REG - Seraphim Space I.T. - Full Year Results
17/10/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231017:nRSQ3021Qa&default-theme=true
RNS Number : 3021Q Seraphim Space Investment Trust PLC 17 October 2023
SERAPHIM SPACE INVESTMENT TRUST PLC
("SSIT" or "the Company")
Full Year Results
Seraphim Space Investment Trust plc (LSE: SSIT), the world's first SpaceTech
investment company, announces its audited results for the financial year ended
30 June 2023.
The annual report can be found at: here
(https://protect.mimecast-offshore.com/s/-8g-CqYnxBsR2mErIZ8_7s?domain=investors.seraphim.vc)
, and the summary is below:
Financial Summary
30 June 2023 30 June 2022
Change
NAV £222.4m £239.3m -7.1%
NAV per share(1) 92.90p 99.97p -7.1%
Portfolio valuation £187.4m £186.1m 0.7%
Fair value vs. cost(1) 98.5% 104.3%
Market capitalisation £64.6m £126.9m -49.1%
Share price(1) 27.0p 53.0p -49.1%
-Discount/+premium(1) -70.9% -47.0%
Ongoing charges(1) 1.89% 1.72%
Number of shares in issue 239.4m 239.4m 0.0%
Liquid resources £35.3m £57.7m -38.8%
(1) Alternative performance measure - see Alternative Performance Measures on
pages 160 to 161 of the annual report
Full Year Highlights
· During the year, £4.9m was invested in six new portfolio companies.
£4.2m into two new additions to the Company's main portfolio, with £0.7m
into early-stage companies.
· The Company completed £12.2m of additional follow-on investments in
eight companies (five in the main portfolio totalling £10.7m and three
early-stage, non-material companies totalling £1.5m).
· The top 10 portfolio companies saw their bookings increase by 199% on
average over the year, with the average revenue growth increase 34% (both on a
fair value weighted basis).
· Seven of SSIT's portfolio companies closed funding rounds at higher
valuations relative to previous rounds, versus only one at a lower valuation
(the remaining rounds were unpriced convertible loan note issues).
· Investment activity was robust, with a total of 11 companies
successfully closing funding rounds.
· The majority of rounds were led by new external investors, with SSIT
participating in two-thirds of the rounds with the other rounds being able to
access the required funding from other investors due to the strength of their
syndicates.
Transactions Completed during the Full Year
Company Segment Sub-sector HQ Type Cost
(£m)
Voyager Beyond Earth Space Infrastructure US New Investment 2.1
Taranis Analyse Data Analytics Israel New Investment 2.1
PlanetWatchers Analyse Data Analytics UK Follow-on 2.5
D-Orbit Launch In-orbit Services Italy Follow-on 4.4
SatVu Platform Earth Observation UK Follow-on 2.1
4 early-stage(1) investments New Investment 0.7
2 early-stage(1), material investments Follow-on 1.7
3 early-stage(1), non-material investments Follow-on 1.5
Total 17.1m
(1) These are very early-stage companies in which small (typically less
than £1m) initial investments are made and provide early access to companies
which could become candidates for substantial growth investment in subsequent
rounds should they progress strongly.
Post Period Highlights
· Since 30 June 2023, the Company has invested a total of £4.1m,
with £3.3m in follow-on funding into three existing portfolio companies and
£0.9m into two new early-stage investments.
· On 13 July 2023, the Company announced a share repurchase
programme. In the period to 8 September 2023, the Company bought back a
total of 2,186,344 shares (0.9% of the shares in issue at 12 July 2023) at an
aggregate cost of £1.0m or 45p per share.
Will Whitehorn, Chair of Seraphim Space Investment Trust plc, commented: "The
SSIT portfolio is well-positioned given the strong global tailwinds of
increased defence spending and the continued investment into solutions to
address the climate and sustainability agenda. The top 10 portfolio companies
saw their bookings increase by 199% on a fair value weighted average basis
over the year. Therefore, these companies have solid contracted orders for the
years ahead, providing great confidence to investors.
Encouragingly, we have seen some well-known private equity investors, such as
KKR, Advent and BlackRock, entering the sector to build their SpaceTech
exposure and indicating interest from new investor groups. Given their broad
mandate to invest across sectors, their focus on space gives us confidence of
increasing growth aspirations for the domain. Furthermore, with significant
amounts of dry powder (capital which has been committed to but not yet
invested by investment vehicles) sat in impact and climate funds from across
the globe, we remain confident that there is a large and growing pool of
motivated capital to support the needs of companies in the SSIT portfolio in
the years ahead.
We have reserved cash to support portfolio fundraisings as required in the
year ahead, leaving a modest sum for new investment until the market improves
and more capital can be raised. Some of the best investments are undertaken at
the bottom of the economic cycle. The SSIT deal flow pipeline is healthy and,
given cash constraints, we are focused on participating in only the most
exceptional opportunities, carefully selecting those with a strong growth
premise that offer the highest returns for shareholders."
James Bruegger, Chief Investment Officer, Seraphim Space Manager LLP, said:
"We are delighted with the progress the portfolio has made during the period.
The portfolio has proven itself adept at successfully accessing capital at a
time when the wider funding raising environment has been challenging. It is
particularly gratifying that many of these companies have closed funding
rounds led by new investors and on improved terms relative to their previous
funding rounds. The success in capital raising across the portfolio is in no
small part due to the impressive commercial traction achieved allied to the
scale of the opportunities these companies are addressing. With the majority
of the portfolio now well-funded through the next 12‑18 months, we are
excited to see what will be achieved over the year ahead."
Mark Boggett, Chief Executive Officer, Seraphim Space Manager LLP, said: "We
remain confident with the outlook for the space domain globally as well as the
SSIT portfolio, consisting of best-of-breed SpaceTech companies. We continue
to enjoy the privileged position of seeing the majority of the sector's global
deal flow. This provides an information asymmetry over the sector that informs
our every move.
With the secular trends relating to global security, food security, climate
change and sustainability expected to accelerate, we believe the Company is
well-positioned to take advantage of the resultant opportunities. We
anticipate that demand for the products and services of the Company's
portfolio companies, particularly from governments, should result in the
portfolio delivering strong growth metrics.
As of 13 October 2023, cash was £29.4m, with a potential further £3.0m of
liquidity available in the holdings of listed companies. We believe this
liquidity should be sufficient to provide the necessary levels of support to
the portfolio over the course of the next 12 months. Whilst we expect to
continue to diversify the portfolio with selective new investments,
uncertainty around the timing of market recovery (and, therefore, our ability
to raise new equity capital) means that the size of new investments will
likely be small, with investment activity expected to be more weighted in
favour of supporting the existing portfolio until a time when the market
provides the appropriate conditions to fundraise."
A copy of the Annual Report has been submitted to the National Storage
Mechanism and will shortly be available for inspection here
(https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism)
.
Results Presentations
The Company will also be hosting a virtual presentation for analysts at 9.00am
today and an online presentation for retail investors at 11.00am. To register
for either event, please contact SEC Newgate at seraphim@secnewgate.co.uk
(mailto:seraphim@secnewgate.co.uk) .
Capital Markets Day
The Company is hosting a Capital Markets Day in London for institutional
investors and equity analysts at 15:00pm on Wednesday, 18 October 2023.
Institutional investors and equity analysts can register for the in-person
event by contacting Deutsche Bank/J.P. Morgan Cazenove or by emailing SEC
Newgate at seraphim@secnewgate.co.uk (mailto:seraphim@secnewgate.co.uk)
Following the announcement of the results, no new material information will be
disclosed at the event.
- Ends -
Media Enquiries
Seraphim Space Manager LLP (via SEC Newgate)
Mark Boggett, CEO / James Bruegger, CIO / Rob Desborough
SEC Newgate (Communications advisers)
seraphim@secnewgate.co.uk
(mailto:seraphim@secnewgate.co.uk)
Emma Kane / Clotilde Gros / George Esmond
+44 (0) 20 3757 6767
Deutsche Numis
Mark Hankinson / Gavin Deane / Neil Coleman
+44 (0) 20 7545 8000
J.P. Morgan Cazenove
William Simmonds / Jérémie Birnbaum / Rupert
Budge
+44 (0) 20 7742 4000
Ocorian Administration (UK)
Limited
seraphimteam@ocorian.com (mailto:seraphimteam@ocorian.com)
Lorna Zimny
+44 7387 971915
Notes to Editors:
About Seraphim Space Investment Trust plc
Seraphim Space Investment Trust plc (the "Company") is the world's first
listed fund focused on SpaceTech. The Company seeks exposure predominantly to
early and growth stage private financed SpaceTech businesses that have the
potential to dominate globally and that are sector leaders with first mover
advantages in areas such as climate, communications, mobility and cyber
security.
The Company is listed on the Premium Segment of the London Stock Exchange.
Further information is available at: https://investors.seraphim.vc
(https://investors.seraphim.vc/)
Please note that the Glossary below provides definitions for defined terms
used through the Annual Report.
Investment Manager
The Company is managed by Seraphim Space Manager LLP (the 'Investment Manager'
or 'Seraphim Space'), the world's leading SpaceTech investment group. The
Investment Manager's team consists of seasoned venture capitalists and some of
the space sector's most successful entrepreneurs who scaled their businesses
to multi-billion Dollar outcomes.
The Investment Manager has supported more than 100 SpaceTech companies across
its fund management and accelerator activities since 2016 and has a proven
track record of delivering value.
Positioned at the heart of the global SpaceTech ecosystem, the Investment
Manager has a unique model, using information asymmetry generated from its
global deal flow, partnerships with leading industry players and primary
research to back the most notable emerging SpaceTech companies shaping a new
industrial revolution.
The Investment Manager is a signatory to the UN Principles for Responsible
Investment ('UN PRI'). Its first UN PRI report is due in 2024.
Key Highlights
For the year ended 30 June 2023
Average portfolio company revenue growth(1) Average portfolio company bookings growth(1)
34% 199%
Investment into new portfolio companies Follow on investments
£4.9m £12.2m
Key Performance Indicators
For the year ended 30 June 2023
NAV per share movement(2) Share price movement(2)
-7.1% -49.1%
Discount (as at 30 June 2023)(2) Ongoing charges(2)
70.9% 1.89%
Fair value vs. initial cost (as at 30 June 2023)(2)
98.5%
(1) Fair value weighted average (as defined in the Glossary) year-on-year
growth for the 12 months ended 30 June 2023 of the top 10holdings,
representing 86% of fair value (72% of NAV) at the year end. Source: Portfolio
company data.)
((2) Alternative performance measure - see Alternative Performance Measures
below.)
Sector Highlights
The year ended 30 June 2023 was another year of breakthroughs for the space
sector. It was marked by new scientific boundaries being pushed, SpaceTech's
central role in geopolitics being reinforced, Big Tech (the most dominant and
largest technology companies) further embracing satellite communications,
multi-billion Dollar mergers and acquisitions and concerted efforts to protect
the sustainability of space.
· Jul-22: First images from James Webb Space Telescope
· Sep22: NASA DART mission alters trajectory of asteroid
· Oct-22: Construction of the Chinese Space Station completes
· Nov-22: Apple/Globalstar deal establishes direct to smartphone
satcoms
· Nov-22: Successful first launch of NASA's Space Launch System (SLS),
marking the first step in the next era of lunar exploration
· Nov-22: Satcoms operator Eutelsat announces plans to merge with 'mega
constellation' OneWeb for $3.4bn
· Dec-22: New US Federal Communication Commission rules on de-orbiting
all space craft within five years of end of life
· Dec-22: Private Equity group, Advent International, acquires Maxar
for $6.4bn
· Apr-23: SpaceX attempts first launch of its next generation Starship
launch vehicle that is projected to decrease launch costs by a further 10x
· Apr-23: Virgin Orbit files for bankruptcy following its failed launch
in Jan-23
· May-23: Satellite operators Viasat and Inmarsat complete $7.3bn
merger
Sizeable Markets Addressed by Space
Size of the Opportunity
The space industry has evolved beyond the confines of traditionally being
classified within 'aerospace and defence', with the utilisation of space data
in large, well-established terrestrial markets. Telecommunications, navigation
and transportation represent the most significant opportunities, after
defence, in the near term, and have become increasingly reliant on space-based
assets to drive business.
With climate change taking centre stage among global priorities, earth
observation data has played a crucial role in monitoring the planet. With
meteorology heavily reliant on space technology for weather forecasting, space
data has also helped us better monitor deforestation and the health of oceans
and ecosystems. Satellites equipped with multispectral and hyperspectral
imaging sensors can detect and map mineral deposits, oil reserves and
vegetation health.
As the applications of space data remain diverse, a common factor among all of
them is that SpaceTech has brought a welcome move of modernisation to
traditionally large markets slow to innovate. From a venture perspective,
large markets such as telecommunications and navigation remain ripe for
disruption by new technologies.
The global space economy is valued at $386bn, with 72% of this attributed to
the satellite industry and its downstream applications. This sub-sector is
well-represented across SSIT's portfolio with 57% of companies operating
within satellite services.
Investment Activity
Seraphim Space tracks global venture capital activity within the SpaceTech
market. Collating information drawn from both public and private sources on
individual transactions, Seraphim Space publishes a quarterly SpaceTech
venture capital index (the 'Seraphim Space Index') that provides insights into
the latest trends in the SpaceTech investment market. The charts in the annual
report are drawn from this index.
· SpaceTech venture capital investment for the 12 months ending
June 2023 totalled $4.5bn, down from $9.2bn the previous year. However, this
decline is primarily attributable to unusually large funding rounds in CY21
and CY22 such as those by SpaceX1 and Sierra Space(2). Excluding these,
investment activity was down less than one third compared to the previous
period.
· The sector has shown strong signs of recovery in the first half
of CY23, where there was a 57% increase in investment compared to the second
half of CY22.
· The overall number of deals in the sector has increased this
year, underlining a robust early stage investment environment. Early stage
investments reached an all-time high, with 257 deals in Q2 CY23, showing that
investor interest remains strong at Seed and Series A.
· The number of late stage investments also saw a notable uptick in
H1 CY23, particularly in Series C deals in Q2 CY23, reinforcing growing
investor confidence in established SpaceTech companies.
((1) SpaceX raised $1.16bn in Q2 CY21, $1.72bn in Q2 CY22 and $750m in Q1
CY23.)
((2) Sierra Space raised $1.4bn in Q4 CY21.)
Trailing 12 Months Spacetech Investment Activity Index
· The Seraphim Space Index serves as an investment activity barometer,
indexing global SpaceTech VC deals against Q1 CY18.
· Investment activity peaked at an index value of 417 in Q2 CY21 and
remained strong through Q3 CY22, declining to 178 in Q2 CY23 due to less
growth investing.
· Despite general market declines affecting SpaceTech, underlying
startup activity continues to reach new heights with 301 deals in Q2 CY23,
indicating robust sector health.
Spacetech Annual Cumulative Investment Tracker ($bn invested)
· H1 CY23 showed a SpaceTech investment rebound, marked by a resurgence
in growth deals absent in H2 CY22.
· Notable funding rounds included SpaceX's $750m, Astranis' $200m, and
Isar Aerospace's $165m, signaling renewed investor interest.
· Despite being down due to weak H2 CY22, trailing 12 months' data
shows early signs of recovery.
· Even though H1 CY23 investment lagged behind CY21 and CY22, it still
outpaced all previous years, confirming enduring market strength.
Trailing 12 Months Spacetech Investment by Sub-Sector ($bn)
· From CY17 to CY22, the Platform segment led in venture capital
investment, primarily funding next-gen communications and earth-sensing
networks.
· Investment is now more diversified across the SpaceTech ecosystem,
with rising interest in newly emerging sectors like Beyond Earth.
Number of Spacetech Deals by Region (12 Months Ended Q2 CY)
· Europe surpassed the US in Q1 CY23 investment, marking an early
recovery in the region.
· The US regained its lead in Q2 CY23, but Europe still saw a 60%
surge in deal numbers year-over-year.
· Asian investment also showed robust growth, increasing by 79%
over the prior year.
SpaceTech VC activity compared to general technology VC activity
· Compared to the broader technology venture capital landscape,
SpaceTech has shown superior performance when indexed against Q1 CY18.
· Despite a 50% drop in investment from CY22 peaks, SpaceTech
investment is still over twice its Q1 CY18 levels, whereas general technology
VC investment is at 1.25x.
· SpaceTech has demonstrated greater resilience amid macroeconomic
uncertainty, contrasting with broader technology VC trends.
· The sector's resilience is evident in its growing deal activity, in
stark contrast to five quarters of decline in general technology.
Chair's Statement
'SSIT addresses two of the biggest threats we collectively face over this
decade: firstly, geopolitical tensions and the ever-present potential for
escalation of war and, secondly, the growing symptoms of climate change,
including increasing instances and severity of wildfires, flooding and
hurricanes. Our portfolio companies are delivering innovative ways to gather
unique datasets about our planet in high resolution from space and then
applying AI to create insightful solutions. The portfolio is largely
well-capitalised following robust fundraising activity, with a total of 11
companies successfully closing funding rounds, the majority led by external
investors and priced higher than previous rounds. This positive activity
demonstrates the continued strength of the SSIT portfolio and the increasing
market recognition of its potential.
In July 2023, the Board commenced a share repurchase programme which has
resulted in a share price recovery to a discount level comparable to our
broader peer group. We have confidence that underlying portfolio performance
will instil confidence in investor sentiment going forward.'
Will Whitehorn
Chair
I am pleased to present the Annual Report of Seraphim Space Investment Trust
PLC for the year ended 30 June 2023.
I would like to thank all shareholders for their continued support during the
challenging macroeconomic climate of 2022/23.
Progress in the Year
£4.9m was invested in six new portfolio companies during the year, two of
which were sourced through accelerator programmes managed by an affiliate of
the Investment Manager. In addition, a further £12.2m was deployed as
follow-on investments in eight existing portfolio companies during the year.
Highlights include the following:
· World firsts: Several portfolio companies achieved major milestones
showcasing new capabilities that set the path for the space sector's future:
o AST SpaceMobile (NASDAQ: ASTS) successfully demonstrated its ability to
deliver space-based cellular communications at 4G speeds direct to unmodified
smartphones, marking a major development in the convergence of space-based and
terrestrial connectivity.
o SatVu (formerly Satellite Vu) successfully launched 'HOTSAT 1', its first
smallsat capable of measuring the thermal footprint of any building on the
planet. This marked an important step in space's critical role in helping the
world achieve Net Zero.
o Tomorrow.io successfully launched its first two miniaturised radar
satellites for collecting real time precipitation data to turbo charge global
weather forecasting capabilities.
o Xona was the first private company ever to launch a GPS satellite which
demonstrated its ability to provide centimetre-level user positioning with its
proprietary satellite hardware and software stack.
· Traction: Buoyed by a spike in demand by governments for commercial
space capabilities to enhance global security and combat climate change,
several portfolio companies witnessed record contract wins:
o ICEYE's deal with Bayanat to provide five of its SAR satellites to the
United Arab Emirates.
o D-Orbit closing multi-million Euro contracts with the European and Italian
Space Agencies.
· New additions, new horizons: The six new companies invested in during
the year have reinforced the Company's focus on the intersection of space
technology and climate change, alongside first forays into the opportunities
presented by space to the life sciences sector.
At the year-end, the Company's portfolio consisted of 30 active SpaceTech
companies with an aggregate fair value of £187.4m and its cash reserves were
£35.3m.
The war on Ukraine and the global macroenvironment have had a significant
impact on global capital markets. As a consequence, the Company continued to
implement its decision to reserve cash by deliberately slowing the pace of
deployment in order to follow its rights in key existing portfolio companies
whilst also continuing to actively seek to invest smaller ticket sizes in new
target companies. As outlined in the Investment Manager's Report, overall, the
portfolio continues to be well-capitalised, with a significant number of
portfolio companies completing funding rounds during the year.
NAV
A reduction in the fair value of the portfolio caused the NAV per share to
decrease by 7.1% over the year, from 99.97p to 92.90p at 30 June 2023.
The private companies in the portfolio, which accounted for 86.7% by number
and 97.4% by fair value of the portfolio (2022: 87.1% by number, 90.0% by fair
value), represented £182.6 million of NAV (2022: £167.5 million) and
continued to be relatively stable in aggregate over the year, despite the
challenging macroeconomic environment. 11 completed funding rounds during the
year, only one of which was priced at a lower price than the previous round.
The fair value of the private companies in the portfolio was 119.2% of cost
(2022: 122.5%) or 122.9% excluding FX impact (2022: 117.1%). A combination of
underperformance against expectations, limited cash runways and lower priced
funding rounds led to write downs of PlanetWatchers, ALL.SPACE, Altitude
Angel, Edgybees, Xona Space Systems and LeoLabs, which was more than offset by
mark-ups of SatVu, D-Orbit, ICEYE, Astroscale and HawkEye 360 in the main
portfolio and also two early stage companies. The Investment Manager's
Report includes a more detailed review of the performance of portfolio
companies.
The listed element of the portfolio (13.0% in fair value vs. cost (2022:
44.7%)) continued to experience reducing share prices. We continue to believe
that this is distinct from the performance of the private portfolio, and
continues to be in line with other companies which went public via mergers
with special purpose acquisition companies ('SPACs'), precipitated by rising
interest rates, global energy prices, high inflation and the war on Ukraine,
as well as being driven by fundraises at two of the companies which put
pressure on their share prices.
Continued strengthening of Sterling against the US Dollar over the year
resulting in £6.8m in FX loss in the year (2022: £16.8m gain).
Share Price
The Company's share price continued to fall over the year driven by
significant volatility experienced by global stock markets in 2022/23. In
particular, the heavy falls suffered by growth and smaller technology stocks
and alternative investment vehicles, which continue to be depressed, has also
impacted the broader peer group. The NAV per share has remained more
resilient, in line with performance of the underlying private portfolio
companies which continue to develop their products and services. At 30 June
2023, the share price was 27.0p, a decrease of 49.1% from 53.0p at 30 June
2022.
SSIT underperformed the peer group, particularly in relation to its share
price, over the period, although the share price recovery since the year-end
has led to significant improvement, with SSIT outperforming its peer group
since early August 2023, as shown in the chart in the annual report.
The share price as at 30 June 2023 represented a 70.9% discount to NAV, a
further decline from the 47.0% discount as at 30 June 2022, and an implied
84.2% discount to the fair value of the portfolio (once cash on balance sheet
is discounted) (2022: 62.8%). The Board continues to believe this does not
reflect the performance of the portfolio or how downside protections in
well-capitalised companies are effectively protecting shareholder value (see
the Investment Manager's Report for more detail). Post the year-end, the share
price decline continued, reaching a low of 26.1p on 12 July 2023. The Company
announced a share repurchase programme on 13 July 2023 and the share price has
improved to 39.5p on 13 October 2023.
Earnings and Dividend
The Company made a revenue loss after tax of £4.5m for the year, equal to
-1.88p per share.
The Company is focused on achieving capital growth over the long term. Given
the nature of the Company's investments, we do not anticipate recommending to
pay a dividend in the foreseeable future.
Responsible Investment
The Board is keen to demonstrate the Company's commitment to responsible
investing through objective reporting metrics for ESG factors. The Investment
Manager continues to use its proprietary due diligence tool in order to assess
sustainability opportunities and ESG risks associated with each potential
investment, and has been able to identify risks that have led it to turn down
opportunities in the year, as well as to identify opportunities that portfolio
companies can take advantage of in order to deliver positive ESG and
sustainability impacts.
Board
From the Annual General Meeting which took place on 13 November 2022, Angela
Lane succeeded Christina McComb as Chair of the Audit Committee and Christina
succeeded me as Chair of the Management Engagement Committee.
Availability of Annual Reports
In the interests of the environment and for ease of access, Annual Reports are
available on the Company's website and can be viewed and downloaded at
https://investors.seraphim.vc/ (https://investors.seraphim.vc/) . Copies of
Annual Reports will only be available on request.
Annual General Meeting
The AGM of the Company will be held at 12.00 p.m. on 20 November 2023 at
Seraphim Space's offices, 1 Fleet Place, London, EC4M 7WS (GPS postcode EC4M
7RA). The AGM will include a presentation from the Investment Manager (a
video of the presentation will be added to the website as soon as practicable
after the AGM). Details of the resolutions to be proposed at the AGM, together
with explanations, will be included in the notice of meeting to be distributed
to shareholders on 19 October 2023. As a matter of good practice, all
resolutions will be conducted on a poll and the results will be announced to
the market as soon as possible after the AGM.
The Directors and representatives of the Investment Manager will be available
at the AGM (either in person or via video conference) to answer shareholder
questions. We do recognise that some shareholders may be unable to come to
the AGM and, if you have any questions about the Annual Report, the investment
portfolio or any other matter relevant to the Company, please write to us via
email at seraphimteam@ocorian.com or by post to The Company Secretary,
Seraphim Space Investment Trust PLC, 5(th) Floor, 20 Fenchurch Street, London,
EC3M 3BY. If you are unable to attend the AGM, I urge you to submit your proxy
votes in good time for the meeting, following the instructions on the proxy
form. If you vote against any of the resolutions, we would be interested to
hear from you so that we can understand the reasons behind any objections.
Events After the Year End
As mentioned under 'Share Price' above, the Company announced a share
repurchase programme on 13 July 2023. The weighted average share price at
which the shares were brought back represents a discount of 51% to the NAV per
share at 30 June 2023. In the period to 13 October 2023, the Company bought
back a total of 2,186,344 shares (0.9% of the shares in issue on 12 July 2023)
at an aggregate cost of £1.0m. The shares bought back are being held in
treasury. The closing share price on 13 October 2023 was 39.5p, an increase of
51% from the closing share price of 26.1p on 12 July 2023.
Since 30 June 2023, five further investments (two new investments and three
follow-on investments) have been concluded for an aggregate cost of £4.1m,
and terms have been agreed on another potential addition to the portfolio. A
further additional potential investment is in due diligence.
On 7 October 2023, conflict broke out between Israel and Palestine. We are
working with the Israeli companies in the portfolio to support them as
necessary, but there has been limited impact to date.
Outlook
The Board continues to believe that the SSIT portfolio is well-positioned
given the strong global tailwinds of increased defence spending and an
openness to adopt solutions to address the climate and sustainability agenda.
The top 10 companies saw their bookings increase by 199% on average1 over the
year. Therefore, these companies have solid contracted orders for the years
ahead, providing great confidence to investors.
Encouragingly, we have seen some well-known private equity investors, such as
KKR, Advent and BlackRock, entering the sector to build their SpaceTech
exposure and indicating interest from new investor groups. Given their broad
mandate to invest across sectors, their focus on space gives us confidence of
increasing growth aspirations for the domain. Furthermore, with significant
amounts of dry powder (capital which has been committed to but not yet
invested by investment vehicles) sat in impact and climate funds from across
the globe, we remain confident that there is a large and growing pool of
motivated capital to support the needs of companies in the SSIT portfolio in
the years ahead.
We have reserved cash to support portfolio fundraisings as required in the
year ahead, leaving a modest sum for new investment until the market improves
and more capital can be raised. Experience demonstrates that some of the best
investments are undertaken at the bottom of the economic cycle. The SSIT deal
flow pipeline is healthy and, given cash constraints, we are focused on
participating in only the most exceptional opportunities, carefully selecting
those with a strong growth premise that offer the highest returns for
shareholders.
Will Whitehorn
Chair
16 October 2023
((1) Fair value weighted average (as defined in the Glossary) year-on-year
growth for the 12 months ended 30 June 2023 of the top 10 holdings,
representing 86% of fair value (72% of NAV) as at 30 June 2023. Source:
Portfolio company data.)
Investment Manager's Report
'In a challenging and volatile macroeconomic environment, our portfolio
companies have demonstrated resilience and leadership, resulting in strong
revenue (+34%) and bookings growth (+199%). We've been heartened by the
support from both existing co-shareholders and new investors, reflecting a
flight to quality during uncertain times. This year, 11 portfolio companies
successfully raised funding, with the majority led by new external investors,
and we actively participated in two-thirds of these rounds. Our portfolio's
valuations have remained robust, with a fair value of £187.4m, experiencing a
marginal 0.7% year-on-year increase. The structuring of investments using a
combination of preference shares and anti-dilution protection has made us less
susceptible to short-term fluctuations in enterprise value.
During the year, the Company invested £4.2m into two additions to the
Company's main portfolio, Taranis and Voyager. We also continued to support
the portfolio companies in which we have the highest conviction, investing
£12.2m in eight companies, split between our main portfolio (£10.7m) and
early stage, non-material positions (£1.5m). The cash position within the
portfolio is robust with 20 months of cash runway on average in the private
portfolio. Looking ahead we remain focused on essential follow-on investments
and smaller transactions, as we prioritise cash preservation in the current
economic climate. Overall, we remain committed to our strategy and are
confident in the performance outlook of our portfolio.'
Mark Boggett
CEO, Seraphim Space
Overview
We moved to a slower rate of deployment in Q1 CY22 and established a framework
to preserve cash, support the portfolio and continue to make limited new
investments. This strategy has played out in line with expectations, and we
have been encouraged by both the performance of the underlying portfolio
companies and the continued appetite of co-shareholders and new investors to
support the capital needs of the portfolio companies. In challenging times
there is always a flight to quality, and we can confidently assert that many
portfolio companies have extended their leadership positions during this more
challenging and volatile macroeconomic period and are delivering strong
revenue and bookings growth, as they address strong demand for their products
and services. The value of the Company's investments has been robust, with the
portfolio fair value at £187.4m, up 0.7% year-on-year. As explained below, 11
portfolio companies raised funding, with the majority of rounds led by new
external investors. SSIT participated in two-thirds of the rounds. Seven of
the rounds were made at higher valuations relative to previous rounds, one was
flat and one was lower, with the remainder being unpriced convertible loan
notes. This positive investment activity demonstrates the continued strength
of the portfolio companies and the increasing market recognition of their
potential.
This also brings into sharp focus the underlying investment structuring
employed across the portfolio, including liquidation preference and
anti-dilution clauses, which is an important part of our investment toolset.
This approach to structuring makes SSIT less vulnerable to short-term negative
fluctuations in the enterprise value of a portfolio company. In the case of
liquidation preference, the last monies invested stand first in line to get
back the original subscription price paid before any other prior round
shareholders are paid. Anti-dilution provides for additional shares to be
issued to rebalance the stake in a company in the event that future rounds are
undertaken at a lower share price.
Portfolio valuation methodologies
92.6% of the portfolio by fair value is valued using either available market
price or an enterprise value that has been recalibrated in the last three
months.
Downside protection
An important consideration in relation to valuation is the structuring of
individual investments. We routinely seek to obtain downside protection
measures across the private companies within the portfolio via preference
shares, rather than common equity. All the top 10 private companies in the
portfolio are structured via preference shares with weighted average
anti-dilution protection and/or liquidation preference.
Preference shares sit above common equity in the capital structure in the
event of a liquidity event, but below creditors such as banks. Preference
shares offer more defensive exposure to an asset with their 'liquidation
preference'. Liquidation preference provides a prioritised return ahead of
other previously issued share classes, which means value can be preserved even
in scenarios where a business is sold at a far lower valuation than that used
to make the investment.
Anti-dilution rights retrospectively amend the price paid or the number of
shares owned where a subsequent funding round is done at a lower valuation (a
down round). These measures can help mitigate dilution in the event of a down
round, but it rarely results in no dilution. Additional shares are often
issued at par to ensure that the shareholdings of existing investors are at
least partially protected in a down round. We typically apply weighted average
dilution, which provides a proportion of adjustment and less protection, but
still a better outcome than if no anti-dilution measures were applied in the
event of a down round.
Downside protection afforded by liquidation preferences means that, relative
to the most recent valuation event used to calculate fair value, valuations
within the top 10 holdings would on average need to fall by more than 30.0%
before fair value would fall below cost (on a fair value weighted basis). The
chart in the annual report shows how much the enterprise value of each company
in the top 10 private companies (on an anonymised basis) would need to fall in
order to return cost. In order to deliver cost, companies 9 and 10 need to see
an increase in enterprise value, as their enterprise values are currently
below cost.
Applying sensitivities of a 10-50% reduction in the enterprise values of the
top 10 holdings results in an implied NAV per share of 70p to 93p.
Preference shares
What are they?
• Class of shares that rank senior to ordinary shares/common
stock.
• 'Liquidation preference' provides for priority return ahead
of other previously issued classes of shares.
How do they work?
• Ranks junior to debt and, typically, future issues of
preference shares, but senior to ordinary shares/other classes of existing
shares.
• At exit, holder receives amount - normally equivalent to 1x
return - ahead of any other proceeds being distributed to junior ranking
shares.
What is their purpose?
• Protect value of investment.
• Provide downside protection by potentially delivering 1x
return in low exit scenarios.
Enterprise value recalibrations
Proportion of fair value where EV was recalibrated in the 3 months to 30 June Top 10 private companies' EV change1 in the year
2023
4.8%
92.6%
Number of portfolio companies that were existing portfolio companies at the Number of portfolio companies that were existing portfolio companies at the
start of the year and raised a priced round in the year start of the year and raised a priced round post the year end
9
4
((1) Fair value weighted average (as defined in the Glossary) year-on-year
change for the 12 months ended 30 June 2023 of the top 10 holdings,
representing 86% of fair value (72% of NAV) as at 30 June 2023)
The chart in the annual report shows, on an anonymised basis, the percentage
change in the underlying EV of each of these companies for the year ended 30
June 2023. Changes in EV relate to either new funding rounds or adjustments
from quarterly valuation recalibration exercises. It is worth noting that, as
a result of the downside protections in place, most particularly liquidation
preferences, where there were reductions in underlying EV, these have not
necessarily translated directly into commensurate reductions in fair value.
Therefore, while the underlying EV of the private companies within the top 10
holdings has increased by 4.8%, the aggregate fair value has increased more,
8.5% (both on a fair value weighted average basis).
The chart in the annual report shows the fair value changes for the top 10
holdings from 1 July 2022 to 30 June 2023. Amounts below the axis are
reductions in fair value.
As explained above, more recently we have seen an uptick in the number of new
funding rounds being raised. Portfolio companies representing more than 60% of
the fair value of the portfolio were existing companies at the start of the
year and managed to raise a priced round during the year or post the year end.
Of the nine priced funding rounds completed during the year, seven were priced
higher than the previous round, one was priced lower and one was flat. We
believe this indicates improvement in the market.
Investment Activity
Year ended 30 June 2023
In light of global markets and the continued share price discount restricting
the ability to raise additional capital, we slowed down the pace of investment
significantly from the beginning of 2022. The chart in the annual report shows
the number of deals done in the year ended 30 June 2023 vs. the previous year.
The number of follow-on investments remained relatively constant. New
investments and late stage (Series B+) deals were both lower than in the year
ended 30 June 2022 as we focused on required follow-on investments and
favoured smaller transactions due to the need to preserve cash in the current
environment.
New investments
During the year, the Company invested £4.2m into two additions to the
Company's main portfolio (Taranis and Voyager) and funded the investment in
Tomorrow.io which had closed at the end of the previous financial year. In
addition, there were four new investments into early stage portfolio companies
for a total of £0.7m.
Taranis is an agriculture-focused AI company that uses earth observation data
to optimise crop yields and increase global food supply. Taranis is improving
agricultural efficiency by providing insights to growers on field health.
Taranis uses satellite and drone imagery, in combination with its extensive
library of crop health indicators, for early detection of disease or nutrient
deficiencies. These accurate and local assessments improve crop yields by
better tailoring the use of fertilisers and pesticides. In August 2022, the
Company completed a $2.5m (£2.1m) investment in Taranis' Series B investment
round. Taranis received investment from numerous top Israeli venture and
growth investors. With this round, Taranis will build out its US sales
capability, and gain early traction with its new carbon monitoring product.
Voyager is a next generation Space Prime that is developing Starlab, a free
flying space station. Starlab will provide the facilities to host public and
private astronauts, as well as forming the critical infrastructure required to
support research, development and manufacturing in space. The Company
completed a $2.5m (£2.1m) investment into Voyager's Series B investment round
in July 2022. Voyager intends to use the funds raised to continue to finance
the development of Starlab and expand its capabilities through strategic
M&A.
New investment case study: Tomorrow.io
Investment thesis Tomorrow.io is revolutionising weather forecasting by enabling companies
across industries to easily build, standardise and automate weather-related
operating protocols. This is possible through high-accuracy, hyperlocal
short-term forecasts that are unrivalled within the industry.
Round New investment: Convertible Loan Note Pre-Series E round.
SSIT investment / round size $5m / $87m.
Co-investors Activate Capital, Canaan Partners, Clearvision Ventures, Pitango, Square Peg,
Stonecourt Capital.
Problem Billon Dollar industries, including aviation, logistics and utilities, are
adversely impacted by weather events. Traditional weather forecasts are not
sufficient to translate into operational decisions.
Solution Tomorrow.io provides industry-specific actionable weather insights via
APIs/platforms that are embedded into the operational processes of its
customers. Insights are based on both proprietary weather models and satellite
data.
Market Global spend on weather was estimated to be $56bn in 20151. Assuming growth
has continued at the historic 8% CAGR, the market would have been valued at
roughly $104bn in 2022.
Latest news · Successfully closed $87m Series E in June 2023.
· Launched its first two weather radar satellites in Q2 CY23 to
provide proprietary global precipitation data.
· Released new Unified Precipitation (UP) solution to provide
real-time and nowcast (0-6 hours) global precipitation with unparalleled
accuracy.
((1) Global disparity in the supply of commercial weather and climate
information services by Lucien Georgeson, Mark Maslin and Martyn Poessinouw,
24 May 2017)
New investment case study: Voyager
Investment thesis The commercial and government ecosystem in low earth orbit is experiencing
sustained growth that will create sufficient demand for a new Space Prime akin
to incumbent defence prime contractors such as Lockheed Martin. The most agile
and adaptable companies are expected to be competitive given existing primes
are hampered by engrained procedures and operations, making them ill-suited
for the prime contracts of tomorrow.
Round New investment: Series B.
SSIT investment / round size $2.5m / $92m.
Co-investors Walleye Capital, Senvest, Juniper, Scout.
Problem Today, the only organisations capable of delivering cutting edge space
infrastructure, like space stations and CisLunar missions are the existing
base of large defence primes. These organisations are notoriously slow moving,
costly and regularly subject to delays and cost overruns due to outdated
working practices. They are unsuited to the evolving and dynamic needs of the
in-space economy.
Solution Voyager's lean, fast-moving organisation, with a strong commercial mindset,
will provide the next generation hardware demanded by the evolving userbase of
space. Voyager will be best positioned to capitalise on the demand from a
customer base increasingly prioritising commercial considerations for the
businesses which they operate in space.
Market With Voyager's Starlab space station, the business is well-placed to address
the approximately $4bn annual spend on the International Space Station.
Furthermore, new markets of in-space manufacturing and R&D at maturity are
expected to be worth $5bn annually.
Latest news · Acquired its (7t)h subsidiary, ZIN Technologies. ZIN Technologies
brings decades of experience in engineering, design and integration of
human-rated spaceflight systems.
· Announced its $80m Series B raise.
· Announced a joint venture with Airbus to build and operate the
Starlab space station.
Follow-on investments
The Company continues to invest in line with the strategy articulated at the
time of its IPO, seeking to increase the level of support for those portfolio
companies which we have the greatest conviction in. During the year, the
Company invested £12.2m of additional funding in eight companies (five in the
main portfolio totalling £10.7m and three early stage, non-material positions
totalling £1.5m). The main follow-ons are outlined below.
In August 2022, the Company completed a $3m (£2.5m) follow-on investment in
PlanetWatchers, acting as co-lead alongside Creative Ventures as part of
Planet Watchers' Series A investment round. With this round, PlanetWatchers is
looking to invest in automation and fuel its commercial growth through
expanded sales efforts. PlanetWatchers uses synthetic aperture radar data to
tell the story of every field, helping crop insurers and farmers to automate
data capture and claims validation.
In December 2022, the Company invested a further €5m (£4.4m) alongside
other shareholders in D-Orbit to help consolidate its position as the market
leader within the in-space transportation market. D-Orbit is the market leader
in space logistics, providing last-mile satellite delivery, space cloud
computing and hosted payload operations.
In March 2023, the Company completed a €1.0m (£0.9m) follow-on investment
in QuadSAT as part of the company's €6.3m Series A investment round led by
IQ Capital. QuadSAT will utilise this funding to execute on its increasingly
strong commercial pipeline. QuadSAT provides satellite operators, antenna
manufacturers and service providers with a flexible and cost-efficient
solution to test and validate the performance of antennas. Its drones,
equipped with specialised instruments, collect data efficiently and accurately
without the need for manual labour.
In May 2023, the Company completed a £2.1m follow-on investment in SatVu as
part of the company's £13m Series A2 round. Shortly after the closing of this
round, SatVu launched its first satellite (HOTSAT1). This funding round will
allow the business the runway to start executing on over £100m of commercial
interest and provide meaningful headway to the launch of the second satellite
in its constellation. SatVu is deploying a constellation of infrared sensing
satellites. Using this constellation, the business will be able to monitor the
temperature of any building on the planet in near real time to determine
valuable insights about economic activity, energy efficiency and carbon
footprint.
Follow-on study: SatVu
Investment thesis Finding a way to pinpoint the worst energy-wasting buildings on a global scale
is a pressing issue if the world is to achieve Net Zero.
By measuring the thermal footprint of any building on the planet, SatVu's high
resolution, high revisit infrared satellite constellation holds the key to
resolving this issue.
Round £13m Series A2.
SSIT investment Total: £6.7m (Seed, Series A and Series A2).
Series A2: £2.1m.
Co-investors Molten Ventures, AO Proptech, Lockheed Martin, In-Q-Tel.
Problem Infrared (IR) has a unique capability to 'see' inside buildings/objects. This
holds vast potential for gathering intelligence for defence, economic activity
and energy efficiency applications. Existing IR satellites are
government-operated, cost hundreds of millions of Dollars and lack the
resolution or revisit required for these applications.
Solution SatVu is developing the world's first constellation of mid-wave IR small
satellites that represent a 10-100x reduction in cost and weight versus
existing government satellites.
Market Defence, intelligence, industrial monitoring, climate.
Latest news · First satellite launched by SpaceX on 12 June 2023.
· Closed £13m Series A2 round, extending cash runway until at
least September 2024.
· Gathered pipeline of 50+ pre-contracts with options to purchase
£100m+ in imagery.
Follow-on study: D-Orbit
Investment thesis D-Orbit is the leader in the nascent 'space taxi' market offering last mile
delivery services for customers' satellites. Beyond its pioneering space taxi
services, the company innovates with high-margin ancillary offerings,
including using its ION spacecraft for on-orbit cloud computing and in-space
logistics, carving a path to become a cornerstone in the new space economy.
Leveraging its unique capabilities and vision, D-Orbit is on track not only to
dominate the space taxi sector but also to explore lucrative avenues in space
servicing and cloud infrastructure, promising substantial growth and value.
Round Convertible loan bridge round.
SSIT investment Total: £10.7m.
Bridge round: €5m.
Co-investors Large Ventures, Indaco, Neva.
Problem Rideshare models, like SpaceX, are limited in the orbits they can achieve. The
rapidly growing smallsat market lacks reliable, efficient means to deliver
satellites to specific orbits.
Solution D-Orbit's breakthrough IONs combine low-cost rideshare with targeted, quick
satellite delivery. After launch, IONs form a 'pseudo constellation',
adaptable for varied high-margin applications and potential in-orbit services.
Market Space logistics (€1bn+), in-space computing (€3bn+).
Latest news · Launched 11(th) successful mission.
· Delivered over a hundred payloads in total to orbit.
· Won €26m contract from ESA for IRIDE, an earth observation
programme. D-Orbit will design and build a synthetic aperture radar satellite
with an additional €24m option.
· Won another 3 multi-million Euro contracts with ESA and ASI.
· Completed 10-month in-orbit cloud computing demonstration with
AWS.
Disposals
In the year, the Company received £3.3m in proceeds from disposals. During a
rally in November 2022, we took the opportunity to sell down some of the Arqit
holding at an average price of $8.48 per share in order to provide some
additional liquidity to support private portfolio companies. In addition, we
sold one of the early stage portfolio companies which had been fully written
down back to its founder for a diminimis sum.
Portfolio Performance
Year ended 30 June 2023
Portfolio cash runway
During the year, a number of the Company's investments completed funding
rounds supported by new investors, which provides strong external validation
of the valuation progression of individual investments. 11 portfolio companies
that were in the portfolio at the start of the period raised 12 rounds. SSIT
participated in the rounds of seven of these portfolio companies.
The companies in the portfolio at the start of the year which raised rounds
during the year largely experienced positive valuations in those rounds as
outlined in the annual report.
The average cash runway of the private portfolio from 30 June 20231 is 20
months. 87% of the fair value of the private holdings has a cash runway to 30
June 2024 or beyond. The chart in the annual report shows the material
holdings' cash runways and their syndicates' strength and ability to support
future capital needs of the businesses. Syndicate strength is an area we
assess prior to investment. We note that some of the larger holdings with 12
months' or less cash runway are in the advanced stages of closing significant
additional capital before the end of 2023 which will materially extend their
cash runways. In addition, some of the larger holdings are now forecasting
that they will become cashflow positive without requiring additional funding.
((1) Fair value weighted average (as defined in the Glossary) number of months
of cash runway from 30 June 2023 for the private holdings representing 97% of
fair value, taking into account cash as at 30 June 2023 and any funding raised
post period end. Source: Portfolio company data.)
Listed portfolio
Continued share price reductions of three of the listed portfolio companies
(Arqit, Spire Global and AST SpaceMobile) led to an aggregate fair value
decrease of £9.1m for the listed portfolio (£8.0m excluding FX losses) over
the year. In aggregate, the listed portfolio represented just 2% of NAV and 3%
of portfolio fair value at the end of the year (fair value vs. cost: 13.0%,
down from 44.7% at 30 June 2022). These listed companies continue to
experience depressed share prices, similar to that experienced by other
companies which went public via mergers with special purpose acquisition
companies ('SPACs'), as shown on the chart in the annual report by the DeSPAC
Index. We believe that the greater reductions seen by the listed portfolio
companies' share prices than that experienced by the DeSPAC Index is likely
driven by the fact that both Arqit and AST SpaceMobile were able to raise
additional funding in the year (albeit at a discount to their share prices
which would have caused further downward pressure). Positively, there appear
to be some signs of improvement in the IPO market, with the venture
capital-backed and private equity-backed IPO indices both up at the year end
and since.
On 18 November 2022, Nightingale listed on the Australian Stock Exchange
raising AUD5m (ASX: NGL; fair value vs. cost: n/m). The Company had previously
fully provided against this portfolio company, which had been acquired for
zero consideration from Seraphim Space LP as part of the Initial Portfolio,
and the fair value was £0.1m as at 30 June 2023. Nightingale offers an
autonomous drone perimeter security service designed to enhance physical
security at large, sensitive facilities, including critical infrastructure
such as ports and nuclear power facilities through to Fortune 500 companies.
Private portfolio
The private portfolio, which comprises the main part of the Company's
investments representing 97% of fair value and 82% of NAV, continued to
deliver robust performance, with its fair value closing the year at 119% vs.
cost (123% excluding FX losses), down from 122% on 30 June 2022 (117%
excluding FX). These businesses continue to deliver solid revenue and bookings
growth driven by solid fundamentals in their core focus areas (especially
global security and climate change/ sustainability).
As explained above, a number of portfolio companies raised funding at flat or
higher prices than their previous rounds. This led to increasing underlying
fair value for a number of the main portfolio companies, SatVu (fair value vs.
cost: 218%), D-Orbit (fair value vs. cost: 183%), Astroscale (fair value vs.
cost: 105%), QuadSAT (fair value vs. cost: 150%) and Pixxel (fair value vs.
cost: 153%). In addition, the recalibration exercise and sustained strong
performance led us to mark up the value of ICEYE (fair value vs. cost: 115%).
This was more than offset by the combined impact of FX losses and portfolio
companies which saw reducing fair value driven by reductions in enterprise
values due to a combination of underperformance against expectations, limited
cash runways and lower priced rounds, including PlanetWatchers (fair value vs.
cost: 86%), ALL.SPACE (fair value vs. cost: 109%), Altitude Angel (fair value
vs. cost: 167%), Edgybees (fair value vs. cost: 0%), Xona Space Systems (fair
value vs. cost: 84%) and LeoLabs (fair value vs. cost: 106%).
Valuation policy
In respect of private company valuations, fair value is established by using
recognised valuation methodologies, in accordance with the International
Private Equity and Venture Capital Valuation ('IPEV') Guidelines. The Company
has a valuation policy for unquoted securities to provide an objective,
consistent and transparent basis for estimating their fair value in accordance
with IFRS as well as the IPEV Guidelines. The unquoted securities valuation
policy and the associated valuation procedures are subject to review on a
regular basis, and updated as appropriate, in line with industry best
practice.
In summary, the Company determines fair value in accordance with the IPEV
Guidelines by focusing on updating the enterprise value (either through there
being a new funding round or through a valuation calibration exercise or
adjustment for milestones) and then applying the implied equity value (based
on adjustments for new debt, etc) to the company's capital structure (i.e.
preference stack). In the event of commercial (or technical) underperformance
of a portfolio company, a write down can then also be applied, typically in
increments of 25% to reduce fair value.
All valuations are considered on a quarterly basis and calibrated against the
price of the last funding round. However, given valuation volatility during
2022/23, to ensure appropriate NAV reporting, the Board initiated a process to
recalibrate, across an increased number of datapoints, the material portfolio
companies (i) whose last funding rounds took place more than 12 months earlier
or (ii) which had experienced a significant milestone event or material under-
or over-performance (each a 'recalibration event'). This process entails
assessing the enterprise value following the most recent round against a
composite of four elements: observable market data (where possible), recent
relevant private investment transactions, public market valuations of
comparable companies and the company's internal metrics and performance. This
exercise further strengthens the valuation process with the goal of preserving
shareholder confidence in the NAV during volatile market conditions and will
be conducted when a recalibration event occurs and every quarter thereafter
until a new priced funding round is completed.
Performance of the Company
Year ended 30 June 2023
Portfolio Attribution
· £4.9m in new investments (2022: £117.5m) and £12.2m of
follow-ons in the year (2022: £32.5m).
· £3.3m in proceeds from disposals in the year (2022: £0.0m).
· £2.0m realised loss from partial sale of Arqit and the exit of
one of the early stage portfolio companies.
· Reduction in unrealised fair value of £3.7m during the year
(2022: £9.2m) and a £6.8m unrealised FX loss (2022: £16.8m gain).
· £187.4m fair value of portfolio at the end of the year (2022:
£186.1m).
· 576bps decrease in closing portfolio fair value vs. portfolio
cost, including FX movements (2022: 429bps increase).
NAV
· £16.9m decrease in NAV (7.1% decrease) over the year to £222.4m
(30 June 2022: £239.3m).
· £35.3m liquid resources (15.9% of NAV) at 30 June 2023 (30 June
2022: £57.7m).
NAV Per Share: 99.97p
92.90p
NAV decreased from £239.3m to £222.4m during the year. This decrease of
£16.9m was primarily a result of a portfolio fair value decrease (including
FX movements), with a £6.8m FX loss across the portfolio and a £8.0m
reduction in the underlying fair value of listed companies in aggregate more
than offsetting a £4.3m increase in the underlying fair value of private
companies.
The other movements consist of a realised loss for the year (£2.0m) from the
sale of some of the Arqit holding and one of the early stage companies,
management fees (£2.9m) and operating expenses (£1.9m), partially offset by
interest received (£0.3m).
The NAV per share decreased from 99.97p to 92.90p over the year.
The Company is targeting an annualised total return on the Company's portfolio
of at least 20% over the long term. The Company has no formal benchmark index
but has tracked its NAV per share and share price movements against the
following indices for reference.
· MSCI World Aero and Defence Index (£) - a significant proportion
of portfolio companies' revenues are derived from the broader aerospace and
defence industry and/or have governments as significant customers.
· MSCI World Climate Change Index (£) - a significant proportion
of portfolio companies' revenues are derived from climate change products and
services.
· FTSE All-Share Index (£) - the Company is listed on the London
Stock Exchange.
· NASDAQ (£) - the Company invests in SpaceTech, a subset of the
broader technology market, and two of its listed holdings are listed on
NASDAQ.
· Dow Jones Global Technology Index (£) - the Company invests
globally in SpaceTech, a subset of the broader technology market.
· S&P Kensho Space Index (£)- the Company invests globally in
SpaceTech, a subset of the broader space sector.
· Goldman Sachs Future Tech Leaders Equity ETF (£) - the Company
invests globally in SpaceTech, a subset of the broader technology market.
On 30 June 2023, all indices were up year-on-year other than NASDAQ.
As explained in the Share Price section, the Company's share price has been
significantly more volatile than its NAV per share.
Quarterly valuation changes
In the three months ended 30 June 2023
During the quarter ended 30 June 2023, the fair value (adjusted for
acquisitions and disposals over the quarter) rose by £3.9m, increasing fair
value to 98.5% vs. cost (101% excluding FX losses).
An FX loss of £4.2m and fair value reductions at Altitude Angel (£3.6m),
Xona Space Systems (£1.1m) and PlanetWatchers (£0.9m), driven by
underperformance, were more than offset by fair value increases driven by new
funding rounds at D-Orbit (£3.8m), LeoLabs (£3.5m), Pixxel (£1.2m) and
SatVu (£0.7m), as well as a premium being applied to ICEYE's enterprise value
due to strong performance leading to a £4.1m increase in fair value.
Post Year End Developments
Investment activity has continued since the end of the year, with a further
£4.1m invested. One follow-on investment of £2.8m was made into ALL.SPACE,
an existing portfolio company in the main portfolio. In addition, there were
two follow-on investments, totalling £0.5m, and two new investments,
totalling £0.9m, into early stage companies.
Team Update
Investment team members Andre Ronsoehr, Maureen Haverty and Lewis Jones were
all promoted recently to Investment Partner, Investment Principal and
Investment Vice President, respectively. In addition, Zainab Qasim joined the
investment team as an Investment Analyst on 1 April 2023 having previously
worked at the affiliated Seraphim Space Accelerator.
Outlook
We remain confident with the outlook for the space domain globally and SSIT's
portfolio of best-of-breed SpaceTech companies. We continue to enjoy the
privileged position of seeing the majority of the sector's global dealflow.
This provides an information asymmetry over the sector that informs our every
move.
With the secular trends relating to global security, food security, climate
change and sustainability expected to accelerate, we believe the Company is
well-positioned to take advantage of the resultant opportunities. We
anticipate that demand for the products and services of the portfolio
companies, particularly from governments, should result in the portfolio
delivering strong growth metrics.
As at 13 October 2023, cash was £29.4m, with a potential further £3.0m of
liquidity available in the holdings of listed companies. We believe this
liquidity should be sufficient to provide the necessary levels of support to
the portfolio over the course of the next 12 months. Whilst we expect to
continue to diversify the portfolio with selective new investments,
uncertainty around the timing of market recovery (and, therefore, our ability
to raise new equity capital) means that the size of new investments will
likely be small, with investment activity expected to be more weighted in
favour of supporting the existing portfolio until a time when the market
provides the appropriate conditions to fundraise.
Mark Boggett
CEO
Seraphim Space Manager LLP
Investment Manager
16 October 2023
Portfolio at 30 June 2023
Portfolio Snapshot
Fair value Top 10 investments
£187.4m
as % of fair value
85.7%
(2022: £186.1m)
(2022: 87.0%)
Private portfolio Listed portfolio
fair value vs. initial cost
fair value vs. initial cost
119.2% 13.0%
(2022: 122.5%) (2022: 44.7%)
Average portfolio company revenue growth(1) Average portfolio company bookings growth(1)
34% 199%
Average cash runway of the private portfolio from 30 June 2023(3)
20 months
Total money raised by
private portfolio companies(2)
$>360m
((1) Fair value weighted average (as defined in the Glossary) year-on-year
growth for the 12 months ended 30 June 2023 of the top 10 holdings,
representing 86% of fair value (72% of NAV) at the year end. Source: Portfolio
company data.)
((2) Between 1 July 2022 and 30 June 2023. Source: Portfolio company data.)
((3) Fair value weighted average (as defined in the Glossary) number of months
of cash runway from 30 June 2023 for the private holdings representing 97% of
fair value, taking into account cash as at the year end and any funding raised
post period end. Source: Portfolio company data.)
Portfolio Highlights
'We are delighted with the progress the portfolio has made during the year.
The portfolio has proven itself adept at successfully accessing capital at a
time when the wider fundraising environment has been challenging. It is
particularly gratifying that many of these companies have closed funding
rounds led by new investors and on improved terms relative to their previous
funding rounds. The success in capital raising across the portfolio is in no
small part due to the impressive commercial traction achieved, allied to the
scale of the opportunities these companies are addressing. With the majority
of the portfolio now well-funded through the next 12-18 months, we are excited
to see what will be achieved over the year ahead.'
James Bruegger
CIO, Seraphim Space
ICEYE signed contract to service the government of Ukraine by providing access Astroscale successfully closed $76m Series E funding in early 2023. Awarded
to constellation; the only company to make such a deal. Signed five satellite $25.5m contract by US Space Systems Command and $80m SBIR from Japanese
deals with Bayanat in UAE. Announced partnership to provide radar imaging Government after the end of the year.
satellite for BAE Systems' new multi-sensor satellite constellation. Awarded
multi-year purchase agreement by NASA.
ALL.SPACE started deliveries of its game-changing antennas and announced a Altitude Angel announced the development of 265km of drone super highways in
strategic partnership with Kratos Defense & Security Solutions, Inc. the UK and received £5m in backing from BT.
(NASDAQ: KTOS).
HawkEye 360's cluster 7 of satellites launched to orbit in April, bringing its LeoLabs accelerated coverage in Europe with the commissioning of its Azores
constellation to 21 satellites. In July 2023, it announced a new $58m funding Space Radar and now has global radar coverage , with 7 operational radars
round led by BlackRock (NYSE: BLK). achieving c75% market share in LEO.
D-Orbit secured four multi-million Euro contracts with the European and PlanetWatchers won new customers and grew its footprint across the North
Italian Space Agencies to test intersatellite optical links, for satellite American crop insurance market. It also launched its CropCycle webapp, a
servicing and to establish an in-orbit space lab. second product line.
SatVu launched its first satellite on a SpaceX launch in June 2023, and signed Tomorrow.io launched its first two precipitation radar satellites, beginning
£100m in pre-contracts as part of its early-adopters programme. In May 2023, to build the world's most comprehensive precipitation dataset, with a 10x
the company announced an additional £12.7m in funding. improvement in revisit rate. Announced $87m Series E funding round in June
2023.
Voyager and Airbus announced a joint venture to build and operate the Starlab
space station. It also completed its seventh acquisition, of ZIN Technologies,
in March 2023.
Portfolio Lowlights
One of ICEYE's satellites failed to deploy on a SpaceX launch.
A number of portfolio companies were affected by the Silicon Valley Bank
failure
Holdings
30 June 2023
30 June 2022
Company Sub-sector HQ Cost(1) Fair value(1) % of NAV Fair value
£m
£m
£m
ICEYE Earth Observation Finland 39.6 45.5 20.4% 43.3
D-Orbit In-orbit Services Italy 11.7 21.4 9.6% 12.7
ALL.SPACE Ground Terminals UK 19.5 21.2 9.5% 24.9
HawkEye 360 Earth Observation US 18.6 20.6 9.3% 20.6
SatVu Earth Observation UK 6.7 14.7 6.6% 7.8
LeoLabs Data Platforms US 11.7 12.4 5.6% 13.7
Astroscale In-orbit Services Japan 9.4 9.8 4.4% 7.7
Altitude Angel Data Platforms UK 3.7 6.2 2.8% 9.0
PlanetWatchers Data Analytics UK 5.6 4.8 2.2% 8.1
Tomorrow.io Data Platforms US 4.2 3.9 1.8% 4.1
Top 10 investments 130.7 160.6 72.2% 151.9
Other investments 53.5 19.9 8.9%
29.7
Non-material investments 6.0 3.1%
7.0
4.5
Total investments 190.2 84.3%
187.4
186.1
Net current assets 35.0 15.7% 53.2
Total assets 222.4 100.0% 239.3
(1) Includes new and follow-on investments and disposals, where relevant, made
since 30 June 2022 of £11.8m in aggregate.
Portfolio Breakdown (by fair value)(1)
At 30 June 2023
( )
Top 10 Investments
ICEYE ALL.SPACE HawkEye 360 D-Orbit SatVu
Web iceye.com all.space he360.com dorbit.spaceatellitevuu.com
HQ Finland UK US Italy UK
Taxonomy Platform / Earth Observation Downlink / Ground Terminals Platform / Earth Observation Launch / In-orbit Services Platform / Earth Observation
Status Private / Soonicorn Private / Minicorn Private / Soonicorn Private / Soonicorn Private / Minicorn
Stake category >5-10% >10-15% 0-5% >5-10% >15-25%
Fair value vs. cost 115% 109% 111% 183% 218%
Valuation method Premium to price of recent investment Calibrated price of recent investment (post period) Calibrated price of recent investment (post period) Calibrated price of recent investment Calibrated price of recent investment
Description ICEYE operates the world's first and largest constellation of miniaturised ALL.SPACE is aiming to create a mesh network of satellite connectivity by HawkEye 360 operates the world's largest satellite constellation collecting D-Orbit is the market leader in the space logistics and orbital transportation SatVu is aiming to monitor the temperature of any building on the planet in
satellites that use radar to image the earth both during the day and night, developing an antenna capable of connecting to any satellite in any radio frequency signals to identify and geolocate previously invisible services industry. near real time to determine valuable insights into economic activity, energy
even through cloud. ICEYE's radar technology has the ability to monitor change constellation in any orbit. activities. efficiency and carbon footprint.
in near real-time.
Seraphim Space podcast link https://seraphim.vc/generation-space/podcast/portfolio-spotlight-rafal-modrzewski-ceo-and-co-founder-of https://seraphim.vc/generation-space/podcast/portfolio-spotlight-john-finney-ceo-and-founder-of-all https://seraphim.vc/generation-space/podcast/portfolio-spotlight-ceo-of-hawkeye-360-john-serafini/ https://seraphim.vc/generation-space/podcast/portfolio-spotlight-luca-rossettini-ceo https://seraphim.vc/generation-space/podcast/portfolio-spotlight-founder-ceo-of-satellite-vu-anthony-baker/
-iceye/ -space/ (https://seraphim.vc/generation-space/podcast/portfolio-spotlight-ceo-of-hawkeye-360-john-serafini/) -founder-d-orbitportfolio-spotlight/ (https://seraphim.vc/generation-space/podcast/portfolio-spotlight-founder-ceo-of-satellite-vu-anthony-baker/)
(https://seraphim.vc/generation-space/podcast/portfolio-spotlight-rafal-modrzewski-ceo-and-co-founder-of (https://seraphim.vc/generation-space/podcast/portfolio-spotlight-john-finney-ceo-and-founder-of-all (https://seraphim.vc/generation-space/podcast/portfolio-spotlight-luca-rossettini-ceo
-iceye/) -space/) -founder-d-orbitportfolio-spotlight/)
Total estimated long-term addressable market $10bn+ $10bn+ $10bn+ $1-5bn $1-5bn
Key sectors addressed Insurance, defence, climate Communications, defence, transport Maritime, defence Space logistics, datacentres Energy, property
Recent key developments: · ICEYE US awarded 5-year blanket purchase agreement by • Rebranded from Isotropic Systems to ALL.SPACE. · Cluster 7 of satellites launched to orbit in April, · Successfully launched its eleventh ION mission. · Launched its first satellite (HOTSAT 1) on Falcon 9
NASA for use in Earth Science and Research.
bringing constellation to 21 satellites, with meaningful drop in overall
transporter 8 on 12 June 2023.
• Making strong progress in delivering its first latency. · Secured four multi-million Euro contracts with European
· Announced beta release of Wildfire Insights product, a products during 2023.
Space Agency and Italian Space Agency, including one of €26m and one of · Closed additional £13m of funding as part of Series A2
first of its kind with building-level data in near real-time.
· Established new customers in India, Australia, Europe and €6m. round.
• Announced a strategic partnership with Kratos Defense Nigeria, with customers now over 6 continents.
· Entered data agreement with Global Parametrics to drive & Security Solutions, Inc. (NASDAQ: KTOS).
· Featured in Sifted as one of Europe's leading SpaceTech · Gathered pipeline of 50+ pre-contracts with options to
disaster risk management.
· Working with Pacific Islands Forum Fisheries Agency for companies. purchase £100m+ in imagery.
• Delivered first terminal to SES for testing and greater maritime visibility in the Pacific Islands.
· Announced partnership with Bayanat and Yahsat to build verification.
· Completed 10-month edge computing in space demonstration
national satellite and remote sensing capabilities within the UAE.
· Further $58m funding closed in July 2023. with Amazon Web Services.
· Signed contract with Government of Ukraine to provide
access to constellation.
· Announced partnership to provide radar imaging satellite
for BAE Systems' new multi-sensor satellite constellation.
Principal UN SDG alignment: 13, 11, 2 9, 8, 10 9, 16, 8 9, 8, 12 7, 11, 13
LeoLabs Astroscale Altitude Angel Tomorrow.io PlanetWatchers
Web leolabs.space astroscale.com altitudeangel.com tomorrow.io planetwatchers.com
HQ US Japan UK US UK
Taxonomy Product / Data Platforms Beyond Earth / In-orbit Services Product / Data Platforms Platform / Data Platforms Analyse / Data Analytics
Status Private / Minicorn Private / Soonicorn Private / Minicorn Private / Soonicorn Private / Seedcorn
Stake category 0-5% 0-5% >15-25% 0-5% >25-50%
Fair value vs. cost 106% 105% 167% 93% 86%
Valuation method Calibrated price of recent investment (post period) Calibrated price of recent investment Milestones, market comparables Calibrated price of recent investment Partial write down to price of recent investment
Description LeoLabs is providing the mapping service for space by deploying a network of Astroscale is a global leader of space sustainability solutions. It is Altitude Angel operates a cloud-based automated air traffic control platform Tomorrow.io is powering actionable weather insights around the world. The PlanetWatchers has developed an AI-enabled analytics platform using satellite
ground-based antennas capable of detecting objects as small as 2cm as far as currently developing a set of capabilities around satellite monitoring, for drones and flying taxis. Its software powers the world's first sky company's mission is to help countries, businesses and individuals better radar imagery for crop monitoring, insurance and automated insurance claims
1,000km away. refuelling, upgrading, repairing and disposal to enable a vibrant in-orbit corridor for drones. manage their weather-related challenges with the best information and assessments.
economy. insights.
Seraphim Space podcast link https://seraphim.vc/generation-space/podcast/ensuring-space-remains-sustainable-the-truth-about-space https://seraphim.vc/generation-space/podcast/portfolio-spotlight-ceo-of-astroscale-nobo-okada/ https://seraphim.vc/generation-space/podcast/portfolio-spotlight-richard-park-founder-and-ceo-of https://seraphim.vc/generation-space/podcast/how-to-build-a-successful-space-company/ https://seraphim.vc/generation-space/podcast/portfolio-spotlight-planetwatchers-dominic
-junk/ (https://seraphim.vc/generation-space/podcast/portfolio-spotlight-ceo-of-astroscale-nobo-okada/) -altitude-angel/ (https://seraphim.vc/generation-space/podcast/how-to-build-a-successful-space-company/) -edmunds-ceo-of-planetwatchers/
(https://seraphim.vc/generation-space/podcast/ensuring-space-remains-sustainable-the-truth-about-space (https://seraphim.vc/generation-space/podcast/portfolio-spotlight-richard-park-founder-and-ceo-of (https://seraphim.vc/generation-space/podcast/portfolio-spotlight-planetwatchers-dominic
-junk/) -altitude-angel/) -edmunds-ceo-of-planetwatchers/)
Total estimated long-term addressable market $1-5bn $1-5bn $10bn+ $30bn+ $5-10bn
Key sectors addressed Space, insurance, defence Space, defence Logistics, aviation Logistics, aviation, maritime, government civil, government defence Agriculture, insurance, climate
Recent key developments: · Expanded its radar network to 6 sites with another under · Following successful $76m Series E funding round in Q1 · 256km drone super highway announcement made in UK. • Successfully launched first two satellites of its · Successfully expanded customer footprint within North
construction for greater coverage. CY23, Astroscale added Gayle Sheppard, former Corporate VP and CTO at
planned weather radar constellation to provide global coverage. American crop insurance market during CY23 growing season.
Microsoft, and Erica Newland, former Finance Director at Intel, to its board. · Received backing from BT Group's Incubation Hub.
· Awarded contract with the Japanese MoD to provide space
• Completed $87m Series E fundraising, led by US growth · Launched CropCycle webapp as second product line to
situational awareness. · Opened subsidiary and office in France and announced · Began rolling out purpose-built low-altitude aviation investor, Activate Capital. provide easier access to crop intelligence.
partnership with CNES (the French Space Agency) that includes funded study for surveillance network.
· Won sole source contract with US Department of Commerce, active debris removal of French space debris.
• Launched 'Gale' generative AI platform to · Satellite-based acreage reporting product now reaching
validating that LeoLabs is only real viable alternative data source to US
effortlessly convert climate and weather data into predictive and actionable precision higher than 90% in many cases.
Space Surveillance Network. · Announced partnership with Astro Digital US Inc.,which insights.
will incorporate Astroscale's Generation 2 Docking Plate into its satellite
· Continued success in growing commercial/ recurring bus.
revenue base, including several large satellite constellations.
· Showcased its new manoeuvre-detection dashboard,
demonstrating suspicious movements from adversary spacecraft.
Principal UN SDG alignment: 9, 12, 17 9, 8, 12 9, 11, 8 8, 12, 9 12, 2, 8
Case study 1: Wildfire
Background1 Role of space in solving the problem Role of SSIT portfolio in solving the problem
Climate change has increased the frequency, severity and behaviour of Solutions from space provide the unique ability to provide cost effective
wildfires, making them far more difficult to predict and prevent. According to sensing solutions on a global scale, which is necessary for monitoring vast
the US's National Oceanic and Atmospheric Administration and NASA, the earth's areas of wildfire-prone land. Historically, this monitoring was limited to ICEYE operates the world's first and largest constellation of miniaturised
average surface temperature has risen by about 1°C since 1880, which has made small areas with terrestrial sensors or by plane. satellites that use radar to image the earth both during the day and night,
extreme heatwaves five times more likely than 150 years ago. This is a major
even through cloud. ICEYE's radar technology has the ability to monitor change
contributing factor in drying vegetation and soil, making land more in near real-time. With reliable (night/day and through clouds) and rapid
combustible and wildfires more likely. This has led to unprecedented economic
imaging, the business provides situational awareness solutions for disaster
losses from some of the most devastating fires in recorded history. It was Pre-event risk modelling: Earth observation satellites collect imagery across relief following a significant wildfire event whereas optical imagery would be
estimated that, in 2021, California's wildfires resulted in over $45bn in many sensor types that help better qualify the risk of a wildfire event by obscured by smoke. The business also offers solutions to the insurance
economic losses. The Dixie fire in July 2021 understanding vegetation health, the vulnerability of structures, topology and industry to estimate loss exposure following a wildfire.
a variety of different contributing factors. This has applications in
burned over 960 thousand acres and destroyed 1,300 buildings. insurance and is used as a tool by government agencies to identify areas for
controlled burns and reduce risk.
Using proprietary algorithms to analyse satellite imagery and high-resolution
weather forecasts, Delos Insurance can more accurately price wildfire risk to
Local fire departments need to monitor large areas of wildfire-prone land.
offer wildfire cover as part of homeowner insurance policies. In addition, the
Under certain conditions, fires can grow extremely quickly, making them Identifying emerging fires: Imagery can also be used to identify fires early business also delivers insights to consumers wishing to purchase insurance on
difficult to contain. Wildfires and other natural catastrophe events often to prevent widescale disaster. New sensors in multispectral and infrared are how they can better harden their homes to reduce their insurance premiums and
damage critical infrastructure leaving first responders without the necessary capable of detecting small heat signatures which can be used to alert fire the risk of loss in the case of a wildfire.
tools to carry out disaster response and save lives. Insurers do not have the departments.
necessary tools to understand wildfire risk and exposure. Two of the largest
insurers in the US, AllState and StateFarm, have halted property insurance
policy sales in California, citing rapidly growing wildfire exposure as making
SatVu's constellation of infrared imaging satellites will be able to detect
it difficult for them to build profitable portfolios. This has left millions Post-event situational awareness: Imagery is also being used following insured fires as soon as they have begun. Using its imagery, the business can inform
struggling to find homeowner's insurance. events to better estimate potential losses to insurers' portfolios, and by first responders and local fire departments to act quickly before they become
first responders to better coordinate disaster responses. uncontrollable.
Following a catastrophe, insurers must ensure they have the necessary capital
to cover insured losses. Damage assessment has historically involved on the Spire Global is one of the leading satellite manufacturers globally. Through
ground claims assessment, making it time consuming and costly. its satellite-as-a-service products, the business designs, builds and operates
satellites on behalf of customers. OroraTech, a Spire Global
satellite-as-a-service customer, is focused on persistent monitoring of
wildfire-prone areas to inform first responders.
( )
((1)
https://www.climate.gov/news-features/climate-qa/what-evidence-exists-earth-warming-and-humans-are-main-cause)
( )
(https://www.npr.org/2021/11/08/1052198840/1-5-degrees-warming-climate-change
(https://www.npr.org/2021/11/08/1052198840/1-5-degrees-warming-climate-change)
)
(
https://www.imperial.ac.uk/news/241572/wildfires-becoming-more-dangerous-
heres/#:~:text=A%20big%20contributing%20factor%20 is,climate%20change%
20discussions%20and%20science)
(
https://www.cnbc.com/2023/08/22/moodys-hawaii-wildfires-caused-up-to-6-billion-in-economic-losses.html)
(
https://www.swissre.com/risk-knowledge/mitigating-climate-risk/remote-sensing-technology-in-claims-assessment.html)
Case study 2 - Ukraine
Background2 Role of space in supporting Ukraine Role of SSIT portfolio in solving the problem
Overview and death toll: Russia's invasion of Ukraine in February 2022 has Commercial satellite imaging: Satellite imagery provided by commercial
resulted in a devastating human toll and widespread displacement. As of July providers and that is shareable with allies has been integral to Ukraine's
2023, over 9,000 civilians have been recorded dead and more than 16,000 defence. Satellite imagery has provided invaluable intelligence on Russian
injured, though the UN believes the actual numbers are higher. The war has troop locations and movements. Satellite images post-attacks have assessed
also left nearly 500,000 troops either dead or injured, with estimates of up damage, such as after the Kakhovka hydroelectric dam incident. SAR imaging can
to 120,000 Russian and 70,000 Ukrainian soldiers killed. monitor troop movements under diverse conditions (cloud and night). Infrared
can detect artillery fire and locations of intense fighting3. ICEYE, a Finnish SAR (Synthetic Aperture Radar) satellite company, has
Displacement: The conflict has forced millions of Ukrainians to flee their
significantly impacted the conflict between Ukraine and Russia. Its
homes. With a national population exceeding 41 million, about 17.6 million Communication and coordination: Commercial satellite constellations like technology, capable of imaging through cloud cover and darkness, provides an
people now require urgent humanitarian support. Over 5 million people have Starlink and Viasat have ensured that military units and civilian groups unparalleled view of ground activities8.
been internally displaced, and Europe is hosting nearly 6 million Ukrainian remain connected, especially during communication blackouts in certain
refugees. regions. It has even been used to stream live feed imagery back from drones to ICEYE delivered the capacity of one of its satellites to the Ukrainian
command centres4. government through a partnership with the Serhiy Prytula Charity Foundation.
Territorial losses and economic impact: Russia now controls approximately
This 'people's satellite', purchased with donations from Ukrainians, has since
17.5% of Ukraine's territory, including the annexed Crimea. As a result of the Open-source intelligence (OSINT) in Ukraine: Activists and independent played a pivotal role. Within five months of its deployment, the satellite
war and loss of significant territories, Ukraine's economy shrank by 30% in analysts have used satellite images to track troop build-ups along the enabled Ukrainian Defence Intelligence to detect and target 7,321 pieces of
2022. Predictions for 2023 estimate modest growth of 1-3%. The exact financial Ukraine-Russia border. This has allowed for real-time assessments of the Russian military equipment9.
toll of the war on Ukraine remains unclear. situation on the ground5.
Global ramifications: Russia's invasion and the subsequent Western sanctions GPS denial and its impact: Russian forces have deployed jamming equipment to
have disrupted global markets. Key commodities like oil, wheat and metals have interfere with Ukrainian military GPS systems, required for weapons targeting.
witnessed price surges, triggering a global food crisis and contributing to Ukrainian forces are losing up to 2,000 drones per week as a result. Ukrainian
recent increases in inflation. Western support for Ukraine has also been forces have resorted to alternatives like terrain matching and supplementing
substantial, with the US alone committing over $43 billion in security GPS with communication satellite signals6 from commercial providers.
assistance, supplying advanced weaponry and protective equipment.
HawkEye 360 is significantly aiding efforts in the Ukraine conflict through
Radio frequency (RF) signal detection in Ukraine: The detection of RF signals its unique satellite technology. Established with the mission of offering
from Russian communication hubs or moving battalions could indicate commercial space-based RF data and analytics, HawkEye 360's satellite
preparations for major offensives. Ukrainian forces can use this intelligence constellation can detect radio waves emitted by communication equipment and
to anticipate enemy movements7. other electronic devices10.
This capability allows for the identification of enemy troop concentrations,
which is crucial for understanding troop movements and potential threats on
the battlefield. In Ukraine, HawkEye 360's capabilities provide invaluable
insights that help in strategic decision-making on the ground. The company's
satellite data, combined with advanced analytics, offers a comprehensive view
of activities, strengthening Ukraine's situational awareness amidst the
conflict11.
((2)
https://www.reuters.com/world/europe/blood-billions-cost-russias-war-ukraine-2023-08-23)
((3)
https://www.economist.com/interactive/briefing/2023/02/23/data-from-satellites-reveal-the-vast-extent-of-fighting-in-ukraine)
((4)
https://www.defenseone.com/technology/2023/03/black-swan-starlinks-unexpected-boon-ukraines-defenders/383514/)
((5)
https://www.economist.com/interactive/international/2023/01/13/open-source-intelligence-is-piercing-the-fog-of-war-in-ukraine)
((6)
https://www.economist.com/special-report/2023/07/03/the-latest-in-the-battle-of-jamming-with-electronic-beams)
((7)
https://www.economist.com/special-report/2023/07/03/the-war-in-ukraine-shows-how-technology-is-changing-the-battlefield)
((8)
https://interactive.satellitetoday.com/via/november-2022/how-satellite-imagery-magnified-ukraine-to-the-world/)
((9)
https://news.yahoo.com/defence-intelligence-reports-quantity-russian-110700367.html?guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAEnf9fTV0GF1Z-HuKF3hFM49Di78yhJ3R8NaBaQZkI_uE4MvgafFLc-E9nkhyBwaQ5rLDP4cR3VsxkUuR_ci8ZOLD28eHjQT6Oj5bnfL0ZLWLAn_352aupTWENB71sEhwpOLJ5xsu9XjmbZvzrrgvP4)
(NM2RjUCWw5-ewgQdC76iR&guccounter=2)
((10)
https://interactive.satellitetoday.com/via/august-2023/unleashing-the-power-of-rf-data/)
((11)
https://www.nytimes.com/2023/05/21/us/politics/start-ups-weapons-pentagon-procurement.html)
Responsible Investment
'Many of the technologies being developed by the portfolio companies are
delivering ESG impact in key areas such as climate change, sustainability and
security. In addition, as the portfolio companies continue to grow and
develop, their ESG resourcing and risk management is maturing. The Investment
Manager is focused on helping portfolio companies on this ESG journey and
engaging in industry forums to ensure the potential impact that space can make
is understood and leveraged.'
Sarah Shackleton
COO, Seraphim Space
Being a responsible investor and taking into consideration environmental,
social and governance ('ESG') factors are paramount to the way the Company and
Investment Manager operate.
The Investment Manager is a signatory to Principles of Responsible Investment,
the UN-supported network of investors dedicated to promoting sustainable
investment through incorporating ESG factors into their investment and
ownership decisions (the 'UNPRI').
During the year, Seraphim Space was involved in the consultation process to
develop the Space Sustainability Principles by the Earth & Space
Sustainability Initiative ('ESSI')1.
Responsible Investment Policy
The Investment Manager's Responsible Investment Policy, which has been adopted
by the Company, may be found at https://seraphim.vc/esg/
(https://seraphim.vc/esg/) . The Investment Manager will update its
Responsible Investment Policy as necessary to reflect emerging regulations and
best practices.
The Directors and Investment Manager believe that ensuring robust assessment
of ESG-related risks and opportunities as part of the investment analysis and
decision-making processes leads to investment in more robust businesses,
ultimately creating long-term, sustainable value.
((1)
https://www.essi.org/news/essis-memorandum-of-principles-for-space-sustainability-full-signatory-list-published)
Potential Sustainability Impact
SpaceTech is a powerful new industry which can contribute significantly to
achieving the United Nations Sustainable Development Goals (the 'SDGs') and
their underlying targets. The extent to which our portfolio companies
contribute to the SDGs is seen as a key factor in the success of our
investment strategy and, as such, considerations of this are also an integral
part of Seraphim Space's decision-making process. Each portfolio company
contributes to at least two, and up to 11, SDGs. In addition, every SDG is
addressed by at least one portfolio company. SDG 8 (economic growth) and SDG 9
(innovation/infrastructure) are, unsurprisingly, the most common SDGs, with at
least 20 portfolio companies contributing to each of these.
The scorecard in the annual report shows the SDGs being addressed by the
companies in SSIT's main portfolio.
Seraphim Space recently accepted an invite to participate in the United
Nations' Data Expert Group convened to support the UN's efforts for designing
and implementing a global environmental data strategy by 2025. The symposium
was focused on how 'Big Data' can be used more effectively to support the
achievement of the SDGs. Space data will be integral to achieving this, and
through Seraphim Space's continued participation in the UN's Data Expert
Group, we will continue advocating for the critical role we expect many of our
portfolio companies to play in ensuring our planet has a sustainable future.
Ownership and ESG reporting
Each portfolio company is actively encouraged to integrate ESG considerations
in their business strategies and value creation plans. Seraphim Space works
with the boards and management teams of portfolio companies to identify and
address sustainability risks, capitalise on opportunities and meet established
ESG objectives in their own operations and throughout their value chains and
with co-investors to increase collective influence in these areas.
In situations where a portfolio company fails to address adequately any
significant risks identified at investment, Seraphim Space will take this into
consideration when assessing follow-on investment opportunities into the
company.
In September/October 2022, Seraphim Space organised training sessions
delivered by sustainability consultancy Sancroft International for the
management teams of the portfolio companies. Intended as an introduction to
ESG and the general topics of focus for funders and society as a whole, it
also covered the key opportunities and risks specific to the SpaceTech sector,
including materiality, climate change and human rights, as well as the SDGs
and examples of impact in the portfolio.
Following the first collection of ESG data from the portfolio, as explained
below, Seraphim Space is engaging with the portfolio companies to encourage
them to implement further measures to mitigate risk and drive impact and
opportunities.
Objective Reporting Metrics for ESG Factors
Percentage of desired measures(1) in place across the portfolio(2) to manage Proportion of the active portfolio with a founder who identifies as female or
ESG risk from an ethnic minority
67% 20%
Senior management identifying as female or from an ethnic minority within the Seraphim Space staff(3) identifying as female / from an ethnic minority
portfolio(2)
50% / 20%
21%
Percentage of energy consumption that is renewable(2)
Average portfolio company headcount growth(4) 30%
22.1%
((1) Desired measures as explained in the 'ESG governance and risk management
section'. Source: Portfolio company data.)
((2) Fair value weighted average (as defined in the Glossary) of the portfolio
companies providing information (which represents 95% of the fair value as of
30 June 2023). Source: Portfolio company data.)
(()(3)()) (Includes Seraphim Space's affiliates.)
((4)) (Fair value weighted average (as defined in the Glossary) year-on-year
growth for the 12 months ended 30 June 2023 of the top 10 holdings,
representing 86% of fair value (72% of NAV) as at 30 June 2023. Source:
Portfolio company data.)
The Company began collecting ESG metrics, such as carbon emissions, job
creation and diversity, from CY22 (hence there are no comparable metrics for
the prior year in this report) and plans to increasingly report on such
metrics for the aggregate portfolio in the future. In addition, the Company
also collects qualitative information around the following topics:
· effective board and risk management;
· business ethics, legal and compliance;
· data security and customer privacy;
· health and safety;
· employee engagement, diversity and inclusion;
· product quality and safety;
· community relations;
· energy management;
· GHG emissions; and
· materials management.
95% of the portfolio (by fair value as at 30 June 2023) provided the above
data, with the remaining 5% comprised predominantly of listed portfolio
companies or private companies where SSIT has no information rights.
ESG governance and risk management
The Investment Manager allocated points (up to a maximum of 15) to private
portfolio companies based on the number of measures that it would like to see
and which they have in place to manage ESG risk, including frequency of
discussion of such topics by the board and the policies and processes to
assess and mitigate such risks. On a fair value weighted basis, 67% of the
desired measures are in place across the portfolio (71% for portfolio
companies that are post Series A).
Diversity
A growing body of evidence suggests that diverse teams are more innovative and
achieve higher returns than those with just one gender and/ or one race or
ethnicity represented((1)). The World Economic Forum cites that teams that
include a female founder outperform all‑male led teams by 63%((2)). Forbes
also outlines the outperformance of diverse teams, explaining that companies
with at least one female or ethnically diverse founder generate over 60%+ in
business value((3)). Despite this, 2019 data from Pitchbook and the National
Venture Capital Association suggests that venture investors continued to be
white (80%) and male (84%), predominantly backing white, male founders (85% or
$136.5bn in 2019)((4)). The SSIT active portfolio includes six companies (20%)
with a founder that identifies as female or from an ethnic minority.
((1)
https://www.forbes.com/sites/committeeof200/2020/09/22/diversity-as-uperpower-the-well-known-data-against-homogeneous-teams-in-venture-capital/?sh=228846b52019)
((2) https://www.weforum.org/agenda/2021/05/close-gender-gap-venture-capital/)
((3)
https://www.forbes.com/sites/forbesbusinesscouncil/2022/05/26/diversity-the-holy-grail-of-venture-capital/?sh=9eb823a41787)
((4)
https://www.forbes.com/sites/committeeof200/2020/09/22/diversity-as-uperpower-the-well-known-data-against-homogeneous-teams-in-venture-capital/?sh=228846b52019)
SSIT portfolio diversity statistics
SSIT portfolio(1) Industry comparisons
Average Fair value weighted average(2)
Board members identifying as female 9% 4% High tech companies 2020-- 8%(3)
Board members identifying as from an ethnic minority 7% 9%
Senior management identifying as female or from an ethnic minority 19% 21%
Staff identifying as female or from an ethnic minority 27% 23% Venture capital-backed startups 2020-- men (89.3%) and white (71.6%)(4)
Sources: Portfolio company information; Seraphim Space analysis
Notes: (1) Data provided by portfolio companies representing 95% of the fair
value as of 30 June 2023
(2) Fair value weighted average (as defined in the
Glossary)
(3)
https://techcrunch.com/2021/08/29/diversifying-startups-and-vc-power-corridors/
(4)
https://venturebeat.com/games/diversity-vc-reports-1-87-of-venture-capital-allocated-to-women-and-minority-owned-startups
(%20https:/venturebeat.com/games/diversity-vc-reports-1-87-of-venture-capital-allocated-to-women-and-minority-owned-startups)
/
Compared to the diversity information outlined in the BVCA and Level 20
Diversity and Inclusion Report (2023), as at 30 June 2023, Seraphim Space
outperformed the market in most categories as outlined in the chart in the
annual report. With 17% females in all senior roles, it is slightly below the
industry at 20%, although the team is supported by the SSIT Board which is 75%
female. While Seraphim Space had no women in senior investment roles versus
the industry at 12%, Maureen Haverty was promoted post the year end to
Investment Principal (which would take the percentage to 20%), and the
Investment Committee is 33% female. Together with its affiliates, Seraphim
Space has roughly the same proportion of people from ethnic minorities
represented as the industry at 20%.
Job creation
Continued strong revenue growth and the ability for portfolio companies to
access the funding they require is driving headcount increases, despite the
difficult macroeconomic environment over the last 12 to 18 months. On a fair
value weighted basis, the top 10 holdings grew headcount by 22.1% in the 12
months to 30 June 2023.
Carbon emissions/energy reduction
Given the fact that the private portfolio companies are relatively early in
their life, a number are not yet measuring energy consumption, and scope 1/2
and 3 carbon emissions are only measured by four and two private portfolio
companies, respectively. On a fair value weighted basis, 30% of energy
consumption is renewable. We are engaging with the portfolio companies to
drive further work in this key area.
Business Review
Business Model
SSIT is the world's first and only listed SpaceTech fund providing public
access to private SpaceTech businesses.
The Company carries on business as an investment trust, which is a form of a
collective investment vehicle constituted as a closed-ended public limited
company. The Company's shares are traded on the premium segment of the
London Stock Exchange's main market.
The Company has no employees. It is managed by the Board, comprising four
independent non-executive Directors. The management of the Company's
investments in accordance with its investment objective and policy is
delegated to the Investment Manager and the Company's day-to-day functions,
including administrative, financial and share registration services, are
carried out by duly appointed service providers. The Board oversees the
activities and performance of the Investment Manager and other key service
providers. As an investment company with no employees, we believe that the
best way to achieve SSIT's strategic objectives is to have effective and
strong working relationships with the Investment Manager and other key service
providers.
The Company complies, where relevant, with the FCA's Listing Rules, Disclosure
Guidance and Transparency Rules and Prospectus Regulation Rules. In addition
to publishing its Annual and Interim Reports, the Company announces
regulatory, financial and portfolio information on a periodic basis via the
London Stock Exchange, thereby helping current and potential investors to make
informed investment decisions.
Additional information is available on the Company's website
(https://investors.seraphim.vc/ (https://investors.seraphim.vc/) ).
Investment Strategy
The Company provides investors with exposure to nascent SpaceTech companies,
being businesses which rely on Space-based connectivity or precision,
navigation and timing signals, or whose technology or services are already
addressing, originally derived from or of potential benefit to the Space
sector. These businesses comprise companies providing the SpaceTech
infrastructure for collecting and communicating data, principally via
satellites, as well as companies with the technology that facilitates the
exploitation of this data for terrestrial applications in areas such as
climate, communications, mobility and security (including cyber security).
Investment Objective
The Company's objective is to generate capital growth over the long term
through investment in a diversified, international portfolio of predominantly
early and growth stage unquoted SpaceTech businesses with the potential to
dominate globally.
Investment Policy
The Company seeks exposure to early and growth stage privately financed
SpaceTech businesses, acquiring primarily minority holdings. The Company
intends to realise long-term value through exiting its investments over time.
The Company invests internationally with a view to maintaining a diversified
portfolio primarily located in the US, UK and Europe. The Company's portfolio
is expected to comprise 20 to 50 holdings. The Company will at all times
invest and manage the portfolio in a manner consistent with spreading
investment risk.
Investments are mainly in the form of equity and equity-related instruments
although the Company may invest in a range of financial instruments including,
without limit, securities, derivatives, warrants, options, futures,
convertible bonds, convertible loan notes, convertible loan stocks or
convertible preferred equity. The Company may also on occasion invest in other
debt-based investments not referred to above, including, without limit, loan
stock, payment-in kind instruments and shareholder loans. In addition to
participating in new issues, the Company may also undertake secondary
transactions that involve the acquisition of existing stakes.
The Company may invest in companies, as well as other forms of legal entity,
including partnerships and limited liability partnerships. The Company may
acquire investments directly or by way of holdings in special purpose
vehicles, intermediate holding entities or other structures. The Company will
not invest in other listed closed-ended investment funds.
Investment restrictions
The Company will invest and manage its assets with the objective of spreading
risk through the following investment restrictions:
· other than the ability for the aggregate value of the Company's
holding in one single portfolio company or other entity to represent up to 20%
of Gross Asset Value, the aggregate value of the Company's holding in any
other single portfolio company or other entity will represent no more than 15%
of Gross Asset Value; and
· the Company's aggregate investment in publicly quoted companies
will represent no more than 30% of Gross Asset Value.
The Company will generally only invest in publicly quoted companies that
constituted part of the Initial Portfolio or the Retained Assets or in
circumstances where it has already made an initial investment prior to the
portfolio company's initial public offering. However, the Company may invest
up to 5% of Gross Asset Value in aggregate in publicly quoted companies that
do not constitute part of the Initial Portfolio or the Retained Assets or in
which it has not already made an initial investment prior to an initial public
offering. For the avoidance of doubt, any process by which an unlisted
investment of the Company becomes listed shall be deemed not to be a new
investment by the Company.
Each of the restrictions referred to above will be calculated at the time of
investment. The Company will not be required to dispose of any investment or
to rebalance the portfolio as a result of a change in the respective
valuations of its assets.
Hedging and derivatives
Save for investments made using equity-related instruments as described above,
the Company will not employ derivatives of any kind for investment purposes
other than to potentially hedge downside risk on a quoted portfolio company
for specific reasons, such as where the Company is subject to lock-up
provisions. Derivatives may be used for currency hedging purposes.
Borrowings
Although the Company does not intend to use structural gearing with a view to
enhancing returns on investments, the Company may, from time to time, use
borrowings for the purpose of bridging investments, managing its working
capital requirements and efficient portfolio management purposes. Borrowings
will not exceed 10% of NAV, calculated at the time of drawdown of the relevant
borrowings.
Cash management
The Company may hold cash on deposit and may invest in cash equivalent
investments, which may include short-term investments in money market-type
funds and tradeable debt securities ('Cash and Cash Equivalents'). There is no
restriction on the amount of Cash or Cash Equivalents that the Company may
hold or where it is held.
Cash and Cash Equivalents will be held with approved counterparties and in
line with prudent cash management guidelines agreed between the Board and the
Investment Manager.
The Company will hold sufficient Cash or Cash Equivalents for the purpose of
making follow-on investments in accordance with the Company's investment
policy and to manage the working capital requirements of the Company.
Target Returns and Dividend Policy
The Directors intend to manage the Company's affairs to achieve shareholder
returns through capital growth rather than income.
The Company has no formal benchmark. However, the Company targets an
annualised total return on the Company's portfolio of at least 20% over the
long term (adjusted for any dividends paid or share buy-backs by the Company).
This is a target only and reflects the Investment Manager's expectations of
the potential returns that can be generated by investing in a portfolio of
early and growth stage private companies which have the potential to generate
substantial returns for their shareholders over the long term whilst
recognising that not all portfolio companies will achieve their potential and
that some may fail in their entirety. This should not be taken as an
indication of the Company's expected future performance, return or results
over any period and does not constitute a profit forecast. The actual return
generated by the Company over any period will depend on a wide range of
factors, including, but not limited to, the terms of the investments made, the
performance of its portfolio companies, general macroeconomic conditions and
fluctuations in currency exchange rates.
As the Company's priority is to produce capital growth over the long term, it
has no dividend target and will not seek to provide shareholders with a
particular level of distribution. However, the Company intends to comply with
the requirements for maintaining investment trust status for the purposes of
section 1158 of the Corporation Tax Act 2010 regarding distributable income.
Therefore, in accordance with regulation 19 of the Investment Trust (Approved
Company) (Tax) Regulations 2011, the Company will not (except to the extent
permitted by those regulations) retain more than 15% of its income (as
calculated for UK tax purposes) in respect of each accounting period and any
excess will be distributed in the form of a final dividend.
Share Rating Management
The Board recognises the need to address any sustained and significant
imbalance of buyers and sellers which might otherwise lead to the ordinary
shares trading at a material discount or premium to their NAV.
The Board has not adopted any formal discount or premium targets which would
dictate the point at which the Company would seek to buy back or issue
ordinary shares. However, the Board is committed to utilising its share
buy-back and issuance authorities where appropriate in such a way as to
mitigate the effects of any such imbalance. In considering whether buy-back or
issuance might be appropriate in any particular set of circumstances, the
Board will take into account, amongst other things, prevailing market
conditions, (in the case of buy-backs) the level of the Company's discount
relative to those of comparable listed investment companies, the cash
resources readily available to the Company, the Company's immediate pipeline
of investment opportunities, the level of the Company's borrowings (if any),
the Company's working capital requirements and the degree of NAV accretion
that will result from the buy-back or issuance, and, in the case of buy-backs,
whether higher returns would be made from investing capital than buying back
ordinary shares.
On 13 July 2023, the Board announced a share repurchase programme to mitigate
the effect of the substantial discount experienced by the Company. In the
period to 13 October 2023, the Company bought back 2,186,344 shares pursuant
to the share repurchase programme. The shares bought back are being held in
treasury and may be resold in due course at a premium to NAV. The Board will
keep shareholders informed, on a regular and ongoing basis, of the approach
which it has adopted to share rating management, principally through
commentary in the Company's Annual and Interim Reports.
Key Performance Indicators
At each Board meeting, the Directors consider a number of performance measures
to assess the Company's success in achieving its objectives. The key
performance indicators ('KPIs') used to measure the performance and progress
of the Company over time are as follows:
· the movement in NAV per share (as the Company does not pay
dividends, this is the same as the NAV total return per share);
· the movement in the share price (as the Company does not pay
dividends, this is the same as the share price total return per share);
· the premium/discount of the share price to the NAV per share;
· ongoing charges; and
· portfolio fair value vs. cost.
The first four KPIs are established industry measures. Having regard to the
Company's target return, we believe that, at this stage in the Company's life,
the portfolio fair value vs. cost is an appropriate KPI to measure the
portfolio's performance.
An explanation of the KPIs can be found in Alternative Performance Measures.
The KPIs for the year ended 30 June 2023 are shown in the Key Highlights
within the Strategic Report.
Environmental, Social and Governance Matters
Socially responsible investment
The Board has endorsed the Investment Manager's Responsible Investment Policy,
which seeks to ensure that the Investment Manager's management of SSIT's
investments takes account of environmental, social, governance and ethical
factors, where appropriate. The Investment Manager actively engages with
portfolio companies on ESG factors and often has a participation role at board
level with such companies, helping to guide their governance policies. Details
of the Responsible Investment Policy are included in the Strategic Report
above.
Environment
As an investment company with all its activities outsourced to third parties,
the Company does not have any physical assets, property, employees or
operations of its own and, therefore, the Company's own direct environmental
impact is minimal. The Company has no greenhouse gas emissions to report from
its operations, nor does it have responsibility for any other emissions
producing sources under the Companies (Directors' Report) and Limited
Liability Partnerships (Energy and Carbon Reporting) Regulations 2018. For
the same reasons, the Company considers itself to be a low energy user under
the Streamlined Energy & Carbon Reporting Regulation and, therefore, is
not required to disclose energy and carbon information.
The Company notes the Taskforce for Climate-related Financial Disclosures
('TCFD') recommendations on climate-related financial disclosures. The Company
is an investment company and, as such, it is exempt from the FCA's Listing
Rules requirement to report against the TCFD framework.
A key focus of the Investment Manager's Responsible Investment Policy, and its
engagement with portfolio companies, is on their management of environmental
risks, particularly those associated with the climate change, and their
ability to develop products and services that help address climate change
impacts.
Employees, human rights and community issues
The Board recognises the requirement under section 414C of the Companies Act
2006 to provide information about employees, human rights and community
issues, including information in respect of any of its policies in relation to
these matters and their effectiveness. These requirements do not apply to
SSIT as it has no employees, all of the Directors are non‑executive and it
has outsourced all of its functions to third-party service providers.
Consequently, SSIT has not reported further in respect of these provisions.
Modern slavery
The Company does not provide goods or services in the normal course of
business and, as an investment company, does not have customers.
Consequently, the Directors do not consider that the Company is required to
make a statement under the Modern Slavery Act 2015 in relation to slavery or
human trafficking.
Diversity
The Board and Investment Manager strongly believe that having diversity in
skills, experience, identity and cognitive thought has significant benefits
when making decisions.
The Board currently comprises four independent Directors appointed on
merit-based qualifications. The skills and experience which the current
members of the Board bring to SSIT's leadership are described in the Corporate
Governance section below. Currently, the Board has 75% female representation
(greater than the FCA's target for listed companies of 40%) and the Senior
Independent Director (Sue Inglis) is also female (in line with the FCA's
target for listed companies of one senior position being held by a woman).
Given the size of the Board and that fact the Company is in an early stage, it
does not currently have at least one member of the Board from a minority
ethnic background (contrary to the FCA's target for listed companies) but this
will be a key consideration for future appointments.
The Investment Manager (together with its affiliates) has a diverse employee
base (currently, 50% female and 23% from non-white British or other white
backgrounds) and continues to dedicate recruiting resources to increasing its
diversity across all positions and levels.
Bribery Act 2010
The Board has a zero-tolerance policy in relation to bribery and corruption
and has received assurance through internal controls reporting from the
Company's key service party providers, including the Investment Manager, that
adequate safeguards are in place to protect against any such potentially
illegal behaviour by employees or agents.
Criminal Finances Act 2017
The Company has a zero-tolerance policy towards the criminal facilitation of
tax evasion.
Principal and Emerging Risks and Uncertainties
Under the FCA's Disclosure Guidance and Transparency Rules, the Directors are
required to identify those material risks to which the Company is exposed and
take appropriate steps to mitigate those risks.
The Board thoroughly considers the process for identifying, evaluating and
managing any significant risks faced by the Company, including emerging risks,
on an ongoing basis, and these risks are reported and discussed at Board
meetings. The Board ensures that effective controls are in place to mitigate
these risks and that a satisfactory compliance regime exists to ensure all
applicable local and international laws and regulations are upheld. For each
material risk identified in the risk matrix, the likelihood and consequences
are identified, management controls and frequency of monitoring are confirmed
and results are reported and discussed at each scheduled Audit Committee
meeting and more often if required.
The key areas of risk faced by the Company and mitigating factors are
summarised below:
Risk Potential impacts Mitigation
Investment return • Reduced demand for SSIT's shares • Seraphim Space has deep sector knowledge and experience and a
rigorous investment process designed to identify and manage risks
Risk that SSIT fails to achieve • Reduced liquidity in SSIT's share trading
• The portfolio is managed in accordance with the investment policy to
its investment objective and provide a satisfactory investment return • Increase in share price discount spread investment risk
• The investment environment, portfolio performance, specific factors
affecting portfolio companies (individually or collectively), transactions,
investment pipeline opportunities and cash flow forecasts are reviewed
regularly by the Board
• The Board conducts a rigorous strategy review annually
Discount • Reduced liquidity in SSIT's share trading • The Board, Seraphim Space and SSIT's corporate brokers monitor the
SSIT share price discount (and premium) on an ongoing basis and movements in
Risk that SSIT's shares trade at a material discount to NAV as a result of an • Reduced shareholder return the share register on a regular basis, taking into account broader market
imbalance between buyers and sellers which may occur for a wide variety of
conditions
reasons • Discount may attract short-term investors with return aspirations
materially different to SSIT's investors supportive of its long-term strategy • Proactive investor communication and engagement by the Board,
Seraphim Space and SSIT's corporate brokers to enhance investors'
• SSIT's access to additional capital constrained understanding of SSIT, its strategy and associated risks
• Shareholders are encouraged to engage freely with the Board on
matters that are of concern to them so that the Board can understand their
views and concerns and consider them in its discussions and decision-making
• SSIT has authorities in place to buy back shares, which the Board
may use when deemed to be in the best interests of shareholders as a whole (in
July 2023, the Board announced a share repurchase programme to support the
Company's share price in light of the substantial discount it was
experiencing)
Liquidity · Dilution of SSIT's holdings in existing portfolio companies · Seraphim Space monitors the cash runways of portfolio companies
and maintains cash flow projections based on its assessment of return
Risk that SSIT has insufficient liquid resources to particate in subsequent · Reputational damage potential, timing and scale of potential funding rounds, the ability of others
funding rounds by portfolio companies or make new investments
in portfolio company syndicates to support funding rounds, the availability of
· Reduced NAV growth new investment opportunities and SSIT's projected operating costs in order to
manage SSIT's ability to participate in forthcoming funding rounds
· Reduced shareholder return
· Cash flow forecasts are reviewed regularly by the Board
Portfolio company performance · Reduction in relevant portfolio company valuations, potentially · Seraphim Space has extensive experience of investing into and
resulting in 100% write-off supporting early and growth stage businesses
Risk that portfolio companies, being early and growth stage companies which
may lack breadth and depth of management team and capital and have a higher · Reduced NAV and shareholder returns · Seraphim Space has a rigorous investment process designed to
risk profile than larger, more established companies, are unable to
identify and manage risks
commercialise their technology, products, business concepts or services and/or
otherwise fail to achieve their business objectives · A third party technical due diligence provider is engaged prior
to every material deal to assess the technological and market opportunity
· Seraphim Space monitors progress against critical milestones,
with the aim of supporting portfolio companies in changes in strategy where
progress is not as anticipated
· SSIT's investment strategy is to ensure sufficient
diversification within its portfolio and to syndicate investments with other
investors to ensure portfolio companies are well capitalised
· Portfolio company performance is regularly reviewed by the Board
Public company share price volatility • Increased share price volatility • The investment policy includes restrictions on investment in listed
companies
Risk of extreme volatility in the share prices of SSIT's listed portfolio • Reduced demand for SSIT's shares
companies materially adversely impacting the concentration risk associated
• Seraphim Space monitors share price fluctuations and portfolio
with the portfolio • Reduced liquidity in SSIT's share trading concentration levels
• Reduced NAV and shareholder returns
• Increase in share price discount
Macroeconomic · Significant widescale disruption impacting businesses generally · Seraphim Space completes extensive due diligence procedures prior
to investment and, on an ongoing basis, monitors and works closely with
Risk that the performance of portfolio companies may be materially adversely · Adverse impact on global markets and investor sentiment portfolio companies to provide advice and experience in dealing with adverse
affected by geopolitical risks, a pandemic/epidemic, climate change and/or
macroeconomic conditions and disruptive events
other macroeconomic conditions, including interest rate rises and inflation · Reduced portfolio valuations
· Portfolio companies have business continuity plans, which, in
· Reduced demand for SSIT's shares many cases, have been fully tested during the COVID-19 pandemic and/or since
the war in Ukraine began and demonstrating that they are adept at adjusting in
· Reduced liquidity in SSIT's share trading response to major widescale disruption
· Reduced NAV and shareholder return · The investment environment and specific factors affecting
portfolio companies (individually or collectively) are assessed regularly by
· Increase in share price discount the Board
· SSIT's access to additional capital constrained
Valuation · False market in SSIT's shares · Valuations are prepared in accordance with the IPEV Valuation
Guidelines and Seraphim Space's valuation policy, which has been formally
Risk that estimates, assumptions and judgements used in valuing SSIT's · Reputational damage reviewed by the Board and commented upon by the Company's Auditor and is
investments in private companies lead to a material misstatement of the
consistently applied
valuation and, consequently, in SSIT's NAV · Reduced NAV and shareholder returns
· In advance of quarterly Audit Committee meetings, the Audit
· Increase in share price discount Committee meets with Seraphim Space solely for the purpose of reviewing the
quarterly valuations, giving the Audit Committee an opportunity to challenge
the valuations and to request further information before the valuations are
approved
· SSIT's Auditor reviews the valuations and methodology and attends
ad hoc Audit Committee meetings when interim and year end valuations are
presented and discussed by the Investment Manager as part of their annual
audit review procedures
Realisation · Reduced NAV and shareholder returns · SSIT's investment strategy is to hold investments for the long
term in order to deliver capital growth, SSIT has no debt, dividend or
Risk that, as SSIT's private company investments are illiquid and its buy-back obligations, it does not have a fixed life and it manages its
investments may have restrictions on sale or transfer of shares, SSIT may be liquidity to pay its operating costs as they fall due, so there is no pressure
unable to realise investments at short notice or at all and/or the price to realise investments
achieved on any realisation may be at a material discount to the prevailing
valuation · As set out opposite 'Valuation' above, SSIT has a robust and
consistent valuation process
Foreign exchange · Reduced NAV and shareholder returns · SSIT invests globally and has exposure to several non-Sterling
currencies, providing some FX risk diversification
Risk that FX movements materially adversely affect the value of investments
made in currencies other than Sterling · Whilst it is not currently SSIT's policy to actively manage FX
risk, Seraphim Space monitors FX rates and may, in consultation with the Board
and SSIT's corporate brokers, explore mitigating options
· The Company has engaged a provider who has demonstrated a track
record of favourable rates for FX spot trades
Key persons • Adverse impact on SSIT's ability to implement its investment • Seraphim Space has controls and incentives in regard to key persons
strategy retention, including annual bonus, share of any performance fee payable by
Risk that one or more of Mark Boggett, James Bruegger and Rob Desborough (key
SSIT and succession planning
members of Seraphim Space's team) • Reduced NAV and shareholder returns
• Seraphim Space's recruitment and appointments since SSIT's IPO have
cease to be actively engaged in the management of SSIT's portfolio added further depth to its team
• The Investment Management Agreement may be terminated by SSIT if a
key person leaves Seraphim Space and is not replaced by (a) person(s) of equal
or satisfactory standing within specified timeframes
ESG · Reputational damage · With the assistance of an international sustainability
consultancy firm, Seraphim Space has developed a robust Responsible Investment
Risk that Seraphim Space fails to identify ESG issues in portfolio companies · SSIT's shares may be less attractive to investors Policy and associated tools
or receive adequate ESG information from portfolio companies or that portfolio
companies fail to adequately address any material climate change impacts they · Issues regarding valuations of portfolio companies concerned · Seraphim Space works with the boards and management teams of
might have portfolio companies to identify and address ESG issues, including ESG
reporting, and with co-investors to increase collective influence on such
matters.
Each of the above principal risks has been identified in the Company's risk
matrix, which is reported and discussed at Audit Committee and Board meetings.
The Directors ensure that effective controls are in place to mitigate each
risk and the graphics in the Annual Report show the Board's assessment of the
likelihood and impact of each, both pre‑control and post-control.
Going Concern
In light of the conclusions drawn in the longer-term viability statement below
and as set out in note 2 to the financial statements, the Directors have a
reasonable expectation that the Company has adequate resources to continue in
operational existence for at least 12 months from the date of this annual
report. Accordingly, the Directors believe that it is appropriate to
continue to adopt the going concern basis in preparing the financial
statements.
Longer-term Viability
As required by the AIC Code, the Directors have assessed the prospects of the
Company over a period longer than the 12 months required for the going concern
statement. The Board has assessed the Company's prospects over the period of
three years ending 30 September 2026. The Board has chosen this period because
it is consistent with the three-year basis that the Directors evaluate the
Company's financial position as a whole on a quarterly basis and projecting
financial and economic scenarios over a longer period would be imprecise given
the lack of long-term economic visibility. Soon after the period of three
years ending 30 September 2026, an ordinary resolution will be proposed at the
AGM in 2026 pertaining to the Company continuing as an investment company.
In assessing the Company's prospects and longer-term viability, the Board has
taken into account:
· the principal and emerging risks and their mitigation identified
in the 'Principal and Emerging Risks and Uncertainties' section above;
· the nature of the Company's business;
· the Company's cash and other liquid reserves, as well as the
value of its listed holdings;
· the ability of the Investment Manager and Directors to minimise
the level of cash outflows, if necessary, as the Investment Manager considers
the Company's future cash requirements before making investments and the Board
receives regular updates from the Investment Manager on the Company's cash
position and forecast cash flows, which allows the Board to limit funding for
existing and/or new investments as required;
· the Investment Manager monitors the Company's cash requirements
to meet ongoing fees and expenses and expects to maintain sufficient assets in
cash reserves to meet these obligations;
· the circumstances in which a performance fee is payable to the
Investment Manager as outlined in note 4 to the financial statements; and
· the Company does not have any gearing or any obligation to pay
dividends.
The process for identifying, evaluating and managing significant and any
emerging risks faced by the Company and periodic reports from the Investment
Manager and Administrator regarding risks faced by the Company are reviewed
routinely at Audit Committee and Board meetings. The Board ensures that
effective controls are in place to mitigate these risks and that a
satisfactory compliance regime exists to ensure all applicable local and
international laws and regulations are upheld. When required, the Company
seeks expert advice regarding tax, legal and other factors.
Based on a robust assessment of the principal and emerging risks facing the
Company, the Board believes that the most significant risks to the Company's
longer-term viability are:
· the risk of a significant and prolonged economic downturn which
could impact the Company through poor ratings of growth with consequent
discounts, high interest rates adversely impacting growth company valuations
and a tough fundraising environment;
· a significant majority of the Company's investments are in
private companies that are not liquid and may be subject to restrictions on
sale or transfer, which may limit the Company's ability to realise investments
at short notice and/or at a reasonable price or at all; and
· the inability to raise funds, should the need arise.
The Board has considered the Company's viability over the three-year period,
based on a working capital model prepared by the Investment Manager. The
working capital model forecasts key cash flow drivers, such as capital
deployment rate and operating expenses, and includes robust downside scenarios
with continued high interest rates and a considered amount of additional
investment activity in the near term. Capital raises, realisations and/or
share buy-backs are assumed to not occur during the three-year period, unless
already predetermined.
Based on its assessment, the Board has concluded there is a reasonable
expectation that the Company will continue to meet its liabilities as they
fall due and remain viable, even in a scenario where global macroeconomic
uncertainty persists for an extended period and including severe but plausible
downside scenarios over the three-year period of the assessment.
Life of the Company
The Company has no fixed life but, in accordance with its Articles of
Association, an ordinary resolution proposing that it continues in existence
as an investment company will be proposed at its AGM in 2026 and, if passed,
every five years thereafter. If any such resolution is not passed, proposals
will be put forward by the Directors within three months from the date of the
resolution to the effect that the Company be wound up, liquidated,
reconstructed or unitised.
Future Development of the Company
While the future development of the Company is dependent on the success of its
investment strategy, which is subject to various factors including external
ones (such as the macroeconomic environment and market developments) which are
outside the control of the Board and Investment Manager, and the future
attractiveness of the Company as an investment vehicle, the Board's intention
is that the Company will continue to pursue its investment objective and
policy. The Chair's Statement and the Investment Manager's Report include
commentary on the outlook for the Company.
Approval of Strategic Report
The Strategic Report is provided in accordance with The Companies Act 2006
(Strategic Report and Directors' Report) Regulations 2013 and is intended to
provide information about the Company's strategy and business needs, its
performance and results for the year and the information and measures which
the Directors use to assess, direct and oversee the Investment Manager in the
management of the Company's activities. The Strategic Report has been approved
by the Board and is signed on its behalf by:
Will Whitehorn
Chair
16 October 2023
Section 172: Engaging with Key Stakeholders
'Our responsibilities to stakeholders, together with consideration of the
long-term consequences of our decisions and maintaining high standards of
business conduct, are integral to the way the Board operates'.
S.172 Responsibilities
Under section 172 of the Companies Act 2006 ('s.172'), the Directors have a
duty to act in the way they consider, in good faith, would be most likely to
promote the success of the Company for the benefit of its members as a
whole. In doing so, the Directors are required to take into account (amongst
other matters) the likely long-term consequences of their decisions, the need
to foster relationships with the Company's wider stakeholders, the
desirability of the Company maintaining a reputation for high standards of
business conduct and the impact of the Company's operations on the community
and environment.
As an externally managed investment company, SSIT has no premises, employees
or customers and conducts its core activities through third-party service
providers. Currently, SSIT has no debt finance. We consider, therefore,
shareholders to be the Company's principal stakeholders but also regard
potential shareholders, the Investment Manager, the Administrator, other key
service providers (corporate brokers, Auditor, legal advisers, public
relations and communications adviser, depositary and registrar) and portfolio
companies as key stakeholders. The Investment Manager's Responsible
Investment Policy is integrated into its investment process, ensuring that it
has regard to the impact of SSIT's investments on the wider community and
environment.
Our responsibilities to stakeholders, together with consideration of the
long-term consequences of our decisions and maintaining high standards of
business conduct, are integral to the way we operate as a Board and are
foremost in our minds in our discussions, decision-making and reporting. We
welcome, therefore, shareholders' and other stakeholders' views and concerns
and place great importance on our engagement with them so that we can better
understand and consider them in our discussions and decision-making.
Stakeholder Engagement
The table below sets out the principal ways in which we engage with the
Company's key stakeholder groups.
Stakeholder group
Shareholders and potential investors Why they are important
Continued shareholder support and engagement and attracting new investors are
critical to the continuing existence of the Company and the delivery of its
long-term strategy.
How we engage
The Company has a broad range of shareholders, comprising both professional
and retail investors, and has developed various ways of engaging with them,
including:
· Regulatory announcements and publications: The Company issues
regulatory announcements via the London Stock Exchange in respect of routine
reporting obligations, periodic financial and portfolio information updates
and in response to other events. The Company's Annual and Interim Reports and
associated presentations, as well as quarterly reports and shareholder
circulars, are made available on the Company's website. Their availability
is announced via the London Stock Exchange.
· RNS Reach Newsletter: The Company issues a monthly SpaceTech
Sector Newsletter via RNS Reach to provide timely updates, based on publicly
available information, on the Company's investments, its Investment Manager
and the wider SpaceTech market. The first publication was issued on 9 January
2023. Their availability is also announced via the London Stock Exchange and
are available via the 'RNS Announcements' section under 'Investor Relations'
on the Company's website.
· Website (https://investors.seraphim.vc/
(https://investors.seraphim.vc/) ): This includes videos, research notes
available to retail investors and other relevant information to enhance
investors' understanding of the Company and its strategy. Shareholders and
other interested parties can subscribe to email news updates by registering
online on the website.
· Investor meetings and events: The Investment Manager, on behalf
of the Board and with the assistance of SSIT's corporate brokers and public
relations and communications advisor, undertakes a programme of investor
engagement throughout the year. During the year to 30 June 2023, the
Investment Manager held four group meetings for research analysts for each
quarterly results and four professional and/or retail investor webinars
through the Company's public relations and communications advisor. Each
analyst presentation had 25 attendees. Through the Company's corporate
brokers, there were 120 interactions with 57 unique investors. Directors
attend some investor meetings to gauge sentiment first hand. All investors
are offered the opportunity to meet the Chair, Senior Independent Director or
other Board members.
· Capital markets day: This is an event, attended by research
analysts and professional investors, held periodically consisting of
presentations from the Chair and senior members of the Investment Manager's
team. The capital markets day held on 12 May 2022 also included presentations
from a selection of SSIT's portfolio companies. Videos of the event are
available on SSIT's website. The next capital markets day is scheduled for 18
October 2023.
· Investor relations updates: At quarterly Board meetings, the
Directors receive updates on the share trading activity, share price
performance and investor feedback. The Directors also receive investor
feedback following investor roadshows arranged by the Company's corporate
brokers.
· Annual General Meetings: The Annual General Meeting of the
Company provides a forum for shareholders to meet, ask questions and discuss
issues with the Directors and Investment Manager. The next Annual General
Meeting will take place on 20 November 2023.
· Working with external partners: The Board also engages some
external providers, such as a public relations and communications adviser, to
assist in investor communication and obtain input on specific aspects of
shareholder communications, such as developing more effective ways to
communicate with investors.
We welcome diversity of thought and opinions. Shareholders may contact the
Company via seraphimteam@ocorian.com (mailto:seraphimteam@ocorian.com) or by
post via the Company Secretary on any matters that they wish to discuss with
the Board and the Company Secretary will arrange for the relevant Board member
to contact them.
Target outcomes
Shareholders and potential investors receive relevant information to enable
them to evaluate whether their investment interests are aligned with the
Company's strategy.
We receive feedback and views on investor concerns and priorities which inform
our discussions and decisions.
Investment Manager Why it is important
(Seraphim Space Manager LLP) The Investment Manager's specialist knowledge and experience is vital to
implementing SSIT's investment strategy successfully and achieving its
investment objective, so maintaining a strong, collaborative relationship with
the Investment Manager is critical to SSIT's long-term success.
How we engage
Important components in the collaboration with the Investment Manager are:
· drawing on Board members' individual experience to support the
Investment Manager in the performance of its responsibilities to the Company,
including implementing SSIT's investment strategy;
· willingness to make the Board members' experience available to
support the Investment Manager in the sound, long-term development of its
business and resources, recognising that SSIT is currently the principal
client of the Investment Manager and so the long-term success of the
Investment Manager is closely aligned to that of the Company; and
· having in place appropriate remuneration arrangements to
incentivise the Investment Manager whilst aligning with shareholders'
interests.
We engage with the Investment Manager in numerous ways, including:
· Regular reporting: We receive at least quarterly reports from the
Investment Manager on performance, investment activity and pipeline, portfolio
company developments, cash flow projections, and investor relations
activities, as well as on a wide range of other topics.
· Meetings: The Board and Investment Manager meet face-to-face at
least quarterly for scheduled Board and Committee meetings. In addition, the
Board and Investment Manager frequently meet, either in person or virtually,
between scheduled Board and Committee meetings to consider ad hoc matters.
· Continuous dialogue: The Board maintains an open dialogue with
the Investment Manager, engaging on key matters affecting SSIT or the
Investment Manager.
Target outcomes
We maintain a strong, collaborative relationship with the Investment Manager.
The Company's portfolio is well-managed, enabling it to meet its strategic
objectives and achieve long-term sustainable success.
Administrator / Company Secretary Why it is important
(Ocorian Administration (UK) Limited) The Administrator provides accounting, company secretarial and other
administrative services, so maintaining a strong, collaborative relationship
with the Administrator is critical to the effective running of SSIT's
day-to-day operations.
How we engage
We engage with the Administrator in several ways, including:
· Regular reporting: We receive at least quarterly reports from the
Administrator on a range of matters, including financial, corporate
governance, legal, regulatory and compliance matters.
· Meetings: The Administrator attends both scheduled and ad hoc
Board and Committee meetings.
· Continuous dialogue: The Board maintains open and constructive
dialogue with the Administrator, engaging on key matters affecting SSIT.
In addition, the Investment Manager, on our behalf, engages with the
Administrator on at least a weekly basis and ensures service levels are
satisfactory and appropriate controls are in place.
Target outcomes
We maintain a strong, collaborative relationship with the Administrator.
The Company's day-to-day operations are well-managed, supporting its ability
to meet its strategic objectives and achieve long-term sustainable success.
Other key service providers Why they are important
(corporate brokers, Auditor, legal advisers, public relations and For the Company to operate as a listed investment company, the Board relies on
communications adviser, depositary, registrar) the other key service providers for essential services and for advice and
support in meeting relevant obligations and complying with best practice.
Constructive working relationships with the other key service providers helps
ensure the Company continues to operate effectively.
How we engage
We engage with the other key service providers in a collaborative and
collegiate manner, with open and respectful discussion and debate being
encouraged, whilst also ensuring that appropriate and regular challenge is
brought. We engage with the other key service providers in several ways,
including receiving regular and, as needed, ad hoc reports, face-to-face
meetings (at the request of the Board or the relevant service provider) and
other dialogue as and when appropriate.
In addition, the Investment Manager and/or Administrator, on our behalf,
engages with the other key service providers on a regular basis and ensures
service levels are satisfactory.
Target outcomes
We, directly and indirectly, maintain constructive working relationships with
our other key service providers.
Other key service providers provide the required level of service, enabling
the Company to meet its obligations and follow best practice.
Portfolio companies Why they are important
For the Company to deliver capital appreciation, it needs to invest in
portfolio companies that ultimately develop their products and services and
successfully grow.
How we engage
We look to engage with the portfolio companies in a collaborative and
collegiate manner. We engage with portfolio companies during investor
events.
In addition, the Investment Manager, on our behalf, engages with portfolio
companies on a regular basis through participation on their boards,
interaction with their shareholders, introductions to partners, customers and
potential funding providers and value-add support and advice.
Target outcomes
We, directly and indirectly, maintain constructive working relationships with
our portfolio companies.
Portfolio companies benefit from the engagement, leading to their growth and,
ultimately, higher value for the Company.
Examples of Stakeholder Considerations
Set out below are examples of decisions and actions during the year which have
required the Directors to have regard to applicable s.172 factors.
Topic Stakeholder considerations and outcome
Responsible investment S.172 consideration: the impact of the Company's operations on the community
and the environment
Whilst the Company's operations are limited (with all substantive operations
being conducted by its third-party service providers), the Board is aware of
the need to consider the impact of the Company's investment strategy on
society and the environment. The Board is also aware, based on feedback from
investor meetings, that investors would like a better understanding of how ESG
matters are factored into the Company's investment strategy.
Stakeholders influencing and/or impacted considerations and outcome: Portfolio
companies, shareholders and potential investors.
Investment approvals S.172 consideration: the desirability of the Company maintaining a reputation
for high standards of business conduct
The Company has appointed the Investment Manager to manage its investments on
a discretionary basis, save where the Investment Manager may have a potential
conflict of interest. A company affiliated with the Investment Manager runs
accelerator programmes for very early stage SpaceTech companies and receives
share options and/or warrants from participants in those programmes.
During the financial year, the Investment Manager proposed that SSIT invest,
in aggregate, up to £2.3m, in two former accelerator programme participants
(one new investment which did not close prior to the year end and one
follow-on) where the affiliate had a potential conflict of interest. In each
case, the Board considered the proposed investment and the conflict and noted
that only the independent members of the Investment Manager's Independent
Advisory Committee had considered the investment at the Investment Manager's
Investment Committee meeting and were recommending the investment. The Board
was satisfied that the conflict had been managed appropriately and the
investments were consistent with SSIT's strategy and objectives and had the
benefit of having been monitored by the Investment Manager for some time.
The Board also noted that the terms of each proposed investment were in line
with those for other comparable transactions, and there was participation from
arm's length investors, including significant investment from a new investor
or more than pro-rata participation from an existing investor. Accordingly,
the Board concluded that it was in the interests of SSIT's shareholders to
approve the investments.
Stakeholders influencing and/or impacted considerations and outcome:
Shareholders and potential investors, Investment Manager.
Capital allocation S.172 consideration: the likely consequences of the decisions in the long term
Having regard to the challenging environment for raising additional capital
(debt and/or equity) and in expectation that such environment would continue
for some time, the Board and Investment Manager regularly reviewed the
Company's cash resources and other sources of liquidity, identified
anticipated shorter-term funding requirements of SSIT's portfolio companies
and agreed capital allocations for supporting portfolio companies and new
investment opportunities until such time as the fundraising environment
improves or a significant liquidity event occurs. These allocations were
consistent with SSIT's long-term strategy, should enable the Company to
continue to foster good relationships with portfolio company management teams
and maintain it's standing as a key investor in the SpaceTech sector and are
aimed at supporting the long-term growth of the NAV per share.
Stakeholders influencing and/or impacted considerations and outcome:
Shareholders and potential investors, portfolio companies, Investment Manager.
Share buy backs S.172 consideration: the likely consequences of the decisions in the long
term, the need to act fairly as between members of the Company
The Board considers that it is not in Shareholders' interests for the Ordinary
Shares of the Company to trade at a significant discount to the prevailing NAV
in normal market conditions. SSIT's shares have traded at a material discount
to NAV during the year (and continue to do so). The Board has authority to
buy-back shares when they are trading at a discount to NAV. The Board kept
under review whether buying back shares would be in the interests of
shareholders having regard to market conditions generally, the ratings of
other similar listed investment companies, the anticipated shorter-term
funding requirements of SSIT's portfolio companies, the investment
opportunities available to the Company, feedback from shareholder meetings and
advice from SSIT's corporate brokers. The Board believes that the most
effective means of minimising any discount at which the Ordinary Shares may
trade is for the Company to deliver strong, consistent, long-term performance
from the investment portfolio. However, wider market conditions and other
considerations inevitably affect the rating of the Ordinary Shares from time
to time.
Towards the end of the year, the Ordinary Share price discount widened to a
level that the Board concluded, having regard to the matters referred to in
the previous paragraph, that it would be in the interests of shareholders to
commence a share repurchase programme. On 13 July 2023, the Board announced a
share repurchase programme funded out of SSIT's existing cash resources. Since
then, and up to 13 October 2023, the Company bought back a total of 2,186,344
shares (0.9% of the shares in issue at 12 July 2023) at an aggregate cost of
£1m. The shares bought back are being held in treasury. The closing price as
at 13 October 2023 was x p, an increase of x % from the closing share price
of 26.1p on 12 July 2023. The shares were bought at a discount to net asset
value in order to ensure that the company's shareholders found liquidity for
their shares when market demand was insufficient and on terms that enhanced
net asset value for remaining shareholders.
Stakeholders influencing and/or impacted considerations and outcome:
Shareholders and potential investors.
Annual review of service providers S.172 consideration: the need for the Company's to foster business
relationships with suppliers, customers and others
The Management Engagement Committee met during the year to review the
Company's external service providers and, in particular, the quality and costs
of the services provided (details of the review are included in the Management
Engagement Report). For the reasons noted in its Report, the Management
Engagement Committee concluded that the interests of the Company's
shareholders would be best served by the ongoing appointments of the
Investment Manager, the Administrator and SSIT's other key service providers
on the existing terms.
Stakeholders influencing and/or impacted considerations and outcome:
Investment Manager, Administrator, other key service providers.
Strategy session S.172 consideration: the likely consequences of the decisions in the long term
In June 2023, the Board held a strategy session with the Investment Manager,
outside of the scheduled quarterly Board meetings, to consider the Company's
strategic objectives. Topics discussed included liquidity projections,
scenario planning and allocation of existing cash resources. The Board
believes that the strategy session helped to strengthen a clear and
collaborative vision for the strategic direction of the Company, while taking
into account the views and needs of stakeholders. The Board will continue to
conduct a strategy session annually.
Stakeholders influencing and/or impacted considerations and outcome:
Shareholders and potential investors, portfolio companies, Investment Manager.
Directors and Investment Manager
Board of Directors
The Board of the Company, which combines considerable knowledge of the
SpaceTech industry, venture capital investment, the investment company sector
and corporate governance, is responsible for ensuring conformance to the
investment strategy, monitoring the performance of the Investment Manager and
ensuring good governance, including in relation to ESG matters.
The Directors are all non-executive and independent.
Photo Photo Photo Photo
William (Will) Whitehorn Susan (Sue) Inglis Christina McComb Angela Lane
Chair Senior Independent Director Director Director
Date of appointment 14 June 2021 14 June 2021 14 June 2021 1 January 2022
Committee membership AC, RNC, MEC AC, RNC©, MEC AC, RNC, MEC© AC©, RNC, MEC
Skills and experience Will was formerly a director of Virgin Group and President of Virgin Galactic Sue has a wealth of experience from more than 30 years advising listed Christina has over 25 years' experience of venture capital and growth Angela has decades of experience working with private equity-owned companies
until 2010. He has since pursued a private equity and non-executive career. He investment companies and financial institutions. Her executive roles included investment as a former director of 3i PLC and other venture funds. She has and investment companies and as the chair of audit and remuneration
is the President of UKSpace, the trade body that represents the Space industry Managing Director, Corporate Finance in the investment companies team at been a director of other investment companies, including as Chair of Standard committees. She is a Fellow of the Institute of Chartered Accountants in
in the UK. Will chairs the Scottish Event Campus, which hosted COP26. In Cantor Fitzgerald Europe and investment companies and financial institutions Life European Private Equity Trust PLC, from which role she retired in April England and Wales and began her career at the venture capital firm 3i PLC and
addition to these corporate roles, he has been a Fellow of the Royal teams at Canaccord Genuity. Sue is a qualified lawyer and was a partner and 2022. She has also held a number of senior public sector roles involved in SME became a partner of 3i's Growth Capital business, overseeing the UK Growth
Aeronautical Society since 2014 and is a member of the UK Government's Space head of the funds and financial services group at Shepherd & Wedderburn, a and growth business finance, including as Senior Independent Director at the Capital portfolio. Subsequently, she has held a number of positions as chair
Exploration Advisory Committee, which reports to the UK Space Agency. leading Scottish law firm. In 1999 she was a founding partner of Intelli British Business Bank. She was awarded an OBE in the Queen's Birthday Honours of private equity-backed businesses. She is currently on the Board of and acts
Corporate Finance, an advisory boutique firm focusing on the asset management 2018 for services to the economy. as chair of the audit committee for three investment trusts investing in
and investment company sectors, which was acquired by Canaccord Genuity in quoted and unquoted companies.
2009.
External appointments Chair of Good Energy Group PLC and Craneware PLC and non-executive director of Chair of ThomasLloyd Energy Impact Trust PLC and the senior independent Non-executive director of Big Society Capital Ltd and trustee and chair of Non-executive director and chair of the Audit Committee of BlackRock
AAC Clyde Space AB. director of Baillie Gifford Growth US Growth Trust PLC and CT Global Managed Investment Committee of Nesta, the UK's Innovation Agency for Social Good. Throgmorton Trust PLC, Pacific Horizon Investment Trust PLC and Dunedin
Portfolio Trust PLC. Enterprise Investment Trust PLC.
Committee membership key
AC Audit Committee
MEC Management Engagement Committee
RNC Remuneration and Nomination Committee
© Chair
Investment Manager
The Company has appointed Seraphim Space Manager LLP as its alternative
investment fund manager. The Seraphim Space team is comprised of seasoned
venture capitalists and some of the sector's most successful entrepreneurs who
scaled their SpaceTech businesses to multi-billion Dollar exits.
The senior individuals responsible for executing and overseeing the Company's
investment strategy are shown below.
Mark Boggett, CEO
Mark is a pioneer in SpaceTech investment having co-founded Seraphim Space and
launched the Seraphim Space LP fund, Seraphim Space Camp Accelerator, UK Space
Tech Angels and SSIT. Previously, Mark was a director at YFM Equity Partners,
the firm behind the high profile British Smaller Companies VCTs 1 & 2. He
also worked at Brewin Dolphin and Williams de Broe. He completed his
undergraduate degree in Accounting & Finance and Master's in Economics and
Finance from University of Leeds. Mark has been a fund representative on the
boards of a range of leading global SpaceTech companies, including LeoLabs,
Spire Global (listed on NYSE), Arqit (listed on NASDAQ) and HawkEye 360.
James Bruegger, CIO
James, co-founder and CIO of Seraphim Space, is a prolific venture capital
investor in the global SpaceTech domain. James was an early venture capital
investor in Arqit, ICEYE, LeoLabs and D-Orbit and led investments in several
companies that went public, including Spire Global and AST SpaceMobile.
Previously, he worked at YFM Equity Partners and Burlington Consultants, a
boutique strategy consultancy that was acquired by Deloitte & Touche.
James holds a first-class degree in History from University College London.
James has been a fund representative on the boards of a range of leading
global SpaceTech companies, including ICEYE, D-Orbit, Ultrasoc, ALL.SPACE
(formerly Isotropic Systems) and SatVu.
Rob Desborough, Managing Partner
Rob is a partner at Seraphim Space, heading up the early stage investments. He
is a co-founder of Seraphim Space Camp Accelerator, which was launched in 2018
and is now one of the world's leading accelerator programmes for SpaceTech
start-ups. Prior to Seraphim Space, Rob was with YFM Equity Partners as an
Investment Director. Rob holds a BSc (Hons) in Biomedical Sciences from
University of Glasgow and a Postgraduate Diploma (PGDip) in Information
Technology Systems from University of Strathclyde. Under Rob's guidance the
Seraphim Space Camp Accelerator has graduated 63 SpaceTech start-ups, which
have collectively raised $200m in co-investment syndicated from 73 venture
capital investors. He is a fund representative on the boards of Xona Space
Systems, Altitude Angel and other early stage investments.
Patrick McCall, Venture Partner
Patrick is the former chair of Virgin Galactic and Virgin Orbit. He was a
Director at Virgin from 2001 and developed businesses including Virgin Active
and Virgin Trains. His most recent role was senior partner at Virgin Group.
Sarah Shackleton, COO
Sarah is the COO at Seraphim Space and has more than 25 years of finance
experience. Prior to Seraphim Space, Sarah was a partner at Development
Partners International since its inception in 2007. She was responsible for
administration of the firm and its funds, including legal, compliance, HR, IT,
operations, facilities and ESG and also sat on the investment committee. Sarah
has experience as an active board director on private equity fund general
partners and investment holding companies. Before joining Development Partners
International, Sarah was an Associate Director on the Technology Equity
Research team at UBS in London, specialising in the telecommunications
equipment sector and covering large-cap European companies, including Nokia,
Ericsson and Alcatel-Lucent. Sarah holds a BSc (Hons) in Economics and
Accounting from University of Bristol.
Andre Ronsoehr, Investment Partner
Andre is an Investment Partner at Seraphim Space, following a career focussed
on the Space sector. He worked for almost a decade at Virgin Management, the
family office of Sir Richard Branson. Andre co-led the seed investment in
OneWeb in 2015 and was instrumental in investments into Virgin Galactic and
Virgin Orbit. During this time, Andre worked hand-in-hand with the boards and
C-level teams of each of these three pioneering space businesses, helping
shape them into $billion businesses Andre has been a fund representative on
the boards of a range of SpaceTech companies, including Astroscale and
PlanetWatchers.
Maureen Haverty, Investment Principal
Maureen joined Seraphim Space in 2022 following a successful career in the
space industry. She was COO at Apollo Fusion, a space start up that was sold
for $145m, where she was responsible for business development, manufacturing
and complex programmes. She was also Senior Director of Corporate Development
at Astra, a rocket launch company listed on NASDAQ. She has a first-class
Batchelor Civil and Environmental Engineering (BE) degree from University
College Cork and a PhD in Nuclear Engineering from University of Manchester.
Maureen is focussed on deal origination, deal execution, portfolio management
and fund operations in addition to actively supporting the Seraphim Space Camp
Accelerator.
Candace Johnson, Independent Advisory Committee Member
Candace has a long and distinguished career as founder/co-founder of Space
ventures such as SES ASTRA, SES Global, Loral-Teleport Europe and Europe
Online, as well as having played critical roles in developing Space sector
leaders, including Iridium and ILS. An experienced venture capitalist and
investor, she has been a member of the Strategic Committee of Iris Capital for
the past decade and served as President of the European Business Angel
Network, and is now President Emeritus. Candace serves and has served on the
boards of a number of emerging Space leaders, including NorthStar Earth and
Space and Kacific. Candace serves on Seraphim Space's Investment Committee as
an independent member to advise on and address any conflicts of interest.
Matt O'Connell, Independent Advisory Committee Member
Matt is a recognised thought leader in the geospatial intelligence industry.
Currently an Operating Partner at DCVC, supporting its investments, including
Space companies Capella and Planet. Matt has been working with Seraphim Space
since 2018. Before that, he was CEO of OneWeb until July 2016. In 2006, he
founded GeoEye (NASDAQ: GEOY), a leading global provider of satellite and
aerial imagery and digital mapping information, which was acquired by Digital
Globe in 2013 for $1.3bn. He has served on several private company boards and
government and industry advisory commissions. Matt serves on Seraphim Space's
Investment Committee as an independent member to advise on and address any
conflicts of interest.
Ann Winblad, Independent Advisory Committee Member
Ann is a Managing Director of Hummer Winblad Venture Partners, a venture
capital firm she co-founded in 1989. She is a well-known and respected
software industry entrepreneur and technology leader. Ann's firm has launched
over 160 enterprise software companies and led investments that pioneered
successful companies across the enterprise software sector. She served as a
director of numerous private and public companies including MuleSoft,
Hyperion, Sonatype, The Knot, Liquid Audio, Net Perceptions and Ace Metrix.
She also currently serves as a Director of OptiMine. Ann serves on Seraphim
Space's Investment Committee as an independent member to advise on and address
any conflicts of interest.
Directors' Report
The Directors present their Annual Report and audited financial statements for
the Company for the year ended 30 June 2023. The Corporate Governance Report
forms part of this Report.
Company Status
The Company is incorporated and domiciled in the United Kingdom and registered
in England and Wales.
The Company is an investment company as defined in section 833 of the
Companies Act 2006 and is as an approved investment trust in accordance with
section 1158 of the Corporation Tax Act 2010 ('s.1158'). The Directors
intend at all times to conduct the affairs of the Company to enable it to
continue to qualify as an investment trust for the purposes of s.1158.
The Company manages its affairs so as to be a qualifying investment for
inclusion in an Individual Savings Account and it is the Directors' intention
that the Company should continue to do so.
Business Review
The Company's principal activity is investment in a diversified, international
portfolio of predominantly early and growth stage privately financed SpaceTech
businesses that have the potential to dominate globally and are category
leaders with first mover advantages in areas such as climate change,
sustainability, communications, mobility and global security (including cyber
security) with the objective of generating capital growth over the long term.
A detailed review of the Company's business and performance during the year,
the principal risks and uncertainties facing the Company, any future likely
developments in the Company and any important events since 30 June 2023 are
contained in the Strategic Report and should be read as part of this Report.
Results and Dividends
The loss for the year was £16.9 million. A loss of £4.5 million was
attributable to the revenue reserve. As the Company is focused on generating
capital growth over the long term and given the nature of the Company's
investments, the Board does not anticipate recommending paying any dividends
in the foreseeable future.
Share Capital
As at 30 June 2023, the Company's issued share capital comprised 239,384,928
ordinary shares and no shares were held in treasury. The total number of
voting rights of the Company at 30 June 2023 was, therefore, 239,384,928.
Shareholders are entitled to all dividends paid by the Company (as stated
above, the Company does not expect to pay dividends in the foreseeable
future). On a winding up, provided the Company has satisfied all its
liabilities, shareholders are entitled to the surplus assets of the Company.
Shareholders are entitled to attend and vote at all general meetings of the
Company and, on a poll, to one vote for each ordinary share held.
There are:
· no restrictions on the transfer of securities in the Company save
where the Company is legally entitled to impose such restrictions, such as
restrictions on transfers by Directors and persons closely associated with
them during closed periods, or the Company's Articles of Association allow the
Board to decline to register a transfer of shares or otherwise impose a
restriction on shares to prevent the Company breaching any law or regulation;
· no agreements between holders of securities regarding their
transfer which are known to the Company;
· no restrictions on exercising voting rights save where the
Company is legally entitled to impose such restrictions, such as if, having
been served with a notice under section 793 of the Companies Act 2006, a
shareholder fails to disclose details of any past or present beneficial
interest;
· no special rights with regard to control attached to securities
in the Company; and
· no agreements to which the Company is party that might affect its
control following a successful takeover bid.
Share Issues and Buy-backs
The Board has not adopted any formal premium or discount targets which would
dictate the point at which the Company would seek to issue or buy back
ordinary shares. Information on the Board's approach to share issues and
buy-backs can be found under 'Examples of Stakeholder Considerations' and
'Share Rating Management'.
The Company's current general authority to allot for cash on a non-pre-emptive
basis up to 23,938,492 ordinary shares, representing c.10% of the ordinary
shares in issue on the date the authority was granted, expires at the
conclusion of the 2023 AGM. Special resolution 10 will be proposed at the
forthcoming AGM seeking renewal of such authority until the 2024 AGM or 31
December 2024, whichever is the earlier. Unless specifically authorised by
shareholders, no issue of ordinary shares on a non-pre-emptive basis will be
made at a price less than the prevailing NAV per ordinary share at the time of
issue.
The Company's current authority to make market purchases up to 35,883,800
ordinary shares, representing 14.99% of the ordinary shares in issue on the
date the authority was granted, expires at the conclusion of the 2023 AGM. No
shares were bought back under this authority during the year ended 30 June
2023. In the period since the year end to 13 October 2023, the Company
bought back 2,186,344 shares under this authority following a share repurchase
programme announced on 13 July 2023. The shares bought back are being held in
treasury. Special resolution 11 will be proposed at the forthcoming AGM
seeking renewal of this authority until the 2024 AGM or 31 December 2024,
whichever is the earlier. The Company may hold bought-back shares in treasury
and then re-sell such shares (or any of them) for cash or cancel bought-back
shares (or any of them). Shares will only be re-sold from treasury at a
premium to the NAV per share.
Major Interests in Shares
At 30 June 2023 and 30 September 2023, the Company had been notified under the
FCA's Disclosure Guidance and Transparency Rules or was otherwise aware of the
following shareholders who were directly or indirectly interested in 3% or
more of the voting rights in the Company's issued share capital:
Holder % of voting rights % of voting rights
30 June 2023
29 September 2023
British Business Bank Finance Ltd 13.94 14.07
Schroders Plc 12.25 12.19
RBC Brewin Dolphin 6.78 6.65
RBC Dominion Securities Inc 5.22 5.27
Hargreaves Lansdown Asset Mgmt 4.71 5.00
Airbus Defence & Space Limited 3.66 3.69
Directors
The names and biographical details of the Directors at the date of this Report
are shown in the Corporate Governance section. Details of the interests of
the Directors and their connected persons in the Company's ordinary shares,
the Directors' remuneration policy and their remuneration can be found in the
Directors' Remuneration Report. No Director has a service contract with the
Company and there are no agreements between the Company and its Directors
providing for compensation for loss of office.
The rules concerning the appointment and replacement of Directors are
contained in SSIT's Articles of Association and the Companies Act 2006.
Further details are provided in the Corporate Governance Report.
In line with the AIC Code and the Company's Articles of Association all of the
Directors are retiring at the forthcoming AGM and each offers themself for
re-election. The Chair confirms that, following formal performance
evaluation, all the Directors continue to be effective and their contribution
is valuable and they demonstrate full commitment to and independence in their
roles. The Board considers each Director to be independent of the Investment
Manager and each has the full support of the Board in standing for
re-election.
Directors' Insurance and Indemnification
Directors' and officers' liability insurance cover is in place in respect of
the Directors and was in place throughout the year.
The Company's Articles of Association provide that the Company may, subject to
the Companies Act 2006 and other applicable UK legislation for the time being
in force affecting the Company, indemnify any person who is a Director of the
Company against (a) any liability whether in connection with any negligence,
default, breach of duty or breach of trust by that person in relation to the
Company or any associated company or (b) any other liability incurred by or
attaching to that person in the actual or purported execution and/or discharge
of that person's duties and/or the exercise or purported exercise of that
person's powers and/or otherwise in relation to or in connection with that
person's duties, powers or office.
Related Party and Investment Manager Transactions
The Company's transactions with related parties during the year were with its
Directors.
There were no material transactions between the Company and its Directors
during the year other than the amounts paid to them in respect of Directors'
remuneration for which there were no outstanding amounts payable at the year
end.
In relation to the provision of services by the Investment Manager, other than
fees payable by the Company in the ordinary course of business, there were no
transactions with the Investment Manager affecting the financial position of
the Company during the year. Details of amounts paid to the Investment Manager
during the year may be found in note 4 to the financial statements. There
were no amounts outstanding to the Investment Manager at 30 June 2023.
Risks and Risk Management
The principal risks and uncertainties facing the Company are set out in the
Strategic Report. Further details of the Company's key financial risks are
set out in note 14 to the financial statements.
Articles of Association
The Company's Articles of Association may only be amended by special
resolution at a general meeting of shareholders.
Listing Rule 9.8.4
The FCA's Listing Rule 9.8.4 requires the Company to include certain
information in a single identifiable section of the Annual Report or a cross
reference table indicating where the information is set out.
Whistleblowing
The Board has considered arrangements by which staff of the Investment Manager
or Administrator may, in confidence, raise concerns within their respective
organisations about possible improprieties in matters of financial reporting
or other matters. It has concluded that adequate arrangements are in place
for the proportionate and independent investigation of such matters and, where
necessary, for appropriate follow-up action to be taken within their
organisations.
Disclosure of Information to the Company's Auditor
Having made enquiries of the Investment Manager and Administrator, each of the
Directors confirms that, at the date of approval of this Report:
· as far as they are aware, there is no relevant audit information
of which the Auditor is unaware; and
· they have taken all the steps a Director might reasonably be
expected to have taken to be aware of any relevant audit information and to
establish that the Auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the
provisions of section 418 of the companies Act 2006.
Independent Auditor
The Directors will propose the re-appointment of BDO LLP as the Company's
Auditor and resolutions concerning this and to authorise the Audit Committee
to determine the Auditor's remuneration will be proposed at the forthcoming
AGM.
Annual Report
As disclosed in the Audit Committee Report, after due consideration the Audit
Committee concluded that the Annual Report, taken as a whole, is fair,
balanced and understandable. Therefore, the Board is of the opinion that the
Annual Report provides the information necessary for shareholders to assess
the position and performance, strategy and business model of the Company.
Events After the Balance Sheet Date
On 13 July 2023, the Board announced a share repurchase programme to mitigate
the effect of the substantial discount experienced by the Company. In the
period to 13 October 2023, the Company bought back 2,186,344 shares pursuant
to the share repurchase programme announced.
There have been no other significant events since 30 June 2023.
2023 AGM
A separate notice convening the Company's 2023 AGM will be sent to
shareholders in due course. The notice will include an explanation of the
resolutions to be considered at the AGM. A copy of the notice will also be
published on the Company's website (https://investors.seraphim.vc
(https://investors.seraphim.vc) ).
We believe that all the resolutions to be proposed at the AGM are in the best
interests of shareholders as a whole and therefore recommend shareholders to
vote in favour of them as we will be doing with our own holdings.
Approval
This Directors' Report was approved by the Board on 16 October 2023.
On behalf of the Board:
Will Whitehorn
Chair
16 October 2023
Corporate Governance Report
The Board aims to promote SSIT's long term sustainable success and ensure that
SSIT is run in a manner that is consistent with our beliefs in integrity,
fairness, transparency and diligence. This is achieved through the application
and maintenance of the highest standards of corporate governance.
Corporate Governance Framework and Compliance
The FCA's Disclosure Guidance and Transparency Rules (the 'Disclosure Rules')
require listed companies to disclose how they have applied the principles and
complied with the provisions of the UK Corporate Governance Code issued by the
Financial Reporting Council (the 'FRC') in July 2018 (the 'UK Code'). The UK
Code can be viewed at www.frc.org.uk (http://www.frc.org.uk) .
The related Code of Corporate Governance issued by the Association of
Investment Companies (the 'AIC') in February 2019 (the 'AIC Code') addresses
the principles and provisions set out in the UK Code, as well as setting out
additional provisions on issues that are of specific relevance to listed
closed-ended investment companies, such as the Company. The AIC Code is
available on the AIC website (www.theaic.co.uk (http://www.theaic.co.uk) ).
It includes an explanation of how the AIC Code adapts the principles and
provisions set out in the UK Code to make them relevant for listed
closed-ended investment companies. The FRC has endorsed the AIC Code and
confirmed that AIC member companies who report against the AIC Code will be
meeting their obligations in relation to the UK Code and the associated
disclosure requirements of the Disclosure Rules.
The Company is a member of the AIC and the Board considers that reporting
against the principles and provisions of the AIC Code provides more relevant
information on the Company's governance arrangements to shareholders than
reporting against the principles and provisions of the UK Code.
The Board operates under a governance framework which is consistent with the
principles and provisions of the AIC Code. This Report describes how the
Company applies those principles and provisions. The Audit, Management
Engagement and Remuneration and Nomination Committee Reports form part of this
Report. The Board confirms that the Company complied with the relevant
principles and provisions of the AIC Code during the year.
As an externally managed investment company, the Company has no employees and
all its substantive operations are conducted on its behalf by its third-party
service providers. Consequently, the Company has not complied with the
provisions in the UK Code relating to the role of the chief executive,
executive directors' remuneration and the need for an internal audit
function. However, the Audit Committee considers the need for an internal
audit function at least annually.
Board Leadership and Purpose
Role of the Board
The Board is collectively responsible for promoting the long-term sustainable
success of the Company, generating value for shareholders whilst having regard
to the interests of wider society.
The Board's role is to provide leadership and direction within a robust
framework of risk management and internal controls. It sets the Company's
strategic objectives (subject to the Company's Articles of Association and
such approval of the shareholders in general meeting as may be required from
time to time) and ensures that the necessary resources are in place to enable
the Company's objectives to be met.
In managing the Company, the aim of both the Board and the Investment Manager
is always to ensure SSIT's long-term sustainable success and, therefore, the
likely long-term consequences of any decision are a key consideration. The
Investment Manager's Responsible Investment Policy is integrated into its
investment process, ensuring that it has regard to the interests of wider
society in managing SSIT's portfolio.
Company purpose and strategy
The Company's purpose is to provide a vehicle through which a broad range of
investors can gain exposure to a diversified, international portfolio of
predominantly early and growth stage privately financed SpaceTech businesses
that have the potential to dominate globally and are category leaders with
first mover advantages in areas such as climate change, sustainability,
communications, mobility and security (including cyber security). The
Company seeks to generate capital growth over the long term for shareholders.
Operating as an externally managed investment company, SSIT seeks to fulfil
its purpose by delegating operational matters to specialist third-party
service providers, subject to oversight by the Board. In particular, the
Investment Manager and Administrator are responsible for implementing the
Company's strategy and managing the Company's day-to-day operations,
respectively. The Company's success is based on such implementation and
management being effective. The Board's strategy is, therefore, to work
closely with the Investment Manager and Administrator in a long-term
relationship designed to foster an environment that is consistent with SSIT's
culture and values and contributes to achieving SSIT's strategic objectives.
Culture and values
As an externally managed investment company, SSIT's culture and values are the
product of the behaviours of both the Board and the Investment Manager and the
way in which they interact with each other and with the Company's other
stakeholders.
The Board operates in an open, respectful and inclusive manner, where
differences of perspective are welcomed and constructive challenge is
encouraged. Advice and input are sought from external advisers and others, as
required, to ensure a broad range of views are available and to guard against
groupthink. As noted in more detail under 'Section 172: Engaging with
Stakeholders', the Board seeks to engage with its Investment Manager,
Administrator and other key stakeholders in a constructive and collaborative
manner.
The Investment Manager has established an organisation driven by purpose where
its employees are united by a passion to work with the most impactful
companies in the SpaceTech sector. The Investment Manager strives to develop a
culture of candour and openness, with employees empowered to innovate and work
autonomously. Value is placed on output (the quality of work produced)
rather than input (the number of hours logged). Team cohesion and
collaboration are core tenets of the Investment Manager's people strategy.
Both the Board and Investment Manager aim to ensure that SSIT is run in a
manner that is consistent with their beliefs in integrity, fairness,
transparency and diligence and responsive to the views of the Company's
shareholders and other stakeholders. Both seek to maintain high standards of
business conduct at all times.
We believe that the culture and values of the Board and Investment Manager
encourage constructive and robust challenge and debate, generate strong
collective wisdom and ultimately lead to good decision making, all of which
are important to the successful implementation of the Company's strategy.
Recognising the importance of culture and values, the Board monitors them on
an ongoing basis. They are also formally reviewed as part of the annual
Board and Investment Manager evaluation process.
Conflicts of interest
Directors have a duty to avoid situations where they have, or could have, a
direct or indirect interest that conflicts, or possibly could conflict, with
the Company's interests ('conflict situations'). As permitted by the
Companies Act 2006, the Company's Articles of Association allow the Directors
to authorise conflict situations, where appropriate.
The Board has a procedure in place to deal with conflict situations. As part
of this process, Directors must submit any actual or potential conflict
situations they may have to the Board for approval as soon as possible. In
deciding whether to approve a conflict situation, the Board will act in a way
it considers, in good faith, will be most likely to promote the Company's
success, taking into consideration whether the Director's ability to act in
accordance with their wider duties is affected. The Company Secretary
maintains the register of approved conflict situations (which also includes a
list of other external positions held). Directors have a duty to keep the
Board updated about any changes to their approved conflict situations. In
certain circumstances the conflicted Director may be required to absent
themself from discussions or decisions on the matter on which they are
conflicted (in which event, the Director will not be counted when determining
whether the meeting is quorate). No such circumstances arose in the year.
None of the Directors have, or have had, any potential conflicts of interest
of the nature listed in provisions 6 and 12 of the AIC Code.
The Board also has a procedure in place to manage potential conflicts of
interest of the Investment Manager. These can arise, for example, where
share options and/or warrants have been granted to an affiliate of the
Investment Manager by a participant in an accelerator programme run by that
affiliate and the Company subsequently has the opportunity to invest in the
participant. In such instances, only the independent advisory committee
members of the Investment Manager's Investment Committee consider the
investment at the Investment Committee meeting, and the final stage of the
Board's conflict management process requires any such investment to be
approved by the Board before it is made. During the year, the Board approved
investments in 2 companies (£2.3m of investments in aggregate) in former
accelerator programme participants (for further information, see 'Examples of
Stakeholder Considerations').
Division of Responsibilities
The Board has overall responsibility for the Company's activities. However,
the Company has delegated or outsourced various matters to its standing
Committees and key service providers, most notably the Investment Manager and
the Administrator, all of which operate within clearly defined terms of
reference or agreements that set out their roles, responsibilities and
authorities.
Board
The Board's principal responsibilities include:
· determining the Company's strategic objectives;
· overseeing the execution of the Company's strategy, business
conduct and implementation of its key investment, financial, operational and
compliance policies, ensuring they are aligned with SSIT's purpose and
strategy and the Board's culture and values and that any necessary corrective
action is taken;
· ensuring that appropriate internal controls and risk management
frameworks are in place to enable risk to be managed and continually assessed;
· scrutinising the performance of the Investment Manager,
Administrator and other key service providers and holding them to account;
· ensuring effective engagement with, and encouraging participation
from, shareholders and other key stakeholders; and
· providing constructive challenge and strategic guidance and
offering specialist advice.
The Board's responsibilities for this Annual Report are set out in the
Directors' Responsibility Statement.
Matters not delegated or outsourced to Committees and key service providers
are reserved for consideration and approval by the Board (including those
matters listed in a formal schedule of reserved matters approved by the
Board), thus enabling the Board to maintain full and effective control over
appropriate strategic, financial, operational and compliance issues. The
reserved matters include:
• approving SSIT's long-term objectives and any matters of a strategic
nature, including any change in investment objective, policy and restrictions,
including those which may need to be submitted to shareholders for approval;
• the appointment and removal of key service providers and any
material amendments to the Company's agreements with them;
• approval of any other material contracts and agreements entered
into, varied or terminated;
• approving any transactions with related parties;
• approval of quarterly and any ad hoc NAV and other financial
announcements;
• approval of the Company's operating and marketing budgets;
• the Company's corporate governance arrangements; and
• approving any actual or potential conflicts of interest, including
any potential investments in respect of which the Investment Manager may have
a potential conflict of interest.
The full schedule of matters reserved for the Board is available on the
Company's website (https://investors.seraphim.vc/
(https://investors.seraphim.vc/) ).
The primary focus at Board meetings is a review of investment performance and
associated matters (such as new investments, progress of portfolio companies,
investment pipeline, projected cash flow and market environment), share price
discount/premium, investor relations, industry issues, legal and regulatory
(including corporate governance) developments and principal and emerging risks
and uncertainties, in particular those identified in the Strategic Report.
Chair
The Chair is Will Whitehorn. His primary role as Chair is to provide
leadership to the Board. The principal responsibilities of the Chair include:
• ensuring the overall effectiveness of the Board in directing the
Company;
• taking a leading role in setting the Company's strategic objectives;
• facilitating open, honest and constructive debate among Directors
and the effective contribution of all Directors;
• ensuring the Company is meeting its responsibilities to shareholders
and wider stakeholders; and
• engaging with shareholders to ensure that the Board has a clear
understanding of their views.
Full details of the role and responsibilities of the Chair are available on
the Company's website (https://investors.seraphim.vc/
(https://investors.seraphim.vc/) ).
Senior Independent Director
The Senior Independent Director is Sue Inglis. Her primary responsibilities
as such are to serve as a sounding board for the Chair, act as an intermediary
for other Directors and be available to respond to shareholders' concerns if
they cannot be resolved through the normal channels of communication (i.e.
through the Chair). The Senior Independent Director leads the annual
evaluation of the Chair. Full details of the role and responsibilities of
the Senior Independent Director are available on the Company's website
(https://investors.seraphim.vc/ (https://investors.seraphim.vc/) ).
Board Committees
The Board has three standing Committees, being the Audit Committee, Management
Engagement Committee and Remuneration and Nomination Committee: The roles
and responsibilities of the Committees are included in their respective
Reports and the terms of reference of each Committee are available on the
Company's website (https://investors.seraphim.vc/
(https://investors.seraphim.vc/) ). The Committees review their terms of
reference at least annually, with any proposed changes recommended to the
Board for approval. Committee Chairs will attend AGMs to answer any
questions on each of their Committees' activities. In addition, Committee
Chairs will seek engagement with shareholders on significant matters related
to their areas of responsibility.
The Board may also establish additional Committees from time to time to take
operational responsibility on specific matters. These Committees ensure that
key matters are dealt with efficiently.
Investment Manager
The Investment Manager is the Company's alternative investment fund manager
('AIFM') for the purpose of the EU AIFM Directive as incorporated into UK
legislation. The Investment Management Agreement dated 22 June 2021 between
the Company and the Investment Manager (the 'IMA') sets out the matters in
respect of which the Investment Manager has authority and responsibility,
subject to the overall control and supervision of the Board. These include
the Investment Manager having full discretion in relation to SSIT's portfolio
management activities in accordance with SSIT's investment policy and any
other restrictions imposed by the IMA or the Board from time to time. The
Investment Manager is also responsible for promoting the Company's investment
proposition to professional and retail investors.
In advance of Board meetings, the Investment Manager provides regular reports,
which include operating updates on the Company's investments, information on
potential new investment opportunities, cash flow forecasts and other
financial information and other relevant information. Senior representatives
of the Investment Manager attend Board meetings. The Investment Manager is
responsible for keeping the Board informed, in a timely manner, of any
material developments arising from its portfolio management activities or
other relevant matters, including interactions with shareholders and other key
stakeholders.
Under the IMA, the Investment Manager is entitled to management and
performance fees, details of which are included in note 4 to the financial
statements. The Investment Manager's appointment is terminable by the
Company or Investment Manager on not less than 12 months' notice, such notice
to expire on or at any time after the third anniversary of SSIT's launch (14
July 2021). The IMA may be terminated with immediate effect on the occurrence
of certain events.
Administrator/Company Secretary
The Company has appointed the Administrator to provide fund accounting,
company secretarial and other administrative services. The Administrator's
responsibilities include:
• undertaking the day-to-day financial and administration functions of
the Company, including calculation of the NAV and maintenance of the Company's
accounting and statutory records;
• providing the company secretarial functions required by the
Companies Act 2006;
• ensuring that the Company complies with applicable laws, rules and
regulations, including laws and regulations applicable to investment trusts
and the rules of the FCA and London Stock Exchange;
• advising on governance matters;
• supporting the Board to ensure that it has the policies, processes
and information it needs to function effectively and efficiently;
• ensuring that Board procedures are followed; and
• facilitating the flow of information between the Board, Committees,
Investment Manager and other service providers.
In advance of Board meetings, the Administrator provides regular reports,
which include financial and other operational information, details of any
breaches or complaints and relevant legal and regulatory, corporate governance
and other technical updates. The Administrator is responsible for keeping
the Board informed, in a timely manner, of any material developments regarding
matters within the scope of its role and responsibilities.
Board and Committee Meetings
Regular Board and Committee meetings are scheduled throughout the year (Board:
four; Audit Committee: four; Management Engagement Committee: one;
Remuneration and Nomination Committee: one). In addition, the Board and
Committees meet between scheduled meetings in preparation for or follow-up
after scheduled meetings and any other matters that may arise between
scheduled meetings. The Company also holds an annual strategy meeting to
enable the Directors to consider strategic matters outside of scheduled
quarterly Board meetings.
The Company Secretary assists the Board and Committee Chairs in agreeing the
agenda in sufficient time before the meeting to allow input from key
stakeholders. Care is taken to ensure that papers are presented clearly and
with the appropriate level of detail to assist the Board and Committees in
discharging their duties. The Board uses a web-based system which provides
ready access to Board and Committee papers and materials. Prior to each
Board and Committee meeting the Directors receive the agenda and supporting
papers through this system to ensure that they have all the latest and
relevant information in advance of the meeting to enable them sufficient time
to prepare properly for the meeting and to make further enquiries about any
matter prior to the meeting, should they so wish. This also allows any
Director who is unable to attend to submit views in advance of the meeting.
The Investment Manager, the Administrator and, as required, the Company's
other key service providers are expected to be present at formal Board and
Committee meetings unless identified conflicts require otherwise.
Due to its size the Board has deemed it appropriate for all Directors to be
members of all Committees. When running meetings, the Chair or Committee Chair
maintains a collaborative atmosphere and ensures that all Directors have the
opportunity to contribute to the debate. The Directors are able to voice their
opinions in a calm and respectful environment, allowing coherent discussion.
The proceedings at all Board and Committee meetings are fully recorded,
including any Director's concerns, in the minutes. After each Board and
Committee meeting, the Company Secretary operates a follow-up procedure to
ensure that actions are completed as agreed by the Board or Committee.
The number of scheduled meetings during the year, and the attendance of the
individual Directors at those meetings, is shown in the table below.
Board Audit Committee Remuneration and Nomination Committee Management Engagement Committee
Number of meetings 4 4 1 1
Will Whitehorn 4 4 1 0(1)
Sue Inglis 4 4 1 1
Christina McComb 4 4 1 1
Angela Lane 4 4 1 1
¹Mr Whitehorn was unable to be present at the Management Engagement Committee
meeting held on 15 May 2023 but was briefed on the outcomes of the meeting by
the Chair of this Committee shortly after the meeting.
In addition to the scheduled meetings and the annual strategy meeting, there
were nine ad hoc Board and Committee meetings during the year. These
meetings were convened to conclude a number of matters previously discussed at
scheduled meetings and deal with matters arising between scheduled meetings,
as well as, to consider the Investment Manager's preliminary reports on
proposed portfolio valuations. Prior to ad hoc meetings, the Directors receive
the agenda and supporting papers. Typically, all Directors attend ad hoc
meetings, although this is not always feasible or necessary and Directors who
are unable to attend a meeting can communicate their views ahead of the
meeting.
Board Composition and Succession
Board composition and independence
At the date of this Report, the Board consists of four non-executive
Directors, all of whom are (and were on appointment) independent of the
Investment Manager. Each of the Directors is (and was on appointment)
independent when assessed against the circumstances set out in provision 13 of
the AIC Code.
The current Board was selected to bring a breadth of skills, experience and
knowledge relevant to the Company's structure and strategy. Three of the
Directors were appointed prior to the IPO and the fourth joined the Board on 1
January 2022. Details of the Directors, including their skills and
experience, are set out in the Corporate Governance section.
The composition of the Board is a fundamental driver of its success as the
Board must provide strong and effective leadership of the Company without any
one individual or small group dominating the decision-making. The strong and
diverse mix of experienced individuals on the current Board enables high
calibre debate and constructive challenge. The Board is able to use the
skills, experience and knowledge of the individual Directors to their maximum
potential and make decisions that are in the best long-term interests of the
Company.
The Board's tenure, succession and diversity policies seek to ensure that the
Board continues to be well-balanced and refreshed by the appointment of new
Directors with the necessary skills, experience, knowledge and personal
qualities and who can bring fresh perspectives.
Board diversity
The Board acknowledges the importance of diversity as a key driver of
effectiveness and strongly believes that having diversity in skills,
experience, identity and cognitive thought has significant benefits when
making decisions. The Board currently comprises four independent Directors
appointed on merit-based qualifications. The skills and experience which the
current members of the Board bring to SSIT's leadership are described in the
Corporate Governance section.
The Board supports the progress being made under the direction of the FCA's
guidance to improve the governance of listed companies by increasing both
gender and racial diversity amongst the directors who serve these businesses.
As at 30 June 2023, our Board composition exceeded the revised gender targets
which require at least 40% of the Board to be women and met the target that at
least one of the senior Board positions be filled by a woman. Currently, the
Board has 75% female representation and the Senior Independent Director (Sue
Inglis) is also female.
Reporting table on gender representation at 30 June 2023
Number of Board members Percentage of the Board Number of senior positions on the Board (Chair and Senior Independent
Director)
Men 1 25% 1
Women 3 75% 1
Other categories - - -
Not specified/prefer not to say - - -
Given the current tenure, knowledge and experience of our relatively small
Board and the fact that the Company is in an early stage, it does not
currently have at least one member of the Board from a minority ethnic
background (contrary to the FCA's target for listed companies). Further
consideration will be given to these targets when implementing future
succession plans.
Reporting table on ethnicity representation at 30 June 2023
Number of Board members Percentage of the Board Number of senior positions on the Board (Chair and Senior Independent
Director)
White British or other White (including minority-white groups) 4 100% 2
Mixed/Multiple Ethnic groups - - -
Asian/Asian British - - -
Black/African/ Caribbean/Black British - - -
Other ethnic group, including Arab - - -
Not specified/ prefer not to say - - -
The Board will keep under review and evaluate its balance and composition to
ensure that both it and its Committees have the appropriate mix of skills,
experience, independence and knowledge to ensure their continued
effectiveness. In doing so, the Board will consider diversity, including age,
gender, ethnicity, educational and professional backgrounds and cognitive and
personal strengths amongst other relevant factors.
Appointments to the Board
The Remuneration and Nomination Committee reviews at least annually the
composition of the Board and its Committees, including the balance of skills,
experience, knowledge, diversity (including age, gender, social and ethnic
backgrounds and cognitive and personal strengths) and length of service, and
makes recommendations to the Board when it considers that a new Director
should be recruited.
Once a decision has been taken by the Board to recruit a new Director, the
Remuneration and Nomination Committee oversees the recruitment process. At
the outset, the Committee reviews the current balance and diversity of the
Board, identifies any specific skills, experience, knowledge and personal
qualities that are required to ensure the continued effective operation of the
Board and then sets objective selection criteria to ensure a formal and
transparent appointment process. The Remuneration and Nomination Committee
intends to use non-executive director recruitment consultants and/or open
advertising when recruiting new Directors. Following the creation of a
shortlist of candidates, the decision-making process will be based on merit,
with due consideration of the objective selection criteria identified.
When considering new appointments, the Committee also takes into account other
demands on the candidates' time. In advance of joining the Board, successful
candidates will be asked to disclose any existing significant commitments with
an indication of the time involved and to confirm that they are able to
allocate sufficient time to the business of the Company and that there are no
situations where they have, or could have, a direct or indirect interest that
conflicts, or possibly could conflict, with the Company's interests.
Directors are not appointed for any specific term and are subject to election
at the first AGM following their appointment and, thereafter, annual
re-election at AGMs. Directors' appointments are reviewed by the
Remuneration and Nomination Committee ahead of their submission for
re-election, with submission being contingent on satisfactory performance
evaluation. Directors may resign by notice in writing to the Board at any
time.
At the time of appointment, a new Director receives a letter of appointment
that sets out their duties and obligations. Copies of the letters of
appointment of the current Directors are available for inspection at the
Company's registered office and at each AGM.
Board induction and training
New Directors will receive an induction on joining the Board covering the
Company's strategy, policies, operational structure and governance, which will
be coordinated by the Company Secretary. In addition, new Directors will be
briefed fully about the Company's strategy and portfolio by the Investment
Manager.
The Company Secretary is charged with assisting in the ongoing training and
development of all Directors, including providing the Directors with details
of the Company's regulatory and statutory obligations (and changes thereto).
Directors are able to receive training or additional information on any
specific subject pertinent to their role as a Director that they request or
require. The Directors are encouraged to participate generally in industry
events and to attend any other relevant seminars and conferences, if necessary
at the Company's expense.
Information and support
To enable the Board to function effectively and the Directors to discharge
their responsibilities, the Directors are regularly updated, in a timely
manner, on investment, financial, investor and other stakeholder engagement
and other matters. In addition to periodic reporting at scheduled Board and
Committee meetings, the Directors receive, and may request, ad hoc additional
information from the Investment Manager, Administrator and other key service
providers. The Directors also maintain regular engagement, through formal
meetings and calls as well as informal communications, with the Investment
Manager, Administrator and other key service providers. This active
engagement creates an open and collaborative culture that ensures that we have
a thorough understanding of the Company's business and facilitates our robust
scrutiny and constructive challenge of the activities and performance of, in
particular, the Investment Manager and Administrator.
The Directors have access to the advice and services of the Company
Secretary. The Company Secretary is responsible for facilitating good and
timely information flows within the Board and its Committees and between
Directors and the Investment Manager.
There is a procedure in place for Directors to take independent professional
advice at the Company's expense should this be required to aid them in their
duties.
Time commitment
All Directors are aware of the need to allocate sufficient time to the Company
in order to discharge their responsibilities effectively. Directors must
obtain prior approval from the Board when they take on any additional external
appointments and it is their responsibility to ensure that such appointments
will not prevent them meeting their time commitments to the Company.
Where a significant additional external appointment is approved by the Board,
the reasons for permitting the appointment will be explained in the Annual
Report.
Election and re-election by shareholders
Directors are required to stand for election at the first AGM following their
appointment and annual re-election at each subsequent AGM. A Director who
retires at an AGM may, if willing to continue to act, be elected or re-elected
at that meeting. If, at a general meeting at which a Director retires, the
Company neither re-elects that Director nor appoints another person to the
Board in the place of that Director, the retiring Director shall, if willing
to act, be deemed to have been re-elected unless at the general meeting it is
resolved not to fill the vacancy or unless a resolution for the re-election of
the Director is put to the meeting and not passed.
All of the Directors will retire at the forthcoming AGM and are willing to
continue to act. Having considered their effectiveness, demonstration of
commitment to the role, attendance at meetings and contribution to the Board's
and Committees' deliberations, the Board has approved the nomination for
re-election of all of the Directors.
Board tenure
The Board's policy on Director, including Chair, tenure is that a Director
should normally serve no longer than nine years but, where it is in the best
interests of the Company, its shareholders and other stakeholders, a Director
may serve for a limited time beyond that.
The Board believes that the continuity of experience and knowledge of its
Directors is important and that a suitable balance requires to be struck with
the need for refreshing of the skills and experience of the Board. The Board
believes that some limited flexibility in its approach to Director, including
Chair, tenure will enable it to manage succession planning more effectively.
The Board also believes that Directors with more than nine years' service can
still form part of an independent majority. In the event that any Director,
including the Chair, shall have been (or on re-election would be) in office
for nine years or more the Company will consider whether there is a risk that
such a Director might reasonably be deemed to have lost independence through
such long service.
In the event of a Director being in office for nine years or more at the AGM
at which their re-election is to be proposed, the Board will include an
explanation in the relevant Annual Report or notice convening the next AGM as
to its reasoning for recommending re-election notwithstanding the length of
tenure.
As the Company was incorporated on 14 May 2021, no issues regarding long
tenure have arisen to be considered by the Board.
Succession planning
The aim of the Company's succession plan is:
· to preserve continuity by phasing the retirement of the original
Directors so that they do not all retire at once after serving nine
years; and
· to ensure the Board's skills and experience are regularly
refreshed and the benefits of a truly diverse Board are further enhanced, in
terms of age, gender and diversity of background and thought.
Succession planning is explained in more detail in the Remuneration and
Nomination Committee report.
Annual Performance Evaluations
Board, Committees, Chair and individual Directors
Details on the annual evaluations of the Board, its standing Committees, the
Chair and individual Directors, conducted by the Remuneration and Nomination
Committee, are included in that Committee's Report. Having considered the
Committee's report and recommendations, the Board accepted all of the
Committee's recommendations.
Investment Manager
Details on the annual evaluation of the Investment Manager, conducted by the
Management Engagement Committee, are included in that Committee's Report.
Having considered the report and recommendation from the Management Engagement
Committee, the Board believes that the continued appointment of the Investment
Manager on the terms agreed is in the interests of the shareholders as a
whole.
Administrator and other key service providers
Information on the annual evaluations of the Administrator and other key
service providers is included in the Management Engagement Committee Report.
Having considered the Committee's report and recommendations, the Board
accepted all of the Committee's recommendations.
Directors' Remuneration
The Directors' Remuneration Report includes the Directors' remuneration policy
and details of the remuneration of each Director.
Risk Management and Internal Control Systems
A critical factor in achieving the long-term sustainable success of the
Company is understanding the risks that the Company faces and ensuring that
controls are in place to manage and mitigate them. The Company's principal
and emerging risks, together with details of how we seek to manage and
mitigate them, are set out in the Strategic Report. The Company's financial
risks are discussed in note 14 to the financial statements.
Responsibility for, and effectiveness of, risk management and internal
controls
The Board is responsible for determining the nature and extent of the
principal and emerging risks the Company is willing to take in order to
achieve its long-term strategic objectives. The Board is also responsible for
maintaining the Company's systems of risk management and internal controls
(such as financial, operational and compliance controls). The AIC Code
requires the Board to review the effectiveness of the Company's systems of
risk management and internal controls at least annually.
The Board has established an ongoing process for identifying, evaluating and
managing the principal and emerging risks faced by the Company.
The Board, through the Audit Committee, has established, in conjunction with
the Investment Manager and Administrator, an ongoing process designed to meet
the particular needs of the Company in identifying, evaluating and managing
the risks to which it is exposed. The process accords with the Financial
Reporting Council's 'Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting'. The process was in operation throughout the
year and up to the date of this Report. The system is designed to meet the
specific risks faced by the Company and takes account of the nature of the
Company's reliance on the Investment Manager, Administrator and other key
service providers and their internal controls. The process therefore manages
rather than eliminates the risk of failure to achieve the Company's business
objectives and provides reasonable, but not absolute, assurance against
material misstatement or loss.
At its October 2023 meeting, the Audit Committee carried out an annual
assessment of the Company's risk management and internal controls for the year
and taking account of events since 30 June 2023. The Committee determined
that the risk management and internal controls were operating effectively and
as expected, and the results of the assessment were then reported to the Board
at the following Board meeting.
Based on the ongoing work of the Audit Committee in monitoring the risk
management and internal control systems on behalf of the Board and the Audit
Committee's report to the Board on its findings and conclusions regarding
those systems, the Board:
· is satisfied that it has carried out a robust assessment of the
principal and emerging risks facing the Company, including those that could
threaten its business model, future performance, solvency, liquidity or
reputation; and
· has reviewed the adequacy and effectiveness of the risk
management and internal control systems and no significant failings or
weaknesses were identified.
Risk management and internal control systems
The Company's risk management and internal control systems are designed to
identify, manage and mitigate on a timely basis both the principal and
emerging risks inherent to the Company's business and activities and
safeguarding the Company's assets. The Company has a risk-based approach to
risk management and internal controls through a detailed matrix that
identifies each of the key risk areas associated with the Company's business
and activities and the controls employed to minimise and mitigate those risks.
The Audit Committee is responsible for monitoring and regularly reviewing the
Company's risk management and internal control systems, including the risk
matrix, and reports its findings and conclusions to the Board. Where changes
in risk are identified during the year, the risk matrix is updated as
appropriate and an assessment made as to whether further action is required to
manage the changes identified. The risk matrix was reviewed and updated by the
Audit Committee, and approved by the Board, during the year.
The Company has delegated its day-to-day activities to the Investment Manager
and Administrator and has clearly defined their roles, responsibilities and
authorities. The Investment Manager and Administrator have their own risk
management and internal control systems. The Investment Manager, which is
regulated by the FCA, and Administrator both operate risk-controlled
frameworks on an ongoing basis. The Administrator has an annual type 2
report produced under the International Standard on Assurance Engagements
(ISAE) 3402. This entails an independent rigorous examination and testing of
its controls and processes.
The Board oversees the ongoing performance and actions of the Investment
Manager and Administrator at its scheduled quarterly meetings and, as
required, at ad hoc meetings. At each quarterly Board meeting, the Investment
Manager reports on the performance and valuation of the Company's investments,
activities since the last Board meeting, any specific new risks identified
relating to the Company's portfolio and cash projections and the Administrator
reports on the Company's corporate activity and financial, compliance,
governance, legal and regulatory matters. The Board also receives updates
from the Investment Manager and Administrator on material developments
affecting the Company's business, activities or investments between quarterly
Board meetings.
The Board, Investment Manager and Administrator, together, review all
financial performance and results notifications. The Investment Manager
reports to the Board twice a year regarding the Company's longer-term
viability, which includes financial sensitivities and stress testing of the
business to ensure that the adoption of the going concern basis is
appropriate.
The Company is ultimately dependent upon the quality and integrity of the
management and staff of the Investment Manager and Administrator. In each
case, qualified and able individuals have been selected at all levels. The
Investment Manager and Administrator are aware of the risk management and
internal controls relevant to their activities and are collectively
accountable for the operation of those controls.
Each year a detailed review of the quality of services and performance of the
Investment Manager, Administrator and other key service providers pursuant to
their terms of engagement is undertaken by the Management Engagement
Committee.
Internal Audit Function
For the reasons stated in the Audit Committee Report, the Board does not
currently consider that an internal audit function is required.
Relations with Shareholders and Other Stakeholders
We place great importance on communication with shareholders, as well as with
the Investment Manager, Administrator and other key stakeholders. Details of
our engagement with all of the Company's key stakeholders and examples of how
we had regard to those stakeholders in our decision-making processes during
the year are set out in the Strategic Report. In addition, the Chairs of the
Board's standing Committees will seek to engage with shareholders on
significant matters related to their areas of responsibility.
The Board recognises that relationships with suppliers are enhanced by prompt
payment and the Administrator, in conjunction with the Investment Manager,
ensures all payments are processed within the contractual terms agreed with
the individual suppliers.
Approval
This Corporate Governance Report was approved by the Board on 16 October 2023.
On behalf of the Board:
Will Whitehorn
Chair
16 October 2023
Audit Committee Report
The Audit Committee consists of all Board members and is currently chaired by
Ms Lane, who succeeded Ms McComb as Chair of the Audit Committee following the
conclusion of the Company's AGM on 17 November 2022.
The AIC Code permits the Chair of the Board to be a member of the Audit
Committee. The Board believes that Mr Whitehorn's experience and knowledge is
a significant benefit to the Committee.
The Committee members have considerable business and financial experience and
the Board considers that the membership as a whole has sufficient recent and
relevant sector and financial experience to discharge the responsibilities of
the Committee. Ms Lane is a Fellow of the Institute of Chartered Accountants
in England and Wales. All members of the Committee are independent of the
Company's Auditor, Investment Manager and Administrator.
The Committee's authority and duties are clearly defined in its written terms
of reference which are available on the Company's website
(https://investors.seraphim.vc/ (https://investors.seraphim.vc/) ). The
terms of reference include all matters indicated by the FCA's Disclosure
Guidance and Transparency Rule 7.1, the AIC Code and the UK Code. The terms
of reference are reviewed at least annually.
The Committee meets no less than two times a year and at such other times as
the Committee Chair shall require. At least once a year the Committee meets
with the Auditor without any representative of the Investment Manager or
Administrator being present.
The Committee's effectiveness is reviewed on an annual basis as part of the
Board's performance evaluation process.
Key Responsibilities
· Scrutinising and, where appropriate, challenging the Investment
Manager's proposed valuations of SSIT's private company investments.
· Monitoring the integrity of SSIT's financial reporting and, where
appropriate, challenging the financial reporting judgements of the Investment
Manager and Administrator.
· Keeping under review the adequacy and effectiveness of SSIT's
internal controls, including financial controls and risk management systems.
· Considering the ongoing assessment of SSIT as a going concern and
assessment of its longer-term viability.
· Appointing the Auditor, approving its remuneration, monitoring
the extent of any proposed non‑audit services and generally overseeing the
relationship.
· Monitoring the Auditor's independence, objectivity and
effectiveness.
· Reviewing the performance and quality of the Auditor's audit
work.
Reporting to the Board on how the Committee has discharged its
responsibilities and making recommendations as appropriate.
Main Activities
During the year, the Committee held four scheduled meetings and several ad hoc
meetings and there was ongoing liaison and discussion between the Auditor, BDO
LLP, and the Audit Committee Chair with regard to the audit approach,
identified risks and other matters pertinent to the Committee.
The matters considered, monitored, reviewed and, where appropriate challenged
by the Committee during the year included the following:
· the terms of reference of the Committee;
· the Company's accounting policies and practices;
· the Investment Manager's valuation approach and the quarterly
valuations of the Company's investments prepared by the Investment Manager;
· the Company's key risks, including emerging risks, the risk
management systems in place and the Company's risk matrix;
· the adequacy and effectiveness of the Company's internal control
environment;
· whether there is a need for an internal audit function;
· the format of the Annual and Interim Reports and financial
statements, associated results announcements and related matters;
· regulatory changes impacting the Company;
· the Financial Reporting Council's latest Annual Audit Quality
Inspection Report on BDO LLP;
· the independence of the Auditor;
· the remuneration and terms of engagement of the Auditor; and
· the audit plan of the Auditor for the year.
After the year end, the Committee met on 12 October 2023 and 16 October 2023
to consider and review the Annual Report and financial statements and related
matters and recommend the Annual Report and financial statements to the Board
for approval. The Auditor was invited to attend the Committee meeting on 12
October 2023 and 16 October 2023 and a member of the Committee met with the
Auditor without representatives of the Investment Manager or Administrator
being present.
Financial Reporting
The primary role of the Committee in relation to financial reporting is to
review, with the Administrator, Investment Manager and Auditor, and report to
the Board on the appropriateness of the Annual Report and financial statements
and Interim Report, 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 had been applied
or where there had been discussion with the Auditor, including the valuation
of unlisted investments and going concern and viability statements;
· whether the strategic report included in the Annual Report
included a fair review of the development and performance of the business and
financial position of the Company, together with a description of the
principal and emerging risks and uncertainties that it faces; and
· whether the Annual Report and financial statements, taken as a
whole, were fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's position and performance,
business model and strategy.
To aid its review, the Committee considered reports from the Administrator and
Investment Manager and the report from the Auditor on the outcome of its
annual audit.
Significant Areas of Judgement Considered by the Committee
The Committee has determined that a key risk of misstatement of the Company's
financial statements relates to the valuations of its private company
investments held at fair value through profit or loss as they represent a
significant proportion of the Company's net assets (82.1% as at 30 June 2023)
and since the valuations of these investments require the use of estimates,
assumptions and judgements. There is also an inherent risk of management
override as the Investment Manager's performance fee is calculated based on
NAV (see note 4 to the financial statements for details of the performance
fee). Whilst the Administrator is responsible for calculating the NAV, the
most significant input to calculating the NAV is the valuation of the
Company's investments, which are prepared by the Investment Manager and
reviewed by the Committee before approval by the Board.
The Company's private company investments are early or growth stage companies.
Valuations are prepared in accordance with the IPEV Valuation Guidelines and
the Investment Manager's valuation policy, which has been formally reviewed
and approved by the Board. The Investment Manager's approach to valuation of
investments is outlined in the Investment Manager's Report and in notes 2 and
8 to the financial statements. The valuation methodology used for each
private company investment is reassessed at each valuation date.
On a quarterly basis, the Investment Manager provides a detailed analysis of
the proposed valuations of the Company's investments with supporting
materials. The Committee considers in detail and, as necessary, challenges
the analysis and supporting materials, including the methodology and integrity
of the valuations, and may request additional information. Once the
Committee has satisfied itself that the key estimates, assumptions and
judgements used in the valuations are appropriate and that the investments
have been fairly valued, it recommends the valuations for approval by the
Board.
The Auditor has explained the results of its audit work on valuations in the
Independent Auditor's Report. There were no adjustments proposed that were
material in the context of the Annual Report and financial statements as a
whole.
Risk Management
The Board is accountable for carrying out a robust assessment of the principal
risks facing the Company, including those threatening its business model,
future performance, solvency and liquidity.
On behalf of the Board, the Committee reviews the effectiveness of the
Company's risk management processes. The Company's risk assessment process and
the way in which significant business risks are managed are key areas of focus
for the Committee. The work of the Committee during the year was driven
primarily by the Company's assessment of its principal and emerging risks as
set out in the Strategic Report. The Committee also receives reports from the
Investment Manager and Administrator on the Company's risk evaluation process
and reviews changes to significant risks identified.
No significant weaknesses were identified in the year.
Internal Audit
The Committee considers at least once a year whether there is a need for an
internal audit function. Currently, the Committee does not consider there to
be a need for an internal audit function, on the basis that there are no
employees in the Company and all outsourced functions are with parties who
have their own internal controls and procedures. The Management Engagement
Committee regularly reviews the performance of the key service providers and
their risk and control processes.
Auditor
BDO LLP was appointed as the Company's Auditor following its incorporation.
The reappointment of the Auditor is subject to annual shareholder approval at
the AGM. There are no contractual obligations restricting the choice of
Auditor and the Company will put the audit services contract out to tender at
least every 10 years. In accordance with professional guidelines, the
statutory auditor will be rotated at least every five years. The current
statutory auditor, Mr Wieder, has completed his second year in the role.
To form a view on audit quality and the effectiveness of the external audit
process, the Committee reviewed and considered:
· the Auditor's fulfilment of the agreed audit plan and variations
from it;
· discussions or reports highlighting the major issues that arose
during the course of the audit;
· feedback from the Administrator and Investment Manager evaluating
the performance of the audit team, including the robustness of the audit, the
level of challenge offered by the audit team, the skills, experience and
overall quality of the audit team, the timeliness of delivering the tasks
required for the audit and reporting to the Committee and the overall quality
of the service; and
· the Committee's own observations and interactions with the
Auditor.
The Committee also considered the Auditor's technical competence,
understanding of the Company's business and whether it demonstrated an
appropriate level of diligence, professional scepticism and challenge.
Following this review, the Audit Committee was satisfied that BDO LLP had
carried out its duties in a diligent and professional manner and provided a
high level of service.
The Committee monitors the Auditor's independence through three aspects of its
work:
· the approval of a policy regulating the non-audit services that
may be provided by the Auditor to the Company;
· assessing the appropriateness of the fees paid to the Auditor for
all work undertaken by it; and
· reviewing the information and assurances provided by the Auditor
on its compliance with the relevant ethical standards.
Details of the audit and non-audit fees paid to BDO LLP in respect of the year
and prior period are set out in note 5 to the financial statements.
Notwithstanding such non-audit services, the Committee considered BDO LLP to
be independent of the Company and that the provision of such services was not
a threat to BDO LLP's objectivity and independence.
BDO LLP confirmed that all its partners and staff involved with the audit were
independent of any links to the Company and that these individuals had
complied with BDO LLP's ethics and independence policies and procedures which
are fully consistent with the Financial Reporting Council's Ethical Standards.
Having satisfied itself as to the effectiveness and independence of BDO LLP as
the Company's Auditor, the Committee recommended to the Board that BDO LLP be
reappointed as Auditor for the year ending 30 June 2024. Accordingly, a
resolution proposing the reappointment of BDO LLP as the Auditor will be put
to shareholders at the 2023 AGM.
The Committee will continue to monitor the performance of the Auditor on an
annual basis and will consider its independence and objectivity, taking
account of appropriate guidelines. In addition, the Committee Chair will
continue to maintain regular contact with the lead audit partner outside the
formal Committee meeting schedule, not only to discuss formal agenda items for
upcoming meetings, but also to review any other significant matters.
Financial Statements
The Board has requested the Committee to confirm that, in its opinion, the
Board can make the required statement that the Annual Report and financial
statements, taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess the Company's
position and performance, business model and strategy. The Committee has
given this confirmation based on its review of the whole document, underpinned
by involvement in the planning for its preparation and review of the processes
to assure the accuracy of factual content.
Committee Evaluation
The activities of the Committee were considered as part of the Board
evaluation process completed in May 2023 in accordance with standard
governance arrangements as summarised in the Remuneration and Nomination
Committee Report. The conclusion from the process was that the Committee was
operating effectively with the right balance of membership and skills.
Approval
This Audit Committee Report was approved by the Committee on 16 October 2023.
On behalf of the Committee:
Angela Lane
Audit Committee Chair
16 October 2023
Management Engagement Committee Report
The Management Engagement Committee consists of all the Directors and is
currently chaired by Ms McComb, who succeeded Mr Whitehorn as chair following
the conclusion of the Company's AGM on 17 November 2022.
The Committee's authority and duties are clearly defined in its written terms
of reference which are available on the Company's website
(https://investors.seraphim.vc/ (https://investors.seraphim.vc/) ). The
terms of reference are reviewed at least annually.
The Committee meets once a year and at such other times as the Committee Chair
shall require. It met once during the year.
The Committee's effectiveness is reviewed on an annual basis as part of the
Board's performance evaluation process.
Key Responsibilities
· Evaluating the performance of the Investment Manager.
· Reviewing the terms of the Investment Management Agreement.
· Reviewing the Investment Manager's remuneration, including the
methodology and level of the annual management and performance fees.
· Considering the merit of obtaining an independent appraisal of
the Investment Manager's services.
· Evaluating the performance of SSIT's other key service providers
(except for the Auditor) and whether those service providers deliver value for
money services.
· Assessing whether the culture, policies and practices of the
Investment Manager and other key service providers are consistent with good
risk management, compliance and regulatory frameworks.
· Reporting to the Board on how the Committee has discharged its
responsibilities and making recommendations as appropriate.
Evaluation of the Investment Manager
The performance of the Investment Manager is considered at every Board
meeting, with a formal evaluation by the Committee at least once each year.
For the purpose of its ongoing monitoring, the Board receives detailed reports
and views from the Investment Manager on the Company's investment strategy,
investment portfolio and pipeline (including associated risks) and investment
performance.
The Committee met in May 2023 for the purpose of the formal annual evaluation
of the Investment Manager's performance and to review the terms of the
Investment Management Agreement (details of which are included under
'Investment Manager' and in note 4 to the financial statements), including the
fee provisions. The Committee reviewed detailed questionnaires completed by
the Investment Manager, which included sections on the Investment Manager's
systems, controls and policies. The results of the detailed questionnaire
completed by the Directors and the Investment Manager in connection with the
Board evaluation, to the extent that they were relevant to the Investment
Manager evaluation, were also reviewed. Other factors reviewed included:
· quality and continuity of the Investment Manager's team;
· investment results achieved to date;
· the Investment Manager's engagement with the Board and other key
stakeholders;
· the Investment Manager's ongoing commitment to promoting the
Company;
· the Investment Manager's compliance with contractual arrangements
and duties, including compliance with SSIT's investment policy;
· the methodology and level of the annual management and
performance fees (see note 4 to the financial statements for details) and the
other terms of the Investment Management Agreement, having regard to those of
comparable listed investment companies; and
· the Investment Manager's culture and its strategy and goals for
developing its business.
Following its review, the Committee concluded that the Investment Manager was
performing well against the requirements set by the Board and that it was
satisfied, in all material respects, with the services provided by,
performance of and support from the Investment Manager and also with the
interaction between the Board and the Investment Manager.
The Committee concluded that, in its opinion, the continuing appointment of
the Investment Manager on the terms agreed was in the best interests of
shareholders as a whole and recommended this to the Board. The Board agreed
with the Committee's recommendation and approved the continuing appointment of
the Investment Manager on the terms agreed.
Evaluation of Other Key Service Providers
The performance of the Company's other key service providers is monitored by
the Board on an ongoing basis and formally evaluated by the Committee at least
once a year, with a key focus on the Administrator and Company Secretary.
At its meeting in May 2023, the Committee also undertook the formal annual
evaluation of the other key service providers' performance and reviewed their
respective remuneration. The Committee reviewed a detailed questionnaire
completed by the other key service providers, which included sections on their
systems, controls and policies. In most instances, relationships with the
other key service providers are managed by the Investment Manager and/or
Administrator and Company Secretary on behalf of the Board and the Committee
considered feedback received from the Investment Manager and the Administrator
regarding the levels of service provided by, and relationships with, the other
key service providers.
The Committee was satisfied, in all material respects, with the levels of
service provided by the other key service providers. The Committee concluded
that, in its opinion, the continuing appointments of the other key service
providers on the terms agreed remained appropriate and in the best interests
of the Company and recommended this to the Board. The Board agreed with the
Committee's recommendations and approved the continuing appointments of the
other key service provider on the terms agreed.
Committee Evaluation
The activities of the Management Engagement Committee were considered as part
of the Board evaluation process completed in May 2023 in accordance with
standard governance arrangements as summarised in the Remuneration and
Nomination Committee Report. It was concluded that the Committee has the
right balance of membership and skills and is operating effectively.
Approval
This Management Engagement Committee Report was approved on 16 October 2023.
On behalf of the Committee:
Christina McComb
Management Engagement Committee Chair
16 October 2023
Remuneration and Nomination Committee Report
The Remuneration and Nomination Committee consists of all the Directors and is
chaired by Ms Inglis. Individual Directors are not involved in decisions
connected with their own appointments.
The Committee's authority and duties are clearly defined in its written terms
of reference which are available on the Company's website
(https://investors.seraphim.vc/ (https://investors.seraphim.vc/) ). The
terms of reference are reviewed at least annually.
The Committee meets once a year, and at such other times as the Committee
Chair shall require.
The Committee's effectiveness is reviewed on an annual basis as part of the
Board's performance evaluation process.
Key Responsibilities
· Developing and reviewing the Directors' remuneration policy and
policies on Board tenure and diversity.
· In conjunction with the Chair, reviewing the Directors'
remuneration levels and considering the need to appoint external remuneration
consultants.
· Reviewing outside commitments of the Directors.
· Evaluating the Board, its Committees and the Directors and
considering whether the Directors should be recommended for election or
re-election.
· Reviewing the composition of the Board and its Committees,
including the balance of skills, experience, knowledge and diversity
(including gender, social and ethnic backgrounds and cognitive and personal
strengths).
· Formulating succession plans for the Directors consistent with
SSIT's policies on Board tenure and diversity.
· Identifying, evaluating and recommending candidates for new Board
appointments.
· Reporting to the Board on how the Committee has discharged its
responsibilities and making recommendations as appropriate.
Principal Activities During the Year
Annual evaluation of Board, Committees and Directors
The Committee ensures that there is a formal and rigorous annual evaluation of
the performance of the Board, its Committees, the Chair and individual
Directors.
The evaluations, which were facilitated by the Company Secretary and
undertaken during May 2023, consisted of performance appraisals,
questionnaires, and discussions to determine effectiveness and performance in
various areas. The areas considered included (a) the Board's composition,
knowledge, skills and independence, (b) its governance and processes, (c) the
contributions of individual Directors to the Board's work, (d) the
relationships and communication between the Directors, as well as between the
Board and the Investment Manager, the Administrator and other key service
providers, (e) investment matters, (f) delivering shareholder value and (g)
key priorities for the financial year ending 30 June 2024. The Committee
also sought the views of the Investment Manager as part of the evaluation
process. The performance evaluation of the Chair was led by Ms Inglis as the
Company's Senior Independent Director and Chair of the Remuneration and
Nomination Committee.
Following review and discussion of the evaluation results, the Committee
concluded, at its scheduled meeting in May 2023, that:
· the Board and each of its standing Committees had a good balance
of relevant skills, experience and knowledge and their structures, sizes and
compositions were appropriate at this stage in the Company's life and,
accordingly, no changes were expected to be required for at least the next 12
months;
· each Director continued to be independent in character and
judgement, their skills and experience were a significant benefit to the Board
and they had demonstrated their ability to commit the time required to fulfil
their responsibilities;
· the Directors (individually and collectively as the Board) had
been operating effectively;
· there were no specific additional training requirements for any
of the Directors; and
· the proposed re-election of each Director at the 2023 AGM should
be recommended.
The Committee made recommendations to the Board based on the outcome of its
deliberations.
Other routine activities
At its schedule meeting in May 2023, the Committee also:
· reviewed the Board's policies on diversity and Board tenure and
its succession plan and recommended them to the Board for approval (see 'Board
diversity', 'Board tenure' and 'Succession Planning' for details of these
policies, as approved by the Board); and
· reviewed the Directors' remuneration policy and the annual
remuneration of the Directors and concluded that no changes were required in
respect of the year ending 30 June 2024.
Succession Planning
The Board is at an early stage of its life, with all Directors having a number
of years of their tenure left. The tenure of all Directors, including the
Chair, is expected not to exceed nine years unless exceptional circumstances
warrant, such as to allow for phased retirements of the current Directors. The
Committee considers succession planning annually and has developed a
succession plan that seeks to achieve an appropriate balance between
preservation of experience and knowledge and bringing in fresh ideas and
perspectives and is consistent with the Company's policies on Board tenure and
diversity. The Committee is cognisant that it does not currently have ethnic
representation, contrary to the new FCA diversity targets, and this will be an
important consideration in future Board appointments.
The process for recruiting additional Directors is described under
'Appointments to the Board'. The Committee intends to use non-executive
director recruitment consultants and/or open advertising when recruiting new
Directors in the future.
Committee Evaluation
The activities of the Committee were considered as part of the Board
evaluation process completed in May 2023 in accordance with standard
governance arrangements as summarised under 'Annual evaluation of Board,
Committees and Directors' earlier in this Report. The conclusion from the
process was that the Committee was operating effectively with the right
balance of membership and skills.
Approval
This Remuneration and Nomination Committee Report was approved on 16 October
2023.
On behalf of the Committee:
Sue Inglis
Remuneration and Nomination Committee Chair
16 October 2023
Directors' Remuneration Report
This Report has been prepared by the Directors in accordance with the
requirements of the Companies Act 2006 and the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008. By law, the
Company's Auditor is required to audit certain of the disclosures provided in
this Report. Where disclosures have been audited, they are indicated as
such. An ordinary resolution for the approval of this Report (excluding the
section 'Remuneration Policy') will be put to shareholders at the Company's
AGM on 20 November 2023.
Annual Statement from the Chair of the Board
The Company's remuneration policy, which is set out below, is subject to
shareholder approval every three years or sooner if an alteration to the
policy is proposed. The remuneration policy was approved at the AGM of the
Company on 17 November 2022 and no changes to the policy are proposed. It is
intended that the remuneration policy will continue in force until the AGM in
2025.
The remuneration of the Directors has been set in order to attract individuals
of a calibre appropriate to the future development of the Company. For the
year ended 30 June 2023, the Directors' remuneration was set at £50,000 per
annum for each Director. The Remuneration and Nomination Committee reviewed
the level of fees during the year and the Board approved the Committee's
recommendation that there should be no increase in the level of fees for the
year ending 30 June 2024. The Remuneration and Nomination Committee did not
receive independent advice or services in respect of its review of the
Directors' remuneration; however, the Company Secretary provided it with
details of comparable fees and other market information.
Remuneration Policy
It is the Company's policy to determine the level of Directors' fees which
should be sufficient to attract and retain Directors with appropriate skills
and experience necessary for the effective stewardship of the Company and the
expected contribution of the Board as a whole in achieving the Company's
objectives. The time committed to the Company's business and the specific
responsibilities of individual Directors are taken into account. The policy
aims to be fair and reasonable in relation to the level of fees payable to
non-executive directors of comparable investment companies and other
investment companies of similar size and complexity as the Company.
The Company's Articles of Association limit the aggregate fees payable to the
Directors to £500,000 per annum (any change to that limit requires
shareholder approval). Within that limit, it is the responsibility of the
Board as a whole to determine and approve the Directors' fees, following a
recommendation from the Remuneration and Nomination Committee. The fees are
fixed and payable in cash, quarterly in arrears. Annual fees are pro-rated
where a change takes place during a financial year. Directors have no
entitlement to pensions or pension-related benefits, medical or life insurance
schemes, share options or long-term incentive schemes.
The Directors' fee rates are reviewed by the Remuneration and Nomination
Committee at least annually, but reviews will not necessarily result in a
change to the rates. Any feedback received from shareholders will be taken
into account when setting fee rates. Directors abstain from voting on their
own fees.
The Directors are entitled to the reimbursement of reasonable fees and
expenses incurred by them in the performance of their duties. Where expenses
are recognised as a taxable benefit, a Director may receive the grossed-up
costs of that expense as a benefit.
The Directors do not have a service contract. Each Director has signed a
letter of appointment with the Company. The letters of appointment do not
include any minimum period of notice of termination by either party or any
provision for compensation for loss of office.
Annual Report on Directors' Remuneration (Audited Information)
The table below shows all remuneration earned by each individual Director
during the year. No Director received taxable benefits during the year.
30 June 2022 % change from prior period(2)
30 June 2023 £
£
Will Whitehorn (Chair) £50,000 £48,322 3%
Sue Inglis (Senior Independent Director) £50,000 £48,322 3%
Christina McComb £50,000 £48,322 3%
Angela Lane(1) £50,000 £25,000 100%
Total £200,000 £169,966
(1)Appointed with effect from 1 January 2022.
(2) Movement in individual Director's salary based on annualised total
figures. Prior year remuneration was prorated based on duration of service.
Remuneration for each Director is set at £50,000 per annum. None of the
Directors received any other remuneration or additional discretionary payments
during the year from the Company (2022: £NIL).
Relative Importance of Spend on Pay
The remuneration of the Directors with respect to the year totalled £200,000.
The Directors intend to manage the Company's affairs to achieve shareholder
returns through capital growth rather than income. Therefore, no dividends
have been declared or paid during the year and a comparison of amounts paid to
Directors against distributions to shareholders would not be relevant.
Directors' Interests (Audited Information)
The Directors who held office during the year and their interests in the
ordinary shares of the Company at 30 June 2023 are shown in the table below.
There have been no changes to the Directors' interests between 30 June 2023
and the date of this Report.
30 June 2023 Ordinary shares 30 June 2022 Ordinary shares
Will Whitehorn 100,000 100,000
Sue Inglis 50,000 50,000
Christina McComb 41,706 25,000
Angela Lane 47,000 27,284
There are no requirements for the Directors to own shares in the Company.
Statement of Voting at Annual General Meeting
The Company seeks shareholder approval of the Directors' remuneration policy
at every third AGM. At the 2022 AGM, of the proxy votes received in respect of
the Directors' Remuneration Policy, 99.58% were in favour and 0.42% were
against (votes representing approximately 0.03% of the issued share capital
were withheld).
An advisory ordinary resolution to approve the Directors' Remuneration Report
(excluding the Directors' remuneration policy) is put to members at each
AGM. At the 2022 AGM, of the proxy votes received in respect of the
Directors' Remuneration Report, 99.60% were in favour and 0.40% were against
(votes representing 0.03% of the issued share capital were withheld).
Approval
This Directors' Remuneration Report was approved by the Board on 16 2023.
On behalf of the Board:
Will Whitehorn
Chair
17 2023
Directors' Responsibilities Statement
Responsibilities
The Directors are responsible for preparing the Annual Report and financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors are required to prepare the
Company's financial statements, in accordance with UK-adopted International
Accounting Standards and the requirements of the Companies Act 2006. 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 the profit or loss for the Company for that financial
year.
In preparing the financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether they have been prepared in accordance with
UK-adopted International Accounting Standards, subject to any material
departures disclosed and explained in the financial statements;
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business; and
· prepare a Directors' Report, strategic report and Directors'
remuneration report which comply with the requirements of the Companies Act
2006.
The Directors are responsible for:
· keeping adequate accounting records that are sufficient to show
and explain the Company's transactions and disclose with reasonable accuracy
at any time the financial position of the Company and enable them to ensure
that the financial statements comply with the Companies Act 2006;
· for safeguarding the assets of the Company and, hence, for taking
reasonable steps for the prevention and detection of fraud and other
irregularities; and
· ensuring that the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Company's performance, business model and strategy.
Website Publication
The Directors are responsible for ensuring the Annual Report and financial
statements are made available on a website. Financial statements are published
on the Company's website in accordance with legislation in the UK governing
the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the
Company's website is the responsibility of the Directors, which they have
delegated to the Investment Manager. The Directors' responsibilities also
extend to the ongoing integrity of the financial statements contained on the
website.
Responsibility Statement
The Directors confirm to the best of their knowledge that:
· the Company's financial statements have been prepared in
accordance with UK-adopted International Accounting Standards and give a true
and fair view of the assets, liabilities, financial position and profit and
loss of the Company;
· the Strategic Report includes a fair review of the development
and performance of the business and financial position of the Company,
together with a description of the principal and emerging risks and
uncertainties that it faces; and
· the Annual Report and financial statements, taken as a whole, are
fair, balanced and understandable and provide the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy.
This responsibility statement was approved by the Board on 16 October 2023.
On behalf of the Board
Will Whitehorn
Chair
16 October 2023
Statement of Comprehensive Income
For the year ended 30 June 2023
For the year ended 30 June 2023 For the period ended 30 June 2022
Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Investment (loss)/gain
Net (loss)/gain on investments held at fair value through profit or loss 8 - (12,416) (12,416) - 7,655 7,655
- (12,416) (12,416) - 7,655 7,655
Expenses
Management fee 4 (2,912) - (2,912) (2,744) - (2,744)
Other operating expenses 5 (1,851) - (1,851) (1,626) - (1,626)
Total expenses (4,763) - (4,763) (4,370) - (4,370)
Operating (loss)/profit for the year/period (4,763) (12,416) (17,179) (4,370) 7,655 3,285
Finance income
Interest income 260 - 260 84 - 84
Total finance income 260 - 260 84 - 84
(Loss)/profit for the year/period before tax (4,503) (12,416) (16,919) (4,286) 7,655 3,369
Tax 6 - - - - - -
(Loss)/profit and total comprehensive income for the year/period attributable
to:
Equity holders of the Company (4,503) (12,416) (16,919) (4,286) 7,655 3,369
Earnings per share
Basic and diluted (losses)/earnings per share (pence) 7 (1.88) (5.19) (7.07) (1.94) 3.47 1.53
All Revenue and Capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the year or prior
period.
The Total column of this statement is the profit and loss account of the
Company, and the Revenue and Capital columns represent supplementary
information prepared under guidance issued by the Association of Investment
Companies.
The accompanying notes below form an integral part of these financial
statements.
Statement of Financial Position
As at 30 June 2023
Year ended Period ended
30 June 2023 30 June 2022
£'000 £'000
Note
Non-current assets
Investments at fair value through profit or loss 8 187,428 186,083
187,428 186,083
Current assets
Trade and other receivables 9 88 121
Cash and cash equivalents 10 35,309 57,650
35,397 57,771
Current liabilities
Trade and other payables 11 (428) (4,538)
(428) (4,538)
Net current assets 34,969 53,233
Net assets 222,397 239,316
Equity
Share capital 12 2,394 2,394
Share premium 12 60,377 60,377
Other reserves 12 173,176 173,176
Retained (losses)/earnings (13,550) 3,369
Total shareholders' funds 222,397 239,316
Number of shares in issue at period end 239,384,928 239,384,928
Net assets per share (pence) 13 92.90 99.97
The financial statements were approved and authorised for issue by the Board
of Directors on 16 October 2023 and signed on its behalf by:
Will Whitehorn Sue
Inglis
Chair
Director
Registered Company Number 13395698
The accompanying notes below form an integral part of these financial
statements.
Statement of Changes in Equity
For the year ended 30 June 2023
Share capital Share premium Special distributable reserve Retained (losses)/earnings Total
Revenue Capital
£'000 £'000 £'000 £'000 £'000 £'000
Total shareholders' funds at 1 July 2022 2,394 60,377 173,176 (4,286) 7,655 239,316
Total comprehensive expense for the year - - - (4,503) (12,416) (16,919)
Total shareholders' funds at 30 June 2023 2,394 60,377 173,176 (8,789) (4,761) 222,397
For the period from inception to 30 June 2022
Share capital Share premium Special distributable reserve Retained (losses)/earnings Total
Revenue Capital
£'000 £'000 £'000 £'000 £'000 £'000
Total shareholders' funds at 14 May 2021 - - - - - -
Issue of redeemable preference shares 50 - - - - 50
Issues of ordinary shares 2,394 236,991 - - - 239,385
Redemption of redeemable preference shares (50) - - - - (50)
Share issue costs - (3,438) - - (3,438)
Cancellation of share premium - (173,176) 173,176 - - -
Total comprehensive (expense) / income for the period - - - (4,286) 7,655 3,369
Total shareholders' funds at 30 June 2022 2,394 60,377 173,176 (4,286) 7,655 239,316
The accompanying notes below form an integral part of these financial
statements.
Statement of Cash Flows
For the year ended 30 June 2023
For the year ended For the period ended
30 June 2023 30 June 2022
Note £'000 £'000
Cash flows from operating activities
(Loss)/profit for the year/period before tax (16,919) 3,369
Adjustments for:
Foreign currency cash movement 237 -
Purchase of investments (21,330) (84,815)
Disposal of investments 8 3,341 -
Unrealised movement in fair value of investments 8 10,456 (7,655)
Realised loss on disposal of investments 8 1,960 -
Movement in payables 118 310
Movement in receivables 33 (121)
Net cash used in operating activities (22,104) (88,912)
Cash flows from financing activities
Proceeds of share capital issuance - 147,639
Payment of issue costs - (1,077)
Net cash generated from financing activities - 146,562
Net movement in cash and cash equivalents during the year/period (22,104) 57,650
Cash and cash equivalents at the beginning of the year/period 57,650 -
Exchange translation movement (237) -
Cash and cash equivalents at the end of the year/period 35,309 57,650
The accompanying notes below form an integral part of these financial
statements.
NOTES TO THE FINACIAL STATEMENTS
For the year ended 30 June 2023
1. General Information
The Company is an externally managed closed-ended investment company,
incorporated in England and Wales on 14 May 2021 with registered number
13395698. The Company's ordinary shares were admitted to trading on the London
Stock Exchange's main market on 14 July 2021.
2. Significant Accounting Policies
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied, unless otherwise stated.
Basis of preparation
These financial statements have been prepared on the historic cost basis, as
modified for the measurement of certain financial instruments held at fair
value through profit or loss and in accordance with UK-adopted International
Accounting Standards and those parts of the Companies Act 2006 applicable to
companies under International Financial Reporting Standards.
Where presentational guidance set out in the Association of Investment
Companies Statement of Recommended Practice for the Financial Statements of
Investment Trust Companies and Venture Capital Trusts (AIC SORP) is consistent
with the requirements of UK-adopted International Accounting Standards, the
Directors have sought to prepare the financial statements on a basis compliant
with the recommendations of the AIC SORP. In particular, supplementary
information which analyses the Statement of Comprehensive Income between items
of revenue and capital nature has been presented alongside the total Statement
of Comprehensive Income. The determination of whether an item should be
recognised as revenue or capital is carried out in accordance with the
principles and recommendations set out in the AIC SORP. The Directors have
chosen to apply the non-allocation approach, so all indirect costs are charged
to the revenue column of the Statement of Comprehensive Income.
The Company was formed on 14 May 2021, so comparative information in the
financial statements covers the period from 14 May 2021 to 30 June 2022, but
during that period the meaningful activities of the Company took place from
the Company's listing on the London Stock Exchange on 14 July 2021 to 30 June
2022.
In these financial statements, values are rounded to the nearest thousand
(£'000), unless otherwise indicated.
Going concern
The Company's cash balance at 30 June 2023 was £35.3m (2022: £57.7m), which
was sufficient to cover its liabilities of £0.4m (2022: £4.5m including
£4.2m investment settled post period-end) at that date and any foreseeable
expenses for a period of at least 12 months from the date of approval of these
financial statements, including in severe but plausible downside scenarios.
The Company's cash balance at the date of approval of these financial
statements was £29.4m.
The Company's cash balance is comprised of cash held on deposit with
substantial global financial institutions with strong credit ratings and the
risk of default by the counterparties is considered extremely low. The major
cash outflows of the Company are expected to be for the acquisition of new
investments, which are discretionary. The Company is closed-ended and there is
no requirement for the Company to buy back or redeem shares.
The war in Ukraine has had substantial impacts on the global economy, in
particular in respect of heightened inflation rates. Heightened inflation
rates and interest rates have caused a weak macroeconomic environment which
has impacted global markets.
Continued strengthening of Sterling against the US Dollar has more than
reversed the Sterling weakness experienced in the first quarter of this year.
Given the ongoing weak macroeconomic environment, it is currently not possible
to determine the potential scale and scope of the ultimate effects on the
global economy, capital markets and the Company's operations and investments.
As the situation continues to evolve, this will remain a key risk to the
Company. In the meantime, the Directors and Investment Manager are actively
monitoring the situation. In addition, they have considered the following
specific key potential impacts:
· increased volatility in the fair value of investments;
· uncertainty regarding the ability to raise additional capital and
support the existing portfolio; and
· disruptions to business activities of the underlying investments.
In considering these key potential impacts, the Directors and Investment
Manager have assessed them with reference to the Company's risk framework and
mitigation measures in place.
Based on the assessment outlined above, including the various risk mitigation
measures in place, the Directors do not consider that the effects of the weak
macroeconomic environment or the impact of the continuing war on Ukraine have
created a material uncertainty over the assessment of the Company as a going
concern.
On the basis of this review, and after making due enquiries, the Directors
have a reasonable expectation that the Company has adequate resources to
continue in operational existence for at least 12 months from the date of
approval of these financial statements. Accordingly, they continue to adopt
the going concern basis in preparing the financial statements.
Segmental reporting
The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been
identified as the Board of Directors as a whole. The key measure of
performance used by the Board to assess the Company's performance and to
allocate resources is the Company's NAV, as calculated in accordance with
UK-adopted International Accounting Standards, and, therefore, no
reconciliation is required between the measure of profit or loss used by the
Board and that contained in the Annual Report.
For management purposes, the Company is organised into one main operating
segment, which invests predominantly in early and growth stage privately
financed SpaceTech businesses globally.
All of the Company's current bank interest income is derived from within the
UK.
The Company's non-current assets are located in the US, the UK, the EU, Israel
and Japan. Due to the Company's nature, it has no customers.
Functional currency and foreign currency transactions
These financial statements are presented in Sterling. As the majority of the
Company's transactions are in Sterling, it is appropriate for the Company's
functional currency to be Sterling. However, the Company holds investments
denominated in currencies other than Sterling, including US Dollars. In
addition, an element of any income from the Company's investments may be
generated in currencies other than Sterling.
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are translated at the
foreign exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the Statement of Comprehensive
Income. The Company may employ derivatives for currency hedging purposes, but
the Board did not do so in the year.
New and amended standards and interpretations not applied
At the date of authorisation of these financial statements, the following
amendments had been published and will be mandatory for future accounting
periods.
Effective for accounting periods beginning on or after 1 January 2023:
· Narrow-scope amendments to IAS 1 'Presentation of financial
statements', Practice statement 2 and IAS 8 'Accounting policies, changes in
accounting estimates and errors'.
· Amendments to IAS 12 'Income taxes' - deferred tax related to
assets and liabilities arising from a single transaction.
· Amendments to IFRS 17 'Insurance contracts' - this standard
replaces IFRS 4 'Insurance contracts', which currently permits a wide variety
of practices in accounting for insurance contracts.
Effective for accounting periods beginning on or after 1 January 2024:
· Amendments to IAS 1 on classification of liabilities clarify that
liabilities are classified as either current or non-current, depending on the
rights that exist at the end of the reporting period.
The Company has considered the IFRS accounting standards and interpretations
that have been issued but are not yet effective. None of these standards or
interpretations are likely to have a material effect on the Company, as it is
the belief of the Board that the activities of the Company are unlikely to be
affected by the changes to these standards, although any disclosures
recommended by these standards, where applicable, will be provided as
required.
Assessment as an investment entity
IFRS 10 'Consolidated financial statements' sets out the following three
essential criteria that must be met if a company is to be considered as an
investment entity:
· it must obtain funds from multiple investors for the purpose of
providing those investors with investment management services;
· it must commit to its investors that its business purpose is to
invest funds solely for returns from capital appreciation, investment income
or both; and
· it must measure and evaluate the performance of substantially all
of its investments on a fair value basis.
In satisfying the second essential criteria, the notion of an investment time
frame is critical, and an investment entity should have an exit strategy for
the realisation of its investments. Also as set out in IFRS 10, further
consideration should be given to the typical characteristics of an investment
entity, which are that:
· it should have more than one investment to diversify the
portfolio risk and maximise returns;
· it should have multiple investors, who pool their funds to
maximise investment opportunities;
· it should have investors that are not related parties of the
entity; and
· it should have ownership interests in the form of equity or
similar interests.
The Directors are of the opinion that the Company meets the essential criteria
and typical characteristics of an investment entity as it obtains funds from
investors to invest for returns from capital appreciation and substantially
all of its investments are held at fair value through profit or loss, in
accordance with IFRS 9 'Financial instruments'. Fair value is measured in
accordance with IFRS 13 'Fair value measurement'.
Income recognition
Investment income and interest income is accounted for on an accruals basis
using the effective interest rate method.
Fair value movement
Gains or losses resulting from the movement in fair value of the Company's
investments held at fair value through profit or loss are recognised in the
Capital column of the Statement of Comprehensive Income at each valuation
point.
Expenses
Expenses are accounted for on an accruals basis. The Company's management,
administration and all other expenses are charged through the Revenue column
and any performance fee is charged to the Capital column of the Statement of
Comprehensive Income.
Share issue expenses of the Company directly attributable to the issue and
listing of shares are charged to the share premium account.
Taxation
The Company has received confirmation from HMRC that it has been accepted as
an approved investment trust with effect from 14 July 2021, provided it
continues to meet the eligibility conditions of section 1158 of the
Corporation Tax Act 2010 ('s.1158') and the ongoing requirements for approved
companies in the Investment Trust (Approved Company) (Tax) Regulations 2011.
The Directors believe that the Company has conducted its affairs in compliance
with s.1158 since approval was granted and intends to continue to do so.
In respect of each accounting period for which the Company is and continues to
be approved by HMRC as an investment trust, the Company will be exempt from UK
corporation tax on its chargeable gains. The Company will, however, be subject
to UK corporation tax on its income (currently at a rate of 25%).
In principle, the Company is liable to UK corporation tax on any dividend
income. However, there are broad-ranging exemptions from this charge which
would be expected to be applicable in respect of most of the dividends the
Company may receive.
To the extent that the Company receives income from, or realises amounts on
the disposal of, investments in foreign countries it may be subject to foreign
withholding or other taxation in those jurisdictions. To the extent it relates
to taxable income, this foreign tax may, to the extent not relievable under a
double tax treaty, be able to be treated as an expense for UK corporation tax
purposes, or if the Company has a tax liability it may be treated as a credit
against UK corporation tax up to certain limits and subject to certain
conditions.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments, except where the Company is able to control the timing
of the reversal of the difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax is
calculated at the tax rates that are expected to apply in the period when the
liability is settled or the asset is realised. Deferred tax is charged or
credited to the Statement of Comprehensive Income except when it relates to
items charged or credited directly to equity, in which case the deferred tax
is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off tax assets against tax liabilities and when they
relate to income taxes levied by the same taxation authority and the Company
intends to settle its current tax assets and liabilities on a net basis.
Deferred tax assets and liabilities are not discounted.
Financial instruments
Financial assets and financial liabilities are recognised in the Statement of
Financial Position when the Company becomes a party to the contractual
provisions of the instrument. Financial assets and financial liabilities are
only offset, and the net amount reported in the Statement of Financial
Position and Statement of Comprehensive Income, when there is a currently
enforceable legal right to offset the recognised amounts and the Company
intends to settle on a net basis or realise the asset and liability
simultaneously.
At 30 June 2023 and 2022, the carrying amounts of cash and cash equivalents,
receivables, payables and accrued expenses reflected in the financial
statements are reasonable estimates of fair value in view of the nature of
these instruments or the relatively short period of time between the original
instruments and their expected realisation.
Financial assets
The classification of financial assets at initial recognition depends on the
purpose for which the financial asset was acquired and its characteristics.
All financial assets are initially recognised at fair value. All purchases of
financial assets are recorded at the date on which the Company became party to
the contractual requirements of the financial asset.
The Company's financial assets principally comprise of cash and cash
equivalents and investments held at fair value through profit or loss.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, short term deposits held on
call with banks and other short-term highly liquid deposits with original
maturities of three months or less and that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Investments held at fair value through profit or loss
Investments are designated upon initial recognition as held at fair value
through profit or loss. Gains or losses resulting from the movement in fair
value are recognised in the Statement of Comprehensive Income at each
valuation point.
Financial assets are recognised/derecognised at the date of the
purchase/disposal. Investments are initially recognised at cost, being the
fair value of consideration given. Transaction costs are recognised in the
Statement of Comprehensive Income as incurred.
Fair value is defined as the amount for which an asset could be exchanged
between knowledgeable willing parties in an arm's length transaction. The
value of the Company's investments is calculated on the following bases:
· the value of investments that are not publicly traded are valued
using recognised valuation methodologies in accordance with the IPEV Valuation
Guidelines. These methods include primary valuation techniques such as revenue
or earnings multiples, milestones or recent transactions;
· where an investment in an unlisted business has been made
recently, the Company may use the calibrated price of recent investment as the
best indicator of fair value. In such a case, changes or events subsequent to
the relevant transaction date are assessed to ascertain if they imply a change
in the investment's fair value;
· publicly traded securities are valued by reference to their bid
price or last traded price, if applicable, on the relevant exchange in
accordance with the AIC's valuation guidelines and applicable accounting
standards. Where trading in the securities of a portfolio company is
suspended, the investment in those securities would be valued at the estimate
of its net realisable value. In preparing these valuations, account is taken,
where appropriate, of latest dealing prices, valuations from reliable sources,
comparable asset values and other relevant factors; and
· any value otherwise than in Sterling is converted into Sterling
at the prevailing rate.
Derecognition of financial assets
A financial asset (in whole or in part) is derecognised:
· when the Company has transferred substantially all the risks and
rewards of ownership; or
· when it has neither transferred nor retained substantially all
the risks and rewards and when it no longer has control over the asset or a
portion of the asset; or
· when the contractual right to receive cashflow has expired.
Purchases of investments for cash are classified as operating activities in
the Statement of Cash Flows as the Company's objective is to generate capital
growth through investment in a portfolio of predominantly early and growth
stage privately financed SpaceTech businesses.
Financial liabilities
Financial liabilities are classified according to the substance of the
contractual agreements entered into and are recorded on the date on which the
Company becomes party to the contractual requirements of the financial
liability.
The Company's financial liabilities are measured at amortised cost and include
trade and other payables and other short-term monetary liabilities which are
initially recognised at fair value and subsequently measured at amortised cost
using the effective interest rate method.
A financial liability (in whole or in part) is derecognised when the Company
has extinguished its contractual obligations, or it expires or is cancelled.
Any gain or loss on derecognition is taken to the Statement of Comprehensive
Income.
Provisions
A provision is recognised when there is an expected future economic outflow as
a result of a past event and for which the timing or amount is uncertain.
Share capital
Financial instruments issued by the Company are treated as equity if the
holder has only a residual interest in the assets of the Company after the
deduction of all liabilities. The Company's ordinary shares are classified as
equity instruments.
For the issue of each ordinary share, £0.01 has been recognised in share
capital and the remaining amount received has been recognised in share
premium. Incremental costs directly attributable to the issue of new shares
are shown in share premium as a deduction from proceeds. Amounts in the share
capital and share premium accounts are not distributable.
As disclosed in note 11, the amount standing to the credit of the share
premium account of the Company on completion of the IPO, less issue expenses
set off against the share premium account, was cancelled by a court order
dated 14 December 2021 and credited to the special distributable reserve.
Retained earnings include cumulative unrealised movements in investments which
are classified as capital in the Statement of Comprehensive Income, which are
not distributable; and cumulative revenue items, which are classified as
distributable to shareholders.
3. Significant Accounting Judgements, Estimates and Assumptions
The preparation of the financial statements requires the application of
estimates which may affect the results reported in the financial statements.
Estimates, by their nature, are based on judgement and available information.
Investment entity
As disclosed in note 2, the Directors have concluded that the Company meets
the definition of an investment entity as defined in IFRS 10, IFRS 12 and IAS
27. This conclusion involved a degree of judgement and assessment as to
whether the Company met the criteria outlined in the accounting standards.
Valuation
The key area involving a high degree of estimation or complexity that is
significant to the financial statements has been identified as the risk of
misstatement of the valuation of the Company's unlisted investments (see note
8). In addition, as disclosed in note 4, amounts payable as management fee or
performance fee to the Investment Manager are dependent on NAV and, therefore,
valuation of investments.
The Company's unlisted investments are early or growth stage companies. Given
the nature of these investments, there are often no current or short-term
future earnings or positive cash flows. Consequently, the Company abides by
the IPEV Valuation Guidelines in determining fair value. Although not
considered to be the default valuation technique, the appropriate approach to
determine fair value may be based on a methodology with reference to a
calibrated price of recent investment, or, in the case of terms for a future
round being agreed, fair value may be based with reference to a calibrated
price of such future round, discounted for execution risk. This is of greater
reliability than other methods based on estimates and assumptions and,
accordingly, where there have been recent investments by third parties, the
price of that investment generally provides a basis of the valuation. Recent
transactions may include post year-end (if terms agreed pre year-end) as well
as pre year-end transactions depending on their nature and timing. Where a
significant milestone is achieved by a portfolio company and there has not yet
been a subsequent funding round, the fair value is determined using comparable
metrics. Where relevant, such as in cases where portfolio companies are
profitable or have stable and predictable revenues, fair value may be
determined using a multiples approach (earnings or revenue, respectively). It
may be necessary to apply discounts to some or all of the comparables due to
differences between the portfolio company and the comparables (such as size,
margin, liquidity, marketability etc). In addition, in the case of
underperformance, fair value write-downs are taken. Publicly traded securities
are valued by reference to their bid price or last traded price.
The Company considers whether the basis for the last valuation remains
appropriate each time valuations are reviewed. In addition, inputs to the fair
value calculation are recalibrated to assess the appropriateness of the
methodology used in relation to the market performance since the last funding
round, such as the portfolio company's trading performance relative to the
expectations of the round and macroeconomic conditions and general market
performance.
In all cases, valuations of unlisted investments are based on the judgement of
the Directors after consideration of the above and upon available information
believed to be reliable, which may be affected by conditions in the financial
markets. Due to the inherent uncertainty of the investment valuations, the
estimated values may differ significantly from the values that would have been
used had a ready market for the investments existed and the differences could
be material. Due to this uncertainty, the Company may not be able to sell its
investments at the carrying value in these financial statements when it
desires to do so or to realise what it perceives to be fair value in the event
of a sale.
4. Management and Performance Fees
Management fee
Under the Investment Management Agreement, the Investment Manager is entitled
to a management fee of 1.25% per annum of NAV up to £300m and 1.00% per annum
of NAV above £300m, payable quarterly in advance.
Management fees incurred in the year were £2.9m (2022: £2.7m), of which
£NIL was payable to the Investment Manager as at 30 June 2023 (2022: £NIL).
Performance fee
Under the Investment Management Agreement, the Investment Manager is also
entitled to a performance fee of 15% over an 8% hurdle with full catch-up,
calculated on NAV annually. The performance fee is only payable where the
adjusted NAV at the end of a performance period exceeds the higher of the
performance hurdle and a high-water mark. Any accrued performance fee will
only be paid to the extent that the aggregate of the net realised profits on
unlisted investments, net unrealised gains on listed investments and income
received from investments during the relevant performance period is greater
than the performance fee payable and, to the extent that such aggregate is
less than the performance fee payable, an amount equal to the difference shall
be carried forward and included in the performance fee payable as at the end
of the next performance period. Subject to the Takeover Code, the Investment
Manager is required to reinvest 15% of any performance fee paid in shares of
the Company. Full details of the performance fee are set out in the
Company's IPO prospectus, which is available on the Company's website
(https://investors.seraphim.vc/ (https://investors.seraphim.vc/) ).
No performance fee was accrued for or paid to the Investment Manager for the
year (2022: £NIL).
5. Operating Expenses
2023 2022
£'000 £'000
Legal & professional fees 394 298
Administration & depository fees 219 215
Directors' fees 224 170
Insurance expense 23 168
Irrecoverable VAT 95 98
Audit of statutory financial statements 96 80
Other operating expenses 800 597
Total operating expenses 1,851 1,626
During the prior period, the Company's external Auditor, BDO LLP, was also
paid £210k (including VAT) in relation to share issue and valuation work,
completed before the IPO, which was recognised in share premium.
6. Tax
As an investment trust, the Company is exempt from UK corporation tax on
capital gains arising on the disposal of shares.
Capital profits from its creditor loan relationships or derivative contracts
are exempt from UK tax where the profits are accounted for through the Capital
column of the Statement of Comprehensive Income, in accordance with the AIC
SORP.
No tax liability has been recognised in the financial statements.
30 June 2023 30 June 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
UK corporation tax charge on profits for the year / period at 20.5% *(2022: - - - - - -
19%)
* The tax rate changed from 19% to 25% on 31 March 2023 such that the average
rate for the year was 20.5% and this is the percentage used for the tax
reconciliation.
30 June 2023 30 June 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Return on ordinary activities before tax (4,503) (12,416) (16,919) (4,286) 7,655 3,369
Tax at UK corporation tax rate of 20.5% (2022 19%) (923) (2,545) (3,468) (814) 1,454 640
Effects of:
Non-taxable (losses)/gains on investments - 2,545 2,545 - (1,454) (1,454)
Disallowable Expenses 32 - 32 39 - 39
Excess management expenses not utilised in the period 891 - 891 775 - 775
Total tax charge - - - - - -
As at 30 June 2023, the Company has not recognised a deferred tax asset of
£2,105,902 (2022: £1,019,196) arising as a result of having unutilised
management expenses carried forward at the year-end of £8,423,609 (2022:
£4,076,786) based on a prospective corporation tax rate of 25% (2022: 19%).
These expenses will only be utilised if the tax treatment of the Company's
income and chargeable gains changes or if the Company's investment profile
changes.
Deferred tax is not provided on capital gains and losses arising on the
revaluation or disposal of investments because the Company meets (and intends
to continue to meet for the foreseeable future) the conditions for approval as
an Investment Trust company.
7. Earnings Per Share
2023 2022
Revenue Capital Total Revenue Capital Total
(Loss)/profit attributable to equity - £'000 (4,503) (12,416) (16,919) (4,286) 7,655 3,369
Weighted average number of ordinary shares in issue 239,384,928 220,621,858
Basic and diluted earnings per share in the year/period (pence) (1.88) (5.19) (7.07) 1.94 3.47 1.53
8. Investments Held at Fair Value Through Profit or Loss
For the Year ending 30 June 2023 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Opening balance * 16,236 2,373 167,474 186,083
Investment additions - - 17,102 17,102
Investment disposals (3,341) - - (3,341)
Transfers from Level 3 to Level 1 103 - (103) -
Loss on disposals (1,358) - (602) (1,960)
Change in fair value (7,569) (525) 4,427 (3,667)
Change in fair value - Foreign Exchange Movement (900) (211) (5,678) (6,789)
Net loss on investments held at fair value through profit or loss (9,827) (736) (1,853) (12,416)
Closing balance 3,171 1,637 182,620 187,428
For the Year ending 30 June 2022
Opening balance - - - -
vestment additions 2,478 - 86,565 89,043
Investment additions - shares issued (note 11) 39,189 - 50,196 89,385
Change in fair value (23,058) - 30,713 7,655
Closing balance 18,609 - 167,474 186,083
* Investment in AST SpaceMobile has been reclassified to a Level 2 investment
During the year ended 30 June 2023 investments with a fair value at 30 June
2023 of £0.1m were transferred from Level 3 to Level 1 due to the Nightingale
IPO and listing in November 2022 (2022: no transfers).
Fair value measurements
The Company measures fair value using the following fair value hierarchy that
prioritises the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to valuations with unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy under IFRS 13 are as follows:
Level 1: Quoted price (unadjusted) in an active market for
an identical instrument.
Level 2: Valuation techniques based on observable
inputs, either directly (i.e., as prices) or indirectly (i.e., derived from
prices). This category includes instruments valued using quoted prices in
active markets for similar instruments, quoted prices for identical or similar
instruments in markets that are considered less than active, or other
valuation techniques for which all significant inputs are directly or
indirectly observable from market data.
Level 3: Valuation techniques using significant
unobservable inputs. This category includes all instruments for which the
valuation technique includes inputs that are not based on observable data and
the unobservable inputs have a significant effect on the instrument's
valuation. This category includes instruments that are valued based on quoted
prices for similar instruments for which significant unobservable adjustments
or assumptions are required to reflect differences between the instruments.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement. For this purpose, the
significance of an input is assessed against the fair value measurement in its
entirety. If a fair value measurement uses observable inputs that require
significant adjustment based on unobservable inputs, that measurement is a
Level 3 measurement.
Assessing the significance of a particular input to the fair value measurement
in its entirety requires judgement, considering factors specific to the asset
or liability.
The determination of what constitutes 'observable' requires significant
judgement by the Company. The Company considers observable data to be market
data that is readily available, regularly distributed or updated, reliable and
verifiable, not proprietary and provided by independent sources that are
actively involved in the relevant market.
The objective of the valuation techniques used is to arrive at a fair value
measurement that reflects the price that would be received if an asset was
sold or a liability transferred in an orderly transaction between market
participants at the measurement date.
The following table analyses, within the fair value hierarchy, the Company's
investments measured at fair value at 30 June 2023.
As at June 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed investments 3,171 1,637 - 4,808
Unlisted investments - - 182,620 182,620
3,171 1,637 182,620 187,428
As at June 2022
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed investments 18,609 - - 18,609
Unlisted investments - - 167,474 167,474
18,609 - 167,474 186,083
The Level 1 investments were valued by reference to the closing bid prices of
each portfolio company on the reporting date.
The investment in AST SpaceMobile has been reclassified as a Level 2
investment with regards to the Fair Value hierarchy as at 30 June 2023.
Due to their nature, the unlisted investments are always expected to be
classified as Level 3 as these are not traded and their fair values will
contain unobservable inputs.
Significant unobservable inputs for Level 3 valuations
The fair value of unlisted securities is established with reference to the
IPEV Valuation Guidelines and the Company may base valuations on the
calibrated price of recent investment in the portfolio companies, comparable
milestones or multiples of earnings or revenues where applicable. An
assessment is made at each measurement date as to the most appropriate
valuation methodology.
The valuation methodologies applied involve subjectivity in their significant
unobservable inputs and the table below outlines these inputs. Note 13 below
illustrates the sensitivity that flexing these inputs has on fair value
('FV').
Valuation methodology FV (£'000) Unobservable input
Level 1
Available market price 3,171 n/a
Level 2
Available market price 1,637 n/a
Level 3
Calibrated price of recent investment (<3 months) 44,428 Transaction price and company performance
Calibrated price of recent investment (3-6 months) 13,708 Transaction price and company performance
Calibrated price of recent investment (>6 months) 7,624 Transaction price and company performance
Calibrated price of future investment 21,237 Transaction price and company performance
Premium to price of recent investment 45,463 Premium percentage
Partial write down to price of recent investment 10,476 Write down percentage
Discount to price of recent investment (post-period) 33,474 Uncertainty discount
Milestones and multiples 6,210 Weightings and discount to comparables/multiples
Total 187,428
Details of significant holdings as required by Schedule 4 of The Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulation 2008 are
set out below.
30 June 2023
Name Nature of relationship Country of incorporation Class of shares held % shareholding Capital & reserves (£) Profit/(loss) (£) Year-end of data Notes
Bamboo Systems Group Limited Shareholder UK A Preference 47% (1,355,598) Not publicly available 31-Dec-20 In administration as of
21-Nov-21
PlanetWatchers (UK) Limited Shareholder UK Series Seed 2 Preference 78% 12,106,431 Not publicly available 31-Dec-22
Pre-Series A Preference
Series A Preference 29%
43%
30 June 2022
Name Nature of relationship Country of incorporation Class of shares held % shareholding Capital & reserves (£) Profit/(loss) (£) Year-end of data Notes
Altitude Angel Ltd Shareholder UK A1 Preference 52% 4,272,201 Not publicly available 31-Dec-21
A2 Preference 80%
TransRobotics, Inc. Shareholder US Series A Preferred 67% Not publicly available Not publicly available Not publicly available
Bamboo Systems Group Limited Shareholder UK A Preference 47% (1,355,598) Not publicly available 31-Dec-20 In administration as of
21-Nov-21
PlanetWatchers (UK) Limited Shareholder UK Series Seed 2 Preference 78% 6,082,609 Not publicly available 31-Dec-21
Pre-Series A Preference
29%
9. Trade and Other Receivables
2023 2022
£'000 £'000
Prepayments 78 80
VAT receivable 10 41
88 121
10. Cash and Cash Equivalents
2023 2022
£'000 £'000
Cash and cash equivalent on demand 35,309 57,650
35,309 57,650
11. Trade and Other Payables
2023 2022
£'000 £'000
Accruals 313 228
Trade creditors 115 82
Amounts payable for investments - 4,228
428 4,538
12. Share Capital
Date Issued and fully paid Number of shares issued Share capital Share premium Other reserves Total
£'000 £'000 £'000 £'000
14-May-21 Incorporation - ordinary shares 1 - - - -
10-Jun-21 Redeemable preference shares 50,000 50 - - 50
14-Jul-21 IPO - redeemable preference shares (50,000) (50) - - (50)
1 - - - -
14-Jul-21 IPO - Cash (1) 150,000,000 1,500 148,500 - 150,000
14-Jul-21 IPO - Initial portfolio(2) 28,414,561 284 28,130 - 28,414
Share issue costs - (3,438) - (3,438)
178,414,561 1,784 173,192 - 174,976
10-Sep-21 Subsequent share issue(3) 7,418,890 74 7,345 - 7,419
22-Sep-21 Subsequent share issue(3) 26,296,402 263 26,033 - 26,296
14-Dec-21 Cancellation of share premium (173,176) 173,176 -
20-Dec-21 Subsequent share issue(3) 27,255,074 273 26,983 - 27,256
60,970,366 610 (112,815) 173,176 60,971
30 June 2022 239,384,928 2,394 60,377 173,176 235,947
and 30 June 2023
(1)Cash received by the Company was £147,639k after the direct deduction of
certain share issuance costs of £2,361k. Other share issuance costs of
£1,077k were subsequently paid in cash and total share issuance costs of
£3,438k were deducted from share premium.
(2)Shares issued by way of direct subscriptions in connection with the
Company's acquisition of the Initial Portfolio.
(3)Shares issued by way of direct subscriptions in connection with the
Company's acquisition of the Retained Assets.
On incorporation, the issued share capital of the Company was £0.01
represented by one ordinary share, issued to the subscriber to the Company's
Memorandum of Association. The ordinary share was fully paid up.
To enable the Company to obtain a certificate of entitlement to conduct
business and to borrow under section 761 of the Companies Act 2006, on 10 June
2021, 50,000 redeemable preference shares were allotted to the Investment
Manager. The redeemable preference shares were considered to be paid up as to
one quarter of their nominal value and redeemed immediately following the IPO
out of the IPO proceeds.
The amount standing to the credit of the share premium account of the Company
on completion of the IPO, less issue expenses set off against the share
premium account, was cancelled by a court order dated 14 December 2021 and
credited to the special distributable reserve. This amount shall be capable of
being applied in any manner in which the Company's profits available for
distribution, as determined in accordance with the Companies Act 2006, are
able to be applied.
13. Net Asset Value Per Share
The net asset value per ordinary share at the year / period end were as
follows:
30 June 2023 30 June 2022
Net assets £'000 (per Statement of Financial Position) £222.4m £239.3m
Number of ordinary shares issued 239,384,928 239,384,928
Net asset value per share (pence) 92.90p 99.97p
14. Financial Risk Management
Financial risk management objectives
The Company's investing activities intentionally expose it to a variety of
financial risks. The Company makes investments in order to generate returns,
in accordance with its investment policy and objectives.
The most important types of financial risks to which the Company is exposed
are market risk (including price, interest rate and foreign currency risk),
liquidity risk and credit risk. The Board has overall responsibility for the
determination of the Company's risk management and sets policies to manage
financial risks at an acceptable level to achieve the Company's objectives.
The policy and process for measuring and mitigating each of the main risks are
described below. The Investment Manager and the Administrator provide advice
to the Board which allows it to monitor and manage financial risks relating to
its operations through internal risk reports which analyse exposures by degree
and magnitude of risks. The Investment Manager and the Administrator report to
the Board on a quarterly basis.
Categories of financial instrument
For financial assets and liabilities carried at amortised cost, the Directors
are of the opinion that their carrying value approximates to their fair value.
Financial assets/liabilities are as follows:
2023 2022
£'000 £'000
Financial assets
Investments held at fair value through profit or loss: 187,428 186,083
Investments
Other Financial Assets:
Cash and cash equivalents 35,309 57,650
Trade and other receivables 88 121
Financial liabilities
Current liabilities
Trade and other payables 428 4,538
Capital risk management
The Company manages its capital to ensure that it will be able to continue as
a going concern while maximising the capital return to shareholders. The
capital structure of the Company consists of issued share capital, share
premium, retained earnings and other reserves, as stated in the Statement of
Financial Position.
In order to maintain or adjust the capital structure, the Company may buy back
shares or issue new shares. There are no external capital requirements imposed
on the Company.
During the year ended 30 June 2023, the Company had no borrowings (2022:
£NIL).
The Company's investment policy is set out in the Strategic Report.
Market risk
Market risk includes price risk (impact of the general market on the price of
any listed holdings or the uncertainty associated with the price of unlisted
holdings), foreign currency risk and interest rate risk.
a) Price risk
The investments held by the Company present a potential risk of loss of
capital to the Company. Price risk arises from uncertainty about future prices
of the underlying financial investments held by the Company. See note 8 for
quantitative information about the fair value measurement of the Company's
Level 3 investments.
The table below outlines that the valuation methodologies employed involve
subjectivity in their significant unobservable inputs and illustrates
sensitivity of the valuations to these inputs. The inputs have been flexed by
the percentages outlined.
As at June 2023
Valuation methodology FV (£'000) Key unobservable input Other unobservable inputs Range Reasonable possible shift in input Change in FV (£'000)
(+) (-) (+) (-)
Level 1
Available market price 3,171 n/a n/a n/a 5% -5% 159 (159)
Level 2
Available market price 1,637 n/a n/a n/a 5% -5% 82 (82)
Level 3
Calibrated price of recent investment (<3 months) 44,428 Transaction price(1) and company performance (2, 3, 4, 5, 9) n/a 5% -5% 2,221 (2,221)
Calibrated price of recent investment (3-6 months) 13,708 Transaction price(1) and company performance (2, 3, 4, 5, 9) n/a 10% -10% 1,371 (1,371)
Calibrated price of recent investment (>6 months) 7,624 Transaction price(1) and company performance (2, 3, 4, 5, 9) n/a 20% -20% 1,525 (1,525)
Calibrated price of future investment 21,237 Transaction price(1) and company performance (2, 3, 4, 5, 9) n/a 5% -5% 1,062 (1,062)
Premium to price of recent investment 45,463 Premium percentage (6) 5% -15% 2,273 (6,818)
Partial write down to price of recent investment 10,476 Write down percentage (7) 25% - 50% 25% -25% 2,619 (2,619)
Discount to price of recent investment (post-period) 459 Uncertainty discount (8) 15% 20% -5% 92 (23)
Discount to price of recent investment (post-period) 33,015 Uncertainty discount (8) 5% 10% -5% 3,302 (1,651)
Milestones and multiples 6,210 Weightings(9) and discount to comparables / multiples (3, 4, 5) n/a 10% -10% 621 (621)
Total 187,428 15,327 (18,152)
Notes:
(1) While transaction price is observable, where it is deemed to be the
appropriate valuation methodology, it is also calibrated against other
methodologies as outlined in the table above.
(2) Benchmark performance against relevant indices - the selection of
appropriate benchmarks is assessed for each investment, taking into account
its industry, geography, products and customers.
(3) EV/revenue multiple of comparable companies or M&A transactions - the
selection of comparable companies or M&A/secondary transactions is
assessed for each investment, taking into account its industry, geography,
level of revenue and growth profile.
(4) Milestone comparison with private company comparables - the selection of
milestone to be compared to EV is assessed for each investment based on its
industry and includes milestones such as number of satellites/missions/radars,
headcount and funding raised.
(5) Growth in company metrics - the selection of metric is assessed for each
investment based on its industry, level of revenue and growth profile and
includes metrics such as satellites/missions/radars, headcount, revenue and
bookings.
(6) The premium percentage applied for strong performance is typically in 10%
increments - the level of premium to be applied is assessed for each
investment based on its level of performance, cash runway and ability to
deliver revenue growth.
(7) The write down percentage applied for underperformance is typically in 25%
increments - the level of write down to be applied is assessed for each
investment based on its level of underperformance, cash runway and ability to
show improvement.
(8) The uncertainty discount applied where terms for a new funding round have
been agreed, but the round has not yet closed, can vary from 0-100% - the
level of discount applied is assessed for each investment based on the level
of certainty.
(9) Where multiple methods of calibration or valuation are used, weightings of
5-40% are applied to these methods to total 100% - the level of weighting
applied to each method is assessed for each investment based on the relevance
of such method and to offset the impact of any outliers.
As at June 2022
Valuation methodology FV (£'000) Unobservable input Reasonable possible shift in input Change in FV (£'000)
(+) (-) (+) (-)
Level 1
Available market price 18,609 n/a 5% -5% 930 (930)
Level 3
Calibrated price of recent investment (<3 months) 5,197 Transaction price 5% -5% 260 (260)
Calibrated price of recent investment (3-6 months) 56,102 Transaction price 10% -10% 5,610 (5,610)
Calibrated price of recent investment (>6 months) 65,452 Transaction price 20% -20% 13,090 (13,090)
Partial write down to price of recent investment 10,191 Write down percentage 25% -25% 2,548 (2,548)
Discount to price of recent investment (post-period) 8,830 Uncertainty discount 20% -5% 1,766 (441)
Milestone multiples 21,703 Weightings and discount to comparables 10% -10% 2,170 (2,170)
Total 186,084 25,185 (23,860)
Variable input shifts are explained as follows:
· Investments valued using Level 1 methodologies or the calibrated
price of recent transactions which completed in the three months to the
period-end are flexed up and down by 5% as the Board believe these do not
involve significant subjectivity.
· Investments valued using the calibrated price of recent
transactions which completed more than three months but less than six months
before the period-end are flexed up and down by 10% as the subjectivity is
thought to be greater than the above, but still not very material.
· Investments valued using the calibrated price of recent
transactions which completed more than six months before the period-end are
flexed up and down by 20% as there is a greater chance that market movements
would impact the price of private transactions.
· Partial write downs used in the period were 25% and therefore,
the inputs are flexed up and down by this amount to account for a similar
level of improvement or deterioration in the portfolio companies' performance.
· Premiums of 10% were applied where the recalibration exercise
suggested an increase to enterprise value was warranted due to strong
performance. In an upside scenario, this input is flexed up by 5% and accounts
for a 5% flex up in relation to the underlying price which the Board does not
believe involves significant subjectivity. In the downside scenario, the input
is flexed down by 15% to remove the applied premium and accounts for a 5%
reduction in relation to the underlying price.
· Uncertainty discounts of 5% were applied where a funding round
was completed shortly after the end of the period. In an upside scenario, this
input is flexed up by 10% to remove the applied uncertainty discount and
accounts for a 5% flex up in relation to the underlying price which the Board
does not believe involves significant subjectivity. In the downside scenario,
the input is flexed down by 5% in relation to the underlying price (similar to
the flex used for investments valued using the calibrated price of recent
investment which completed in the three months prior to the period-end).
· Uncertainty discounts of 15% were applied where a funding round
was completed after the end of the period. In an upside scenario, this input
is flexed up by 20% to remove the applied uncertainty discount and accounts
for a 5% flex up in relation to the underlying price which the Board does not
believe involves significant subjectivity. In the downside scenario, the input
is flexed down by 5% in relation to the underlying price (similar to the flex
used for investments valued using the calibrated price of recent investment
which completed in the three months prior to the period-end).
· Investments valued using milestone multiples relative to
comparable companies or M&A transactions, with the discount factor flexed
up and down by 10%. A 10% flex is considered reasonable as a result of
judgement in relation to the comparable multiples.
Market risk
The Company is exposed to a variety of risks which may have an impact on the
carrying value of the Company's investments.
i) Not actively traded
The majority of the Company's investments are not generally traded in an
active market but are indirectly exposed to market price risk arising from
uncertainties about future values of the investments held. The Company's
investments vary as to the industry sub-sector, geographic distribution of
operations and size, all of which may impact the susceptibility of their
valuation to uncertainty.
Although the investments are in the same industry, the risk is managed through
careful selection of investments within the specified limits of the investment
policy. The investments are monitored on an ongoing basis by the Investment
Manager.
ii) Concentration
The Company invests principally in early and growth-stage unquoted SpaceTech
businesses. This means that the Company is exposed to the concentration risk
of only making investments in the SpaceTech sector, of which concentration
risk may further relate to sub-sector, geography, relative size of an
investment or other factors.
The Board and the Investment Manager monitor the concentration of the
investment portfolio on a quarterly and ongoing basis respectively to ensure
compliance with the investment policy.
iii) Liquidity
The Company maintains flexibility in funding by keeping sufficient liquidity
in cash, short term deposits and other cash equivalents, which may be invested
on a temporary basis in line with the cash management policy as agreed by the
Board from time to time.
As at 30 June 2023, £35.3m, or 15.9% of Company's financial assets, were
money market fixed deposits and cash balances held on deposit with banks with
high credit ratings (2022: £57.7m, or 24.1%).
b) Foreign currency risk
The Company has exposure to foreign currency risk due to the acquisition of
some investments and payment of some expenses in currencies other than
Sterling. Consequently, the Company is exposed to risks that the exchange rate
of its functional currency relative to other foreign currencies may change in
a manner that has an adverse effect on the value of that portion of the
Company's assets or liabilities denominated in currencies other than Sterling.
The following table shows the FX rates as of 30 June 2023 compared to 30 June
2022.
30 June 2023 30 June 2022 % change
GBP/USD 1.271 1.215 4.7%
GBP/EUR 1.165 1.162 0.3%
GBP/DKK 8.675 8.641 0.4%
GBP/AUD 1.910 1.766 8.2%
The following table sets out, in Sterling, the Company's total exposure to
foreign currency risk and the net exposure to foreign currencies of the
monetary assets and liabilities.
As at 30 June 2023 £ USD $ € DKK AUD $ Total
£'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Investment at fair value through profit or loss 25,477 135,871 22,101 3,876 103 187,428
Total non-current assets 25,477 135,871 22,101 3,876 103 187,428
Current assets
Trade and other receivables 88 - - - 88
Cash and cash equivalents 32,437 2,872 - - - 35,309
Total current assets 32,525 2,872 - - - 35,397
Current liabilities
Trade and other payables (428) - - - - (428)
Total current liabilities (428) - - - - (428)
Total net assets 57,574 138,743 22,101 3,876 103 222,397
If the US Dollar weakened/strengthened by 5% (2022: 5%) against Sterling with
all other variables held constant, the fair value of net assets would
increase/decrease by £6,794k (2022: £7,603k).
If the Euro weakened/strengthened by 5% (2022: 5%) against Sterling with all
other variables held constant, the fair value of net assets would
increase/decrease by £1,105k (2022: £647k).
If the Danish Krone weakened/strengthened by 5% (2022: 5%) against Sterling
with all other variables held constant, the fair value of net assets would
increase/decrease by £194k (2022: £53k).
If the Australian Dollar weakened/strengthened by 5% (2022: 5%) against
Sterling with all other variables held constant, the fair value of net assets
would increase/decrease by £5k (2022: £nil).
As at 30 June 2022 £ $ € DKK Total
£'000 £'000 £'000 £'000 £'000
Non-current assets
Investments at fair value through profit or loss 20,018 152,067 12,942 1,056 186,083
Total non-current assets 20,018 152,067 12,942 1,056 186,083
Current assets
Trade and other receivables 121 - - - 121
Cash and cash equivalents 57,650 - - - 57,650
Total current assets 57,771 - - - 57,771
-
Current liabilities
Trade and other payables (4,538) - - - (4,538)
Total current liabilities (4,538) - - - (4,538)
Total net assets 73,251 152,067 12,942 1,056 239,316
c) Interest rate risk
The Company's exposure to interest rate risk relates to the Company's cash and
cash equivalents. The Company is subject to risk due to fluctuations in the
prevailing levels of market interest rates. Any excess cash and cash
equivalents are invested at short-term market interest rates. As at the date
of the Statement of Financial Position, the majority of the Company's cash and
cash equivalents were held in interest bearing fixed deposit accounts.
The Company had no other Interest-bearing assets or liabilities as at the
reporting date. As a consequence, the Company was only exposed to variable
market interest rate risk. As at 30 June 2023, the cash balance held by the
Company was £35.3m (2022: £57.7m). A 0.5% increase/(decrease) in interest
rates with all other variables held constant would result in a change to
interest received of +/- £176k per annum (2022: 0.5% increase/(decrease)
resulting in a change of +/- £288k).
Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet a demand
for cash or fund an obligation when due. The Investment Manager and the Board
monitor forecast and actual cash flows to consider future investing
activities.
The Company adopts a prudent approach to liquidity management and through the
preparation of budgets and cash flow forecasts maintains sufficient cash
reserves to meet its obligations.
Credit risk
Credit risk refers to the risk that a counterparty to a financial instrument
will default on a contractual obligation or commitment that it has entered
into with the Company, resulting in financial loss to the Company. It arises
principally from investments in money market funds held and also from
derivative financial assets, cash and cash equivalents and other receivables
balances.
The Company's policy for credit risk is to minimise its exposure to
counterparties with perceived higher risk of default by only dealing with
counterparties that meet certain credit standards.
Credit risk is monitored on an ongoing basis by the Investment Manager in
accordance with the procedures and policies in place.
The table below shows the material cash and short-term deposit balances and
credit rating for the counterparties used by the Company at the year-end date.
Counterparty Location Rating 2023 2022
S&P £'000 £'000
Barclays UK A+ 25,038 47,640
JPMorgan Asset Management UK A- 10,271 10,010
The Company's maximum exposure to credit risk default at the period-end is
shown below:
2023 2022
£'000 £'000
Investments held at fair value through profit or loss 184,788 186,084
Other financial assets
Cash and cash equivalents 35,309 58,650
Trade and other receivables (less prepayments) 10 41
15. Related Party and Investment Manager Transactions
Directors
As at 30 June 2023, the Company had four non-executive Directors. Directors'
fees for the year ended 30 June 2023 amounted to £200k (2022: £170k), of
which £NIL was outstanding at the year-end (2022: £NIL).
Investment Manager
Seraphim Space Manager LLP has been appointed as the Company's exclusive
Investment Manager and AIFM and is responsible for the day-to-day operation
and management of the Company's investment portfolio, subject at all times to
the overall supervision of the Board.
For the provision of services under the Investment Management Agreement, the
Investment Manager earns a management fee and performance fee, as disclosed in
note 4. Further details of the Investment Management Agreement are included
under 'Investment Manager' in the Corporate Governance Report above.
16. Ultimate Controlling Party
In the opinion of the Board, on the basis of the shareholdings advised to it,
the Company has no ultimate controlling party.
17. Subsequent Events
Please refer to Post Year End Developments in the Investment Manager's Report
above for details of subsequent events in the normal course of business. There
are no other significant subsequent events.
On 13 July 2023, the Company announced a share repurchase programme to
repurchase ordinary shares of £0.01 in the Company. At the date of signing of
these accounts, the Company holds 2,186,344 of its ordinary shares in
treasury, all of which were acquired pursuant to the share repurchase
programme, and has 237,198,584 ordinary shares in issue (excluding treasury
shares).
Alternative Performance Measures
We assess the Company's performance using a variety of measures, some of which
are not specifically defined under UK-adopted International Accounting
Standards and are therefore termed 'APMs'. Our APMs, which are shown below,
are reconciled, where appropriate, to the financial statements through the
narrative below. The Board believes that each of the APMs, which are typically
used within the listed investment company sector, (with the exception of
portfolio fair value vs. cost), provide additional useful information to
shareholders to help assess the Company's performance.
Share Price Movement
Share price movement in the year/period, expressed as a percentage of the
opening share price.
30 June 2023 vs. 30 June 2022
Share price on 30 June 2022 a 53.0p
Share price on 30 June 2023 b 27.0p
Movement (b-a)/a -49.1%
30 June 2022 vs. 14 July 2021
Share price on 14 July 2021 a 100.0p
Share price on 30 June 2022 b 53.0p
Movement (b-a)/a -47.0%
NAV per Share Movement
Net asset value per share movement in the year/period, expressed as a
percentage of the opening NAV per share.
30 June 2023 vs. 30 June 2022
NAV per share on 30 June 2022 a 99.97p
NAV per share on 30 June 2023 b 92.90p
Movement (b-a)/a -7.1%
30 June 2022 vs. 14 July 2021
NAV per share on 14 July 2021 a 98.15p
NAV per share on 30 June 2022 b 99.97p
Movement (b-a)/a 1.9%
-Discount/+Premium
The amount by which the market price per share of a listed investment company
is either lower (discount) or higher (premium) than the NAV per share,
expressed as a percentage of the NAV per share.
30 June 2023 30 June 2022
NAV per share (note 12 to the financial statements) a 92.90p 99.97p
Share price b 27.0p 53.0p
-Discount/+premium (b-a)/a -70.9% -47.0%
Ongoing Charges
Operating costs incurred in the year/period, charged to Revenue or Capital in
the Statement of Comprehensive Income, calculated as a percentage of the
average published NAV in respect of the year/period. Operating costs exclude,
for this purpose, the costs of acquiring and disposing of investments, any
finance costs, taxation and any costs not expected to recur in the foreseeable
future. The calculation is performed in accordance with the guidelines
issued by the AIC.
30 June 2023 30 June 2022
£'000 £'000
Investment management fee (note 4 to the financial statements) 2,912 2,744
Other operating expenses (note 5 to the financial statements) 1,851 1,626
Less non-recurring operating expenses (442) (251)
Ongoing charges a 4,321 4,119
Average quarterly NAV b 228,604 240,014
Ongoing charges ratio a/b 1.89% 1.72%
The ongoing charges calculated above are different from the ongoing costs
provided in the Company's Key Information Document ('KID'), which are
calculated in line with the Packaged Retail and Insurance-based Investment
Products Regulation. The ongoing costs in the KID include investment
transaction costs.
Portfolio Fair Value vs. Cost
The amount by which the fair value of the assets in the portfolio at the end
of the year/period has changed in relation to the aggregate cost of the assets
(adjusted for any disposals), expressed as a percentage of the aggregate cost.
2023 2022
Portfolio fair value (note 8 to the financial statements) a 187.4 186.1
Aggregate cost of the assets (adjusted for any disposals) b 190.2 178.4
Portfolio fair value vs. cost a/b 98.5% 104.3%
Glossary
Administrator or Company Secretary: Ocorian Administration (UK) Limited.
AGM: Annual general meeting.
AI: artificial intelligence.
AIC: The Association of Investment Companies, the trade body for listed
closed-ended investment companies.
AIC SORP: The Statement of Recommended Practice for the Financial Statements
of Investment Trust Companies and Venture Capital Trusts, issued by the AIC as
amended from time to time.
Amazon AWS Space Accelerator: the accelerator programme run by an affiliate of
the Investment Manager in 2021 on behalf of Amazon Web Services.
API: Application Programming Interface.
Auditor: BDO LLP.
Average quarterly NAV : Calculated as the mean NAV at each of the four quarter
end periods throughout the year.
Board: the Board of Directors of the Company.
Bookings: contracted future revenues.
CAGR: Compound Annual Growth Rate, defined as the rate of return that would be
required for an investment to grow from its beginning balance to its ending
balance, assuming the profits were reinvested at the end of each period of the
investment's life span.
CisLunar: Lying between the earth and the moon or the moon's orbit.
Company or SSIT: Seraphim Space Investment Trust PLC.
CY: Calendar year, a one-year period that begins on 1 January and ends on 31
December.
Directors: the Directors of the Company.
Discount: the share price of a listed investment company is rarely the same as
its NAV. When the share price is lower than the NAV per share it is said to be
trading at a discount. The discount is the difference between the share
price and the NAV, expressed as a percentage of the NAV.
ESG: environmental, social and governance.
EV: enterprise value.
Fair value-weighted average growth: average growth rates for multiple
portfolio companies, weighted by each portfolio company's relative fair value.
FCA: Financial Conduct Authority.
FV: fair value.
FX: foreign exchange.
GEO: geosynchronous equatorial orbit (35,786km from earth) with a 24-hour
period.
GP: general partner.
GPS: global positioning system.
Gross Asset Value: the value of the gross assets of the Company, determined in
accordance with its accounting policies.
HEO: high earth orbit, being any orbit beyond 35,786km from earth.
IAS: International Accounting Standard.
IFRS: the International Financial Reporting Standards, being the
principles-based accounting standards, interpretations and the framework by
that name issued by the International Accounting Standards Board, to the
extent they have been adopted by the UK.
IoT: the interconnection via the internet of computing devices embedded in
everyday objects, enabling them to send and receive data.
Initial Portfolio: the portfolio of investments acquired from the LP Fund by
the Company on completion of its IPO, details of which are set out in the IPO
prospectus, which is available on the Company's website
(https://investors.seraphim.vc/ (https://investors.seraphim.vc/) ).
Investment Management Agreement: the Investment Management Agreement entered
into between the Investment Manager and the Company, details of which are
included under 'Investment Manager' in the Corporate Governance Report.
Investment Manager or Seraphim Space: Seraphim Space Manager LLP.
IPEV: the International Private Equity and Venture Capital Association
IPO: initial public offering, being an offering by a company of its share
capital to the public with a view to seeking an admission of its shares to a
recognised stock exchange.
LEO: low earth orbit, being an orbit that is relatively close to the earth's
surface, extending from 160km to 2,000km above earth.
London Stock Exchange: London Stock Exchange PLC.
LP Fund: Seraphim Space LP.
M&A: mergers and acquisitions.
MEO: medium earth orbit, extending from 2,000km to below 35,786km. All orbits
above LEO and below GEO are said to be in medium earth orbit.
NASDAQ: National Association of Securities Dealers Automated Quotations.
NAV or net asset value: the value of the assets of the Company less its
liabilities as calculated in accordance with its accounting policies (or, in
the context of an ordinary share, the NAV of the Company divided by the number
of ordinary shares in issue (but excluding any treasury shares)).
New Space: the emerging commercial Space industry.
Period: the Company's accounting period to which this annual report relates,
being the period commencing on 1 July 2022 and ending on 30 June 2023.
Premium: a premium occurs when the share price of a listed investment company
is higher than the NAV. The premium is the difference between the share
price and the NAV, expressed as a percentage of the NAV.
Retained Assets: the investments acquired from the LP Fund by the Company
subsequent to its IPO, details of which are set out in the IPO prospectus,
which is available on the Company's website (https://investors.seraphim.vc/
(https://investors.seraphim.vc/) ).
RF: radio frequency, which involves using electromagnetic radiation for
transferring information between two circuits that have no direct electrical
connection.
Seraphim Space Accelerator: accelerator programme for early stage SpaceTech
companies run by an affiliate of the Investment Manager.
Smallsat: small spacecraft with a mass less than 180kg and about the size of a
large kitchen fridge.
SPAC: special purpose acquisition company.
Space Prime: multi-capability space prime contractor offering a wide range of
services to government customers.
SpaceTech: in the context of a business, an organisation which relies on
space-based connectivity and/or precision, navigation and timing signals or
whose technology or services are already addressing, originally derived from
or of potential benefit to the space sector.
Total return: The total return on an investment comprises both changes in the
NAV per share or share price and dividends paid to shareholders and is
calculated on the basis that all historic dividends have been reinvested in
the NAV or shares on the date the shares become ex-dividend.
Treasury shares: the Company has the authority to make market purchases of its
ordinary shares for retention as treasury shares for future reissue, resale,
transfer or cancellation. Treasury shares do not receive distributions and the
Company is not entitled to exercise the voting rights attaching to them.
TTM: Trailing 12 months, being the past 12 consecutive months of the company's
performance.
VC: Venture Capital.
VHF: very high frequency, denoting radio waves of a frequency of c.30-300 MHz
and a wavelength of c.1-10 metres.
Corporate Information
Registered Office
5th Floor
20 Fenchurch Street
London
EC3M 3BY
Board of Directors
Will Whitehorn (Chair)
Sue Inglis (Senior Independent Director)
Christina McComb
Angela Lane
Investment Manager
Seraphim Space Manager LLP
2nd Floor One Fleet Place
London
EC4M 7WS
Administrator and Company Secretary
Ocorian Administration (UK) Limited
5th Floor
20 Fenchurch Street
London
EC3M 3BY
Corporate Brokers
Deutsche Numis
45 Gresham Street
London
EC2V 7AF
J.P. Morgan Securities PLC
25 Bank Street
Canary Wharf
London
E14 5JP
Legal Adviser
Stephenson Harwood LLP
1 Finsbury Circus London
EC2M 7SH
Depositary
Ocorian Depositary (UK) Limited
5th Floor 20 Fenchurch Street
London
EC3M 3BY
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Independent Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Custodian
Liberum Wealth
1st Floor Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey
GY1 3JX
Public Relations and Communications Adviser
SEC Newgate
14 Greville Street
London
EC1N 8SB
Identifiers
Website: https://investors.seraphim.vc/ (https://investors.seraphim.vc/)
ISIN: GB00BKPG0138
Ticker: SSIT
SEDOL: BKPG013
GIIN: GXNBCF.99999.SL.826
Registered Company Number: 13395698
Legal Entity Identifier: 2138002THGUZBGZC2V85
Cautionary Statement
The Annual Report may include statements that are, or may be deemed to be,
'forward-looking statements'. These forward-looking statements are sometimes,
but not always, identified by the use of forward-looking terminology,
including the terms 'believes', 'estimates', 'anticipates', 'expects',
'intends', 'may', 'will' or 'should' or, in each case, their negative or other
variations or comparable terminology.
These forward-looking statements include all matters that are not historical
facts. They appear in a number of places throughout this Annual Report and
include statements regarding the intentions, beliefs or current expectations
of the Directors or Investment Manager concerning, amongst other things, the
investment objective and investment policy, investment performance, results of
operations, financial condition, liquidity, financing strategies and prospects
of the Company and the markets in which it invests.
By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not
occur in the future. Forward-looking statements are not guarantees of future
performance.
The Company's actual investment performance, results of operations, financial
condition, liquidity, financing strategies and prospects may differ materially
from the impression created by the forward-looking statements contained in
this Annual Report.
Subject to their legal and regulatory obligations, the Directors and the
Investment Manager expressly disclaim any obligations to update or revise any
forward-looking statement contained in this Annual Report to reflect any
change in expectations with regard thereto or any change in events, conditions
or circumstances on which any statement is based.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR KZMMGGVMGFZZRecent news on Seraphim Space Investment Trust
See all newsREG - Seraphim Space I.T. - Notice of Results
AnnouncementRCS - Seraphim Space I.T. - White Paper by Seraphim Space Manager LLP
AnnouncementRCS - Seraphim Space I.T. - SpaceTech Sector Newsletter – March 2025
AnnouncementREG - Seraphim Space I.T. - Interim Results
AnnouncementRCS - Seraphim Space I.T. - SpaceTech Sector Newsletter – February 2025
Announcement