listed or quoted on any recognised stock exchange;
(g) it will not invest in any Company where the investment would
result in the Company holding more than 10 percent of the issued share capital
of that Company or any class of that share capital, unless that Company
constitutes a trading Company (for the purposes of the relevant UK
legislation) in which case the Company may not make any investment that would
result in it holding 50 percent or more of the issued share capital of that
Company or of any class of that share capital;
(h) it will not invest more than 5 percent of its assets in units of
unit trusts or shares or other forms of participation in managed open-ended
investment vehicles;
(i) the Company may use options, foreign exchange transactions on
the forward market, futures and contracts for differences for the purpose of
efficient portfolio management provided that:
(1) in the case of options, this is done on a covered basis;
(2) in the case of futures and forward foreign exchange transactions,
the face value of all such contracts does not exceed 100 percent of the NAV of
the Company; or
(3) in the case of contracts for difference (including stock index
future or options) the face value of all such contracts does not exceed 100
percent of NAV of the Company.
None of these restrictions, however, require the
realisation of any assets of the Company where any restriction is breached as
a result of an event outside the control of the Investment Manager which
occurs after the investment is made, but no further relevant assets may be
acquired by the Company until the relevant restriction can again be complied
with. In the event of any breach of these investment restrictions, the Board
will as soon as practicable make an announcement on a Regulatory Information
Service and subsequently write to shareholders if appropriate; and
(j) the Company will ensure gearing does not exceed 20% of net
assets.
Principal and Emerging Risks and Uncertainties
The Directors confirm that they have carried out a robust assessment of the
principal and emerging risks facing the Company, including those that would
threaten its business model, future performance, solvency, or liquidity.
The Board is responsible for the Company's system of internal controls and for
reviewing its effectiveness. The Board also monitors the investment limits and
restrictions set out in the Company's investment objective and policy.
The principal and emerging risks that have been identified and the steps taken
by the Board to mitigate these are as follows:
Principal risk Mitigating factor
Investment activity and performance
An inappropriate investment strategy may result in under performance against The Investment Manager operates in accordance with the investment limits and
the Company's objectives. The Board manages these risks by ensuring a restrictions policy determined by the Board. The Directors review the limits
diversification of investments. and restrictions on a regular basis and BNP Paribas Securities Services
S.C.A., Guernsey Branch (the "Administrator") monitors adherence to the limits
and restrictions every month and notifies the Board of any breach. The
Investment Manager provides the Board with management information including
performance data and reports, and the Stockbroker provides shareholder
analysis. The Directors monitor the implementation and results of the
investment process with the Investment Manager at each Board meeting and
monitor risk factors in respect of the portfolio. Investment strategy is
reviewed regularly.
Level of discount or premium
A discount or premium to NAV can occur for a variety of reasons, including While the Directors may seek to mitigate any discount to NAV per Share through
market conditions or to the extent investors undervalue the management share buybacks, there can be no guarantee that they will do so and the
activities of the Investment Manager or discount their valuation methodology Directors accept no responsibility for any failure of any such strategy to
and judgement. effect a reduction in any discount or premium.
Market price risk
The fair value or future cash flows of a financial instrument held by the The Directors review and agree policies for managing these risks. The policies
Company may fluctuate because of changes in market prices. This market risk have remained substantially unchanged during the year under review. The
comprises currency risk, interest rate risk and other price risk. Investment Manager assesses the exposure to market risk when making each
investment decision and monitors the overall level of market price risk on the
investment portfolio on an ongoing basis.
Emerging risk Mitigating factor
Unusual Business Risks
The Covid-19 pandemic has caused unprecedented disruption to the UK and world The speed with which effective SARS-Cov-2 vaccines
economy. Persistent and rising inflationary pressures, supply chain
disruption, rising rates and bond yields have emerged and their impact is have been developed and rolled out has been nothing short of impressive. World
being exasperated by the Russia-Ukraine conflict. economies have continued to open up, though slower than we would have hoped
due to the ability of the virus to mutate into strains that can evade the
immune system. Nonetheless, the world economy is adapting to the persistent
presence of the virus and is being helped by the effectiveness of vaccines to
limit cases of serious illness and death.
Fiscal and monetary policy initiatives taken by governments and central
bankers worldwide to combat the economic impact of the pandemic were
supporting to economic activity and stock markets. However, persistent supply
chain disruptions and pent up demand have resulted in greater inflationary
pressures than originally envisaged as economies opened up.
This situation was made substantially worse by the Russian invasion of Ukraine
and the expulsion of Russia, a major energy and commodity producer, from the
world economic order.
The result has been high inflationary pressures that central bankers are
beginning to combat by raising interest rates. This has had a negative effect
of stock markets.
The Directors take comfort in the fact that the Company's long held strategy
of having no, or minor, borrowings and its no-dividend policy will help it
withstand short term cash-flow pressures and not require it to sell any
material part of its investments under these uncertain conditions. Moreover,
as stated in the Investment Adviser's Report, the Company's cautious
investment approach, targeting healthy and growing businesses with solid
financial credentials and cash flows, combined with the close relationship
with management teams should minimize the impact of adverse market conditions.
It is hoped that this could even provide fruitful opportunities to buy
additional shares at significant discounts to fair value in the future.
Details of how the Board monitors the services provided by the Investment
Manager and the Administrator, and the key elements designed to provide
effective internal control are explained further in the internal controls
section of the Corporate Governance Statement, which is set out below.
Management, Administration and Custody Arrangements
Harwood Capital Management (Gibraltar) Limited (the " Investment Manager" and
the "Investment Adviser") is an authorised manager by the Gibraltar Financial
Services Commission as a small scheme manager to manage Alternative Investment
Funds under the Alternative Investment Managers Regulations 2013.
Refer to note 4 for further details on the remuneration of the Investment
Manager and the Investment Adviser.
Administration, Custodian and Company Secretarial Services are provided to the
Company by BNP Paribas Securities Services S.C.A., Guernsey Branch. Registrar
services are provided by Link Market Services (Guernsey) Limited.
Related Parties
The Investment Adviser, Investment Manager and Directors are considered
related parties. Please refer to note 18 of the financial statements for
further detail.
Financial Review
At 31 March 2022, the net assets of the Company were £219,409,022 (2021:
£230,311,323). The NAV per Ordinary Share was £15.67 (2021: £16.42).
Details on the NAV and basic and diluted loss/earnings per Ordinary Share are
under note 14 of the financial statements.
Dividend Policy
To the extent that any dividends are paid, they will be paid in accordance
with any applicable laws and regulations of the UK Listing Rules and the
requirements of the Companies (Guernsey) Law, 2008 (as amended). The Directors
do not propose payment of a dividend for the year ended 31 March 2022 (2021:
Nil).
Performance Measurement and Key Performance Indicators
In order to measure the success of the Company in meeting its objectives and
to evaluate the performance of the Investment Manager, the Directors take into
account the following performance indicators:
· Returns and NAV - The Board reviews at each meeting the performance
of the portfolio as well as the NAV and share price of the Company.
For and on behalf of the Board
Nigel Cayzer
Chairman
7 July 2022
DIRECTORS' REPORT
The Directors present their report and the financial statements of the Company
for the year ended 31 March 2022.
Share Capital
The Company's issued share capital as at 31 March 2022 consisted of 14,000,000
(2021: 14,025,000) Ordinary Shares of 50p nominal value each. All shares hold
equal rights with no restrictions and no shares carry special rights with
regard to the control of the Company.
During the year ended 31 March 2022 and up to the date of approval of these
financial statements the Company has not issued any additional Ordinary
Shares.
Buybacks
At the Annual General Meeting ("AGM") of the Company held in August 2021, the
Directors were granted the general authority to purchase in the market up to
10% of the Ordinary Shares of each class in issue (as at 27 August 2021). This
authority will expire at the forthcoming AGM. The Directors intend to seek
annual renewal of this authority from the shareholders.
Pursuant to this authority, and subject to the Companies (Guernsey) Law, 2008
and the discretion of the Directors, the Company may purchase Ordinary Shares
of a particular class in the market on an ongoing basis with a view to
addressing any imbalance between the supply of and demand for Ordinary Shares
of such class, thereby increasing the NAV per Ordinary Share of that class and
assisting in controlling the discount to NAV per Ordinary Share of that class
in relation to the price at which the Ordinary Shares of such class may be
trading.
During the year ended 31 March 2022, 25,000 shares (2021: 167,125) were
repurchased as follows:
Date of purchase Number of Shares purchased Price per share
22 October 2021 3,250 £ 16.38
25 October 2021 21,750 £ 16.50
Total 25,000
Refer to notes 11 and 12 for more information.
Notifications of Shareholdings
As at 31 March 2022, the Company had been notified, in accordance with Chapter
5 of the Disclosure Guidance and Transparency Rules (which covers the
acquisition and disposal of major shareholdings and voting rights), of the
following shareholders that had an interest of greater than 5% in the
Company's issued share capital.
Number of Shares Percentage of total voting rights (%)
Harwood Capital LLP (1) 7,372,500 52.57%
Harbor Advisors 1,038,738 7.40%
Between 1 April 2022 and approval date of the financial statements, no
additional notifications were received.
(1) Harwood Capital LLP as investment manager of North Atlantic Smaller
Companies Investment Trust plc ("NASCIT") made the notification of
shareholding. However the 7,372,500 shares are held by NASCIT.
Life of the Company
The Company does not have a fixed life. However, under Article 51 of the
Articles of Incorporation, the Directors shall give due notice of and propose
or cause to be proposed a special resolution that the Company be wound up at
the AGM of the Company every two years from 2011 onwards. Notices were tabled
at the 2011, 2013, 2015, 2017, 2019 and 2021 AGMs, and in each case were not
carried. This was in line with the Board's recommendation to shareholders to
vote against these resolutions. The next notice will be given in the 2023 AGM
documents, where the Board expect to recommend that shareholders vote against
this resolution.
Going Concern
The Directors have considered the Company's investment objective and risk
management policy, its assets and the expected income and return from its
investments while factoring in the current economic conditions caused by the
outbreak of Covid-19, the Russian invasion of Ukraine, inflation, rising rates
and supply chain disruptions. The Directors are of the opinion that the
Company is able to meet its liabilities and ongoing expenses as they fall due
and they have a reasonable expectation that the Company has adequate resources
to continue in operational existence for the foreseeable future. The Directors
have a reasonable expectation that the special resolution outlined in Article
51 of the Articles of Incorporation and under "Life of the Company" will not
be passed at the AGM later in 2023. Accordingly, these financial statements
have been prepared on a going concern basis and the Directors believe it is
appropriate to continue to adopt this basis for a period of at least 12 months
from the date of approval of these financial statements.
Viability Statement
At least once a year the Directors are required to carry out a robust
assessment of the principal and emerging risks and make a statement which
explains how they have assessed the prospects of the Company, over what period
they have done so and why they consider that period to be appropriate, taking
into account the Company's current position and principal and emerging risks.
The principal and emerging risks faced by the Company are described above.
The prospects of the Company are driven by its investment strategy, objectives
and policy as summarised on above and also by the conditions in the markets in
which the Company invests and the financial market in general.
In assessing the prospects of the Company, the Directors have, in addition to
taking into account the principal and emerging risks facing the Company, taken
into account the Company's current position, which has included a process
encompassing an examination of:
(i) the Investment Manager's view of the market conditions,
including the potential impact of Covid-19, the conflict in Ukraine and
investment opportunities in the market to which the Company is exposed, taking
into consideration the financial markets generally;
(ii) the liquidity and prospects of the underlying positions of the
Company;
(iii) the extent to which the Company directly or indirectly uses
gearing; and
(iv) the liquidity of the companies in which the Company invests.
Based on the results of their assessment process, the Directors have concluded
that a period of three years from the Statement of Financial Position date is
an appropriate period over which to assess the prospects of the
Company. Three years is deemed an appropriate time period given the expected
holding period needed to realize the Company's investment thesis from
individual investments, the general economic outlook, and the time needed for
realization of contingencies or claims. Consideration was also given to the
absence of bank borrowings as well as the Company being a closed-ended
investment Company. Based on this, combined with the level of cash held and
listed investment holdings, the Directors have a reasonable expectation that
the Company will be able to continue in operation and meet its liabilities as
they fall due within this period of assessment. This three year time period
assumes that the special resolution outlined in Article 51 of the Articles of
Incorporation, and under "Life of the Company" is not passed at the AGM later
in 2023.
Section 172(1) Statement
Although the Company is domiciled in Guernsey, the Board adheres to the UK
Corporate Governance Code and acknowledges its duty to comply with section
172(1) of the UK Companies Act 2006 to act in a way that promotes the success
of the Company for the benefit of its members as a whole, particularly having
regard to the shareholders, the service providers and the wider community and
environment, as detailed below:
Who Why we engage How we engage Outcome
Shareholders Shareholders provide the necessary capital for the Company to pursue its The Company engages with Shareholders by: Shareholders receive relevant information allowing them to make informed
purpose and strategy.
decisions about their investments.
· Publishing monthly NAV RNS announcements
· Publishing the Half Yearly Report and Annual Report
· Through interaction at the AGM
Service providers As an investment Company with no employees, the Company is reliant on its The Board receives formal reports from its key service providers (the The Board receives appropriate and timely advice and guidance. The Board's
service providers to conduct its business. Investment Manager, Administrator, Broker and Registrar) at its quarterly engagement with its service providers enables it to help facilitate the
Board meetings. There is frequent informal interaction with the Investment effective running of the Company.
Manager outside of Board meetings.
The wider community and environment The Company recognises the benefits to the greater good that will come from In making investment decisions, the Company, through its Investment Adviser, With every successful investment comes profit to the shareholders, greater
all companies being good social citizens. identifies small and medium sized business enterprises that have the potential employment for the community at large, and growth in the innovative small and
to grow their business but lack the necessary funding or management expertise. medium business sector of the economy. Such innovations have included advanced
and new products in the key healthcare and medical equipment industries.
Reappointment of Auditor
RSM CI (Audit) Limited has expressed its willingness to continue in office as
auditor and a resolution to re-appoint it will be proposed at the Company's
forthcoming AGM.
Disclosure of Information to Auditors
The Directors who were members of the Board at the time of approving this
Report are listed on below. Each of those Directors confirms that:
· to the best of his knowledge and belief, there is no information
relevant to the preparation of their report of which RSM CI (Audit) Limited
(the "Auditor") is unaware; and
· he has taken all steps a Director might reasonably be expected to have
taken to be aware of relevant audit information and to establish that the
Company's Auditor is aware of that information.
Dividend
The directors do not recommend the payment of a dividend for the year (2021:
£nil)
Financial Instruments
The financial instruments employed by the Company primarily comprise equity
and loan stock investments, although it does hold cash and liquid instruments.
Further details of the Company's risk management objectives and policies
relating to the use of financial instruments can be found in note 16 of the
financial statements.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from its operations for
the year to 31 March 2022 (2021: none), nor does it have responsibility for
any other emissions producing sources.
For and on behalf of the Board
Nigel Cayzer
Chairman
7 July 2022
CORPORATE GOVERNANCE REPORT
Applicable Corporate Governance Codes
The Board has considered how the principles and provisions of The UK Corporate
Governance Code 2018 ("the Code") has been applied by the Company and has
reported against this Code (and the associated FRC Guidance on Audit
Committees). A copy of the Code can be found at www.frc.org.uk.
The GFSC has stated in the "Finance Sector Code of Corporate Governance"
("GFSC Code") that companies which report against the UK Corporate Governance
Code are deemed to meet the GFSC Code, and need take no further action.
Corporate Governance Statement
The Company has complied with the recommendations of the Code, except as set
out below and elsewhere in the Corporate Governance Report.
The Chairman should not remain in post beyond nine years from the date of
their first appointment to the Board.
The Chairman of the Board has been the Chairman continuously since the Company
was founded 27 years ago. The shareholders have given the Chairman their
approval for his re-election at every Annual General Meeting held since the
Company's formation and always with a high percentage of the shareholders
voting in favour of his re-election. Furthermore, the Directors have very high
regard for the Chairman's integrity, professionalism, and business expertise.
These considerations, combined with the excellent performance of the Company
over the past 27 years, are key in the overwhelming support the Chairman has
from shareholders and Directors to continue in his role.
Remuneration Committee
The Board has not deemed it necessary to appoint a Remuneration Committee as,
being comprised of a majority of independent Directors; the whole Board
considers these matters on an ongoing basis.
Executive Directors' remuneration
As the Board has no executive Directors, it is not required to comply with the
principles of the Code in respect of executive Directors' remuneration.
Directors' fees are detailed in the Directors' Remuneration Report below.
Internal audit function
As the Company delegates to third parties its day-to-day operations and has no
employees, the Board has determined that there is no requirement for an
internal audit function. The Directors consider the ability to place reliance
on third party service providers and reports therefrom and review annually
whether a function equivalent to an internal audit is needed and will continue
to monitor its systems of internal controls in order to provide assurance that
they operate as intended.
The Company complies with the corporate governance statement requirements
pursuant to the FCA's Disclosure Guidance and Transparency Rules by virtue of
the information included in the Corporate Governance section of the Annual
Report together with information contained in the Strategic Report and the
Directors' Report.
As the Company does not have any employees, the Board or Audit Committee have
not established arrangements by which staff of the Company may, in confidence,
raise concerns about possible improprieties in matters of financial reporting
or other matters.
Directors
Nigel Cayzer (Chairman)
British
Nigel Cayzer is Chairman of Aberdeen Asian Smaller Companies Investment Trust
PLC. He is also a Director of a number of private companies. He has been
Chairman or a Director of a number of Investment Companies and was Chairman of
Maggie's, a leading cancer charity, from 2005 until 2014.
Sidney Cabessa
French
Sidney Cabessa is also a Director of Club-Sagem and Mercator/Nature et
découvertes. He was Chairman of CIC Finance, an Investment Fund and a
subsidiary of French banking group, CIC - Credit Mutuel and was previously a
Director of other investment companies. He has previously been Senior Adviser
with Rothschild and Co (2012 to 2017); and is now Senior Adviser at Essling
Capital. He is also a Director of Harwood Capital Management Limited.
Walid Chatila
Canadian
Walid Chatila is a retired Certified Public Accountant (Texas 1984) and a
Certified Professional Accountant (Ontario 1991). His career includes
international audit and special assignment experience mostly in financial
services in the Middle East and North America from 1983 to 1993. A resident of
Abu Dhabi, United Arab Emirates, since 1993, he was the Finance Director of
Emirates Holdings from 1994 to 2006, and between 2006 and 2011, he assumed the
role of General Manager of Al Nowais Investment LLC. He was also the General
Manager of Arab Development Establishment until June 2017.
Rupert Evans
British
Rupert Evans is a Guernsey Advocate and was a partner in the firm of Ozannes
between 1982 and 2003, since then he has been a consultant to Ozannes (now
Mourant Ozannes). He is a non-executive Director of a number of other
investment companies some of which are quoted on recognised stock exchanges.
He is a Guernsey resident.
Christopher Mills
British
Christopher Mills is a Partner and the Chief Executive Officer of Harwood
Capital LLP. He is also Chief Investment Officer of North Atlantic Smaller
Companies Investment Trust plc ("NASCIT"). NASCIT is the winner of numerous
Micropal and S&P Investment Trust awards. In addition, he is a
non-executive Director of numerous UK companies which are either currently, or
have in the past five years been, publicly quoted.
John Grace
New Zealander
John Grace is actively involved in the management of several global businesses
including asset management, financial services, and real estate. He is a
Director and Founder of Sterling Grace International Ltd. Sterling Grace and
its affiliates manage investments for high net-worth investors, institutions
and investment partnerships. The Company is active in global money management,
financial services, private equity and real estate investments. He is also
Chairman of Trustees Executors Holdings Ltd, owner of the premier and oldest
New Zealand trust Company established in 1882. It is the market leader in the
corporate trust business. Its clients include government divisions,
corporations and banks. The Company is active in wholesale financial services
including trust accounting, securities custody and mutual fund registry. It is
also actively engaged in the personal trust business. He graduated from
Georgetown University. He has served as a Director of numerous public
companies and charities. He currently supports genetic research and education
initiatives in science at the University of Lausanne, EPFL École
polytechnique fédérale de Lausanne and CERN, the European Organization for
Nuclear Research.
John Radziwill
British
John Radziwill is currently a Director of StoneX Group Inc. (known as INTL
FCStone Inc. up to 5 July 2021), Goldcrown Group Limited, Fourth Street
Capital Ltd, Fifth Street Capital Ltd and Netsurion Ltd. In the past ten
years, he also served as a Director of Acquisitor Plc and Acquisitor Holdings
(Bermuda) Ltd, Air Express International Corp., Radix Ventures Inc, Baltimore
Capital Plc, Lionheart Group Inc, USA Micro Cap Value Co Ltd and Radix
Organisation Inc. Mr Radziwill is a member of the Bar of England and Wales.
Our Governance Framework
Chairman
Nigel Cayzer
Responsibilities:
The leadership, operation and governance of the Board, ensuring effectiveness,
and setting the agenda for the Board.
The Board Members of Oryx International Growth Fund Limited:
Nigel Cayzer (Chairman), Sidney Cabessa, Walid Chatila, Rupert Evans, John
Grace, Christopher Mills and John Radziwill.
The Board members, except for Christopher Mills who is a Partner of the
Investment Manager and Sidney Cabessa who is a Director of Harwood Capital
Management Limited, are all independent Directors.
Additionally, the Board members are all non-executive Directors.
Responsibilities:
Overall conduct of the Company's business and setting the Company's strategy.
More details below.
Nomination Committee Audit Committee
Members: Members:
Nigel Cayzer (Chairman) Walid Chatila (Chairman)
Sidney Cabessa Rupert Evans
Walid Chatila John Radziwill
Rupert Evans
John Grace
John Radziwill
Responsibilities: Responsibilities:
To ensure the Board comprises individuals with the necessary skills, knowledge The provision of effective governance over the appropriateness of the
and experience to ensure that the Board is effective in discharging its Company's financial reporting including the adequacy of related disclosures,
responsibilities and oversight of all matters relating to corporate the performance of the external auditors, and the management of the Company's
governance. systems of internal financial and operating controls and business risks.
More details below.
More details below.
Board Independence and Composition
The Board
The Board is comprised of five independent non-executive Directors including
the Chairman Nigel Cayzer and two non-independent non-executive Directors,
Christopher Mills who is an employee of the Investment Manager and Sidney
Cabessa who is a Director of Harwood Capital Management Limited. The
biographical details of the Directors holding office at the date of this
report are listed above, and demonstrate a breadth of investment, accounting
and professional experience. The Board does not consider it necessary to
appoint a Senior Independent Director, as it is considered that all the
Directors have different qualities and areas of expertise on which they may
lead where issues arise and to whom concerns can be conveyed. The performance
of the Company is considered in detail at each Board meeting. An evaluation of
Directors' performance, their independence and the work of the Board as a
whole and its committees is reviewed annually by the Nomination Committee. The
Directors also review the Chairman's performance, without the Chairman
present. The Board considers that independence is not compromised by the
length of tenure and that it has the appropriate balance of skills,
experience, ages and length of service in the circumstances. The majority of
the Board is considered to be independent.
The Investment Manager takes decisions as to the purchase and sale of
individual investments. The Directors have access to the advice and services
of the Company Secretary through its appointed representatives who are
responsible to the Board for ensuring that Board procedures are followed and
that applicable rules and regulations are complied with. Directors are able to
have access to independent professional advice at the Company's expense if
they judge it necessary to discharge their responsibilities as Directors. To
enable the Board to function effectively and allow Directors to discharge
their responsibilities, full and timely access is given to all relevant
information.
The Company Secretary, BNP Paribas Securities Services S.C.A., Guernsey Branch
through its representative, acts as Secretary to the Board and Committees and
in doing so it:
· assists the Chairman in ensuring that all Directors have full and
timely access to all relevant documentation;
· organises induction of new Directors; and
· is responsible for ensuring that the correct Board procedures are
followed and advises the Board on corporate governance matters.
The Culture and Values of the Board
The Board is comprised of seven male Directors from four different
nationalities and with diverse backgrounds and skill sets in key areas
including investment, business management, accountancy, finance and law. The
culture of the Board is to discuss all matters in an open and professional
manner. All members of the Board have proven competence and a history of
success in their business ventures and careers. All are well regarded in their
communities and all acknowledge the responsibility placed on them and the need
to be ethical, professional and assertive in executing their duties.
Directors' Appointment and Re-election
Director Date of Appointment
Nigel Cayzer 3 December 1994
Sidney Cabessa 3 June 2003
Walid Chatila 27 September 2005
Rupert Evans 3 December 1994
John Grace 8 March 2011
Christopher Mills 3 December 1994
John Radziwill 1 May 2007
No Director has a service contract with the Company. Any Director may resign
in writing to the Board at any time.
In accordance with the Code, all Directors seek annual re-election to the
Board at the AGM.
The Board continues to believe that Mr Cayzer, Mr Chatila, Mr Evans, Mr
Radziwill and Mr Grace are independent and that all Directors standing for
re-election make an effective and valuable contribution to the Board and that
the Company should support their re-election.
Responsibilities
The Board meets at least four times each year and deals with the important
aspects of the Company's affairs including the setting and monitoring of
investment strategy, and the review of investment performance. The Investment
Manager takes decisions as to the purchase and sale of individual investments,
in line with the investment policy and strategy set by the Board. The
Investment Manager together with the Company Secretary also ensures that all
Directors receive, in a timely manner, all relevant management, regulatory and
financial information relating to the Company and its portfolio of
investments. A representative of the Investment Manager attends each quarterly
Board meeting, enabling Directors to question any matters of concern or seek
clarification on certain issues. Matters specifically reserved for decision by
the full Board have been defined and a procedure adopted for Directors in the
furtherance of their duties to take independent professional advice at the
expense of the Company.
Tenure
The Board has adopted a policy on tenure that is considered appropriate for an
investment Company. The Board does not believe that length of service, by
itself, leads to a closer relationship with the Investment Manager or
necessarily affects a Director's independence. The Board's tenure and
succession policy seeks to ensure that the Board is well-balanced and will be
refreshed from time to time by the appointment of new Directors with the
skills and experience necessary to replace those lost by Directors'
retirements. Directors must be able to demonstrate their commitment to the
Company. The Board seeks to encompass relevant past and current experience of
various areas relevant to the Company's business.
Relationship with the Investment Manager and the Administrator
The Board has delegated various duties to external parties including the
management of the investment portfolio, the custodian services (including the
safeguarding of assets), the registration services and the day-to-day Company
secretarial, administration and accounting services.
The Board receives and considers reports regularly from the Investment Manager
and ad hoc reports and information are supplied to the Board as required.
The Investment Manager takes decisions as to the purchase and sale of
individual investments. The Investment Manager and Administrator also ensure
that all Directors receive, in a timely manner, all relevant management,
regulatory and financial information. Representatives of the Investment
Manager and Administrator attend each Board meeting enabling the Directors to
probe further on matters of concern. A formal schedule of matters
specifically reserved for decision by the full Board has been defined and a
procedure adopted for Directors. The Directors have access to the advice and
service of the corporate Company Secretary through its appointed
representative who is responsible to the Board for ensuring that Board
procedures are followed and that applicable rules and regulations are complied
with.
Article 22(2)(e) & (f) of AIFMD requires the disclosure of remuneration
paid by the AIFM to senior management. Since the AIFM has only one
remunerated member of senior management, the directors do not consider it
appropriate to make this disclosure.
Shareholder Engagement
Communications with Shareholders
The Board believes that the maintenance of good relations with shareholders is
important for the long-term prospects of the Company. Where appropriate the
Chairman, and other Directors are available for discussion about governance
and strategy with major shareholders and the Chairman ensures communication of
shareholders' views to the Board. The Board receives feedback on the views of
shareholders from the Investment Manager and Broker.
The Board believes that the AGM provides an appropriate forum for investors to
communicate with the Board, and encourages participation. The AGM will be
attended by at least one Director. Details of proxy votes received in respect
of each resolution will be made available to shareholders at the meeting and
will be posted on the Company's website following the meeting.
The Annual and Half-year Reports are available to all shareholders. The Board
considers the format of the annual and interim reports so as to ensure they
are useful to all shareholders and others taking an interest in the Company.
In accordance with best practice, the Annual Report, including the Notice of
the AGM, will be sent to shareholders at least 20 working days before the
meeting.
Institutional Investors - use of voting rights
The Investment Manager, in the absence of explicit instructions from the
Board, are empowered to exercise discretion in the use of the Company's voting
rights in respect of investments and then to report to the Board, where
appropriate, regarding decisions taken. The Board has considered whether it
was appropriate to adopt a voting policy and an investment policy with regard
to social, ethical and environmental issues and concluded that it was not
appropriate to change the existing arrangements.
2022 Annual General Meeting
The AGM will be held in Guernsey on 18 August 2022 at 10:00 BST. The notice
for the AGM set out in the Shareholder Circular accompanying this Annual
Report sets out the ordinary and special resolutions to be proposed at the
meeting. Separate resolutions are proposed for each substantive issue.
Conflict of Interests
Directors are required to disclose all actual and potential conflicts of
interest to the Board as they arise for consideration and the Board may impose
restrictions or refuse to authorise conflicts if deemed appropriate. The
Directors have undertaken to notify the Company Secretary as soon as they
become aware of any new potential conflicts of interest that would need to be
approved by the Board. Only Directors who have no material interest in the
matter being considered will be able to participate in the Board approval
process.
It has also been agreed that the Directors will advise the Chairman and the
Company Secretary in advance of any proposed external appointment. None of the
Directors, except Christopher Mills, had a material interest in any contract,
which is significant to the Company's business. Note 18 provides further
details on the material interests of Christopher Mills. The Directors'
Remuneration Report below provides information on the remuneration and
interests of the Directors.
Performance Evaluation
The Board has adopted a formal annual evaluation of its own performance and
that of its Committees and individual Directors. The last evaluation took
place in 2022 and was led by the Chairman. The Chairman was not involved in
the evaluation of his own performance.
The evaluation is conducted utilising a questionnaire. The Board has developed
criteria for use at the evaluation, which focuses on the individual
contribution to the Board and its Committees made by each Director and the
Chairman, each Director's independence and the responsibilities, composition
and agenda of the Committees and of the Board itself. A review of Board
composition and balance, including succession planning for appointments to the
Board, is included as part of the annual performance evaluation. The
non-executive Directors also meet without the Chairman present to appraise his
performance.
During the annual Board evaluation in 2022, it was concluded that all
Directors with the exception of Messer's Mills and Cabessa were independent.
It was confirmed that the Chairman and all Directors felt well prepared and
able to participate fully at Board meetings, with a good understanding of the
markets and investments of the Company. It was agreed that all relevant
topics were fully discussed at effective Board meetings, with the Board having
a good range of competencies and skills.
The Board will continue to review its procedures, its effectiveness and
development in the year ahead.
Induction/Information and Professional Development
Directors are provided, on a regular basis, with key information on the
Company's policies, regulatory requirements and its internal controls.
Regulatory and legislative changes affecting Directors' responsibilities are
advised to the Board as they arise, along with changes to best practice from,
amongst others, the Company Secretary and the Auditor. Advisers to the
Company also prepare reports for the Board from time to time on relevant
topics and issues.
When a new Director is appointed to the Board, they will be provided with all
relevant information regarding the Company and their respective duties and
responsibilities as a Director. In addition, a new Director will also spend
time with representatives of the Investment Manager in order to learn more
about their processes and procedures.
Independent Advice
The Board recognises that there may be occasions when one or more of the
Directors feels it is necessary to take independent legal advice at the
Company's expense. A procedure has been adopted to enable them to do so, which
is managed by the Company Secretary.
Directors' Indemnity
To the extent permitted by Guernsey law, the Company's Articles of
Incorporation provide an indemnity for the Directors against any liability
except such (if any) as they shall incur by or through their own breach of
trust, breach of duty or negligence.
During the year the Company has maintained insurance cover for its Directors
and Officers under a Directors' and Officers' liability insurance policy.
Board Meetings
The Board meets at least quarterly. Certain matters are considered at all
Board meetings including the performance of the investments, NAV and share
price and associated matters such as asset allocation and investor
relations. Consideration is also given to administration and corporate
governance matters, and where applicable, reports are received from the Board
committees.
Directors unable to attend a Board meeting are provided with the Board papers
and can discuss issues arising in the meeting with the Chairman or another
non-executive Director.
Attendance at scheduled meetings of the Board and its committees for the year
ended 31 March 2022
Board Audit Nomination Committee
Committee
Number of meetings 4 3 1
during the year
Nigel Cayzer 4 n/a 1
Sidney Cabessa 4 n/a 1
Walid Chatila 4 3 1
Rupert Evans 4 3 1
Christopher Mills 4 n/a n/a
John Grace 3 n/a -
John Radziwill 3 2 1
Board Committees
The Board has established a Nomination and an Audit Committee with defined
terms of reference and duties. Further details of these committees can be
found below. The terms of reference for each committee can be found on the
Company's website www.oryxinternationalgrowthfund.co.uk
(http://www.oryxinternationalgrowthfund.co.uk) .
Nomination Committee
Membership:
Nigel Cayzer - Chairman (Independent non-executive Director)
Sidney Cabessa (Non-executive Director)
Walid Chatila (Independent non-executive Director)
Rupert Evans (Independent non-executive Director)
John Grace (Independent non-executive Director)
John Radziwill (Independent non-executive Director)
The Board believes it is appropriate for the Company Chairman to also be
Chairman of the Nomination Committee as he is an independent non-executive
Director.
Key Objectives
To evaluate the effectiveness of the Board and its Committees and to evaluate
the balance of skills, knowledge and experience on the Board and the division
of responsibilities between the Board and the Investment Manager. The
Nomination Committee also meets as and when appropriate to replace Directors
who retire from the Board, leading the process for Board appointments and
making recommendations to the Board.
Responsibilities
· Regularly reviews and makes recommendations in relation to the
structure, size and composition of the Board including the diversity and
balance of skills, knowledge and experience, and the independence of the
non-executive Directors;
· Oversees the performance evaluation of the Board, its committees and
individual Directors;
· Reviews the tenure of each of the non-executive Directors;
· Leads the process for identifying and making recommendations to the
Board regarding candidates for appointment as Directors, giving full
consideration to succession planning and the leadership needs of the Company;
· Makes recommendations to the Board on the composition of the Board's
committees; and
· Is responsible for the oversight of all matters relating to corporate
governance, bringing any issues to the attention of the Board.
Nomination Committee Meetings
Only members of the Nomination Committee have the right to attend Committee
meetings. Representatives of the Investment Manager and Administrator are
invited by the Nomination Committee to attend meetings as and when
appropriate. In the event of matters arising concerning an individual's
membership of the Board, they would absent themselves from the meeting as
required and another independent non-executive Director would take the Chair,
if this applied to the Committee Chairman.
Main Activities during the Year
The Committee met to consider and review the results of the annual Board
evaluation and considered that the balance of experience, skills, independence
and knowledge of the Company was appropriate.
There is a formal, rigorous and transparent procedure for the appointment of
new Directors. Candidates are identified and selected on merit against
objective criteria and with due regard to the benefits of diversity on the
Board.
The Board has not adopted a diversity policy in respect of age or nationality,
believing that prescriptive targets would not be appropriate for, or in the
interests of the Company and its shareholders. Instead the Board focusses on
encouraging diversity of business skills and experience recognising that
Directors with diverse skills sets, capabilities and experience gained from
different backgrounds enhance the Board. The Board considers that its members
have a balance of skills and experience which are relevant to the Company and
remains committed to the value and importance of diversity in the Boardroom.
Nigel Cayzer
On behalf of the Nomination Committee
7 July 2022
AUDIT COMMITTEE REPORT
Audit Committee
Membership:
Walid Chatila - Chairman (Independent non-executive Director)
Rupert Evans (Independent non-executive Director)
John Radziwill (Independent non-executive Director)
Key Objectives
The provision of effective governance over the appropriateness of the
Company's financial reporting including the adequacy of related disclosures,
the performance of the external auditors, and the management of the Company's
systems of internal financial and operating controls and business risks.
Responsibilities
· Reviewing the Company's internal financial controls;
· Reviewing the Company's financial results announcements, financial
statements and monitoring compliance with relevant statutory and listing
requirements;
· Reporting to the Board on the appropriateness of the Company's
accounting policies and practices including critical accounting policies and
practices;
· Advising the Board on whether the Audit Committee believes the annual
report and financial statements, taken as a whole, are fair, balanced and
understandable and provides the information necessary for shareholders to
assess the Company's performance;
· Overseeing the relationship with the external auditor;
· Considering the financial and other implications on the independence
of the auditor arising from any non-audit services provided by the auditors;
and
· Compile a report on its activities to be included in the Company's
annual report.
The Committee members have a wide range of financial and commercial expertise
necessary to fulfil the Committee's duties.
Audit Committee Meetings
The Committee meets at least three times a year. Only members of the Audit
Committee have the right to attend Audit Committee meetings. Representatives
of the Investment Manager and Administrator will be invited to attend Audit
Committee meetings on a regular basis and other non-members may be invited to
attend all or part of the meeting as and when appropriate and necessary. The
Company's external auditor, is also invited whenever it is appropriate. The
Committee is also able to meet separately with the external auditors without
the Investment Manager being present.
Main Activities during the Year
The Committee assists the Board in carrying out its responsibilities in
relation to financial reporting requirements, risk management and the
assessment of internal financial and operating controls. It also manages the
Company's relationship with the external auditor. Meetings of the Committee
generally take place prior to a Company Board meeting. The Committee reports
to the Board, as part of a separate agenda item, on the activity of the
Committee and matters of particular relevance to the Board in the conduct of
their work.
The Committee advises the Board on whether it believes the annual report and
financial statements, taken as a whole, are fair, balanced and understandable
and provides the information necessary for shareholders to assess the
Company's performance, business model and strategy. The Committee's terms of
reference can be found on the Company's website
www.oryxinternationalgrowthfund.co.uk
(http://www.oryxinternationalgrowthfund.co.uk) .
At its meetings during the year, the Committee focused on:
Financial Reporting
The primary role of the Committee in relation to financial reporting is to
review in conjunction with the Investment Manager and the Administrator the
appropriateness of the half-year and the audited annual financial statements
concentrating on, amongst other matters:
· The quality and acceptability of accounting policies and practices;
· The clarity of the disclosures and compliance with financial
reporting standards and relevant financial and governance reporting
requirements;
· Material areas in which significant judgements have been applied or
there has been discussion with the external auditor;
· Whether the annual report and financial statements, taken as a whole,
are fair, balanced and understandable and provides the information necessary
for shareholders to assess the Company's performance, business model and
strategy; and
· Any correspondence from regulators in relation to the quality of our
financial reporting.
To aid its review, the Committee considers reports from the Investment
Manager, Administrator and also reports from the external auditor on the
outcome of their annual audit.
Significant Accounting Matters
In relation to the annual report and financial statements for the year ended
31 March 2022, the following significant issues were considered by the Audit
Committee:
Significant Area How Addressed
Valuation The Board periodically receive a report from the Investment Manager on the
valuation of the portfolio and on the assumptions used in valuing the unlisted
of Investments assets in the portfolio. The Board regularly analyses the investment portfolio
of the Company in terms of investment mix, fair value hierarchy and valuation.
The Board has held discussions with the Investment Manager with regards to the
methodology used in valuing the unlisted assets in the portfolio. The Board
has considered the risk due to Covid-19 and the conflict in Ukraine in detail
as part of its periodic viability and risk assessments.
Based on their above review and analysis the Board confirmed that they are
satisfied with the valuation of the investments.
Internal Controls
The Board is responsible for the Company's system of internal control and for
reviewing its effectiveness, which was in place up to the date the financial
statements were signed. The Board has delegated the responsibility of
regularly reviewing the effectiveness of the systems of internal controls in
place to the Audit Committee. The Audit Committee believes that the key risks
identified and implementation of the system to monitor, and manage those
risks, are appropriate to the Company's business as an investment Company.
The ongoing risk assessment includes the monitoring of the financial,
operational and compliance risks as well as an evaluation of the scope and
quality of the system of internal control adopted by the third party service
providers. The Audit Committee regularly reviews the delegated services to
ensure their continued competitiveness and effectiveness. The system is
designed to ensure regular communication of the results of monitoring by the
third parties to the Board and the incidence of any significant control
failings or weaknesses that have been identified and the extent to which they
have resulted in unforeseen outcomes or contingences that may have a material
impact on the Company's performance or operations. The Audit Committee
believes that, although robust, the Company's system of internal controls is
designed to manage rather than eliminate the risk of failure to achieve
business objectives.
The Committee is responsible overall for the Company's system of internal
financial and operating controls and for reviewing its effectiveness. Such a
system, however, is designed to manage rather than eliminate risks of failure
to achieve the Company's business objectives and can only provide reasonable
and not absolute assurance against material misstatement or loss. The Board
receives each year a report from the Administrator on its internal controls
which includes a report from the Administrator's auditors on the control
policies and procedures in operation.
The Investment Manager has established an internal control framework to
provide reasonable but not absolute assurance on the effectiveness of the
internal controls operated on behalf of its clients. The effectiveness of the
internal controls is assessed by the Investment Manager's compliance and risk
department on an ongoing basis.
In respect of the Company's system of internal controls and reviewing its
effectiveness, the Directors are satisfied that a robust assessment of the
principal and emerging risks facing the Company has been carried out (as
outlined above) and that having reviewed the effectiveness of the risk
management and internal control systems including material financial,
operational and compliance controls (including those relating to the financial
reporting process) no significant failings or weaknesses were identified.
External Audit
The effectiveness of the external audit process is dependent on appropriate
audit risk identification at the start of the audit cycle. The Committee
received a detailed audit plan from RSM CI (Audit) Limited identifying their
assessment of the Key Audit Matters, being the ownership and valuation of
investments. This is consistent with the Committee's own assessment which have
been kept under review throughout the year. The Committee assess the
effectiveness of the audit process in addressing these matters through the
reporting received from RSM CI (Audit) Limited in relation to the year-end. In
addition, the Committee seeks feedback from the Investment Manager and the
Administrator on the effectiveness of the audit process. For the 2022
financial year, the Committee was satisfied that there had been appropriate
focus and challenge on the significant and other key areas of audit risk and
assessed the quality of the audit process to be good.
Independence
The Committee considers the independence of the external auditor on an annual
basis. In its assessment of the independence of the external auditors, the
Committee receives details of any relationships between the Company and RSM CI
(Audit) Limited that may have a bearing on their independence and receives
confirmation that the external auditor is independent of the Company.
Tender and Appointment of the New Auditor
RSM CI (Audit) Limited was appointed on 25 March 2021 as the Company's
independent external auditors. RSM CI (Audit) Limited was appointed following
a competitive tender process overseen by the Audit Committee. RSM CI (Audit)
Limited has acted as auditor to the Company for 2 year-end audits.
Non Audit Services
The external auditor and the Directors have agreed a policy for non-audit
services. All non-audit services are prohibited.
Auditor's Remuneration
The Committee approved the fees for audit services for 2021/22 after a review
of the level and nature of work to be performed, and after being satisfied by
RSM CI (Audit) Limited that the fees were appropriate for the scope of the
work required. The external auditor will be remunerated £58,500 for their
services to be rendered in 2021/22. This entire amount relates to the year-end
audit.
Committee Evaluation
The Committee's activities formed part of the Board evaluation performed in
the year. Details of this process can be found under "Performance evaluation"
above.
Walid Chatila
Chairman of the Audit Committee
7 July 2022
DIRECTORS' REMUNERATION REPORT
The Directors' remuneration for the year is as follows:
Director Year Ended 31 March 2022 Year Ended 31 March 2021
£ £
Nigel Cayzer 27,500 27,500
Sidney Cabessa 20,000 20,000
Walid Chatila 25,000 25,000
Rupert Evans 20,000 20,000
Christopher Mills 20,000 20,000
John Grace 20,000 20,000
John Radziwill 20,000 20,000
Remuneration Policy
The determination of the Directors' fees is a matter dealt with by the Board.
The Directors reviewed the fees paid to the Boards of Directors of similar
investment companies during 2016 and revised the remuneration of the Directors
in 2017. No Director is involved in decisions relating to their own
remuneration.
No Director has a service contract with the Company and Directors'
appointments may be terminated at any time by one month's written notice with
no compensation payable at termination.
The Company's policy is for the Directors to be remunerated in the form of
fees, payable quarterly in arrears. No Director has any entitlement to a
pension, and the Company has not awarded any share options or long-term
performance incentives to any of the Directors. No element of the Directors'
remuneration is performance related. Directors are authorised to claim
reasonable expenses from the Company in relation to the performance of their
duties.
The Company's policy is that the fees payable to the Directors should reflect
the time spent by the Board on the Company's affairs and the responsibilities
borne by the Directors and should be sufficient to enable high calibre
candidates to be recruited. During the year ended 31 March 2022, the policy
was for the Chairman of the Board and the Audit Committee to be paid higher
fees than the other Directors in recognition of their more onerous role and
more time spent. The Board may amend the level of remuneration paid within the
limits of the Company's Articles of Incorporation.
Service Contracts and Policy on Payment of Loss of Office
Directors are appointed with the expectation that they are initially appointed
until the following AGM when, it is required that they be re-elected by
shareholders. Directors will initially serve for a period of three years,
and will stand for re-election every three years. In accordance with the Code,
Directors who have served for more than nine years as non-executive Directors
will retire annually and seek re-election to the Board. Directors or members
of the Investment Manager are subject to annual election, in accordance with
Listing Rule 15.2.13A.
The biographies of the Directors holding office at the date of this report are
provided below.
Directors' Interests
The Company has not set any requirements or guidelines for Directors to own
shares in the Company. The beneficial interests of the Directors and their
connected persons in the Company's shares are shown in the table below:
31 March 2022 31 March 2021
Ordinary Shares Ordinary Shares
Christopher Mills 350,000 350,000
John Grace * 130,000 130,000
346,607 346,607
* John Grace holds a beneficial interest of 130,000 Ordinary Shares. Mr
Grace is also a member of a class of beneficiaries which holds an interest in
346,607 Ordinary Shares.
Christopher Mills is a Partner and Chief Executive Officer of Harwood Capital
LLP and a Director of Harwood Capital Management (Gibraltar) Limited, the
Company's Investment Manager and Investment Adviser. Harwood Capital
Management (Gibraltar) Limited is entitled to fees as detailed in notes 4 and
6 of the financial statements. Rupert Evans is a consultant to the law firm
Mourant Ozannes, the legal adviser to the Company.
No fees were paid or are payable to Harwood Capital Management Limited where
Sidney Cabessa is a Director.
Other than fees payable in the ordinary course of business, there have been no
material transactions with these related parties.
Annual Report on Remuneration
Other than as shown above, no other remuneration or compensation was paid or
payable by the Company during the year to any of the Directors.
Advisers to the Remuneration Committee
The Board has not sought the advice or services by any outside person in
respect of its consideration of the Directors' remuneration.
Nigel Cayzer
On behalf of the Board
7 July 2022
Statement of Directors' responsibilities in respect of the Annual Report and
the financial statements
The Directors are responsible for preparing the Annual Report and financial
statements in accordance with applicable law and regulations.
The Companies (Guernsey) Law, 2008 (as amended) requires the Directors to
prepare financial statements for each financial year. Under that law they are
required to prepare the financial statements in accordance with International
Financial Reporting Standards (IFRS) as adopted by the UK and applicable
law.
Under Company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of its profit or loss 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, relevant and
reliable;
· state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements;
· assess the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
· use the going concern basis of accounting unless they either intend
to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that its financial statements comply with the Companies
(Guernsey) Law, 2008. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error, and 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.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the Annual Report and
financial statements
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company; and
· the Annual Report includes a fair review of the development and
performance of the business and the position of the issuer, together with a
description of the principal and emerging risks and uncertainties that they
face.
We consider the Annual Report and financial statements, taken as a whole, is
fair, balanced and understandable and provides the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy.
By order of the Board
Walid Chatila
Rupert Evans
Director
Director
7 July
2022
7 July 2022
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ORYX INTERNATIONAL GROWTH FUND
LIMITED
Opinion
We have audited the financial statements of Oryx International Growth Fund
Limited (the "Company"), which comprise the statement of financial position as
at 31 March 2022, and the statement of comprehensive income, statement of
changes in equity and statement of cash flows for the year then ended, and
notes 1 to 20 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 as adopted by the United Kingdom ('UK IFRS').
In our opinion the financial statements of the Company:
• give a true and fair view of the state of the Company's affairs as
at 31 March 2022 and of its loss for the year then ended;
• have been properly prepared in accordance with IFRS as adopted by
the United Kingdom; 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
(UK) ('ISAs (UK)') and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the Company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in Guernsey, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Our approach to the audit
Our audit was scoped by obtaining an understanding of the Company and its
environment, including internal control, and assessing the risks of material
misstatement. Audit work to respond to the risks of material misstatement was
performed directly by the audit engagement team.
Our consideration of the control environment
The Company has appointed BNP Paribas Securities Services S.C.A., Guernsey
Branch to provide the accounting function. The accounting function has been
delegated to BNP Paribas Securities Services S.C.A., Jersey Branch ('BNP'). We
have obtained BNP's ISAE 3402 controls assurance report for the period 1
October 2020 to 31 October 2021 which summarises the suitability of design and
implementation and operating effectiveness of controls. We have reviewed the
report and considered the controls relevant to the accounting functions
undertaken by BNP for the Company in order to rely on controls. As the
reporting date of the Company is 31 March 2022 we have obtained correspondence
issued by BNP confirming that there have not been any material changes to the
internal control environment nor any material deficiencies in the internal
controls to this date.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in the audit of the financial statements and include the
most significant assessed risks of material misstatement (whether or not due
to fraud) identified by us, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. 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. In arriving at our audit opinion, the key audit matter was as
follows:
Key Audit Matter How our scope addressed this matter
Ownership and valuation of Investments
The Company's investments (see note 10 and the investment schedule within the
Strategic Report) are included at fair value of £208,887,876 (2021:
£225,873,489). The portfolio is made up of listed and unlisted investments.
Listed investments (96% of NAV (2021: 97%))
Listed investments are actively traded on recognised markets which are
measured at fair value based on market prices and other prices determined with
reference to observable inputs.
Our procedures on the valuation of listed investments included:
Although all of the listed investments have quoted market pricing data
available which is used to value the investments, there is a risk of material
misstatement that the investments may be incorrectly valued due to stale • understanding the relevant controls around listed valuation;
prices, low trading volumes or errors reported in third party prices. Where
investments are not regularly traded there is a greater risk of material
misstatement that the quoted price is not reflective of fair value and this
should be taken into consideration in management's assessment. Valuation has a • testing 100% of the valuations of listed investments by agreeing the
significant impact on the NAV. prices directly to independent third party sources;
There is a risk that listed investments, a record of which is maintained by a • considering the trading history of listed investments to determine whether
third party custodian, are not directly owned by the Company. they have been frequently traded, and values at which they have been traded to
consider whether the year end prices are stale.
Listed investments are held by the custodian. Ensuring that the custodian
records all the investments correctly under the Company's name is critical
since the listed investment portfolio represents the principal element of the
financial statements, being the single largest asset on the statement of
financial position.
Our procedures on ownership of listed investments included:
• obtaining an understanding of the relevant controls around custody of
listed investments by reviewing the ISAE 3402 controls assurance report of the
custodian; and
• agreeing the holdings to independent third party confirmations provided by
the Company's custodian.
Unlisted investments (4% of NAV (2021: 3%))
Unlisted investments are measured at fair value based on the International Our procedures on the valuation of unlisted listed investments included:
Private Equity and Venture Capital (IPEV) valuation guidelines. These
valuations involve material judgements and estimation, the primary measurement
techniques employed by the Directors at 31 March 2022 being earnings multiples
and observable price. • utilising RSM valuation specialists;
• obtaining an understanding of the Company's unlisted investments held at
the year end, including attendance at valuation meetings with the investment
manager and reviewing other relevant documentation;
• obtaining an understanding of and challenging the key assumptions and
judgements affecting investee company valuations, including consideration of
the appropriateness of the valuation basis and sensitivities.
Our procedures on ownership of unlisted investments included:
There is a risk that unlisted investments are not directly owned by the
Company.
• direct confirmation of ownership from third party sources.
Unlisted investments represent a variety of financial instruments, not solely
shares. Ensuring that the Company records ownership of all investments Key observations
correctly is critical.
Based on the procedures, we concluded that the ownership and valuation of
investments is appropriate.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial
statements that makes it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced. We use materiality both
in planning the scope of our audit work and in evaluating the results of our
work.
Based on our professional judgement, we determined materiality for the
financial statements as a whole as follows:
Materiality £3,310,000 (2021: £3,130,000)
Basis for determining materiality - Approximately 1.5% of the Company's total
assets (2021: 1.4%).
Rationale for the benchmark applied - The key users of the financial
statements are primarily focused on the valuation of the Company's assets.
Performance materiality
We set performance materiality at a level lower than materiality to reduce the
probability that, in aggregate, uncorrected and undetected misstatements
exceed the materiality for the financial statements as a whole. Performance
materiality was set at 75% (2021: 75%) of materiality for the 2022 audit. In
determining performance materiality, we considered our understanding of the
entity, including our assessment of the overall control environment.
Error reporting threshold
We agreed with the Audit Committee that we would report to them all audit
differences in excess of £160,000 (2021: £150,000), as well as differences
below that threshold that, in our view, warranted reporting on qualitative
grounds. We also report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the financial
statements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the Company's ability to continue to adopt the going concern
basis of accounting included our review of the directors' statement in note
2(b) and their identification of any material uncertainties to the Company's
ability to continue over a period of at least twelve months from the date of
approval of the financial statements.
We considered as part of our risk assessment the nature of the Company, its
business model and related risks including where relevant the impact of the
Covid-19 pandemic and conflict in Ukraine, the requirements of the applicable
financial reporting framework and the system of internal control.
We evaluated the directors' assessment of the Company's ability to continue as
a going concern, including challenging the underlying data and key assumptions
used to make the assessment, and evaluated the directors' plans for future
actions in relation to their going concern assessment.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the company's ability to continue
as a going concern for a period of at least twelve months from the date of
approval of the financial statements.
We are required to state whether we have anything material to add or draw
attention to in relation to that statement required by Listing Rule 9.8.6R(3)
and report if the statement is materially inconsistent with our knowledge
obtained in the audit. We confirm that we have nothing to report in connection
with this matter.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the 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 respect of these matters.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies (Guernsey) Law 2008 requires us to report to you if, in our opinion;
• adequate accounting records have not been kept; or
• the financial statements are not in agreement with the accounting
records and returns; or
• we have not received all the information and explanations we
require for our audit.
Corporate governance statement
The Listing Rules require us to review the directors' statement in relation to
going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the Company's compliance with the provisions of the
Listing Rule 9.8.10R(2) specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of
the Strategic Report, Directors' Report, Audit Committee Report and Statement
of Directors' Responsibilities is materially consistent with the financial
statements or our knowledge obtained during the audit:
• Directors' statement with regards the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified set out above;
• Directors' explanation as to its assessment of the entity's
prospects, the period this assessment covers and why they period is
appropriate set out above;
• Directors' statement on fair, balanced and understandable set out
below;
• Board's confirmation that it has carried out a robust assessment
of the emerging and principal risks set out above;
• The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out below;
and;
• The section describing the work of the audit committee set out
below.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Company's ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Company or
to cease operations, or have no realistic alternative but to do so.
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 (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs (UK), we exercise professional
judgement 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 the 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 auditors' 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
auditors' 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 those charged with governance 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.
The extent to which the audit was considered capable of detecting
irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The
objectives of our audit are to obtain sufficient appropriate audit evidence
regarding compliance with laws and regulations that have a direct effect on
the determination of material amounts and disclosures in the financial
statements, to perform audit procedures to help identify instances of
non-compliance with other laws and regulations that may have a material effect
on the financial statements, and to respond appropriately to identified or
suspected non-compliance with laws and regulations identified during the
audit.
In relation to fraud, the objectives of our audit are to identify and assess
the risk of material misstatement of the financial statements due to fraud, to
obtain sufficient appropriate audit evidence regarding the assessed risks of
material misstatement due to fraud through designing and implementing
appropriate responses and to respond appropriately to fraud or suspected fraud
identified during the audit.
However, it is the primary responsibility of management, with the oversight of
those charged with governance, to ensure that the entity's operations are
conducted in accordance with the provisions of laws and regulations and for
the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud, we:
• obtained an understanding of the nature of the industry and
sector, including the legal and regulatory frameworks that the Company
operates in and how the Company is complying with those frameworks;
• inquired of management, and those charged with governance, about
their own identification and assessment of the risks of irregularities,
including any known actual, suspected, or alleged instances of fraud; and
• discussed matters about non-compliance with laws and regulations
and how fraud might occur including assessment of how and where the financial
statements may be susceptible to fraud having obtained an understanding of the
effectiveness of the control environment.
We also obtained an understanding of the legal and regulatory frameworks that
the Company operates in, focusing on provisions of those laws and regulations
that had a direct effect on the determination of material amounts and
disclosures in the financial statements.
The key laws and regulations we considered in this context included UK IFRS,
the Companies (Guernsey) Law, 2008, Authorised Closed Ended Investment Scheme
Rules 2021, Listing and Disclosure Transparency Rules and the UK Corporate
Governance Code.
The audit procedures performed included:
• a review of the financial statement disclosures and testing to
supporting documentation;
• completion of disclosure checklists to identify areas of
non-compliance; and
• review of the financial statement disclosures by a specialist in
the Listing and Disclosure Transparency Rules.
The area that we identified as being susceptible to material misstatement due
to fraud was management override of controls. The audit procedures performed
included:
• testing the appropriateness of journal entries and other
adjustments;
• assessing whether the judgements made in determining accounting
estimates, in particular in respect of the fair value of investments, are
indicative of a potential bias; and
• evaluation of the business rationale of any significant
transactions that are unusual or outside the normal course of business.
Owing to the inherent limitations of an audit there is an unavoidable risk
that some material misstatement of the financial statements may not be
detected, even though the audit is properly planned and performed in
accordance with ISAs (UK). However, the principal responsibility for ensuring
that the financial statements are free from material misstatement, whether
caused by fraud or error, rests with the directors who should not rely on the
audit to discharge those functions.
Following the recommendation of the audit committee, we were appointed by the
Board of directors on 25 March 2021 to audit the financial statements for the
year ending 31 March 2021 and subsequent financial periods. The period of
total uninterrupted engagement is 15 months.
No non-audit services have been provided to the Company and we remain
independent of the Company in conducting our audit.
Our audit opinion is consistent with our reporting to the audit committee we
are required to provide in accordance with ISAs (UK).
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.
Philip J Crosby
For & on behalf of
RSM CI (Audit) Limited
Chartered Accountants and Recognized Auditors
Guernsey, C.I.
7 July 2022
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2022
2022 2021
Notes £ £
Income
Dividends 3 2,060,399 965,480
Net realised gains on investments 10 35,907,323 19,883,591
Unrealised (losses)/gains on revaluation of investments 10 (44,145,402) 89,365,329
Net losses on foreign currency translation (28,860) (307)
Other income - 150,113
Total income (6,206,540) 110,364,206
Expenses
Investment management and adviser's fee 4 (2,599,302) (2,041,467)
Directors' fees and expenses 5 (152,500) (152,076)
Legal and professional fees (18,684) (59,855)
Supplementary management fee 6 (420,000) (350,000)
Transaction costs (500,604) (168,647)
Administration fees 7 (170,000) (170,000)
Audit fees (59,400) (62,721)
Custodian fees 8 (30,000) (30,000)
Insurance (7,380) (6,410)
Registrar and transfer agent fees (26,119) (21,312)
Printing costs (31,899) (23,362)
Other expenses (193,825) (53,713)
Total expenses (4,209,713) (3,139,563)
Total (loss)/profit for the year before taxation (10,416,253) 107,224,643
Withholding tax on dividends 9 (9,748) (9,637)
Stamp duty tax 9 (64,200) -
Total (loss)/profit for the year (10,490,201) 107,215,006
(Loss)/earnings per Ordinary Share - basic and diluted 14 (£0.75) £7.60
There are no items of other comprehensive income, therefore profit/(loss)
after taxation is the total comprehensive income attributable to
shareholders.'
All items in the above statement are derived from continuing operations.
The accompanying notes below form an integral part of these financial
statements.
STATEMENT OF FINANCIAL POSITION
as at 31 March 2022
2022 2021
Notes £ £
Non-current assets
Listed investments at fair value through profit or loss (Cost - £157,707,331
(2021 - £130,704,265))
199,552,913 218,222,726
Unlisted investments at fair value through profit or loss (Cost - £5,268,633
(2021 - £5,111,911))
9,334,963 7,650,763
10 208,887,876 225,873,489
Current assets
Cash and cash equivalents 10,624,762 5,783,656
Amounts due from brokers 150,753 128,447
Dividends receivable 128,600 219,500
Prepayments 2,373 16,108
10,906,488 6,147,711
Total assets 219,794,364 232,021,200
Current liabilities
Other payables and accrued expenses (385,342) (378,911)
Amounts due to brokers - (1,330,966)
(385,342) (1,709,877)
Net assets 219,409,022 230,311,323
Shareholders' equity
Share capital 11 49,693,283 49,705,783
Other reserves 169,715,739 180,605,540
Total shareholders' equity 219,409,022 230,311,323
NAV per Ordinary Share 13, 14 £15.67 £16.42
The financial statements were approved by the Board of Directors on 7 July
2022 and are signed on its behalf by:
Walid Chatila
Rupert Evans
Director
Director
The accompanying notes below form an integral part of these financial
statements.
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2022
Share capital Capital redemption reserve Other reserves Total
Notes £ £ £ £
Balance at 1 April 2021 49,705,783 - 180,605,540 230,311,323
Total comprehensive - (10,490,201) (10,490,201)
loss for the year -
Transactions with owners,
recorded directly in equity
Contributions, redemptions and
distributions to shareholders:
- Share repurchase 11, 12 (12,500) - (399,600) (412,100)
Balance at 31 March 2022 49,693,283 - 169,715,739 219,409,022
Share capital Capital redemption reserve Other reserves Total
Notes £ £ £ £
Balance at 1 April 2020 49,789,346 1,246,500 73,836,590 124,872,436
Total comprehensive - 107,215,006 107,215,006
income for the year -
Transactions with owners,
recorded directly in equity
Contributions, redemptions and
distributions to shareholders:
- Share repurchase 11, 12 (83,563) (1,246,500) (446,056) (1,776,119)
Balance at 31 March 2021 49,705,783 - 180,605,540 230,311,323
The accompanying notes below form an integral part of these financial
statements.
STATEMENT OF CASH FLOWS
for the year ended 31 March 2022
2022 2021
Notes £ £
Cash flows from Operating Activities
Total (loss)/profit for the year before taxation (10,416,253) 107,224,643
Adjustments to reconcile total comprehensive (loss)/income to net cash flows:
-Net realised gains on investments 10 (35,907,323) (19,883,591)
-Unrealised losses/(gains) on investments 10 44,145,402 (89,365,329)
-Net losses on foreign currency translation 28,860 307
Purchase of financial assets designated at fair value through profit or (69,486,653) (53,002,097)
loss(1)
Proceeds from sale of financial assets designated at fair value through profit 76,880,915 55,158,554
or loss(2)
Changes in working capital
Decrease/(increase) in dividends receivable(3) 90,900 (101,000)
Decrease/(increase) in prepayments 13,735 (6,834)
Increase/(decrease) in other payables and accrued expenses 6,431 (198,541)
Withholding tax paid on dividends 9 (9,748) (9,637)
Stamp duty tax paid 9 (64,200) -
Net cash generated/(used) from operating activities 5,282,066 (183,525)
Cash flow from financing activities
Share repurchase 11, 12 (412,100) (1,776,119)
Net cash used from financing activities (412,100) (1,776,119)
Net increase/(decrease) in cash and cash equivalents 4,869,966 (1,959,644)
Cash and cash equivalents at the beginning of the year 5,783,656 7,743,607
Effect of exchange rate fluctuations on cash and cash equivalents
(28,860) (307)
Cash and cash equivalents at the end of the year 10,624,762 5,783,656
( )
(1) - Payables outstanding at 31 March 2022 relating to purchases of financial
assets designated at fair value through profit amounted to £nil (31 March
2021: £1,330,966).
(2) - Receivables outstanding at 31 March 2022 relating to sales of financial
assets designated at fair value through profit amounted to £150,753 (31 March
2021: £128,447).
(3) - For the year ended 31 March 2022, cash received from dividends net
withholding taxes was £2,141,551 (2021: £854,843)
The accompanying notes below form an integral part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
1. General
The Company was registered in Guernsey on 2 December 1994 and commenced
activities on 3 March 1995. The Company was listed on the London Stock
Exchange on 3 March 1995.
The Company is a Guernsey Authorised Closed-Ended Investment Scheme and is
subject to the Authorised Closed-Ended Investment Scheme Rules 2021.
The investment activities of the Company are managed by Harwood Capital
Management (Gibraltar) Limited (the "Investment Manager" and the "Investment
Adviser") and the administration of the Company is delegated to BNP Paribas
Securities Services S.C.A., Guernsey Branch (the "Administrator").
Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
2. Accounting policies
a) Basis of preparation
The financial statements of the Company, which give a true and fair view, and
comply with the Companies (Guernsey) Law, 2008 (the "Law"), have been prepared
in accordance with International Financial Reporting Standards ("IFRS"), as
adopted by the UK. This comprises standards and interpretations approved by
the International Accounting Standards Board, and International Accounting
Standards and Standing Interpretations Committee interpretations approved by
the International Accounting Standards Committee that remain in effect.
The financial statements have been prepared on the historical cost basis
except for the inclusion at fair value of certain financial instruments. The
principal accounting policies are set out below.
New standards, amendments and interpretations
Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9, IAS 39, IFRS
7, IFRS 4 and IFRS 16
The amendments to the above standards provide temporary reliefs which address
the financial reporting effects when an interbank offered rate is replaced
with an alternative nearly risk-free interest rate. As the Company does not
hold any instruments that reference interbank offered rates, these amendments
had no impact on the financial statements.
COVID-19-Related Rent Concessions (Amendment to IFRS 16)
In May 2020, COVID-19-Related Rent Concessions were issued which amended IFRS
16 Leases. These amendments had no impact on the financial statements.
Standards, amendments and interpretations issued but not yet effective
Standards that become effective in future accounting periods and have not been
adopted by the Company:
International Financial Reporting Standards (IFRS) Effective for periods beginning on or after
· IFRS 17 - Insurance Contracts 1 January 2023
· IAS 8 - Accounting Policies, Changes in Accounting Estimates and 1 January 2023
Errors - amendments regarding the definition of accounting estimates
As the Company does not participate in insurance contracts in the normal
course of its business, the Directors believe that the application of this
standard will not have an impact on the Company's financial statements.
The new IAS 8 amendments introduce a new definition for accounting estimates:
clarifying that they are monetary amounts in the financial statements that are
subject to measurement uncertainty. The amendments also clarify the
relationship between accounting policies and accounting estimates by
specifying that a Company develops an accounting estimate to achieve the
objective set out by an accounting policy. The definition of accounting
policies remains unchanged. The Directors believe that the application of this
amendment will not have an impact on the Company's financial statements.
A number of amendments and interpretations to existing standards have been
issued, but are not yet effective, that are not relevant to the Company's
operations. The Directors believe that the application of these amendments and
interpretations will not impact the Company's financial statements when they
become effective.
b) Going concern
Going concern refers to the assumption that the Company has the resources to
continue in operation for the next 12 months from the date of approval of
these financial statements. After analysing the following, the Directors
believe that it is appropriate to adopt the going concern basis in preparing
these financial statements:
· Working capital - as at 31 March 2022, there was a working capital
surplus of £10,521,146 (2021: £4,437,834).
· Closed-ended Company --- The Company has been authorised by the
Guernsey Financial Services Commission as an Authorised Closed-ended
Collective Investment Scheme, as such there cannot be any shareholder
redemptions, and therefore no cash flows out of the Company in this respect.
The cash position of the Company as at 31 March 2022 is £10,624,762 (2021:
£5,783,656) which can sufficiently cover annual operating expenses,
investment management and adviser's fees and finance costs amounting to
£4,209,713 for the year ended 31 March 2022 (2021: £3,139,563).
· Investments - The Company has a tradable portfolio, as 96% of the
investments, amounting to £199,552,913 as at 31 March 2022 (2021:
£218,222,726) are listed and can therefore be readily sold for cash.
Under Article 51 of the Articles of Incorporation, the Directors shall give
due notice of and propose or cause to be proposed a special resolution that
the Company be wound up at the Annual General Meeting ("AGM") of the Company
every two years. The next notice will be given in the 2023 AGM documents (the
previous notice was given at the 2021 AGM where the special resolution was not
passed) where the Board will recommend that shareholders vote against
resolution. The Directors, based on discussions with the Company's most
significant shareholder, have a reasonable expectation that the special
resolution outlined in Article 51 of the Articles of Incorporation and under
"Life of the Company" will not be passed at the AGM in 2023.
Based on the above assessments, the Directors are of the opinion that the
Company is able to meet its liabilities as they fall due for payment because
it has and is expected to maintain adequate cash resources. Given the nature
of the Company's business, the Directors have a reasonable expectation that
the Company has adequate financial resources to continue in operational
existence for the next 12 months from the date of approval of these financial
statements. Therefore, the Board consider it appropriate to adopt the going
concern basis in preparing the financial statements.
In making this assessment, the Board has considered the impact of Covid-19 and
the Ukraine conflict on the Company and are confident that it remains
appropriate to adopt the going concern basis.
c) Use of estimates and judgements
The preparation of financial statements in accordance with IFRS as adopted by
the UK requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. These estimates and associated
assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may vary from these estimates.
Judgement is exercised in terms of whether the price of recent transaction
remains the best indicator of fair value for financial instruments at the
statement of financial position date.
The Investment Manager reviews sector and market information and the
circumstances of the investee Company to determine if the valuation adopted at
the statement of financial position date remains the best indicator of fair
value. The estimates and underlying assumptions are reviewed on an on-going
basis. Revisions to accounting estimates are recognised in the period in which
the estimate is revised and reassessed every year to ensure the fair value
remains appropriate.
Information about areas of critical judgements in applying accounting policies
that have the most significant effect on the fair value of financial
instruments recognised in the financial statements are set out in note 2(e).
Information about significant areas of estimation uncertainty that have the
most significant effects on the fair value of financial instruments recognised
in the financial statements are set out in notes 16 and 17.
d) Dividend income
Dividend income is recognised when the right to receive income is established.
This is the ex-dividend date for equity securities. All income is shown gross
of any applicable withholding tax.
e) Financial assets
Classification
All investments of the Company are designated as financial assets at fair
value through profit or loss. The investments are purchased mainly for their
capital growth and the portfolio is managed, and performance evaluated, on a
fair value basis in accordance with the Company's documented investment
strategy, therefore the Directors consider that this is the most appropriate
classification.
Initial recognition
Financial assets are measured initially at fair value being the transaction
price. Subsequent to initial recognition on trade date, all assets classified
at fair value through profit or loss are measured at fair value with changes
in their fair value recognised in profit or loss in the Statement of
Comprehensive Income. Transaction costs are separately disclosed in profit or
loss in the Statement of Comprehensive Income.
Fair value measurement principles
Listed investments have been valued at the bid market price ruling at the
reporting date. In the absence of the bid market price, the closing price has
been taken, or, in either case, if the market is closed on the financial
reporting date, the bid market or closing price on the preceding business day.
Fair value of unlisted investments is derived in accordance with the
International Private Equity and Venture Capital (IPEV) valuation guidelines.
Their valuation includes all factors that market participants would consider
in setting a price. The primary valuation techniques employed to value the
unlisted investments are earnings multiples and the net asset basis. Cost (as
indicator of initial fair value) is considered appropriate for early stage
investments.
For certain of the Company's financial instruments, including cash and cash
equivalents, dividends receivable and amounts due from brokers, the carrying
amounts approximate fair value due to their immediate or short-term maturity.
Derecognition
Derecognition of financial assets occurs when the rights to receive cash flows
from financial instruments expire or are transferred and substantially all of
the risks and rewards of ownership have been transferred.
Fair value hierarchy
Fair value measurement should be determined based on assumptions that market
participants would use in pricing an asset or liability. As a basis for
considering market participant assumptions, IFRS 13 - "Fair Value
measurement", establishes a fair value hierarchy that gives the highest
priority to unadjusted quoted prices in active markets (Level 1) and lowest
priority to unobservable inputs (Level 3). The three levels of the value
hierarchy are as follows:
Level 1: Inputs that reflect unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the ability to access at
the measurement date;
Level 2: Inputs reflect quoted prices of similar assets and liabilities in
active markets and quoted prices of identical assets and liabilities in
markets that are considered to be inactive, as well as inputs other than
quoted prices within level 1 that are observable for the asset or liability
either directly or indirectly; and
Level 3: Inputs that are unobservable for the asset or liability and reflect
the Investment Manager's own assumptions in accordance with the accounting
policies disclosed within note 2 to the financial statements.
f) Prepayments, amounts due from brokers and dividends receivable
Prepayments do not carry any interest and are short term in nature and are
accordingly stated at their amortised cost.
Amounts due from brokers and dividends receivable are measured at amortised
cost and reduced by any lifetime expected credit losses.
g) Cash and cash equivalents
Cash and cash equivalents consist of cash in hand and short term deposits in
banks with original maturities of less than three months.
h) Other payables and accrued expenses
Other payables and accrued expenses are non-interest bearing and are stated at
their amortised cost.
i) Foreign currency translation
Items included in the Company's financial statements are measured using the
currency of the primary economic environment in which it operates (the
"functional currency"). This is Pound Sterling (GBP) which reflects the
Company's activity of investing in predominantly Sterling securities. The
Company's shares are also issued in Pound Sterling (GBP). Foreign currency
monetary assets and liabilities have been translated at the exchange rates
ruling at the statement of financial position date. Transactions in foreign
currency during the period have been translated into Pound Sterling (GBP) at
the spot exchange rate in effect at the date of the transaction. Realised and
unrealised gains and losses on currency translation are recognised in profit
or loss in the Statement of Comprehensive Income.
j) Realised and unrealised gains and losses
Realised gains and losses arising on the disposal of investments are
calculated by reference to the cost attributable to those investments and the
sales proceeds, and are included in profit or loss in the Statement of
Comprehensive Income. The change in unrealised gains and losses arising on
investments held at the financial reporting date are also included in profit
or loss in the Statement of Comprehensive Income. The cost of investments
partly disposed is determined using the weighted average method.
k) Financial liabilities
Financial liabilities include other payables and accrued expenses, amounts due
to brokers and amounts due on redemption of Ordinary Shares which are held at
amortised cost using the effective interest rate method. Amounts due to
brokers represent payables for investments that have been contracted for but
not yet settled or delivered at the year end.
Financial liabilities are recognised initially at fair value, net of
transaction costs incurred and are subsequently carried at amortised cost
using the effective interest rate method. Financial liabilities are
derecognised when the obligation specified in the contract is discharged,
cancelled or expires.
l) Equity
Share capital represents the nominal value of equity shares and the excess of
the paid up capital over the nominal value.
Other reserves and the capital redemption reserve include all current and
prior results as disclosed in the Statement of Comprehensive Income and the
effect of share repurchases. Other reserves also include the deduction for the
excess of consideration paid over nominal value on share buybacks.
m) Expenses
Expenses are recognised in profit or loss in the Statement of Comprehensive
Income upon utilisation of the service or at the date they are incurred.
n) Segmental reporting
Operating segments are reported in the manner consistent with the internal
reporting used by the chief operating decision-maker ('CODM'). The CODM, who
is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors who makes
strategic decisions regarding the investments of the Company on an aggregated
basis. Strategic and financial management decisions are determined centrally
by the Board and, on this basis, the Company operates as a single investment
management business and no segmental reporting is provided. Other than as
disclosed in note 15, the CODM does not consider necessary to provide further
analysis for the Company.
3. Income
2022 2021
£ £
Dividends 2,060,399 965,480
4. Investment Manager and Adviser's fee
In line with the Alternative Investment Fund Management Agreement, dated 1
October 2019, the Investment Manager and Investment Adviser, is entitled to an
annual fee of 1.25% on the first £15 million of the NAV of the Company, and
1% of any excess, payable monthly in arrears. The agreement can be terminated
giving 12 months' notice or immediately should the Investment Manager be
placed into receivership or liquidation. The Investment Manager is entitled
to all the fees accrued and due up to the date of such termination but is not
entitled to compensation in respect of any termination.
The fees incurred for the year ended 31 March 2022 were £2,559,302 (2021:
£2,041,467) and as at the reporting date an amount of £193,516 was still
payable to the Investment Manager (2021: £203,266). This amount is included
in other payables and accrued expenses.
5. Directors' fees and expenses
Each Director is entitled to a fee of £20,000 per annum, the Chairman is
entitled to an additional fee of £7,500 and the Audit Committee Chairman is
entitled to an additional fee of £5,000. In addition, all Directors are
entitled to reimbursement of travel, hotel and other expenses incurred by them
in course of their duties relating to the Company. The Directors' fees and
expenses due for the year ended 31 March 2022 are £152,500 (2021: £152,076)
and as at 31 March 2022 an amount of £38,125 (2021: £38,125) was still
payable to the Directors. This amount is included in other payables and
accrued expenses.
6. Supplementary management fee
During a meeting of the Board of Directors on 16 December 2021, a payment of
£420,000 (2021: £350,000) was recommended by the Chairman in respect of the
2021 Supplementary management fee. This was approved by the Board of Directors
on 16 December 2021 and paid on 14 January 2022. The Board of Directors
consider the payment of a Supplementary management fee annually based on the
performance of the Company. The recognition and subsequent payment of this fee
is at the discretion of the Board of Directors.
7. Administration fees
Administrator of the Company is appointed as secretary and administrator and
is entitled to an annual fixed fee of £170,000 per annum as per the revised
fee schedule signed in November 2019. The fees due for the year ended 31 March
2022 are £170,000 (2021: £170,000) and as at the reporting date an amount of
£42,500 (2021: £42,500) was still payable to the administrator. This amount
is included in other payables and accrued expenses.
8. Custodian fees
The Administrator of the Company is appointed as custodian and is entitled to
an annual safekeeping fee fixed at £30,000 per annum as per the revised fee
schedule signed in November 2019. The fees due for the year ended 31 March
2022 are £30,000 (2021: £30,000) and as at the reporting date an amount of
£7,500 was still payable to the custodian (2021: £7,500). This amount is
included in other payables and accrued expenses.
9. Taxation
The Company is eligible for exemption from taxation in Guernsey under the
provisions of the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989. As
such, the Company is only liable to pay a fixed annual fee, currently £1,200
(2021: £1,200). The withholding tax of £9,748 (2021: £9,637) in the
Statement of Comprehensive Income relates to overseas dividends received or
receivable and is irrecoverable. Stamp duty tax of £64,200 (2021: £nil) in
the Statement of Comprehensive Income was incurred during the conversion of
the Ordinary Shares held in Silence Therapeutics Plc to American Depository
Shares during the year and is also irrecoverable.
10. Investments at fair value through profit or loss
2022 2021
£ £
Cost at beginning of year 135,816,176 116,574,851
Additions 68,155,686 54,330,660
Disposals (76,903,221) (54,972,926)
Net realised gains on investments 35,907,323 19,883,591
Cost at end of year 162,975,964 135,816,176
Net unrealised gains on investments 45,911,912 90,057,313
Fair value at end of the year 208,887,876 225,873,489
Representing:
2022 2021
£ £
Listed Equities 199,552,913 218,222,726
Unlisted Equities and Debt 9,334,963 7,650,763
208,887,876 225,873,489
The net unrealised losses on revaluation of the investments movement for the
year is £44,145,402 (2021: net unrealised gains of £89,365,329), which
consists of unrealised losses worth £75,880,048 (2021: £8,959,408) and
unrealised gains worth £31,734,646 (2021: £98,324,737).
11. Share capital
Authorised Share capital
Number of Shares £
Authorised:
Ordinary Shares of 50p each 90,000,000 45,000,000
Ordinary Shares - 1 April 2021 to 31 March 2022
Ordinary Shares of 50p each Number of Shares Share capital
£
At 1 April 2021 14,025,000 49,705,783
Share repurchase (25,000) (12,500)
At 31 March 2022 14,000,000 49,693,283
Ordinary Shares - 1 April 2020 to 31 March 2021
Ordinary Shares of 50p each Number of Shares Share capital
£
At 1 April 2020 14,192,125 49,789,346
Share repurchase (167,125) (83,563)
At 31 March 2021 14,025,000 49,705,783
Rights attributable to Ordinary Shares
In a winding-up, the holders of Ordinary Shares are entitled to the repayment
of the nominal amount paid up on their shares. In addition, they have the
right to receive surplus assets available for distribution. The shares confer
the right to dividends, and at general meetings, on a poll, confer the right
to one vote in respect of each Ordinary Share held.
12. Share buybacks
In accordance with section 315 of the Law, the Company has been granted
authority to make one or more market acquisitions (as defined in section 316
of the Law, of Ordinary Shares of 50 pence each in the capital of the Company
(the "Ordinary Shares") on such terms and in such manner as the Directors of
the Company may from time to time determine, provided that:
a) the maximum aggregate number of Ordinary Shares authorised to be
acquired does not exceed 10 per cent. of the issued Ordinary Share capital of
the Company on the date the shareholders' resolution is passed;
b) the minimum price (exclusive of expenses) payable by the Company for each
Ordinary Share is 50 pence and the maximum price payable by the Company for
each Ordinary Share is an amount equal to 105 per cent of the average of the
middle market quotations for an Ordinary Share as derived from The London
Stock Exchange Daily Official List for the five business days immediately
preceding the day on which that Ordinary Share is purchased and that
stipulated by Article 5(1) of the Buyback and Stabilisation Regulation being
the higher of the price of the last independent trade and the highest current
independent bid available in the market;
c) subject to paragraph (d), this authority shall expire (unless previously
renewed or revoked) at the earlier of the conclusion of the next annual
general meeting of the Company or on the date which is 18 months from the date
of the previous shareholders' resolution;
d) notwithstanding paragraph (c), the Company may make a contract to
purchase Ordinary Shares under the authority from the shareholders' before its
expiry which will or may be executed wholly or partly after the expiry of the
authority and may make a purchase of Ordinary Shares in pursuance of any such
contract after such expiry; and
e) the price payable for any Ordinary Shares so purchased may be paid by the
Company to the fullest extent permitted by the Law.
A renewal of the authority to make purchases of the Company's own Ordinary
Shares will be sought from existing shareholders at each annual general
meeting of the Company.
Between 1 April 2021 and 31 March 2022, the Company carried out two share
buybacks, resulting in a total reduction of 25,000 shares for a cost of
£412,100. These shares were subsequently cancelled. Between 1 April 2020 and
31 March 2021, the Company carried out two share buybacks, resulting in a
total reduction of 167,125 shares for a cost of £1,776,119. These shares were
subsequently cancelled.
13. Reconciliation of NAV to published NAV
2022 2021
£ £ per share £ £ per share
Published NAV 223,906,248 15.99 235,375,735 16.78
Unrealised loss on revaluation of investments at bid / mid-price
(4,497,226) (0.32) (5,064,412) (0.36)
NAV attributable to shareholders 219,409,022 15.67 230,311,323 16.42
The published monthly NAV is produced within 15 working days of the month end
and values the listed investments at mid-price. The financial statements value
listed investments at their bid price.
14. Loss/earnings per Ordinary Share and NAV per
Ordinary Share
The calculation of basic loss per Ordinary share of £0.75 (2021: earnings per
Ordinary share of £7.60) is based on net loss of £10,490,201 (2021: net
profit of £107,215,006) and the weighted average number of shares in issue
during the year of 14,014,151 shares (2021: 14,109,853 shares). At 31 March
2022 there was no difference in the diluted loss/earnings per share
calculation for the Ordinary Shares.
The calculation of NAV per Ordinary Share of £15.67 (2021: £16.42) is based
on a NAV of £219,409,022 (2021: £230,311,323) and the number of shares in
issue at the year-end of 14,000,000 shares (2021: 14,025,000 shares).
15. Segment information
The Chief Operating Decision Makers ("CODM") of the Company are the Board of
Directors. The Company has one reportable segment. The Board of Directors
review internal management reports on a quarterly basis.
Information on realised gains and losses derived from sales of investments are
disclosed in note 10 to the financial statements.
The Company is domiciled in Guernsey. All of the Company's income from
investments is from underlying companies. The majority of these companies are
incorporated in countries other than Guernsey (mainly Great Britain).
The geographical breakdown of the Company's investment portfolio is set out in
the Annual Report.
The Company has no non-financial assets classified as non-current assets.
Shareholders with holdings of 5% or more are disclosed in the Annual Report.
16. Financial risk management
The main risks arising from the Company's activities are:
(i) market risk, including currency risk, interest rate risk
and other price risk;
(ii) liquidity risk; and
(iii) credit risk
The Company Secretary, in close co-operation with the Board of Directors and
the Investment Manager, coordinates the Company's risk management. The
policies for managing each of these risks are summarised below and have been
applied throughout the year.
i) Market risk
The fair value of future cash flows of a financial instrument held by the
Company may fluctuate because of changes in market prices. This market risk
comprises currency risk, interest rate risk and other price risk. The Board of
Directors reviews and agrees policies for managing these risks.
Currency risk
The functional and presentation currency of the Company is Pound Sterling
(GBP) and, therefore, the Company's principal exposure to foreign currency
risk comprises investments priced in other currencies, principally US Dollars.
The Investment Manager monitors the Company's exposure to foreign currencies
and reports to the Board on a regular basis. The Investment Manager measures
the risk to the Company of the foreign currency exposure by considering the
effect on the NAV and income of a movement in the rates of exchange to which
the Company's assets, liabilities, income and expenses are exposed.
At 31 March 2022 the currency profile of those financial assets and
liabilities was:
GBP EUR USD Total
£ £ £ £
Investments at fair value through profit or loss 203,631,209 208,887,876
- 5,256,667
Dividends receivable 128,600 - - 128,600
Amounts due from brokers 150,753 - - 150,753
Cash and cash equivalents 10,622,128 - 2,634 10,624,762
Trade and other payables (385,342) - - (385,342)
Total net foreign currency exposure 214,147,348 - 5,259,301 219,406,649
At 31 March 2021 the currency profile of those financial assets and
liabilities was:
GBP EUR USD Total
£ £ £ £
Investments at fair value through profit or loss 222,279,949 2,160,918 225,873,489
1,432,622
Dividends and interest receivable 219,500 - - 219,500
Amounts due from brokers 128,447 - - 128,447
Cash and cash equivalents 5,781,143 - 2,513 5,783,656
Trade and other payables (1,709,877) - - (1,709,877)
Total net foreign currency exposure 226,699,162 1,432,622 2,163,431 230,295,215
Sensitivity analysis is based on the Company's monetary foreign currency
instruments held at each balance sheet date.
31 March 2022 31 March 2021
Currency Increase/ Impact on Total Comprehensive Income Impact on Net Assets Impact on Total Comprehensive Income Impact on Net Assets
(decrease) in the exchange rate
£ £ £ £
USD & EUR vs GBP 10%/(10%) (477,879)/584,074 (477,879)/584,074 (326,914) / 399,561 (326,914) / 399,561
Interest rate risk
Interest rate movements may affect:
· the fair value of the investments in fixed rate securities;
· the level of income receivable on cash deposits and floating rate
debt instruments; and
· the interest payable on the Company's variable rate borrowings, if
any.
The possible effects on fair value and cash flows that could arise as a result
of changes in interest rates are taken
into account when making investment decisions and borrowings, if any. The
Board reviews on a regular basis the values of the unquoted loans and
preferred shares to companies in which private equity investment is made.
Interest rate risk is not significant to the Company as it has no significant
fixed income investments or borrowings.
Other price risk
Other price risks (i.e. changes in market prices other than those arising from
currency risk or interest rate risk) may affect the value of investments.
The Company's exposure to price risk comprises mainly of movements in the
value of the Company's investments. As at the year-end, the spread of the
Company's investment portfolio is detailed above.
The Board of Directors manages the market price risks inherent in the
investment portfolio by ensuring full and timely access to relevant investment
information from the Investment Manager. The Board meets regularly and at each
meeting reviews investment performance. The Board monitors the Investment
Manager's compliance with the Company's objectives and is directly responsible
for investment strategy and asset allocation.
The Company's exposure to other changes in market prices at 31 March 2022 on
its investments was as follows:
2022 2021
£ £
Financial assets at fair value through profit or loss
- Non-current investments at fair value through profit or loss
208,887,876 225,873,489
The following table illustrates the sensitivity of the profit and net assets
to an increase or decrease of 15% (2021:15%) in the fair values of the
Company's investments. This level of change is considered to be reasonably
possible based on observation of current market conditions. The sensitivity
analysis is based on the Company's investments at each balance sheet date,
with all other variables held constant.
2022 2021
Increase in fair value Decrease in fair value Increase in fair value Decrease in fair value
£ £ £ £
Statement of Comprehensive Income
Profit/(loss) for the year 31,333,181 (31,333,181) 33,881,023 (33,881,023)
Net assets 31,333,181 (31,333,181) 33,881,023 (33,881,023)
ii) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting
obligations associated with financial liabilities.
The Company is faced with some level of liquidity risk as 4.25% (2021: 3.3%)
of the Company's investments are in unlisted equities and other investments
that may not be readily realisable.
In accordance with the Company's policy, the Investment Manager monitors the
Company's liquidity risk, and the Board of Directors has overall
responsibility.
The table below shows the split of investments with maturity dates of less
than a year and investments with no maturity date.
31 March 2022 31 March 2021
Less Greater than 1 year No maturity date Less than 1 year Greater No maturity date
than 1 year Total than 1 Total
year
£ £ £ £ £ £ £ £
Listed - - 199,552,913 199,552,913 - - 218,222,726 218,222,726
Unlisted - - 9,334,963 9,334,963 - 1,427,137 6,223,626 7,650,763
- - 208,887,876 208,887,876 - 1,427,137 224,446,352 225,873,489
The Company's financial liabilities are due to mature within one year from the
Statement of Financial Position date. The contractual maturities of these
financial liabilities equal their carrying amount on the Statement of
Financial Position. As the Company is in a net current asset position, the
Directors are satisfied that there are adequate resources to meet these
obligations as they fall due.
iii) Credit risk
The Company does not have any significant exposure to credit risk arising from
any one individual party. Credit risk is spread across a number of
counterparties, each having an immaterial effect on the Company's cash flows,
should a default happen. The Company's maximum credit risk exposure at the
Statement of Financial Position date is represented by the respective carrying
amounts of the financial assets in the Statement of Financial Position.
There is a risk that the custodian and bank used by the Company to hold assets
and cash balances could fail and that the Company's assets may not be
returned.
Associated with this is the additional risk of fraud or theft by employees of
those third parties. The Board manages this risk through the Investment
Manager monitoring the financial position of those custodians and banks used
by the Company.
The credit rating of the custodian and the bank, BNP Paribas Securities
Services S.C.A., Guernsey Branch, is A-1 with Standard & Poor's.
iv) Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide
variety of causes associated with the processes, technology and infrastructure
supporting the Company's activities with financial instruments either
internally within the Company or externally at the Company's service
providers, and from external factors other than credit, market and liquidity
risks such as those arising from legal and regulatory requirements and
generally accepted standards of investment management behaviour.
The Company's objective is to manage operational risk so as to balance
limiting of financial losses and damage to its reputation with achieving its
investment objective.
Capital management policies and procedures
The Company's capital management objectives are:
- to ensure that the Company will be able to continue as a going
concern; and
- to maximise the income and capital return to its equity shareholders
through an appropriate balance of equity capital and long-term debt. The
policy is that gearing should not exceed 20% of net assets.
The Company's capital at 31 March 2022 comprises:
2022 2021
Equity £ £
Share capital 49,693,283 49,705,783
Other reserves 169,715,739 180,605,540
219,409,022 230,311,323
The Company does not have any long term debt outstanding as at 31 March 2022
and 31 March 2021.
The Board, with the assistance of the Investment Manager, monitors and reviews
the broad structure of the Company's capital on an ongoing basis. This review
includes:
- the planned level of gearing, which takes account of the Investment
Manager's views on the market;
- the need to buy back equity shares for cancellation, which takes
account of the difference between the NAV per share and the share price (i.e.
the level of share price discount or premium);
- the need for new issues of equity shares; and
- the extent to which revenue in excess of that which is required to be
distributed should be retained.
The Company's objectives, policies and processes for managing capital are
unchanged from the preceding accounting period and there are no imposed
capital requirements.
17. Fair value hierarchy
Where an asset or liability's value is determined based on inputs from
different levels of the hierarchy, the level in the fair value hierarchy
assumed for the valuation assessment is the lowest level input significant to
the fair value measurement in its entirety.
Investments whose values are based on quoted market prices in active markets,
and therefore classified within level 1, include active listed equities. The
Company does not adjust the quoted price for these instruments.
Financial instruments that trade in markets that are not considered to be
active but are valued based on quoted market prices, dealer quotations or
alternative pricing sources supported by observable inputs are classified
within level 2. As level 2 investments include positions that are not traded
in active markets and/or are subject to transfer restrictions, valuations may
be adjusted to reflect illiquidity and/or non-transferability, which are
generally based on available market information.
Investments classified within level 3 have significant unobservable inputs.
Level 3 instruments consists of private equity positions. As observable prices
are not available for these securities, the Company has used valuation
techniques to derive the fair value. For certain investments, the Company
utilises comparable trading multiples and recent transactions in arriving at
the valuation for these positions. The Investment Manager determines
comparable public companies (peers) based on industry, size, developmental
stage and strategy.
Management then calculates a trading multiple for each comparable Company
identified. The multiple is calculated by dividing the enterprise value of the
comparable Company by its earnings before interest, taxes, depreciation and
amortisation ("EBITDA"). The trading multiple is then discounted for
considerations such as illiquidity and differences between the comparable
companies based on Company-specific facts and circumstances. New investments
are initially carried at cost, for a limited period, being the fair value of
the most recent investment in the investee Company.
In accordance with IPEV valuation guidelines, changes and events since the
acquisition date are monitored to assess the impact on the fair value of the
investment and the valuation derived from investment cost is adjusted if
necessary. Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
The table below analyses financial instruments measured at fair value at the
end of the reporting period by the level in the fair value hierarchy into
which the fair value measurement is categorised.
31 March 2022 Level 1 Level 2 Level 3 Total
£ £ £ £
Financial assets at fair value
through profit or loss
Listed securities 199,552,913 - - 199,552,913
Unlisted securities - - 9,334,963 9,334,963
199,552,913 - 9,334,963 208,887,876
31 March 2021
Financial assets at fair value
through profit or loss
Listed securities 214,389,553 3,833,173 - 218,222,726
Unlisted securities - - 7,650,763 7,650,763
214,389,553 3,833,173 7,650,763 225,873,489
There were 2 listed positions which transferred from level 2 to level 1. The
transfer was considered appropriate because trading volumes and liquidity in
the market improved and therefore values are based on quoted market prices in
an active market.
The following table summarises the changes in fair value of the Company's
Level 3 investments for the year ended 31 March 2022.
2022 2021
£ £
Balance at 1 April 7,650,763 8,874,788
Net realised gains on investments 4,421,918 475,742
Unrealised gains/(losses) on investments 3,098,143 (127,216)
Sale of investments (12,864,339) (1,572,551)
Purchase of investments 2,108,675 -
Transfers between level 1 and level 3 4,919,803 -
Balance at 31 March 9,334,963 7,650,763
There was 1 position which transferred from level 3 to level 1 since it became
listed on the LSE during the year. There was 3 positions which transferred
from level 1 to level 3 given that they was put under
administration/liquidation during the year. There were no transfers to and
from level 3 during the year ended 31 March 2021.
Transfers between levels are determined based on changes to the significant
inputs used in the fair value estimation. The Directors have selected an
accounting policy to apply transfers between levels in the fair value
hierarchy at the beginning of the relevant reporting period.
The table below sets out sensitivity to the earnings multiples used at 31
March 2022 in measuring a significant investment categorised as Level 3 in the
fair value hierarchy and measured based on comparable multiples approach.
Valuation Method Fair Value at 31 March 2022 (£) Unobservable inputs Factor Sensitivity to changes in significant unobservable inputs
Comparable Company Multiples 2,351,230 Earnings (EBITDA) multiple 6 The estimated fair value would increase if:
- the Earnings (EBITDA) multiple was increased
.7x
Valuation Method Fair Value at 31 March 2021 (£) Unobservable inputs Factor Sensitivity to changes in significant unobservable inputs
Comparable Company Multiples 2,002,538 Earnings (EBITDA) multiple 6x The estimated fair value would increase if:
- the Earnings (EBITDA) multiple was increased
The remaining investments classified as Level 3 have not been included in the
above analysis as they have either a fair value that either approximates a
recent transaction price or is cash held in escrow pending the outcome of
certain post sale conditions (i.e. warranties).
Although the Company believes that its estimates of fair value are
appropriate, the use of different methodologies or assumptions could lead to
different measurements of fair value. For fair value measurements in Level 3,
changing one or more of the assumptions used to reasonably possible
alternative assumptions would have the following effects on the net assets
attributable to the shareholders.
As at 31 March 2022
Valuation Method Input Sensitivity used £
Comparable Company Earnings (EBITDA) multiple +/- 10.0% (7.4/6.0) 186,507/(186,507)
Multiples
As at 31 March 2021
Valuation Method Input Sensitivity used £
Comparable Company Earnings (EBITDA) multiple +/- 10.0% (6.6/5.4) 173,657/(173,657)
Multiples
A sensitivity of 1.0x and 10% has been considered appropriate given the
earnings (EBITDA) multiple for comparable Company multiples lies within this
range.
18. Related parties
All transactions with related parties are carried out at arm's length and the
prices reflect the prevailing fair market value of the assets on the date of
the transaction.
The Investment Manager and Investment Adviser are considered to be related
parties. The fees paid are included in the Statement of Comprehensive Income
and further detailed in notes 4 and 6.
The Directors are also considered related parties and their total fees during
the year ended 31 March 2022 amounted to £152,500 (2021: £152,076). At 31
March 2022, £38,125 (2021: £38,125) included in other accruals and payables
was payable to the Directors. Please refer to note 5 for further details.
Christopher Mills is a Director and shareholder of the Company. He is also a
Director of the Company's Investment Manager and Investment Adviser and Chief
Investment Officer of North Atlantic Smaller Companies Investment Trust plc
("NASCIT"), which is a substantial shareholder of the Company as detailed
above and note 19 of the Annual Report.
Rupert Evans is a consultant to the law firm Mourant Ozannes, the legal
adviser to the Company. The Company did not receive any legal services from
Mourant Ozannes during the year, nor did it receive any services in the prior
year.
On 29 October 2021, the Company entered into an agreement for a short-term,
unsecured and interest-free loan from Harwood Holdco in order to finance new
investments. The facility amounted to GBP 3,500,000 and were all repaid on 15
November 2021.
Sidney Cabessa is a Director of Harwood Capital Management Limited, the parent
Company of the Investment Adviser and Investment Manager. No fees were paid or
are payable to Harwood Capital Management Limited.
19. Majority Shareholder
NASCIT holds 52.57% of the Ordinary shares of the Company.
20. Subsequent Events
There have been no significant events subsequent to the year end, which, in
the opinion of the Directors, may have had an impact on the financial
statements for the year ended 31 March 2022.
ALTERNATIVE PERFORMANCE MEASURES
NAV per Ordinary Share
NAV per Ordinary Share means an amount equal to, as at the relevant date, the
NAV attributable to Ordinary Shares divided by the number of Ordinary Shares
in issue as at such date.
Reason for use
Common industry performance benchmark for calculating the Total Return and
Share Price (Discount)/Premium to NAV per Ordinary Share.
Recalculation
NAV per Ordinary Share is calculated as follows:
31 March 2022 31 March 2021
Net Assets as per Statement of Financial Position £219,409,022 £230,311,323
Number of Ordinary Shares in issue at year 14,000,000 14,025,000
NAV per Ordinary Share £15.67 £16.42
Share Price Discount to NAV per Ordinary Share
Closing price as at such date as published on the London Stock Exchange
divided by the NAV per Ordinary Share.
Reason for use
Common industry measure to understand the price of the Company's shares
relative to its net asset valuation.
Recalculation
31 March 2022 31 March 2021
Closing price as at 31 March as published on the London Stock Exchange
£14.80 £14.90
NAV per Ordinary Share £15.67 £16.42
Share Price Discount (5.55)% (9.26)%
COMPANY INFORMATION
Registered Office
BNP Paribas House,
St Julian's Avenue,
St Peter Port, Guernsey, GY1 1WA
Investment Manager and Investment Adviser
Harwood Capital Management (Gibraltar) Limited LLP
Suite 827 Europort, Europort Road, Gibraltar
Custodian
BNP Paribas Securities Services S.C.A., Guernsey Branch
BNP Paribas House, St Julian's Avenue,
St Peter Port, Guernsey, GY1 1WA
Secretary and Administration
BNP Paribas Securities Services S.C.A., Guernsey Branch
BNP Paribas House, St Julian's Avenue,
St Peter Port, Guernsey, GY1 1WA
Registrars
Link Market Services (Guernsey) Limited
PO Box 627, St Sampson, Guernsey, GY1 4PP
Stockbroker
Winterflood Securities Limited
The Atrium Building, Cannon Bridge House
25 Dowgate, Hill, London, EC4R 2GA
Independent Auditor
RSM CI (Audit) Limited
P.O. Box 179, 40 Esplanade
St Helier, Jersey, JE4 9RJ
Legal Advisers
To the Company as to Guernsey law:
Mourant Ozannes
Royal Chambers, St. Julian's Avenue, St Peter Port,
Guernsey, Channel Islands, GY1 4HP
To the Company as to English law:
Bircham Dyson Bell
One Bartholomew CI
London, EC1A 7BL
Website
www.oryxinternationalgrowthfund.co.uk
(http://www.oryxinternationalgrowthfund.co.uk)
Enquiries:
Colin Eastburn-Mallory
BNP Paribas Securities Services S.C.A., Guernsey Branch
Tel: +44 (0) 1481 750 859
A copy of the Company's Annual Report and Financial Statements is available
from the Company Secretary, (BNP Paribas Securities Services S.C.A., Guernsey
Branch, St Julian's Avenue, St Peter Port, Guernsey, GY1 1WA), or on the
Company's website (www.oryxinternationalgrowthfund.co.uk
(http://www.oryxinternationalgrowthfund.co.uk/) ).
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. END FR FLFFRDVIDIIFRecent news on Oryx International Growth Fund
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