Aurora UK Alpha plc
(formerly Aurora Investment Trust plc)
Annual Report 31 December 2024
Company No. 03300814
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Annual Report Contents 1
Contents
Strategic
Report
Financial and Performance Highlights 3
Chair’s Statement 4
Investment Policy and Results 7
Top Holdings 11
Portfolio Analysis 12
Statement from the CIO of the Investment Manager 13
Investment Manager’s Report 14
Phoenix UK Fund Track Record 18
Report under Section 172 of the Companies Act 2006 20
Other Strategic Report Information 24
Governance
Directors, Investment Manager and Advisers 29
Directors’ Report 32
Corporate Governance Statement 39
Directors’ Remuneration Report 47
Statement of Directors’ Responsibilities 52
Audit Committee Report 54
Independent Auditor’s Report 57
Financial Statements
Income Statement 69
Statement of Financial Position 70
Statement of Changes in Equity 71
Cash Flow Statement 73
Notes to the Financial Statements 74
Alternative Performance Measures 93
Glossary 95
Notice of Meeting 98
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2 Annual Report Strategic Report
Strategic Report
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Annual Report Strategic Report 3
Strategic Report
Investment Objective
To provide shareholders with long-term
total returns by investing predominantly in
aportfolio of UK listed companies.
Policy
Phoenix Asset Management Partners
Limited (“Phoenix”) was appointed as
Investment Manager on 28 January 2016.
Phoenix seeks to achieve the Company’s
Objective by investing, primarily, in a
portfolio of UK listed equities.
The portfolio will remain relatively
concentrated. The exact number of
individual holdings will vary over time but
typically the portfolio will include core
holdings in 15to20 companies.
The Investment Policy of the Company
can be found on page 7.
Benchmark
Performance is benchmarked against the
FTSE All-Share Index (total return),
representing the overall UK market.
Dividend
The Board declared an interim dividend of
3.0p per share, which was paid on
6December 2024. No interim dividend
was paid in 2023 and the Board does not
propose to recommend payment of a final
dividend for 2024 (2023: final dividend
3.45p).
Annual General Meeting (“AGM”)
The AGM of the Company will be held at 25
Southampton Buildings, London WC2A1AL
on 11June 2025 at 1p.m. There will be no
Investment Manager presentation at the
AGM. Instead, there will be a separate
Investment Manager presentation and Q&A
event at 3.30p.m. on 15 October 2025 at
the Chartered Accountants Hall,
1Moorgate Place, London EC2R 6EA.
Financial and
Performance
Highlights
The chart above shows the Company’s NAV performance (total return) compared to the FTSE All-Share Index
(total return) since Phoenix became the Investment Manager.
Performance
Aurora Net asset value (“NAV”) per Ordinary Share
FTSE All-Share Index
80
100
120
140
160
180
200
220
Dec-2024Jan-2024Jan-2023Jan-2022Jan-2021Jan-2020Jan-2019Jan-2018Jan-2017Jan-2016
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4 Annual Report Strategic Report continued
I am pleased to present the Aurora UK Alpha plc annual report for the year ended
31December 2024, and extend a welcome to shareholders that joined the Company
from Artemis Alpha Trust plc.
Performance
After a strong year in 2023, performance for the year to 31 December 2024 was
disappointing, with a Net Asset Value (“NAV”) per share total return* of –4.3%
(2023:+36.3%). With a concentrated portfolio and a focus on identifying out of favour
names, performance can go through difficult times, and unfortunately that has been the
case recently. The share price total return* was –5.5% (2023: +28.5%) compared to the
Company’s benchmark FTSEAll-Share Index total return of +9.5% (2023: +7.9%).
Top positive contributors in the year were Castelnau Group, Netflix and Lloyds Banking
Group. Frasers Group and Barratt Redrow were the most significant detractors.
For further details on the portfolio and performance, see the Investment Manager’s
Report on pages 14 to 17.
Combination
The Company’s most notable event in the year was the successful combination with
Artemis Alpha Trust plc (“ATS”). The project was concluded on 29 November 2024,
whenthe Company acquired approximately £101 million of net assets from ATS in
consideration for the issue to ATS shareholders of 38,369,114 new shares in the
Company. The enlarged Company continues to be managed by Phoenix Asset
Management Partners Limited (“Phoenix”) using the same deeply researched,
concentrated, value-based approach as before. The scale of the enlarged Company is
expected to improve secondary market liquidity of the shares and reduce the ongoing
charges, since fixed costs are spread over a larger asset base. The Board is grateful to
our shareholders and advisers, in particular Phoenix, for supporting the project. The
Company, newly renamed Aurora UK Alpha plc, has a clearly differentiated proposition
and this transaction leaves the Company in a strong position to further build its
shareholder base and scale.
Investment Policy and Portfolio Management
During the year the Company’s investment objective and policy were amended on two
occasions. Neither were deemed material, and consequently FCA and shareholder
approval were not sought. However, for good order we are seeking shareholder approval
of the updated investment objective and policy at this year’s AGM.
The first change, announced in June, saw the Board update the investment objective,
replacing “long-term returns through capital and income growth” with “long-term total
returns”. Whilst largely synonymous, the Board considered the new wording more
accurate given the Company has no income target. The Board will continue to distribute
substantially all of the net revenue arising from the investment portfolio each year.
The second change related to the number of portfolio holdings. During the year, a new
portfolio manager joined the team, Kartik Kumar, who previously managed Artemis
Alpha Trust plc. Kartik, along with twoanalysts at Phoenix were each allocated a small
amount of capital to manage. These sub-portfolios, while managed separately, will
follow Phoenix’s investment approach, and within a close-knit team. The investment
Chair’s
Statement
Lucy Walker
Chair
7 April 2025
*Alternative Performance Measure (see page 93).
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Annual Report Strategic Report continued 5
Strategic Report
Chair’s
Statement
Continued
policy previously referenced holdings in 15 to 20 companies, so this was updated to
“core holdings” to reflect that the aggregate number of holdings may exceed this. The
portfolio will remain concentrated, and as at 31 December 2024 the top 5 stocks
amounted to 61% and the top 20 stocks amounted to 89% by value of gross assets.
The Investment Manager and Performance Fees
Phoenix has managed the Company’s portfolio since January 2016, making 2024 the
ninth year, and throughout that time the team has employed a focused and patient
investment approach.
Phoenix earns no ongoing annual management fee, and instead is paid an annual
performance fee, equal to one third of any outperformance of the Company’s NAV
against its benchmark, the FTSE All Share Index (total return).
The performance fee is paid by issuance of the Company’s ordinary shares, which are
subject to a fixed three-year clawback period. This means issued shares will be returned
by the Investment Manager in the event that outperformance versus the index reverses
on the third-year anniversary. If outperformance fully reverses, the Investment Manager
receives nothing.
The clawback period in relation to the performance fee for the year to 31 December
2021 ended on 31 December 2024 and this resulted in an entitlement for the Company
to claw back 89,096 shares from Phoenix. These shares were duly delivered to the
Company and cancelled in January.
Continuation
The Company’s articles provide that shareholders shall have the opportunity to vote on
the Company’s continuation every three years. The last such opportunity was at the
AGM in 2022 and, accordingly, the next occasion will be at the AGM on 11 June 2025.
Consequently, a resolution for continuation of the Company as an investment trust is
included in the notice of the meeting. The Board strongly recommends that
shareholders vote in favour of the Company’s continuation.
Share Price Discount
The Board closely monitors the discount at which the Company’s shares trade to NAV.
During 2024 the discount widened from 10.0% at the end of 2023 to 11.4% at the end of
2024.
While discounts across the investment trust sector remained wide, averaging 14.7%
over the period, closing the discount remains a key objective of the Board.
Marketing activities are a key part of achieving this, and Phoenix along with the
Company’s new broker, Deutsche Numis, and Frostrow Capital as investor relations and
marketing adviser continue to promote the Company proactively. Since the year end, the
Board announced the Company may buy back some shares, demonstrating the value in
the underlying portfolio and the Company’s shares.
The Board is seeking to renew the power granted to it by shareholders to buy back
shares at the forthcoming annual general meeting. The Board will also seek to renew its
powers to issue new shares in order to be able to issue shares to investors should the
shares return to a premium, as well as to enable the issue of shares to the Investment
Manager in respect of performance fees earned.
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6 Annual Report Strategic Report continued
Annual General Meeting (“AGM”) and separate Investment Manager
presentation event
Following on from the last two years, this year’s AGM will not include an Investment
Manager presentation. The AGM will be held at the Company’s registered office,
25Southampton Buildings, London WC2A 1AL, on 11 June 2025 at 1 p.m. to consider
the business set out in the Notice of Meeting on pages 98 and 99.
A separate investor event will be held at 3.30 p.m. on 15 October 2025 at the Chartered
Accountants Hall, 1 Moorgate Place, London EC2R 6EA. This event has been well
attended in previous years and is intended to be of interest to both existing and
prospective Aurora shareholders. It will include multiple speakers from the Investment
Manager and is intended to be recorded and made available afterwards on the
Company’s website.
With respect to the AGM, the Board strongly encourages shareholders to register their
votes online in advance of the meeting by visiting
https://uk.investorcentre.mpms.mufg.com/login and following the instructions on the
site. Appointing a proxy online will not restrict shareholders from attending the meeting
in person should they wish to do so and will ensure their votes are counted if they are
not able to attend. Shareholders are invited to send any questions they may have to the
Company Secretary by email to info@frostrow.com ahead of the meeting.
Dividend
The Board declared an interim dividend of 3.0p per share in advance of the ATS
combination, which was paid on 6 December 2024. An interim dividend was not paid in
2023 and the Board does not propose to recommend payment of a final dividend for
2024 (2023: final dividend 3.45p). The Board’s previously published intention to
distribute substantially all of the Company’s net revenue proceeds remains unchanged.
Your Board
David Stevenson, having reached nine years of tenure, plans to retire from the Board in
December 2025. The Board will instigate a recruitment process for another Director
shortly.
Outlook
At the time of writing, the US market, long seen as the default outperformer, is under
pressure, and many global uncertainties remain. But uncertainty can be fertile ground
for long-term investors. What we can be certain of is the consistency of our Investment
Manager’s approach, to seek out exceptional companies at the moments when others
won’t. It’s a discipline that can test patience, and 2024 was no exception – a year when
many of those out-of-favour companies remained that way. We don’t welcome volatility,
but we do recognise its role as it often precedes outsized future returns. History tells us
that the most compelling long-term performance is built in precisely these periods. The
Investment Manager’s commentary on pages 13 to 17 sets out in more detail reasons
for confidence, not just in the resilience of the companies in the portfolio, but in their
potential to thrive from here.
Lucy Walker
Chair
7 April 2025
Chair’s
Statement
Continued
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Strategic Report
The Company seeks to achieve its investment objective (see page 3) by investing
predominantly in aportfolio of UK listed companies. The Company may from time to
time also invest in companies listed outside the UK and unlisted securities. The
investment policy is subject to the following restrictions, all of which are at the time of
investment:
• The maximum permitted investment in companies listed outside the UK at cost
price is 20% of the Company’s gross assets;
• The maximum permitted investment in unlisted securities at cost price is 10% of the
Company’s gross assets;
• There are no pre-defined maximum or minimum sector exposure levels but these
sector exposures are reported to and monitored by the Board in order to ensure that
adequate diversification is achieved;
• The Company’s policy is not to invest more than 15% of its gross assets in any one
underlying issuer (measured at the time of investment) including in respect of any
indirect exposure through Castelnau Group Limited (“Castelnau”);
• The Company may from time to time invest in other UK listed investment
companies, but the Company will not invest more than 10% in aggregate of the
gross assets of the Company in other listed closed-ended investment funds; and
• Save for Castelnau Group Limited, the Company will not invest in any other fund
managed by the Investment Manager.
While there is a comparable index for the purposes of measuring performance over
material periods, no attention is paid to the composition of this index when constructing
the portfolio and the composition of the portfolio is likely to vary substantially from that
of the index. The portfolio will be relatively concentrated. The exact number of individual
holdings will vary over time but typically the portfolio will include core holdings in 15 to
20 companies. The Company may use derivatives and similar instruments for the
purposes of capital preservation.
The Company does not currently intend to use gearing. However, if the Board did decide
to utilise gearing the aggregate borrowings of the company would be restricted to 30%
of the aggregate of the paid-up nominal capital plus the capital and revenue reserves.
Any material change to the investment policy of the Company will only be made with the
approval of shareholders at a general meeting. In the event of a breach of the
Company’s investment policy, the Directors will announce through a Regulatory
Information Service the actions which will be taken to rectify the breach.
Dividend Policy
The Company does not have a fixed dividend policy. However, the Board expects to
distribute substantially all of the net revenue arising from the investment portfolio.
Accordingly, the Company is expected to pay an annual dividend that may vary each year.
Borrowing Policy
The Company is not prohibited from incurring borrowings for working capital purposes,
however the Board has no current intention to utilise borrowings. Whilst the use of
borrowings should enhance the total return on the ordinary shares where the return on
the Company’s underlying assets is rising and exceeds the cost of borrowing, it will have
the opposite effect where the underlying return is falling, further reducing the total return
on the ordinary shares. As a result, the use of borrowings by the Company may increase
the volatility of the NAV per share.
Investment
policy and
results
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8 Annual Report Strategic Report continued
The Company has a policy not to invest more than 10% of its gross assets in other UK
listed investment companies. As a consequence of its investments, the Company may
therefore itself be indirectly exposed to gearing through the borrowings from time to
time of these underlying investment companies.
Purpose and Key Performance Indicators (“KPI’s”)
The Company’s purpose is encapsulated in its investment objective, which is to provide
shareholders with long-term total returns by investing predominantly in a portfolio of UK
listed companies. The Board measures the Company’s success in attaining its objective
by reference to KPI’s as follows:
a. To make an absolute total return for shareholders on a long-term basis;
b. To make a relative total return for shareholders on a long-term basis, as measured
against the Company’s benchmark, the FTSE All-Share Index (total return);
c. The Board seeks to ensure that the operating expenses of running the Company as
aproportion of NAV (the Ongoing Charges Ratio) are kept to a minimum; and
d. The discount/premium to NAV per share at which the Company’s shares trade is
also closely monitored in view of its effect on shareholder returns.
These are alternative performance measures (“APMs”). Whereas the Financial
Statements (onpages 69 to 92) set out the required statutory reporting measures of the
Company’s financial performance, the Board additionally assesses the Company’s
performance against these APMs, which are viewed as being particularly relevant for the
Company. These APMs are widely used in reporting within the investment company
sector and the Directors believe they enhance the comparability of information and
assist investors in understanding the Company’s performance. Further information on
each of the KPI’s is set out below. Definitions of the APMs and the basis of their
calculation are set out on pages 93 and 94.
The Chair’s Statement on pages 4 to 6 incorporates a review of the highlights during the
year.
The Investment Management Review and Outlook on pages 14 to 17 gives details on
investments made during the year and how performance has been achieved.
Performance (KPI’s a and b)
The Company’s performance in absolute terms and relative to the FTSE All-Share Index
(total return) benchmark since Phoenix was appointed as Investment Manager in 2016
is shown below:
Cumulative
since Year to Year to
28 January 2016 31 December 31 December
to 31 December 2024 2024 2023
% % %
NAV per share (total return) 86.5 (4.3) 36.3
Share price (total return) 68.9 (5.5) 28.5
Benchmark (total return) 88.7 9.5 7.9
The Directors regard the Company’s share price total return to be the overall measure of
performance over the long term, since it approximates the return in the hands of
shareholders. It combines the change in the share price with the dividends paid to
shareholders, which are added back as though reinvested at the ex-dividend date.
Investment
policy and
results
Continued
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Annual Report Strategic Report continued 9
Strategic Report
The Directors regard the Company’s NAV per share total return to be a key indicator of
the Investment Manager’s performance. The NAV per share total return is the change in
the Company’s NAV per share with distributions to shareholders added back.
The Board monitors these against the Company’s benchmark and peer investment
companies.
The Company’s performance under both of these total return measures disappointed in
2024, but the Company's strategy is to invest for the long term and short-term volatility
is not indicative of the underlying intrinsic value of the portfolio.
Ongoing charges (KPI c)
Ongoing charges represent the costs that shareholders can reasonably expect the
Company to pay from one year to the next under normal circumstances, excluding
performance fees and taxation.
Phoenix does not earn an ongoing annual management fee, but instead is paid an
annual performance fee, only if the benchmark is outperformed, equal to one third of the
outperformance of the Company’s NAV against its FTSE All-Share Index (total return)
benchmark.
The Board monitors the Company’s other operating costs carefully and aims to maintain
a sensible balance between good quality services and costs. Based on the Company’s
average net assets for the year ended 31 December 2024, the Company’s ongoing
charges figure calculated in accordance with the Association of Investment Companies
(“AIC”) methodology was 0.45% (2023: 0.45%). As the size of the Company grows the
ongoing charge figure, is expected to reduce.
Premium/Discount to NAV (KPI d)
The discount of the price at which the Company’s shares trade to the NAV per share is
considered a key indicator of performance as it impacts the share price total return and
can provide an indication of how investors view the Company’s performance and its
investment objective. Accordingly, it is closely monitored by the Board as discussed in
the Chair’s Statement on page 5. The share price closed at a discount of 11.4% to the
NAV per share as at 31December 2024 (2023: 10.0% discount). During the course of the
year, based on the daily published NAVs per share (which are not adjusted to comply
with IFRS 2 (see pages 10 and 56), the Company’s shares traded at a discount of
between 3.6% and 15.5%, with an average discount of 9.4% (2023: the Company’s
shares traded at a discount of between 5.0% and 14.1% to NAV per share, with an
average discount of 10.4%). Discount is further discussed on pages 5 and 34.
Revenue Result and Dividend
The Company’s revenue after tax for the year ended 31 December 2024 was £2,556,000
(2023: £2,661,000). The Board declared an interim dividend of 3.0p per share, which was
paid on 6 December 2024 to shareholders on the register on 1 November 2024, before
the combination with Artemis Alpha Trust plc (no interim dividend was paid in 2023).
The Board does not propose to recommend payment of a final dividend for 2024 (2023:
final dividend 3.45p).
Investment
policy and
results
Continued
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10 Annual Report Strategic Report continued
Investment
policy and
results
Continued
Our registrar, MUFG Corporate Markets (“MUFG”), administers a Dividend Re-Investment
Plan (“DRIP”) onbehalf of the Company whereby direct shareholders resident in the
United Kingdom can choose for MUFG to apply their cash dividend to buy further shares
in the market. Details about the DRIP, including the terms and conditions and how to join
or exit the DRIP are available at https://uk.investorcentre.mpms.mufg.com/login or by
calling MUFG on +44 (0)371 664 0300. Calls are charged at the standard geographic rate
and will vary by provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 9.00a.m. and 5.30p.m., Monday to
Friday, excluding public holidays in England and Wales.
Five Year Summary
Dividend per Year end
Year end Share in respect Share price
NAV per Share of the year (mid-market)
Year (pence) (pence) (pence)
Year ended 31 December 2020 216.93 0.55 207.00
Year ended 31 December 2021 253.78 1.84 234.50
Year ended 31 December 2022 203.45 2.97 194.50
Year ended 31 December 2023 274.34 3.45 247.00
Year ended 31 December 2024 256.17 3.00 227.00
Net Asset Value per Share (NAV per share)
The Company recognises performance fees and clawbacks on fees paid in prior
performance periods under IFRS 2 – Share Based Payment in its annual and half year
financial statements. However, for the purposes of the Company's unaudited NAVs that
are announced daily to the London stock exchange and other regulatory information
services the current performance fee, and any clawback on fees paid in prior
performance periods, are recognised on a liability basis, which diverges from the
Company's accounting policy.
The table below is a reconciliation between the NAV per share as at 31December 2024
announced on the London Stock Exchange on 2January 2025 and the NAV per share
disclosed in these financial statements. The difference is principally the result of
amortising performance fees over the vesting period in accordance with IFRS 2 –
Share-based Payment in these financial statements, whereas the NAV per share as at
31December 2024 published on 2January 2025 treated the performance fees as
earned on 31December 2024, in accordance with the investment management
agreement. The remaining reconciling balances relate to adjustment of the unquoted
investment valuations and expenses, due to timing lag.
NAV per
NAV share
£’000 p
NAV as published on 2 January 2025 294,626 257.15
Deduct performance fees accrued under non-IFRS 2 approach (561) (0.49)
Adjustments on final valuation of unquoted investments
and expenses (564) (0.49)
NAV as disclosed in these financial statements 293,501 256.17
NAVs and performance quoted on the Company’s website, other than within the Interim
and Annual Reports, are based on the unaudited daily NAVs.
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Strategic Report
Date Average
Holding Percentage of first cost per Share Market
Company Sector in Company Valuation of net assets purchase share* price capitalisation
£’000 % Million
Castelnau Group Limited
#
Financial 51,134,587 47,045 16.0 Oct-21 £0.92 £0.92 £303
Frasers Group Plc Retail 7,118,886 43,354 14.8 Jun-07 £4.25 £6.09 £2,670
Barratt Redrow Plc Construction 9,786,312 43,070 14.7 Nov-18 £4.64 £4.40 £4,289
Lloyds Banking Group Plc Financial 47,069,000 25,784 8.8 Sep-08 £0.54 £0.55 £33,645
Ryanair Holdings Plc Leisure 1,297,000 20,418 7.0 May-19 €12.08 €19.04 €20,574
Bellway Plc Construction 466,940 11,636 4.0 Oct-12 £22.60 £24.92 £2,961
Other holdings (less than 3%) 85,615 29.1
Total holdings
276,922 94.4
Other current assets and liabilities
16,579 5.6
Net assets
293,501 100.0
* Average net cost including sales.
# Castelnau is a multi-sector financial holding company, listed on the Specialist Fund Segment of the London Stock Exchange. Castelnau is also managed by Phoenix and
its value is excluded from the Company’s net assets when calculating performance fees earned by Phoenix to avoid double charging. As a consequence of the
combination of Artemis Alpha Trust plc with the Company, 14,713,166 additional Castelnau shares transferred into the portfolio on 29 November 2024. At the value
ascribed to these shares for the purposes of the combination, this resulted in a combined holding in Castelnau at the time equivalent to 15.4% of gross assets. Whilst this
exceeds the 15% single investment restriction set out in the Company’s investment policy on page 7, it is not considered to constitute a breach of the investment policy
since it was not due to an active investment decision and there is no current intention to reduce the holding.
Top Holdings
as at 31 December 2024
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12 Annual Report Strategic Report continued
Portfolio Analysis
as at 31 December 2024
Percentage of Net
Sector Assets
%
Financial* 29.8
Retail 22.6
Construction 19.2
Leisure 13.8
Technology & Entertainment 3.0
Materials 2.9
Industrials 2.4
Food & Beverage 0.7
Other current assets and liabilities 5.6
Total 100.0
* Castelnau is included in the Financial classification as it is a multi-sector financial holding company.
29.8
22.6
19.2
13.8
3.0
2.9
0.7
2.4
5.6
Other current assets
and liabilities
Industrials
Materials
Food & Beverage
Retail
Financial
Construction
Leisure
Technology &
Entertainment
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Annual Report Strategic Report continued 13
Strategic Report
It is an uncomfortable aspect of value investing that there is a disconnect between the
work we do and the results we deliver. When it comes to communicating with investors
it means that there is often a peculiar conundrum in that what we are able to talk
authoritatively about, i.e. the fundamental performance of the portfolio and the value of
our changes to it, bears little resemblance to the performance numbers that accompany
our words. The numbers are real, they tell you how your investment has done, but over
time periods like one year they won’t reflect the work we have done on your behalf. You
end up with seemingly incongruous statements like I am about to write about 2024. It
was a year of good fundamental progress in the portfolio, our actions added to the
intrinsic value but the NAV declined by 4.3%, and the share price was down by 5.5%. At
the same time the FTSE All-Share rose by 9.5%.
To call it a year of good progress might sound delusional. Even if you give us a fairer and
longer comparative period of 5 years there still isn’t outperformance, there isn’t even
absolute performance, which is ultimately what we judge ourselves by. In the 5 years
from December 2019 to December 2024 the share price has moved from 237p to 227p.
In that same period though the intrinsic value of the portfolio, based upon our estimates
of the individual intrinsic values of the portfolio holdings, has risen from 420p per share
to 650p, and this I believe is a better measure of our efforts and the performance of our
businesses.
The amount of upside to that level has increased from 60% to 171% and that is what we
often refer to as the stretched elastic between price and value. Intrinsic value is our
North Star for a reason, it anchors us on fundamentals and allows us to avoid or take
advantage of the noise. Our decision making is rational and based upon values. Our
history tells us that ultimately it ends up being the best predictor of what is to come.
In summary, I am incredibly optimistic about what the value in the fund means for future
returns but back to that problem with value investing, I have no idea when it will show up
in price but a high degree of confidence that it will.
Gary Channon
Chief Investment Officer
Phoenix Asset Management Partners
7 April 2025
Statement
from the Chief
Investment
Officer of the
Investment
Manager
Gary Channon
Chief Investment Officer Phoenix
Asset Management Partners
7 April 2025
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14 Annual Report Strategic Report continued
Introduction and Performance Summary
Over the year to 31 December 2024, the NAV per share total return was -4.3%, while the
share price total return was -5.5%. For comparison, the FTSE All-Share Index delivered a
positive return of 9.5% over the same period. Since Phoenix assumed management
responsibilities on 28 January 2016, on a total return basis the NAV has risen 86.5%,
slightly lagging the 88.7% return of the FTSE All-Share Index. Over this same timeframe,
the share price total return was 68.9%.
Net assets concluded the year at £293 million, a notable increase from £208 million at
the end of 2023. This growth was largely attributable to the combination with Artemis
Alpha Trust plc (“ATS”), which successfully completed at the end of November, adding
£101 million to the combined vehicle’s assets. At the same time as the combination
completed, we welcomed Kartik Kumar, the ATSmanager, to the Phoenix investment
team.
Given the underperformance relative to the benchmark in 2024, no performance fee
wasearned. We remind investors that our performance fee structure is designed for
long-term alignment. Fees, if earned, are paid entirely in the Company's ordinary shares
and are subject to a fixed three-year clawback. Should the initial outperformance versus
the index reverse by the third-year anniversary, some or all the shares are returned. If
outperformance fully reverses, Phoenix ultimately receives nothing for that period.
Inaccordance with this, the clawback test conducted on 31 December 2024, for the fee
awarded at the end of 2021 resulted in the return of all 89,096 shares, reflecting the
underperformance over the subsequent three years.
Whilst 2025 has been eventful, performance is largely unchanged. As of 31 March, the
NAV had fallen 0.8% year-to-date, compared to a 4.5% rise for the FTSE All-Share index.
While performance in 2024 was disappointing, our confidence in the portfolio is
undiminished. That confidence is underpinned by the depth of work we have done on
the holdings and the expertise we have built in their business models and competitive
landscapes. We believe the value in those businesses will appear in the fullness of time
as earning progression translates into investment return.
The Phoenix Approach
For the benefit of all shareholders, both new and longstanding, we believe it is useful to
restate the philosophy and approach underpinning our management of your capital.
Our primary objective at Phoenix is the protection and compounding of the capital
entrusted to us over the very long term. We aim for rates superior – meaning
significantly higher and at lower risk – than passive strategies.
We pursue this goal by investing in businesses that we assess as earning high and
enduring returns on their capital. While the price paid for an investment is crucial, the
underlying economics of the business hold even greater importance for us, as we seek
very long, potentially indefinite, holding periods.
Our conviction stems from the belief that markets occasionally misprice businesses,
often driven by an overemphasis on short-term factors affecting what are fundamentally
long-term securities.
Such mispricings can create highly attractive investment opportunities, offering
substantial risk-adjusted returns. However, these can only be capitalised upon by the
prepared mind. We concentrate our efforts on developing deep expertise within a
specific niche of businesses, believing this gives us an edge in comprehending their
long-term value.
Investment
Manager’s
Report
Steve Tatters
Director
Phoenix Asset Management
Partners
7 April 2025
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Annual Report Strategic Report continued 15
Strategic Report
We employ a distinct philosophical and analytical framework to minimise biases,
integrating deep analysis, real-world monitoring, and clear thinking. This allows
confident assessment of certain businesses and managements to support investment
decisions at predetermined prices.
Phoenix operates as a learning organisation; this principle permeates our culture. We
consistently apply our methodology, incorporating a feedback loop for continuous
improvement.
Risk management is paramount. We invest only where we can actively assess
competitive dynamics through rigorous monitoring programmes, deepening our
understanding and reducing error risk. We avoid ruinous capital structures or business
models and never invest above the low end of our intrinsic value range, aiming to
prevent permanent capital loss.
This discipline enables a concentrated portfolio where risk is mitigated via the depth of
our knowledge and monitoring. We diversify only sufficiently to protect against mistakes;
otherwise, positions are focused and weighted according to our risk-adjusted
assessment of the upside considering the range of potential outcomes and our level of
confidence.
Understanding a company's 'economic moat' takes time and dedicated work. We
research businesses as future opportunities, building knowledge for when a valuation
opportunity arises. Management is another important factor. We back management
teams with integrity and pay attention to alignment and competence. We seek out great
managers who have built winning cultures.
Finally, we embrace patience – a willingness to do nothing, letting internal returns
compound and waiting for the appropriate opportunity. This may mean periods of
inactivity and holding cash, which we believe provides an edge over perpetually invested
strategies.
Our approach necessitates a partnership with investors who understand and embrace
this long-term perspective, accepting the volatility inherent in concentration and the
often superficially unattractive nature of our investments at the time of purchase.
To follow the unfolding developments within our key holdings and gain timely
perspective from us as managers about our thinking and activity, we encourage
investors to read the quarter end factsheets published on the Company’s website
(www.auroraukalpha.com).
Performance & Activity Review 2024
2024 unfolded as a tale of two halves, significantly influenced by the UK political
landscape and attendant market sentiment. The period leading up to the July General
Election saw improving conditions, with NAV performance positive up to 31 July
(+10.8%). However, the narrative shifted in the final five months as initial post-election
optimism faded, giving way to market caution around the new government's first
budget. This resulted in the NAV declining from its July peak to finish the year with a
total return down 4.3%.
The most significant positive event influencing performance occurred mid-year. Positive
news regarding the balance sheet restructuring at Dignity, the largest investment within
Castelnau Group, led to a 35% uplift in Castelnau’s NAV in early July. This single event
propelled the Company's NAV by 9.1% in July alone, and made Castelnau Group the
largest positive contributor for the full year, adding 1.9% to performance despite the later
market downturn.
Investment
Manager’s
Report
Continued
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16 Annual Report Strategic Report continued
Investment
Manager’s
Report
Continued
Other positive contributions came from Netflix and Lloyds Banking Group. Netflix
continued its strong growth, particularly in the first half, driven by successful paid
sharing initiatives and subscriber numbers significantly exceeding expectations (adding
9.3 million in Q1). Management continued to highlight the long-term market opportunity,
while also experimenting with entry into new verticals. Its strong share price
performance contributed 1.9% to the Company's NAV. Lloyds also performed well,
adding 1.2% to NAV.
Hargreaves Lansdown, a position initiated late in 2023, was exited during the third
quarter following a bid approach, realising value sooner than anticipated and
contributing positively during its holding period. We expressed frustration at the time
that we had only been able to build a 2% weighting before the price moved away and a
bid was announced.
Frasers Group was the largest detractor to performance, negatively impacting NAV by
5.8% following a 33% decline in its share price during the year. The other material
negative influence was Barratt Redrow, detracting 2.4% from NAV after a 19% share
price fall.
The broader housebuilding sector navigated challenging conditions due to higher
interest rates and affordability pressures. Barratt completed its merger with Redrow
during the period. Within the portfolio, Bellway demonstrated resilience despite lower
year-on-year completions, noting that moderating mortgage rates eased affordability
pressures in the second half, supporting an increase in reservations towards year-end
and into early 2025. It targets higher completions for the year ahead.
Lastly, whilst having a modest impact due to its size, we note the failure of Randall &
Quilter, which provided a significant learning experience, reinforcing lessons about
management alignment and trust.
The year was again one of modest portfolio activity, which reflected our confidence in
the portfolio. There was a certain amount of rebalancing of the holdings that were
transferred as part of the ATS transaction. We report on holdings above a 3% weight and
at year end no holdings inherited as part of the ATS transaction were above a 3% weight.
As at the end of March, Nintendo had become a 3.2% weight due to positive price
performance in the early months of 2025.
In the first half of 2024, notable activity included the Lloyds Banking Group holding
being increased by 1% and Ryanair being reduced by the same amount due to ongoing
concerns over Boeing’s ability to deliver their 737 MAX aircraft. We rebuilt the weighting
in July following a fall in price.
We made one new investment in the year, taking a position in Burberry in September at
an attractive price equivalent to circa £2 billion market capitalisation (£5.72 per share).
This is our first investment in the luxury goods sector, despite over a decade studying it
and therefore we limited the initial position size. Unfortunately the price moved out of
our range before we got to a 2% weight, which was below our initial target allocation.
Our thesis rests on the enduring nature of luxury demand, the excellent economics of
established brands (where value is often not captured by balance sheet assets), and
their resilience to mismanagement. Burberry, with its deep heritage rooted in innovation
like gabardine and iconic products like the trench coat, exemplifies these qualities.
The opportunity arose from multiple compounding negative factors: a cyclical luxury
market retreat (especially in China), specific company missteps around pricing, and the
general undervaluation of its London listing, capped by its FTSE 100 demotion.
This created a purchase price offering a significant margin of safety, allowing for
potential setbacks in the turnaround under new leadership, while retaining considerable
upside potential towards our intrinsic value estimate. We have a mid-case intrinsic value
of £4.8 billion.
Aurora p001-027 Strategic Report.qxp 07/04/2025 13:03 Page 16
Annual Report Strategic Report continued 17
Strategic Report
Outlook
Attempting short-term market forecasts is not our practice; our gaze remains fixed on
the long-term intrinsic value of the businesses we own. The market's cautious stance
towards the end of 2024 underscores the prevailing sensitivity to economic policy shifts.
When businesses are valued very cheaply, their fundamental success tends to translate
more directly into investment returns, either through dividends or reinvestment driving
per-share value growth, even without market re-rating.
The Company’s portfolio currently trades at what we believe is a significant discount to
intrinsic value, offering a substantial margin of safety.
This, combined with the quality of the underlying businesses, underpins our confidence
in the potential for attractive long-term returns. The present discount at which the
Company’s shares trade adds an additional element to the valuation opportunity.
When we look back five years from now though, we think the most significant factor
impacting business value and economic development will have been Artificial
Intelligence. It’s a freight train heading down the tracks and we’ve just scratched the
surface on its potential impact.
Our early estimation is that enormous productivity gains are coming, initially potentially
at the cost of employment. We are not sure if the future is dystopian or utopian yet, but
it’s certainly risk and opportunity for businesses.
We remain committed to our disciplined, patient, long-term investment approach.
Steve Tatters
Director
Phoenix Asset Management Partners
7 April 2025
Investment
Manager’s
Report
Continued
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18 Annual Report Strategic Report continued
Value of £1,000 invested
in the Phoenix UK Fund at
launch to 31 December 2024
Phoenix UK Fund Track Record
The investment strategy followed by the Phoenix UK Fund is the same as that followed by the Company*
Phoenix UK Fund (Net)
FTSE All-Share Index (total return)*
£
31 December
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
20242022202020182016201420122010200820062004200220001998
Source: Phoenix. All figures shown are net of fees and do not account for an investor’s tax position. The FTSE All-Share Index is shown with dividends re-invested. The
Fund’s inception date is May 1998.
* Whilst the investment strategy is the same in all material respects, the portfolio holdings will not necessarily be the same and investors in the Company will have no
exposure to the investment performance of the Phoenix UK Fund. For illustrative purposes only, not a recommendation to buy or sell shares in the Fund.
Pastperformance is not a reliable indicator of future performance.
Aurora p001-027 Strategic Report.qxp 07/04/2025 13:03 Page 18
Annual Report Strategic Report continued 19
Strategic Report
Phoenix UK Fund Track Record
Investment FTSE NAV
Return NAV Return All-Share Per Share
Year (Gross) (Net) Index (A Class)
% % % £
1998 (8 mths) 17.6 14.4 (3.3) 1,143.71
1999 (1.3) (4.6) 24.3 1,090.75
2000 24.7 23.0 (5.8) 1,341.46
2001 31.7 26.0 (13.1) 1,690.09
2002 (17.8) (20.1) (22.6) 1,349.64
2003 51.5 49.8 20.9 2,021.24
2004 14.1 11.2 12.8 2,247.26
2005 1.4 0.3 22.0 2,254.99
2006 9.5 8.3 16.8 2,442.90
2007 3.4 2.3 5.3 2,498.40
2008 (39.5) (40.2) (29.9) 1,494.31
2009 62.8 59.7 30.2 2,386.48
2010 1.1 0.0 14.7 2,386.37
2011 3.0 1.9 (3.2) 2,430.75
2012 48.3 42.2 12.5 3,456.27
2013 40.5 31.3 20.9 4,539.47
2014 1.9 0.1 1.2 4,544.25
2015 20.1 14.7 0.9 5,211.13
2016 9.1 7.6 16.8 5,605.58
2017 21.5 16.3 13.1 6,518.69
2018 (13.6) (14.7) (9.5) 5,558.97
2019 30.3 27.7 19.1 7,098.36
2020 (3.9) (4.9) (9.7) 6,748.66
2021 23.4 18.7 18.3 8,011.17
2022 (16.7) (17.4) 0.2 6,619.32
2023 33.6 32.5 7.7 8,770.25
2024 1.5 0.7 9.4 8,851.34
Cumulative 1,532.2 785.1 272.3 n/a
Annualised Returns 11.1 8.5 5.1 n/a
Aurora p001-027 Strategic Report.qxp 07/04/2025 13:03 Page 19
20 Annual Report Strategic Report continued
Directors’ duty to promote the success of the Company
Section 172 of the Companies Act 2006 requires the Directors to seek to promote the
success of the Company for the benefit of its members as a whole, having regard to the
likely consequences of any decision in the long term, the need to foster the Company’s
business relationships with suppliers and others, the impact of the Company’s
operations on the community and the environment, the desirability of the company
maintaining a reputation for high standards of business conduct, and the need to act
fairly as between members of the Company.
The Board seeks to understand the views of the Company’s shareholders and their
interests, and those of its other key stakeholders, and to consider these, together with
the other matters set out in section 172, in Board discussions and decision-making. The
Board keeps engagement mechanisms under review so that they remain effective and in
fulfilling their duties the Directors carefully consider the likely consequences of their
actions over the long term.
The following describes how the Directors have had regard to the views of the
Company’s stakeholders in their decision-making.
Shareholders
The Investment Manager regularly meets the largest shareholders and beneficial
owners and reports back to the Board on those meetings. The Company’s corporate
broker, now Deutsche Numis, previously Panmure Liberum, and Frostrow Capital LLP
(“Frostrow”), in its capacity as the Company’s investor relations & marketing adviser, also
meet with investors and seek to understand their views, which they relay to the Board.
Additionally, the Company Chair is available to meet with investors on request and did
engage with certain shareholders during the year. Through these interactions and other
communications the Board and the Investment Manager seek to promote asupportive
investor base of long-term investors.
The Board communicates with investors twice a year via the Annual Report and
Half-yearly Report and more frequently via the Company’s website which hosts various
information, including news reports, video presentations by the Investment Manager
and monthly factsheets. Additionally, the NAV per share is announced daily via a
regulatory information service.
Shareholders may attend the Company’s AGM, at which the Directors are available in
person to meet with shareholders and to answer their questions. As has been the case
for the last two years, the AGM this year will not include a presentation from the
Investment Manager. Instead, a separate Investment Manager presentation and Q&A
event, which the Directors will also attend, will be held at 3.30p.m. on 15October 2025
at the Chartered Accountants Hall, 1 Moorgate Place, London EC2R 6EA. This event is
intended to be of interest to both existing and prospective Aurora shareholders and will
include multiple speakers from the Investment Manager. It is intended for this event to
be recorded and made available afterwards on the Company’s website.
The Notice of Meeting on pages 98 and 99 sets out the business of the AGM and each
resolution is explained in Explanatory Notes to the Resolutions, which follow the Notice,
starting on page 104. Separate resolutions are proposed for each substantive issue. The
Company Chair, and where relevant, each Committee Chair, welcomes engagement with
the Company’s shareholders (and the Company’s other key stakeholders) on significant
issues raised by them at the AGM or at other times. Details of the votes cast on each
resolution will be announced via a regulatory information service shortly after the AGM
and published on the Company’s website.
Report under
Section 172 of
the Companies
Act 2006
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Annual Report Strategic Report continued 21
Strategic Report
At each of its regular meetings the Board tracks shareholder changes and monitors the
evolving shareholder profile. A list of the largest shareholders in the Company can be
found on page 37.
Although the combination with Artemis Alpha Trust plc (“ATS”) during the year did not
originate from shareholder interactions, the support for the transaction from
shareholders is indicative of the alignment of the Board with shareholders’ wishes.
Other stakeholders
As an externally managed investment company, the Company has no employees and all
operational activities are outsourced to third party service providers. These include the
Investment Manager, the Company Secretary and Administrator, the Registrar, the
Depositary, the Custodian, lawyers and financial advisers. The Board has identified these
service providers to be key stakeholders in the Company, together with its shareholders
and investee companies. The Board is aware of the need to foster the Company’s
relationships with its key stakeholders through its stakeholder management activities.
As part of the Board and stakeholder evaluation processes that are undertaken annually,
the Board reviews its engagement mechanisms to ensure they remain effective.
In fulfilling their duties, the Directors carefully consider the likely consequences, for
stakeholders and otherwise, of their actions over the long term.
During the Board’s quarterly meetings the Directors consider and are mindful of:
i. the Company’s investment objective and policy;
ii. the main trends and factors likely to affect the future development, performance
and financial position of the Company;
iii. the Company’s key performance indicators;
iv. the Company’s peers;
v. the Company’s overall strategy; and
vi. the Company’s core values, which are integrity, accountability, transparency and
commitment.
The service provider most fundamental to the Company’s long-term success is the
Investment Manager, and the Board provides oversight and challenge to the Investment
Manager at all Board meetings to ensure that the portfolio is managed in line with the
Company’s published investment policy.
A description of key service providers’ roles together with the terms of their engagement
can be found on pages 34 to 36. The Management Engagement Committee, on behalf
of the Board, reviews the performance and terms of engagement of each of the
Company’s key service providers annually to ensure each remains competitive and to
consider the quality of the services they provide.
Environmental, Social and Governance (“ESG”) Matters
The Board expects companies in which the Company invests to have good governance
standards and satisfies itself that the Investment Manager consistently and proactively
engages with them on this basis.
All shareholdings are voted at listed company meetings worldwide where practicable in
accordance with the Investment Manager’s own corporate governance policies.
Further details of the Investment Manager’s approach to ESG within its investment
framework can be found on its website at www.phoenixassetmanagement.com.
Report under
Section 172 of
the Companies
Act 2006
Continued
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22 Annual Report Strategic Report continued
Monitoring of Key Decisions and the outcome of those decisions
The Board meets at least quarterly and at such other times as deemed appropriate.
During these meetings, the Board considers reports from the Investment Manager on
the Company’s portfolio, investment activity and sector diversification. In addition, the
Investment Manager provides an overview of engagement with the investee companies
and with potential investee companies. The Board discusses the Company’s portfolio
and notable acquisitions or disposals at each of its meetings and challenges stock
selection where deemed appropriate.
The Board receives reports from Frostrow, in its capacity as Company Secretary,
Administrator and Investor Relations & Marketing Adviser, respectively on the latest
governance, legal and investment trust sector issues, the Company’s management
accounts and, together with the Company’s corporate stockbroker, on the Company’s
shareholder base, including changes thereto. The Depositary also provides oversight
reports and the Company’s corporate stockbroker also reports on performance relative
to the Company’s peers and the market liquidity of the Company’s shares. Contact with
shareholders by the Investment Manager, Frostrow and the Company’s corporate
stockbroker is also relayed to the Board who consider these discussions at their
quarterly meetings.
During the year, in addition to regular interactions, the Management Engagement
Committee on behalf of the Board reviewed the performance and terms of engagement
of each of its key service providers, which included a review of their control reports and
policies, such as whistleblowing, anti-bribery, anti-money laundering and corruption,
cyber security, data protection policies and each entity’s business continuity
arrangements to ensure they were in place and were adequate. Additionally, for the
second consecutive year service providers were asked to participate in a360degree
review whereby they provided comments on their interactions with the Board and each
other. It was partly as a result of these reviews that the Board decided to conduct a
review of the Company’s appointed corporate stockbroker. The Board is grateful for the
support of Panmure Liberum over many years, but following this review and receiving
alternative pitches decided to appoint Deutsche Numis as the Company’s appointed
corporate stockbroker going forward.
In relation to engagement with shareholders, the Board decided in 2023 to decouple the
Investment Manager’s presentation from the AGM and hold aseparate Manager
presentation event in October, where Directors were also available to interact. This was
repeated in 2024 and seems to be a successful formula for increasing engagement,
with good attendances in both years, and will be continued in 2025 as mentioned above.
The most significant decision in the year was to instigate the combination with ATS,
which followed from a Board strategy meeting at the start of the year. This received
overwhelming support (99.97% in favour) from the Company’s shareholders, enhances
the scale and profile of the Company, enhances liquidity of the shares and should
improve the ongoing charges ratio as a result of fixed costs being spread over alarger
asset base. The transaction completed on 29 November 2024.
Related decisions were to change the name of the Company and to pay an interim
dividend before the transaction completed. The latter was for multiple purposes: to
comply with the Board’s published intention to distribute substantially all the Company’s
revenue to shareholders by way of dividends; to satisfy the investment trust status
requirement that no less than 15% of the Company’s qualifying revenue must be
retained each year; and so as not to dilute the dividend for existing shareholders if the
previous practice of recommending a final dividend for approval at the AGM was
followed.
Report under
Section 172 of
the Companies
Act 2006
Continued
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Annual Report Strategic Report continued 23
Strategic Report
Boardroom Diversity
The Board supports the principle of Boardroom diversity, and the Board currently
comprises four non-executive Directors of which three are female and one male.
OneDirector is from a minority ethnic background. The Board considers its composition,
including the balance of skills, knowledge, diversity (including gender and ethnicity) and
experience, amongst other factors on an annual basis and when appointing new
Directors. The Board has considered the requirements under the FCA’s Listing Rule
UKLR 6.6.6R (10) in relation to target reporting, and has provided full details in the
Corporate Governance Statement section on pages 40 and 41. Summary biographical
details of the Directors are set out on pages 29 and 30.
Stewardship code
The Board and the Investment Manager support and have a strong commitment to the
FRC’s 2020 UK Stewardship Code, which is endorsed by the AIC and sets out principles
of effective stewardship by institutional investors. Whilst the Investment Manager is not
a formal signatory to the Stewardship Code, it has chosen to adhere to the 12 principles
as closely as possible. Further details of the Investment Manager’s approach to the
Stewardship code can be found on the Investment Manager’s website at
www.phoenixassetmanagement.com.
Modern slavery disclosure
Due to the nature of the Company’s business, being a company that does not have
employees and does not offer goods or services to consumers, the Board considers that
the Company falls outside of the scope of the Modern Slavery Act 2015 and is not
required to issue a slavery and human trafficking statement. The Board considers the
Company’s supply chains, since it deals predominately with professional advisers and
service providers in the UK financial service industry, to be low risk in thismatter.
Anti-bribery and corruption
It is the Company’s policy to conduct all of its business in an honest and ethical manner.
The Company takes a zero-tolerance approach to bribery and corruption and is
committed to acting professionally, fairly and with integrity in all its business dealings
and relationships wherever it operates. The Company’s policy and the procedures that
implement it are designed to support that commitment. The Board has made enquiries
of its third-party service providers to ensure they have procedures and policies in place.
Criminal Finances Act 2017
The Company maintains a zero-tolerance policy towards the provision of illegal services,
including the facilitation of tax evasion. The Company has received assurances from the
Company’s main service providers that they maintain a zero-tolerance policy towards
the provision of illegal services, including the facilitation of tax evasion.
Report under
Section 172 of
the Companies
Act 2006
Continued
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24 Annual Report Strategic Report continued
Principal Risks and Risk Management
The Board is responsible for the identification, evaluation and management of the risks
facing the Company. Risk is a key element of all the Board’s deliberations. Additionally,
the Board has delegated to the Audit Committee the formal regular review of these risks,
together with their mitigation and the discerning of emerging risks, on its behalf. This
process accords with the UK Corporate Governance Code and the FRC’s Guidance on
Risk Management, Internal Control and Related Financial and Business Reporting.
The Audit Committee and the Board has carried out a robust assessment of the
emerging and principal risks facing the Company, including those that would threaten its
business model, future performance, solvency and liquidity.
The Board’s policy on risk management has not materially changed during the course of
the reporting period and up to the date of this report. In particular, the Board undertakes
a review of the performance of the Company and scrutinises and challenges notable
transactions at each quarterly Board meeting.
The Audit Committee maintains a framework of the key risks and the policies and
processes in place to monitor, manage and mitigate them where possible. This risk map
is reviewed regularly by the Audit Committee, as set out in the Audit Committee Report
starting on page 54.
The Audit Committee and the Board consider that the risks summarised below are the
principal risks currently facing the Company. It is not an exhaustive list of all risks faced
by the Company. In addition to these featured risks, during the year the Board also
recognised risks associated with the project to combine the assets of ATS with the
Company, including transaction execution risk and risks around portfolio realignment.
The former was recognised as the most significant emerging risk until the transaction
was completed on 29 November 2024. The assessment of the other risks outlined
below did not change significantly over the course of the year.
Principal Risks and Uncertainties
Geopolitical and economic risks
The Company and its portfolio are at risk from economic and market conditions such as
from rising interest rates; inflation; recession; local and global politics; and disruptive
local and global events. These can disrupt trade and supply chains and cause increased
market volatility, which could substantially and adversely affect the Company’s
prospects and the market prices of its investments. Increased interest rates, inflation
and the threat of recession continue to be contemporary areas of concern, together with
the conflicts in Ukraine and the Middle East.
The opportunity for the Board to mitigate such macro risks is somewhat limited. The
Board and the Investment Manager monitor and discuss the macroeconomic
environment at each Board meeting, along with potential impacts. The Investment
Manager also provides a detailed update on the investments at each meeting, including,
inter alia, developments in relation to the macro environment and trends. Mitigating
factors include the experience and expertise of the Investment Manager, that the
Company’s portfolio, although concentrated, is diversified across a range of sectors, and
that the Company has no leverage and a net cash balance. Sanctions imposed in
relation to the Ukraine conflict have not had any direct impact on the Company to date.
Other Strategic
Report
Information
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Annual Report Strategic Report continued 25
Strategic Report
Investment objective and strategy risks
The Company’s investment objective is to provide shareholders with long-term total
returns by investing predominantly in a portfolio of UK listed companies. It is not
assured that the objective will be met or that it will continue to meet investors’ needs.
Poor performance or the investment objective losing its attractiveness to shareholders
could result in reputational damage and a widening discount.
The Board reviews performance at every Board meeting and challenges the Investment
Manager on stock selection and diversification.
The Board also seeks to understand shareholder sentiment with respect to the
investment objective and the strategy being followed with the help of the Company’s
Investment Manager, corporate broker and investor relations & marketing adviser.
Shareholders are provided with an opportunity to vote on the Company’s continuation
every three years. The continuation vote provides a gauge of the attractiveness of the
Company to its shareholders. The next opportunity to vote on the Company’s
continuation will be at the AGM in 2025. The Board recommends that shareholders vote
in favour of continuation and, given the level of support for the Company signalled in
connection with the recent combination with ATS, is optimistic they will do. The previous
continuation vote took place at the Company’s AGM on 28 June 2022 and was
successfully passed with overwhelming support from shareholders (100% voted in
favour).
Risks related to the Investment Manager
The Company’s success is closely dependent on the performance of the Investment
Manager. In addition to the performance of the portfolio, the Company is also exposed
to any potential loss of key personnel from, and the reputation of, the Investment
Manager.
The Investment Manager has a well-defined investment strategy, a proven process and
an extensive track record. The performance and the terms of engagement of the
Investment Manager are reviewed annually by the Management Engagement
Committee on behalf of the Board, in addition to the Board’s ongoing communications,
monitoring and challenge. The Investment Manager also reports regularly to the Board
on personnel changes and other developments.
Discount risk
The Board specifically recognises the risk that the price of the Company’s shares may
not reflect their underlying net asset value, which could compromise shareholders’
returns.
The Board, along with its advisers and the Investment Manager, monitors the discount
closely and seeks to enhance share price performance through effective marketing. The
Board also seeks authority from shareholders each year to buy back shares and has
recently announced that it will consider doing so if the discount becomes excessive and
persistent.
Other Strategic
Report
Information
Continued
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26 Annual Report Strategic Report continued
Operational Risks
Operational Risks incorporate, amongst other things, the potential for errors or
irregularities in published information, cyber risks, business continuity risks, and
regulatory risks.
The Audit Committee has received internal controls reports from the relevant service
providers, where available, and has satisfied itself that adequate controls and
procedures are in place to limit any impact on the Company’s operations, particularly
with regard to a financial loss. It has also satisfied itself that they have appropriate
business continuity plans in place. The performance of service providers is reviewed
annually by the Management Engagement Committee. Each service provider’s contract
defines their duties and responsibilities and has safeguards in place including provisions
for termination in the event of a breach or under certain circumstances.
ESG
The Board recognises the risks posed by environmental, social and governance (“ESG”)
factors, particularly with respect to portfolio risks and potential reputational risk should
the Company not meet investor expectations in relation to ESG. Investment companies
are currently exempt from reporting under the Task Force on Climate-Related Financial
Disclosures (“TCFD”) and the Company has not voluntarily adopted the requirements,
but considers ESG factors that might affect portfolio companies to be an emerging risk
area for the Company. The Board and Investment Manager also recognise the potential
opportunity afforded by attention to the wider climate change agenda. ESG risk
assessment is embedded in the Investment Manager’s due diligence and
decision-making process when investing in new companies and monitored thereafter.
However, the Company does not have explicit sustainability investment objectives or
policies and accordingly has not adopted a sustainability label under the FCA’s UK
Sustainability Disclosure Requirements and investment labels regime (“SDR”).
Financial Risks
The Company is exposed to liquidity risk and credit risk arising from the use of
counterparties. If a counterparty were to fail it could adversely affect the Company
through either delay in settlement or loss of assets. The most significant counterparty to
which the Company is exposed is the Depositary, which is responsible for the
safekeeping of the Company’s custodial assets.
Further details on the Company’s financial risks are included in Note 13 to the financial
statements starting on page 88.
The Board reviews the services provided by the Depositary and the internal controls
report of the Custodian to ensure that the security of the Company’s custodial assets is
maintained. The Investment Manager is responsible for undertaking reviews of the
creditworthiness of the counterparties that it uses.
Viability Statement
In accordance with the UK Corporate Governance Code, the Directors have carefully
assessed the Company’s position and prospects as well as the principal risks and have
formed a reasonable expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the next five financial years to 31December
2029.
Other Strategic
Report
Information
Continued
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Annual Report Strategic Report continued 27
Strategic Report
The Board has chosen a five-year horizon in view of the long-term nature and outlook
adopted by the Investment Manager when making investment decisions.
After making enquiries, the Directors have a reasonable expectation that the Company
has adequate resources to continue in operational existence and meet its liabilities as
they fall due for at least five years to 31 December 2029. A continuation vote, as
required by the Company’s Articles, was held on 28 June 2022 and passed with
overwhelming support from shareholders. The next vote will take place at the
Company’s AGM in 2025. Given the level of support for the Company signalled in
connection with the recent combination with ATS, the Board is optimistic that the next
vote will successfully pass.
In reaching their conclusion, the Directors have considered each of the principal risks
and uncertainties set out above as well as the following assumptions in assessing the
Company’s viability:
• there will continue to be demand for investment trusts;
• the Board and Investment Manager will continue to adopt a long-term view when
making investments;
• the Company invests principally in the securities of UK listed companies to which
investors will wish to continue to have exposure; and
• regulation will not increase to a level that makes running the Company
uneconomical.
Factors including higher interest rates, inflation, and the conflicts in Ukraine and the
Middle East were also incorporated into the key assumptions. As part of this process the
Board considered the impact of severe but plausible scenarios, including the impact of
significant market movements, on the Company’s liquidity and solvency, its income and
expenses profile and that (although not utilised) gearing is an instrument permitted by
the Company’s investment policy. A significant proportion of the Company’s investments
comprise readily realisable securities which could, if necessary, be sold to meet the
Company’s cash requirements. The financial considerations were based on the going
concern assessment, discussed on pages 37 and 38, and extended to cover the five-year
period from the approval of this annual report.
The Board aspires for the Company to continue to grow and keeps its potential for doing
so under review. Portfolio changes and market developments are also discussed at
quarterly Board meetings.
The internal control framework of the Company is subject to formal review on at least
an annual basis and this includes consideration of the operational resilience of the
Company’s service providers.
Outlook
The outlook for the Company is discussed in the Chair’s Statement on page 6, and by
the Investment Manager on pages 13 and 17.
This Strategic Report was approved by the Board on 7 April 2025.
Lucy Walker
Chair of the Board of Directors
Other Strategic
Report
Information
Continued
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28 Annual Report Governance
Governance
Aurora p028-067 Governance.qxp 07/04/2025 13:10 Page 28
Annual Report Governance 29
Governance
Directors
Lucy Walker
Company Chair
Lucy Walker joined the Board on 2 December 2019 and became Chair of the Company
on 28 June 2022.
Lucy Walker is a founder and chair in investment management and technology. She
founded the award-winning AM Insights fund data platform in 2020 to transform how
fund data informs decisions in asset and wealth management. She is former SID of
Henderson International Income Trust plc and former head of fund research and fund
manager at Sarasin & Partners, where she advised on over £1.2 billion for clients.
Named Marketing Influencer of the Year at the 2024 Women in Investment Awards, Lucy
has been regularly featured in publications including the FT, and she engages a wide
audience through her LinkedIn platform and Fund Selectors podcast.
Farah Buckley
Chair of the Audit Committee
Farah Buckley joined the Board as a non-executive Director on 8 September 2022 and
became chair of the Audit Committee on 27 February 2023.
She has spent over 23 years in financial services across audit, mergers & acquisitions
and private equity. Previously the Head of Investment Solutions at asset manager
Hermes GPE and the Head of UK at Adveq, the Swiss private equity investor, Farah
brings extensive experience of growth, innovation and strategy. Farah worked at
boutique corporate finance house McQueen where she worked on numerous deals
within the retail, consumer and leisure sectors. She is a qualified chartered accountant
having gained her ACA qualification at Deloitte. Farah is a non-executive director of
Caledonia Investments plc, Leeds Building Society and Lloyds of London managing
agent Apollo Syndicate Management Limited.
Lady Rachael Robathan
Chair of the Management Engagement Committee and the Nomination &
Remuneration Committee
Lady Robathan joined the Board on 2 December 2019 and served as Audit Committee
chair from then until 8 September 2022, when she became chair of the Management
Engagement Committee and the Nomination & Remuneration Committee.
She is a Westminster City Councillor and former Leader of the Council. First elected in
2010, she held the Finance, Property and Housing Cabinet portfolios before becoming
Leader from 2020 to 2022. Prior to this, she worked for 20 years in emerging market
investment management at Invesco and AIB Govett before joining Pictet as part of the
UK based Family Office team. She is also a Trustee of Westminster Almshouses
Foundation, asheltered housing charity, a director of The Knightsbridge Neighbourhood
Forum Limited and is a member of The Royal Parks Investment Committee.
Directors,
Investment
Manager, Other
Service
Providers and
Advisers
Aurora p028-067 Governance.qxp 07/04/2025 13:10 Page 29
30 Annual Report Governance continued
David Stevenson
David Stevenson joined the Board as a non-executive Director on 2 February 2016.
He is a columnist for the Financial Times, Citywire and Money Week and author of
anumber of books on investment matters. He is the chairman of Secured Income Fund
Plc and a non-executive director of Gresham House Energy Storage Fund Plc and
Castelnau Group Limited (Guernsey). He is also a director and founder of
ETFStream.com and Stockmarkets Digest Limited as well as founding director of
Rocket Science Group Holdings Limited. He has also been a strategy consultant to a
number of asset management firms and investment banks. Having been a Director of
the Company for nine years, he plans to step down from the Board in December 2025.
Alternative Investment Fund Manager (“AIFM”) and Investment
Manager
Phoenix Asset Management Partners Limited
64-66 Glentham Road
London SW13 9JJ
Telephone: 0208 600 0100
The Company’s Investment manager is Phoenix Asset Management Partners Limited
(“Phoenix”). Phoenix is a specialist fund management company, founded in 1998.
Itmanages the Phoenix UK Fund, which it has managed since 1998, and other
segregated accounts following the same strategy. It has been the Company’s
Investment Manager since 28 January 2016.
Phoenix is a focused and patient investor, aiming to buy a relatively small number of
great businesses, with a high return on capital, pricing power and strong prospects, at
attractive prices and which it expects to hold for very long periods.
Phoenix defines risk as being the potential for a permanent loss of capital, rather than
share price volatility. They see permanent loss of capital as a function of an insufficiently
thorough understanding of a business and the potential threats it faces. An ongoing
monitoring and research programme for every stock in the portfolio seeks to mitigate
this risk.
Although the portfolio is concentrated, Phoenix pay attention to the fundamental
business risks across the holdings, ensuring sufficient diversification and avoiding
duplication and doubling up.
Directors,
Investment
Manager, Other
Service
Providers and
Advisers
Continued
Aurora p028-067 Governance.qxp 07/04/2025 13:10 Page 30
Annual Report Governance continued 31
GovernanceGovernance
Other Service Providers and Advisers
Website Address: www.auroraukalpha.com
Registered Number – 03300814
A MEMBER OF THE ASSOCIATION OF INVESTMENT COMPANIES
Company Secretary,
Administrator, Investor
Relations & Marketing
Adviser and Registered
Office
Frostrow Capital LLP
25 Southampton Buildings
London WC2A 1AL
Registrar
MUFG Corporate Markets
Central Square
29 Wellington Street
Leeds LS1 4DL
Depositary & Custodian
Northern Trust Investor Services Ltd
50 Bank Street
London E14 5NT
Stockbroker
Deutsche Numis
45 Gresham Street
London EC2V 7BF
Auditor
BDO LLP
55 Baker Street
London W1U 7EU
Directors,
Investment
Manager, Other
Service
Providers and
Advisers
Continued
Aurora p028-067 Governance.qxp 07/04/2025 13:10 Page 31
Directors’
Report
By Order of the Board
Frostrow Capital LLP
Company Secretary
7 April 2025
32 Annual Report Governance continued
The Directors present their report and Financial statements for the year ended
31December 2024.
Strategic Report
The Directors’ Report should be read in conjunction with the Strategic Report on
pages3to 27, including the Principal Risks and Uncertainties faced by the Company.
Corporate Governance
The Corporate Governance Statement on pages 39 to 46 forms part of this report.
Legal and Taxation Status
The Company was incorporated and registered in England and Wales on 10 January
1997 as a public limited company, registered number 03300814. It is an investment
company as defined by section 833 of the Companies Act 2006 and operates as an
investment trust within the meaning of the Corporation Tax Act 2010 (CTA) and the
Investment Trusts (Approved Company) (Tax) Regulations 2011. HM Revenue &
Customs has approved the Company’s status as an investment trust and, in the opinion
of the Directors, the Company has conducted its affairs so as to enable it to maintain
such approval.
The Board and Re-Election of Directors
The Directors of the Company, who are listed on pages 29 and 30, all served throughout
the year to 31 December 2024. All Directors are non-executive. In accordance with the
AIC Corporate Governance Code, the entire Board is subject to annual re-election and
accordingly resolutions will be put to shareholders to re-elect all of the Directors at the
Company’s forthcoming AGM. Having been a Director of the Company for nine years,
David Stevenson plans to step down from the Board in December 2025.
The report on Corporate Governance starting on page 39 contains a description of the
Board’s method of operation, its work during the year, together with that of its
Committees, and of how its performance has been evaluated.
Director’s Indemnities and Insurance
Subject to the provisions of the Companies Act 2006 and certain provisions contained in
the deeds of indemnity issued by the Company, the Company will indemnify each of the
Directors against all liabilities which each Director may suffer or incur arising out of or in
connection with any claim made or proceedings taken against them, or any application
made under sections 661(3), 661(4) or 1157 of the Companies Act 2006 by them, on the
grounds of their negligence, default, breach of duty or breach of trust, in relation to the
Company or any Associated Company. The indemnities would provide financial support
from the Company after the level of cover provided by the Company’s Directors’ and
Officers’ insurance policy has been fully utilised.
A policy of insurance against Directors’ and Officers’ liabilities is maintained by the
Company.
Directors are permitted, in the furtherance of their duties, to take independent
professional advice at the expense of the Company.
Aurora p028-067 Governance.qxp 07/04/2025 13:10 Page 32
Annual Report Governance continued 33
Governance
Disclosure of information to the auditor
The Directors are listed on pages 29 and 30. The Directors confirm that:
• to the best of each Director’s knowledge and belief, there is no relevant audit
information of which the Company’s auditor is unaware; and
• the Directors have taken all the steps that they ought to have taken as Directors to
make themselves 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.
Continuation of the Company
The Company’s articles require that a continuation vote is held every three years.
Aresolution to approve the continuation of the Company as an investment trust will be
put to shareholders at the AGM to be held on 11 June 2025.
Share Capital and Voting Rights
The Company has a single share class, being ordinary shares that each have a nominal
value of 25p, and has not issued any other forms of security. Each share, other than any
held by the Company in Treasury, entitles the holder to one vote on a poll. Should voting
on a resolution at ashareholder meeting be by show of hands rather than by poll, each
shareholder present in person or by proxy will have one vote.
Shares contractually issued to the Investment Manager in lieu of the Investment
Manager’s fees are subject to a three-year lock-in period during which the Investment
Manager cannot sell the shares awarded to it. Aside from this, no special restrictions or
obligations apply to any of the Company’s shares. Shareholders have equal rights with
regards to distributions of all kinds in proportion to their shareholdings. Final dividends
are payable subject to approval by shareholders at general meetings or AGMs; interim
dividends can be declared by the Directors and do not require shareholder approval.
The Board seeks shareholders’ authority each year to issue and buy back shares. As at
31December 2024 the Directors had shareholders’ authority to buy back up to
11,436,279 shares and to issue, and/or sell from Treasury, up to 15,258,544 shares.
During the year the Company issued to the Investment Manager, 172,373 ordinary
shares at a price of 260.32 pence per share on 17 January 2024 and 41,891 ordinary
shares at a price of 267.79 pence per share on 29 April 2024. These were to settle
performance fees earned in the year to 31 December 2023 pursuant to the terms of the
Company’s Investment Management Agreement with Phoenix Asset Management
Partners Limited. As such they are subject to a three-year lock-in following the date of
issue and a fixed three-year clawback period.
Separately, in connection with the combination of ATS with the Company, following
approval by the Company in a General Meeting, the Company issued, on 29 November
2024, 38,369,114ordinary shares to ATS shareholders at a deemed price of
262.58pence per share, in consideration for the transfer to the Company of
approximately £101 million of net assets from ATS.
No shares were issued in 2023.
Directors’
Report
Continued
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34 Annual Report Governance continued
No shares were bought back during the year under review. However, the three-year
clawback period in relation to the performance fee for the year ended 31 December 2021
ended on 31 December 2024 and this resulted in an entitlement as at 31December 2024
to claw back 89,096 shares from the Investment Manager. These shares were delivered to
the Company and were cancelled on 15 January 2025. Following this cancellation there
were 114,572,742 ordinary shares in issue. The number of ordinary shares with voting
rights was also 114,572,742 after the claw back. Further details on the Investment
Manager’s performance fees are disclosed in Note4, starting on page81.
No performance fee has been earned for the year ended 31 December 2024.
The total number of shares that have been issued to the Company’s Investment
Manager since their appointment in 2016 to date, net of claw backs, is 1,505,196.
Discount and Premium Control
The Board aims for the ordinary share price over the long term to reflect the level and
movement of the NAV per share. Means by which it is hoped this can be achieved are as
follows:
(i) The Company will use clear and transparent communication that seeks to
attract new and existing investors to invest and keep investing in the Company.
(ii) Execution of the investment strategy as communicated and the delivery of
excellent long-term investment returns in excess of most peers and the
benchmark.
(iii) The Board may arrange for the Company to buy back its shares when the
discount to NAV per share is persistent and it considers that a share buyback
represents the best use of shareholders’ funds.
(iv) The Board intends to issue new shares and/or sell shares from Treasury when
the Company’s shares trade at a premium to the then prevailing NAV per share
when the Board considers this to be in the best interest of shareholders.
Holding Shares in Treasury
The Board monitors on an ongoing basis whether shares in the Company should be
repurchased and, if so, whether they should be held in Treasury or whether they can and
should be sold from Treasury. Any sales of shares from Treasury are made at prices not
less than the latest available NAV per share at the time of sale. On 31December 2024,
the clawback period on restricted shares issued to the Investment Manager in relation
to the performance period to 31 December 2021 ended and 89,096 shares that had
been issued to the Investment Manager in respect of that period were returned to the
Company. These were held in Treasury as at 31December 2024 and subsequently
cancelled on 15 January 2025.
Investment Management Agreement
The Company entered into an Investment Management Agreement with Phoenix on
28January 2016.
Phoenix does not earn an ongoing annual management fee. Rather, it is paid an annual
performance fee equal to one third of the outperformance of the Company’s NAV per
share total return (including dividends and adjusted for the impact of share buybacks and
the issue of new shares) over the FTSE All-Share Index (total return) for each financial
year. The Company’s NAV per share return is based on the weighted number of shares in
issue and NAV over the relevant period.
Directors’
Report
Continued
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Annual Report Governance continued 35
Governance
The total annual performance fee is capped at 4% per annum of the NAV of the
Company at the end of the relevant financial year, in the event that the NAV per share
has increased in absolute terms over the period, and 2% in the event that the NAV per
share has decreased in absolute terms over the period. Anyoutperformance that
exceeds these caps will be carried forward and only paid if the Company outperforms,
and the annual cap is not exceeded, in subsequent years.
The performance fee is subject to a high-water mark so that no performance fee will be
payable in any year until all underperformance of the Company’s NAV since the last
performance fee was payable has been made up. The performance fee will also be subject
to a clawback if over a rolling period of three years following the end of the last financial
year for which a performance fee was payable the Company underperforms. Specifically,
Phoenix must return a number of shares the value of which equals the difference between
the calculated Performance Fee and the Performance Fee that would have been earned
had the relevant performance period included the lock-in period.
The performance fee will be paid to Phoenix by means of the issue of shares (issued at the
prevailing NAV per share at the time) and such shares must be retained by Phoenix for a
minimum period of three years from the date of issue. No performance fee was earned in
the performance fee period ended 31 December 2024 (2023:£560,903). Further details on
the performance fees are disclosed in Note4, starting on page81.
Continuing Appointment of the Investment Manager
The Management Engagement Committee has reviewed the position of the Investment
Manager and recommended to the Board that the Phoenix Investment Management
Agreement should be continued. The process of evaluation is described in the report on
Corporate Governance. Having taken into account the long-term performance of
Phoenix, the prospects for the Company and the recommendations of the Management
Engagement Committee, the Board has concluded that continuing the appointment of
Phoenix as Investment Manager on the terms outlined above is in the best long-term
interests of shareholders.
Alternative Investment Fund Managers’ Regulation (“UK AIFMD”)
The Company is classified as an Alternative Investment Fund under UK AIFMD and is
therefore required to have an Alternative Investment Fund Manager (“AIFM”). Because of
the scale of its overall funds under management, Phoenix, the Company’s AIFM, is
classed as a full-scope AIFM. This brings the Company into the full scope of UK AIFMD,
requiring inter alia the appointment of a Depositary. The AIFM is required to make certain
disclosures on its remuneration in respect of the AIFM’s relevant reporting period, which
is the year ended 31 December 2024. These disclosures are available on the AIFM’s
website, www.phoenixassetmanagement.com, in a document labelled MIFIDPRU
Disclosure that can be found in the regulatory documents, or are available on request
from the AIFM.
Company Secretary, Administrator and Investor Relations &
Marketing Adviser
Frostrow Capital LLP provides the Company with all of the usual and necessary services of
an administrator and company secretary and also serves as the Company’s investor
relations & marketing adviser, under an administration and distribution agreement dated
28September 2022. Under that agreement, which is terminable on six months notice,
Frostrow is entitled to a periodic fee equal to 17.5 basis points per annum of the
Company’s market capitalisation up to (but not including) £150 million plus 15 basis points
per annum on that part of the Company’s market capitalisation in excess of £150 million.
Directors’
Report
Continued
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36 Annual Report Governance continued
Depositary and Custodian
Since 28 September 2022 the positions of Depositary and Custodian to the Company
have been held by Northern Trust Investor Services Ltd.
Banking
The Company’s cash balances were held with Northern Trust at 31 December 2024 and
31December 2023. At 31 December 2024 the gross external borrowings of the
Company were £nil (2023: £nil).
Leverage (under UK AIFMD)
The AIFM is required to set a limit as a percentage of net assets for the Company utilising
methods prescribed under UK AIFMD. These methods are known as the gross method
and the commitment method. Under both methods the AIFM has set a maximum limit of
leverage for the Company of 15,000%. This equates to 150x leverage.
The Company’s leverage under each of these methods at its year end is shown below:
Gross method Commitment method
Maximum leverage limit 15,000% 15,000%
Actual leverage at 31 December 2024 96.81% 99.56%
Disclosure Required By Listing Rule UKLR 6.6.4
The above rule requires listed companies to report certain information in a single
identifiable section of their annual financial reports. The Company confirms that, other
than the allotment of equity securities (UKLR 6.6.1(6)) detailed on page86, there is no
information to report under this rule for the year ended 31December 2024.
Retail Distribution of Investment Company Shares
The Company has concluded that the distribution of its shares, being ordinary shares in
an investment trust, is not restricted as a result of the FCA rules determining which
investment products can be promoted to ordinary retail investors. The Company
conducts its affairs so that there is no bar to a financial adviser recommending the
Company’s shares to ordinary retail investors when the adviser deems it appropriate.
Market Information
The Company’s shares are listed on the London Stock Exchange. The market price is
shown daily in the Financial Times. The NAV per share is calculated daily and released
daily to the London Stock Exchange and monthly to the AIC. The Company subscribes
to the website www.trustnet.com, which compares the Company’s performance to that
of its peer group.
Substantial Interests in Share Capital
The Company was aware of the following substantial interests of 3% or more in the
voting rights of the Company as at 31 December 2024 and 31 March 2025.
Directors’
Report
Continued
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Annual Report Governance continued 37
Governance
31 March 2025 31 December 2024
% of issued % of issued
Number of share Number of share
Shareholder shares capital shares capital
Rothschild Wealth
Management 11,134,152 9.7 10,669,146 9.3
RBC Brewin Dolphin 7,169,033 6.3 7,293,069 6.4
Raymond James Investment
Services 6,940,077 6.1 6,850,767 6.0
Phoenix Asset Management
Partners 6,580,345 5.7 5,400,345 4.7
1607 Capital Partners 6,345,164 5.5 6,686,088 5.8
Hargreaves Lansdown 6,159,414 5.4 6,338,044 5.5
HSBC Private Bank 4,981,185 4.3 5,276,310 4.6
Interactive Investor 4,346,680 3.8 4,637,132 4.0
Rossie House Investment
Management 4,275,904 3.7 4,311,923 3.8
ING Luxembourg 4,057,873 3.5 3,961,873 3.5
Greenhouse Gas Emissions
As an Investment Company with no physical assets, property, employees or operations
of its own, the Company does not provide goods or services in the normal course of its
business and nor does it have customers. In consequence, the Company has no direct
greenhouse gas emissions to report from its operations, nor does it have responsibility
for any other sources of emissions under the Companies Act 2006 (Strategic Report
and Directors’ Reports) Regulations 2013 (“SECR”). The Company consumed less than
40,000 kWh of energy during the year and is therefore exempt from having to report
against SECR.
Going Concern
The financial statements have been prepared on the going concern basis. The Directors
have a reasonable expectation, after making enquiries, that the Company has adequate
resources to continue in existence for at least 12 months from the date of approval of
this Annual Report. In reaching this conclusion, the Directors have considered the
liquidity of the Company’s portfolio of investments as well as its latest financial position
and forecast of income and expenses.
As at 31 December 2024, the Company held £17,076,000 (2023: £6,248,000) in cash
andcash equivalents, £272,105,000 (2023: £200,733,000) in quoted investments and
£4,817,000 (2023: £1,476,000) in unquoted investments. The total ongoing operating
expenses for the year ended 31 December 2024 were £966,000 (2023: £749,000). It is
estimated that 39.0% of the Company’s latest portfolio could be liquidated in a
non-market impacting way within 7days, using 25% of historic three-month average
daily volume. This approach is considered conservative as it does not include the
Company’s ability to access liquidity through block trades.
Directors’
Report
Continued
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38 Annual Report Governance continued
The Company’s going concern status has been assessed under stress scenarios, which
incorporated key assumptions such as significant falls in the Company’s investment
portfolio value and investment income. These scenario tests encompassed possible
impacts from factors such as the existing and potential further risks arising from the
conflicts in the Middle East and Ukraine, as well as any tail risks from Brexit. Aprolonged
and deep market decline could lead to falling investment values or interruptions to cash
flow, however the Company currently has more than sufficient liquidity to meet any
liabilities when they fall due in the foreseeable future. The Board is keeping the
development of external risk factors under close scrutiny and does not believe that these
will have any impact on the Company’s going concern status.
At the date of approval of this Annual Report the Company’s cash and cash equivalents
balance and the market value of its investments are well in excess of the estimated level
of liabilities and the Company has substantial operating expenses cover.
Annual General Meeting
The Company’s Annual General Meeting (“AGM”) will be held at 25 Southampton
Buildings, London WC2A 1AL on 11 June 2025 at 1 p.m.
The business of the meeting is summarised in some detail in the Explanatory Notes to
the Resolutions on pages 104 to 106 of this Annual Report.
The AGM resolutions include the following items of special business:
Resolution 10 (ordinary resolution) Authority to allot shares.
Resolution 11 (special resolution) Authority to disapply pre-emption rights.
Resolution 12 (special resolution) Authority to repurchase shares.
Resolution 13 (special resolution) Authority to hold General Meetings (other than the
AGM) on at least 14 clear days’ notice.
Additionally, as required by the Company’s Articles, Resolution 2 (ordinary resolution)
has been inserted this year to approve the continuation of the Company as an
investment trust. Also, as set out in the Chair’s Statement on page 4, shareholders are
being asked by way of Resolution 9 to ratify non-material changes made to the
Company’s Investment Objective and Policy during the year.
The full text of the resolutions can be found in the Notice of AGM beginning on page98.
The Board considers that the proposed resolutions are in the best interests of
shareholders as a whole. Accordingly, the Board unanimously recommends to
shareholders that they vote in favour of the resolutions to be proposed at the forthcoming
AGM, as the Directors intend to do in respect of their own beneficial holdings.
By order of the Board
Frostrow Capital LLP
Company Secretary
7 April 2025
Directors’
Report
Continued
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Annual Report Governance continued 39
Governance
Introduction
The Board is committed to maintaining and demonstrating high standards of corporate
governance. The Board has considered the Association of Investment Companies’ 2019
Code of Corporate Governance (the “AIC Code”); the AIC Code addresses the principles and
provisions set out in the 2018 UK Corporate Governance Code (the “UK Code”) as well as
setting out additional provisions on issues that are of specific relevance to investment
companies, including the Company.
The Board considers that reporting against the AIC Code, which has been endorsed by
the Financial Reporting Council, provides more relevant information to shareholders.
The AIC Code is available on the AIC website (www.theaic.co.uk) and includes an
explanation of how the AIC Code adapts the principles and provisions set out in the UK
Code to make them relevant for investment companies.
The Company has complied with the AIC Code and the relevant provisions of the
UKCode, except as set out below. The Board considers that the following provisions are
not relevant to the position of the Company, being an externally managed investment
company with no employees. The Company has therefore not reported further in
respect of these provisions.
• Senior Independent Director – Being small in number, the Board has decided not to
nominate a Senior Independent Director.
• Executive Directors – The UK Code includes provisions relating to the role of the
chief executive and executive Directors’ remuneration. The Board considers these
provisions are not relevant to the Company as it does not have any employees and,
as such, it does not have any executive board members.
• Internal Audit function – The UK Code includes provisions for an internal audit
function. For reasons set out in the AIC Code, the Board considers these provisions
are not relevant to the Company as it is an externally managed investment company.
In particular, all of the Company’s day-to-day management and administrative
functions are outsourced to third parties. As a result, the Company has no internal
operations.
Evaluation of the Board and its Committees
The Directors undertook an internal evaluation of the Board and its Committees in
November 2024, based on questionnaires and led by Lady Rachael Robathan. At the
same time a 360 degree evaluation process was conducted whereby questionnaires
were completed by the Board and the Company’s principal service providers, each
providing scores and comments on the respective entities they had interactions with.
This provided some third party insight into their views of the Board’s effectiveness in
addition to the Directors’ internal assessment. The Directors concluded that, overall, the
Board and its Committees worked effectively, incorporated appropriate qualifications,
skills, knowledge, experience, diversity and independence and provided good oversight
of the Company on behalf of shareholders.
Re-elections at the forthcoming AGM
Having considered the appointment of each Board member individually, the Board
regards each to have invaluable experience, knowledge and commitment both within
and outside meetings and strongly recommends that shareholders vote in favour of
each Board member’s re-election at the forthcoming AGM. Notwithstanding the
forgoing, having been a Director of the Company for nine years, David Stevenson will not
serve until the 2026 AGM and plans to step down from the Board in December 2025.
Corporate
Governance
Statement
The Corporate Governance
Statement forms part of the
Directors’ Report
7 April 2025
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40 Annual Report Governance continued
Independence
The Board has noted the inference of the provisions in the AIC Code that Non-Executive
Directors who sit on the board of other companies managed by the same manager should
be presumed not to be independent. The Board has further noted that MrStevenson, as
the Company’s nominated representative on the Board of Castelnau Group Limited which
was the Company’s largest investment position at 31 December 2024, would fall within
this definition. However, it is the Board’s assessment that the provisions in place to
manage actual or potential situational conflicts of interest are sufficiently robust and all of
the Directors undertake to always promote the success of the Company. The Board has
concluded that Mr Stevenson continues to demonstrate independence of character and
judgement. His skills and experience contribute significantly to the strength of the Board
and his continued service is invaluable to the long-term success of the Company. The
Directors have a broad range of relevant experience to meet the Company’s requirements
as can be seen from their biographies on pages 29 and 30. In accordance with the
Company’s Conflicts of Interest policy (see page 44), Mr Stevenson will recuse himself
from any decisions relating to Castelnau.
The Board believes that during the period ended 31 December 2024 its composition was
appropriate for the Company’s nature and size. All of the Directors are considered
independent of the Investment Manager and are able to allocate sufficient time to the
Company to discharge their responsibilities effectively. Mr Stevenson plans to retire from
the Company’s Board in December 2025. He will step down from the Castelnau board at
the same time and the Company’s Board will nominate another of their number to replace
him at Castelnau.
Balance of Skills and Diversity
As described on the previous page under “Evaluation of the Board and its Committees”,
the Nomination & Remuneration Committee, on behalf of the Board, conducts areview
of the Board’s strengths and weaknesses with the aim of ensuring that there is available
a good balance of attributes that are useful to the direction of the Company, in addition
to the skills and commitment of the Investment Manager.
The Company’s policy on diversity is that the Board should be comprised of Directors
who collectively possess the necessary balance of professional skills, experience, length
of service and industry knowledge and that appointments to the Board should be made
on merit, against objective criteria, including diversity in its broadest sense.
The objective of the policy is to have a broad range of approaches, backgrounds, skills,
knowledge and experience represented on the Board. The Board believes that this will
make the Board more effective in promoting the long-term success of theCompany
andgenerating value for its shareholders by ensuring there is a breadth of perspectives
among the Directors and the capacity to challenge needed to support good
decision-making.
The Board confirms that its members are highly experienced, both generally and in
respect of the direction of an investment trust company, and that the backgrounds and
seniority of the Directors provide the Board with a high overall level of independence.
The Board has noted the FCA’s listing rules UKLR 6.6.6R(9) to (11) which require
companies to report against the following diversity targets using prescribed tables:
(a) At least 40% of individuals on the board are women;
(b) At least one of the senior board positions is held by a woman; and
(c) At least one individual on the board is from a minority ethnic background.
Corporate
Governance
Statement
Continued
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Annual Report Governance continued 41
Governance
The following tables set out the Company’s positions against these targets in
compliance with the rules. Being an externally managed investment company, the
Company does not have the roles of CEO or CFO, nor has the Board appointed asenior
independent director, and therefore, as allowed by the rules, it does not need to report
against target (b) above as it is not applicable. Accordingly, for both tables, the right
hand column, which relates to target (b), is deliberately left blank and other columns
related specifically to executive management have been excluded in entirety. Each
Director volunteered how they wished to be included in the tables.
The Board has chosen to align its diversity reporting reference date with the Company’s
financial year end and proposes to maintain this alignment for future reporting periods.
(a) Table for reporting on gender identity or sex
Number of
senior
positions on
Number of the board
board Percentage of (CEO, CFO,
As at 31 December 2024 members the board SID and Chair)
Men 1 25
Women 3 75
Not specified/prefer not to say – –
(b) Table for reporting on ethnic background
Number of
senior
positions on
Number of the board
board Percentage of (CEO, CFO,
As at 31 December 2024 members the board SID and Chair)
White British or other White (including
minority-white groups) 3 75
Mixed/Multiple Ethnic Groups – –
Asian/Asian British 1 25
Black/African/Caribbean/Black British – –
Other ethnic group – –
Not specified/prefer not to say – –
Policy with regard to tenure and reappointment
The Directors recognise that independence is not a function of length of service and that
experience is an important attribute within the Board. The Board has noted the
implication of the provisions in the UK Corporate Governance Code that Non-executive
Directors who have served for more than nine years should be presumed not to be
independent. The AIC does not believe that this presumption is appropriate for
investment companies and therefore does not recommend that long-serving Directors
be prevented from forming part of the independent majority of an investment trust
board. Accordingly, the Directors may decide to recommend a Director with more than
nine years’ service for re-election. In accordance with the AIC Code of Corporate
Governance, Directors stand for re-election annually. The performance of each Director
is appraised by the Nomination & Remuneration Committee annually. The Directors have
Corporate
Governance
Statement
Continued
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42 Annual Report Governance continued
appointment letters which do not state any specific term. Notwithstanding the forgoing,
the tenure of each independent non-executive Director, including the Chair, isnot
ordinarily expected to exceed nine years.
How the Board operates
The Company does not have any employees. The Board has contractually delegated the
Company’s operations to external agencies, including the Investment Manager for the
management of the Company’s investment portfolio, the depositary (which includes
responsibility for the safeguarding of the Company’s custodial assets), the registrar and
the administrator and company secretary. Each of these contracts was entered into
after full and proper consideration of the quality and cost of services offered, including
the financial control systems in operation in so far as they relate to the affairs of the
Company. The Board reviews these contracts annually.
The Board does not undertake any executive function but is responsible to shareholders
for the overall strategy and performance of the Company. It reviews and evaluates all
aspects of the Company’s performance and all functions performed by the service
providers. The Board has a culture of open and inclusive debate on all issues and aims
to conduct itself responsibly, ethically and fairly in its dealings with shareholders, service
providers and other stakeholders.
A formal schedule of matters reserved for the Board has been established covering
strategy; structure and capital; investment objective, policy and limits; gearing; dividend
and corporate governance policy; performance; key contracts; risk; financial reporting
and Board membership. This is reviewed annually to ensure compliance with latest
regulatory requirements and best market practice.
Division of Responsibility
The AIC Corporate Governance Code requires the Board to agree the responsibilities of
the Chair, Board and Committees and to set them out in writing and make them publicly
available.
Role of the Board
• To set the parameters for monitoring the investment strategy and investment policy;
• To review the Company’s investment performance;
• To consider all strategic policy matters, including share issuance and buy backs,
discount/premium monitoring, corporate governance matters, dividends, gearing
and oversight of the Company’s activities;
• To promote the long-term success of the Company and generate value for
shareholders;
• To establish the Company’s purpose, values and strategy, and satisfy itself that
these and its culture are aligned;
• To ensure the necessary resources are in place for the Company to meet its
objective;
• To establish key performance indicators and to measure performance against them;
• To establish a framework of prudent and effective controls, which enable risk to be
assessed and managed; and
• To ensure effective engagement with and encourage participation from
shareholders and other stakeholders.
Corporate
Governance
Statement
Continued
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Annual Report Governance continued 43
Governance
Role of the Chair of the Board
• To provide leadership to the Board;
• To promote high standards of governance;
• To ensure the Board is provided with sufficient information to enable it to discharge
its duties;
• To ensure each Board member’s views are considered and appropriate action taken;
• To ensure each Committee has the support required to fulfil its duties;
• To ensure the Board assesses and improves its performance, following the advice of
the Nomination & Remuneration Committee;
• To oversee the induction of new Directors and the development of existing Directors;
• To remain independent of the Investment Manager, whilst providing effective
support, challenge and advice;
• To support other service providers;
• To ensure the Board as a whole has a clear understanding of the views of
shareholders;
• To ensure regular engagement with each service provider; and
• To keep up to date with key developments.
Role of Committees
Audit Committee
• To consider the Company’s risk management;
• To consider the internal control reports of each of the Company’s key service
providers;
• To consider the need for an internal audit function;
• To review the Half-yearly and the Annual Report and financial statements and
recommend them to the Board for approval;
• To agree the scope of the external Auditor’s work;
• To approve the remuneration of the external Auditor;
• To consider the external Auditors’ appointment/re-appointment and the Auditor’s
independence and objectivity; and
• To manage the audit tender process.
Management Engagement Committee
• To consider the terms of engagement and continued appointment of the Investment
Manager; and
• To consider the terms of appointment of each of the Company’s service providers
and the continued appointment of each.
Nomination & Remuneration Committee
• To consider succession planning arrangements;
• To oversee the Board’s appraisal process;
• To consider the engagement of an external board evaluation agency or recruitment
consultant and agree their fees;
• To consider Board appointments/re-appointments;
• To oversee the recruitment process of additional Board members; and
• To consider the Board’s remuneration.
Corporate
Governance
Statement
Continued
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44 Annual Report Governance continued
Conflicts of Interest
As required by law, a Director must avoid a situation where they have an interest that
conflicts with the Company’s interests. The Company’s Articles of Association permit
the Directors to authorise potential conflicts of interest. The Directors are able to impose
limits or conditions when giving authorisation if they think this is appropriate. The policy
observed by the Board in dealing with conflicted matters is as follows:
• Any Board member so conflicted must recuse themself from the decisions involving
the relevant conflict. As stated earlier, Mr Stevenson will recuse himself from
decisions concerning Castelnau Group Limited;
• Only Directors who have no interest in the matter being considered are able to
debate the matter and take the relevant decision; and
• In taking decisions the Directors must act in a way they consider, in good faith, will
be most likely to promote the Company’s long-term success and be in the best
interest of the Company’s shareholders.
The Directors have declared any potential conflicts of interest to the Company. These
are entered into the Company’s conflicts of interest register, which is reviewed regularly
by the Board. The Directors are obliged to advise the Company Secretary as soon as
they become aware of any potential conflicts of interest.
Attendance at Board meetings
The Board holds at least four meetings a year. During the year ended 31 December 2024
there were five regular meetings of the Board, one of which being specifically to consider
strategy matters. Additional ad hoc Board and committee meetings were held as
required for administrative purposes and in connection with the combination with ATS.
Directors’ attendance of all meetings is set out below.
Management Ad Hoc
Board Audit Engagement Nomination & Board and
(scheduled) Committee Committee Remuneration Committees
Type and number of
meetings 5 3 1 1 6
Lucy Walker 5 3 1 1 5
Farah Buckley 5 3 1 1 5
Lady Rachael Robathan 5 3 1 1 5
David Stevenson 5 3 1 1 4
Board Committees
The Board has formed three permanent committees: the Audit Committee, the
Management Engagement Committee and the Nomination & Remuneration Committee.
The role, responsibilities and activities during the year of the Audit Committee are detailed
in its report on pages 54 to 57. Those of the Management Engagement Committee and
the Nomination & Remuneration Committee are shown below.
The Board considers that all of the Directors are independent and so may be members
of each Committee. The main purpose of the Committees in the context of the
Company’s structure is that their existence ensures time is set aside on a formal basis
to cover certain important issues of governance, without those issues obscuring the
flow of general Board business. Each Committee has a separate chair, as detailed under
Corporate
Governance
Statement
Continued
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Annual Report Governance continued 45
Governance
the separate headings below. The Committees have formal terms of reference, which
are available to shareholders upon request from the Company’s registered office and
can be viewed via the Company’s website at www.auroraukalpha.com.
Management Engagement Committee
The Management Engagement Committee considers issues related to the engagement
of the Investment Manager and other service providers, making recommendations as
appropriate to the Board. The Committee considers whether amounts paid to service
providers are appropriate, with particular reference to those contracted to the Company
on a continuing basis, including the Investment Manager, and whether those contracts
should be maintained. Lady Rachael Robathan chairs the Management Engagement
Committee and all of the Directors are members.
The criteria which are taken into consideration when reviewing the performance of the
Investment Manager are as follows:
• The performance of the Company;
• Commitment to the investment trust business generally and to the Company
in particular;
• Investment management skills and experience, track record, use of gearing,
knowledge of currency issues and other investment-related considerations;
• General management skills – understanding of administrative and financial
issues and working relationship with the Administrator/Company Secretary;
• Shareholder relations – consciousness of and commitment to shareholders
and share price awareness; and
• Reasonableness of the Investment Management Agreement – fees, notice
period and duties.
The Management Engagement Committee is also responsible for reviewing the
remuneration and services of the Company’s other service providers.
The Committee met once in 2024 and considered the appraisal of the Investment
Manager and other key service providers. As explained on page 39 under “Evaluation of
the Board and its Committees”, a 360 degree evaluation process was conducted in
December 2024 whereby questionnaires were completed by the Board and the
Company’s principal service providers, each providing scores and comments on the
respective entities they had interactions with. This provided third party insight into the
effectiveness of the service providers, and the Board, in addition to the Directors’ own
assessment.
The Committee recommended that the Company’s appointed corporate broker be
reviewed in the new year. Subject to this, the Committee concluded that the continued
appointment of each of the service providers, including the Investment Manager, was in
the best interest of shareholders.
Nomination & Remuneration Committee
The Nomination & Remuneration Committee has been established to identify and
interview candidates for vacancies on the Board, consider the Board’s remuneration and
undertake Board appraisals. It is established as a principle that this process should be
led by independent Directors. Lady Rachael Robathan chairs the Committee and all of
the Directors are members. The Committee meets at least annually.
During the year the Committee oversaw a Board and Committee appraisal process and
also considered the Directors’ fees.
Corporate
Governance
Statement
Continued
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46 Annual Report Governance continued
Internal Controls and Risk Management
The Board has delegated the review of the effectiveness of the Company’s risk
management and system of internal controls to the Audit Committee, as set out in the
Audit Committee Report on pages 54 and 55. The Board recognises its ultimate
responsibility for the Company’s system of internal controls and accordingly receives
and considers reports from the Audit Committee. The system of internal controls is
designed to manage rather than eliminate the risk of errors and irregularities, so it can
provide only reasonable assurance against material misstatement or loss. The Board
has undertaken a robust review of the Company’s risk management and internal control
framework, which covers financial, operational and compliance controls.
As an externally managed investment company, the Board has contractually delegated
to external agencies the services the Company requires to operate. The Board
continuously monitors the performance of all the principal service providers with a
formal evaluation process being undertaken each year. The Audit Committee, on behalf
of the Board, reviews internal controls reports and key policies (including measures
taken to mitigate cyber risks and disaster recovery procedures) put in place by its
principal service providers.
The Administrator reports separately in writing to the Board concerning risks and
internal control matters within its purview, including internal financial control
procedures, compliance with investment trust rules and secretarial matters, highlighting
any changes that have occurred. Additional ad hoc reports are received as required and
Directors have access at all times to the advice and services of the Corporate Company
Secretary, which is responsible to the Board for ensuring that Board procedures are
followed and applicable rules and regulations are complied with. Contact with the
Investment Manager and the Administrator enables the Board to monitor the Company’s
progress towards its objectives and encompasses an analysis of the risks involved.
The Board believes that the existing arrangements represent an appropriate control
framework and has concluded that the Company’s risk management and internal
control systems are adequate to meet the needs of the Company.
The Directors’ statement of responsibilities in respect of the accounts is on pages52
and 53, a statement of going concern is on pages 37 and 38, and the report of the
independent auditor is on pages 58 to 67.
Principal and emerging risks
The Directors confirm that they have carried out a robust assessment of the emerging
and principal risks facing the Company, including those that would threaten its business
model, future performance, solvency or liquidity. The principal risks and how they are
being managed are set out in the Strategic Report.
By order of the Board
Frostrow Capital LLP
Company Secretary
7 April 2025
Corporate
Governance
Statement
Continued
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Annual Report Governance continued 47
Governance
This Remuneration Report has been prepared in accordance with the requirements of
the Large and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013.
The Directors’ Remuneration Policy (which must be put to shareholders at least every
three years and is binding) was approved by shareholders at the AGM in 2023 and is set
out below. The annual Remuneration Policy Implementation Report (which must be put
to a shareholder advisory vote every year) for 2024 will be put to shareholders at this
year’s Annual General Meeting.
The law requires the Company’s Auditor to audit certain disclosures provided in this
report. Where disclosures have been audited, they are indicated as such and the
Auditor’s opinion is included in their report to shareholders on pages 58 to 67.
Directors’ Remuneration Policy
It is the policy of the Board and the Nomination & Remuneration Committee that the
remuneration of non-executive Directors should be fair and should reflect experience,
time commitment and work involved, responsibilities and potential liabilities of the
Board as a whole. The non-executive Directors’ fees are determined within the
maximum limit set out in the Company’s Articles of Association, which currently stands
at £250,000 per year.
The Directors are not eligible for bonuses, pension benefits, share benefits, share
options, long-term incentive schemes or other benefits and fees are not linked to
Director’s individual or collective performance.
There are no arrangements in place with respect to compensation for loss of office
(forwhatever reason) or recruitment incentive remuneration and Directors have no
entitlement to any such payments.
No Director has waived or agreed to waive any emoluments from the Company.
Directors are entitled to be reimbursed for any reasonable expenses properly incurred by
them in connection with the performance of their duties and attendance at board,
general and committee meetings.
The Directors’ fees are subject to regular review by the Nomination & Remuneration
Committee having regard to the above factors, the rate of inflation and fee trends in the
investment company sector. Notwithstanding the above, the Company’s Articles also
provide that additional discretionary payments can be made for services which in the
opinion of the Board are outside the scope of the ordinary duties of a Director. Any such
payment would reflect the Board’s assessment of the value to the Company of such
services. The above principles also apply to any new appointments.
The Company has no employees and consequently has no policy on the remuneration
of employees. The Board will consider, where raised, shareholders’ views on Directors’
remuneration.
The Directors do not have service contracts. Directors are appointed under letters of
appointment, copies of which are available for inspection at the registered office of the
Company. These do not state any specific term. In accordance with the AIC Corporate
Governance Code all of the Directors put themselves forward for annual re-election.
Directors’
Remuneration
Report
Lady Rachael Robathan
Chair of the Nomination &
Remuneration Committee
7 April 2025
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48 Annual Report Governance continued
Remuneration Policy Implementation Report
The Nomination & Remuneration Committee considers the framework for the
remuneration of the Directors on an annual basis. It reviews the ongoing
appropriateness of the Company’s remuneration policy and the individual remuneration
of the Directors by reference to the activities and particular complexities of the Company
and in comparison with other companies of a similar structure and size, also taking into
account the inflationary environment. No remuneration consultants were appointed
during the year (2023: none). During its latest review, in December 2024, the Committee
decided to continue the practice adopted in recent years of incrementing the fees by the
annual increase in the Consumer Price Index.
Accordingly, with effect from 1 January 2024 the Directors’ fees increased to: £47,124
per annum for the Company Chair; £35,460 per annum for the Audit Committee Chair;
and £30,384per annum for the other Directors. No additional discretionary payments
were made in the year, nor in the previous year.
No payments were made to former Directors.
Performance
The chart below shows the performance of the Company’s shares, with dividends
reinvested, compared with that of the FTSE All-Share Index (total return), which is the
Company’s Benchmark, over the past 10 years.
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
FTSE All-Share Index (total return)
Aurora share price plus dividends reinvested
80
100
120
140
160
180
200
220
Directors’
Remuneration
Report
Continued
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Annual Report Governance continued 49
Governance
Relative importance of spend on pay
The table below shows the proportion of the Company’s income spent on pay.
Year to Year to Change
31 December 31 December favourable/
2024 2023 (unfavourable)
£’000 £’000 £’000
Revenue income 3,568 3,459 109
Spend on Directors’ fees 140 139 (1)
Other expenses 826 610 (216)
Dividends paid to Shareholders 4,921
#
2,260 2,661
#
Represents two years’ dividends.
The information in the table above is required by the Regulations with the exception of
other expenses, which have been included to show the total operating expenses of the
Company.
Single Total Figure of Remuneration for The Year (Audited)
The fees and expenses paid to the Directors who served during the years ended
31December 2024 and 31 December 2023 were as follows:
31 December 2024 31 December 2023
Taxable Taxable
Fees expenses
^
Total Fees expenses
^
Total
£ £ £ £ £ £
Lucy Walker 45,968 – 45,968 44,200 – 44,200
Farah Buckley*
3
34,590 203 34,793 32,503 114 32,617
Lady Rachael Robathan 29,640 – 29,640 28,500 – 28,500
David Stevenson 29,640 104 29,744 28,500 196 28,696
Helen Vaughan*
4
n/a n/a n/a 5,543 381 5,924
Total 139,838 307 140,145 139,246 691 139,937
^ Taxable expenses primarily comprise travel and associated expenses incurred by the Directors in attending
Board and Committee meetings in London. These are reimbursed by the Company and, under HMRC Rules,
are subject to tax and National Insurance and therefore are treated as a benefit in kind within this table.
* Please refer to the notes underneath the Changes in Directors’ Remuneration table on the following page.
None of the fees referred to above were paid to any third-party in respect of services
provided by the Directors.
Directors’
Remuneration
Report
Continued
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50 Annual Report Governance continued
Changes in Directors’ Remuneration
2025 2024 2023 2022 2021
Fee Level % Fee % Fee % Fee % Fee
Director (projected) Change Level Change Level Change Level Change Level
Lucy Walker
1
47,124 2.5
45,968 4.0 44,200 29.5 34,133 31.5 25,964
Lady Rachael Robathan
2
30,384 2.5 29,640 4.0 28,500 (0.6) 28,675 (0.1) 28,700
David Stevenson 30,384 2.5 29,640 4.0 28,500 10.5 25,800 4.9 24,600
Farah Buckley
3
35,460 2.5 34,590 6.4 32,503 300.1 8,124 – n/a
Helen Vaughan
4
n/a n/a n/a n/a n/a – 9,479 – n/a
Lord Flight
5
n/a n/a n/a n/a n/a – 17,264 (48.9) 33,800
The Hon. James Nelson
6
n/a n/a n/a n/a n/a – 12,582 (48.9) 24,600
1
Appointed as a non-executive Director on 2 December 2019. Appointed Deputy Chair of the Board on
19October 2021. Succeeded Lord Flight as Chair of the Company on 28 June 2022.
2
Appointed as Audit Committee Chair on 2 December 2019. Stepped down from being Chair of the Audit
Committee on 8 September 2022.
3
Appointed as a non-executive Director on 8 September 2022. Appointed as Audit Committee Chair on
27February 2023.
4
Appointed as Audit Committee Chair on 8 September 2022. Stepped down from the Board on 27 February
2023.
5
Chairman of the Company until his retirement on 28 June 2022.
6
Non-executive Director until his retirement on 28 June 2022.
Directors’ Shareholdings (audited)
The Directors’ shareholdings in the Company were:
Ordinary shares of 25p each
as at 31 December
2024 2023
Lucy Walker 31,050 26,300
Lady Rachael Robathan 9,584 9,584
David Stevenson 18,266 18,266
Farah Buckley 4,500 4,500
Since the year end Farah Buckley has purchased a further 5,500 shares. No other
changes have been notified to the date of this report.
There are no requirements or formal guidelines in effect for Directors to hold shares in
the Company, although the Board welcomes such holdings. The interests of each
Director includes the interests of connected persons of which the Company is aware.
Connected persons are persons closely associated as defined in the Market Abuse
Regulation.
Statement of shareholder voting
The Company is committed to ongoing shareholder dialogue and takes an active
interest in voting outcomes. Where there are substantial votes against resolutions in
relation to Directors’ remuneration, the reasons for any such vote will be sought and any
actions in response will be detailed in future Directors’ Remuneration Reports.
Directors’
Remuneration
Report
Continued
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Annual Report Governance continued 51
Governance
The voting on the 2023 Remuneration Policy Implementation Report that was put to
shareholders at the AGM on 12 June 2024 and on the Directors’ Remuneration Policy
that was put to shareholders at the AGM on 27 June 2023 is set out below.
Total
Votes Votes Votes Votes
Resolution For % Against % Cast Withheld
Approval of the Remuneration Policy
Implementation Report for the year ended
31 December 2023 21,774,587 99.9 16,000 0.1 21,790,587 93,822
Approval of the Directors’ Renumeration Policy 22,711,675 99.9 21,763 0.1 22,733,438 91,792
Lady Rachael Robathan
Chair of the Nomination & Remuneration Committee
7 April 2025
Directors’
Remuneration
Report
Continued
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52 Annual Report Governance continued
The Directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each financial
year. Under that law the Directors have prepared the financial statements in accordance
with UK-adopted International Accounting Standards and in accordance with those
parts of the Companies Act 2006 that apply to companies reporting under UK-adopted
International Accounting Standards.
Under company law, Directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs of the Company and
of the profit or loss of the Company for that period. In preparing the financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable UK-adopted International Accounting Standards have been
followed, subject to any material departures disclosed and explained in the financial
statements;
• make judgements and accounting estimates that are reasonable and prudent; and
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
Under applicable law and regulations, the Directors are responsible for preparing
aStrategic Report, a Directors’ Report, a Corporate Governance Statement and
aDirectors’ Remuneration Report which comply with that law and those regulations.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company and enable them to ensure
that the financial statements and the Remuneration Report comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors have delegated responsibility to the Investment Manager for the
maintenance and integrity of the Company’s website.
Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Statement of
Directors’
Responsibilities
for the Annual
Report
Lucy Walker
Chair of the Board of Directors
7 April 2025
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Annual Report Governance continued 53
Governance
Directors’ confirmations
The Directors consider that the Annual Report and financial statements, taken as
awhole, is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Company’s position and performance, business model
and strategy. Each of the Directors, whose names and functions are listed on pages29
and 30 confirm that, to the best of their knowledge:
• the Company’s financial statements, which have been prepared in accordance with
UK-adopted international accounting standards and in accordance with those parts
of the Companies Act 2006 that apply to those companies reporting under
UK-adopted international accounting standards, give a true and fair view of the
assets, liabilities, financial position and net return of the Company; and
• the Strategic Report includes a fair review of the development and performance of
the business and the position of the Company, together with a description of the
principal risks and uncertainties that it faces.
For and on behalf of the Board
Lucy Walker
Chair of the Board of Directors
7 April 2025
Statement of
Directors’
Responsibilities
for the Annual
Report
Continued
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54 Annual Report Governance continued
I am pleased to present the Audit Committee’s report to shareholders for the year ended
31December 2024.
Composition
All of the Directors are members of the Audit Committee (the “Committee”).
According to the UK Code the Chair of the Board should not be a member. However, the
AIC Code permits the Chair to be a member of, but not chair, the Committee if they were
independent on appointment – which the Company Chair was and in the Board’s view
continues to be. In view of the size of the Board, the Directors feel it is appropriate for
her to continue as a member, so that the Committee can continue to benefit from her
experience and knowledge.
The members of the Committee consider that they have the requisite skills and
experience to fulfil the responsibilities of the Committee. The Committee as a whole has
competence relevant to the sector.
Role and Responsibilities
The Committee’s principal functions are:
• to monitor the integrity of the Company’s annual and half-year financial statements
and any announcements relating to the Company’s financial performance and to
challenge judgements and assumptions made in their construction;
• to review the internal controls and risk management systems of the Company and
its third-party service providers;
• to make recommendations to the Board regarding the appointment, re-appointment
or removal of the external Auditor, and to be responsible for leading an audit tender
process at least once every 10 years;
• to have primary responsibility for the Company’s relationship with the external
Auditor, including reviewing the external Auditor’s independence and objectivity as
well as the effectiveness of the external audit process;
• to agree the scope of the external Auditor’s work and to approve their remuneration;
and
• to develop and implement policy on the engagement of the external Auditor to
supply non-audit services and to review and approve any non-audit work to be
carried out by the external Auditor.
Meetings
The Committee meets formally at least twice a year. There were three Committee
meetings during the year ended 31 December 2024. Inaddition, the Committee Chair
met the audit partner for a private discussion on the audit process and was pleased to
find that the auditors had nothing significant to bring to her attention.
Committee evaluation
The Committee’s activities fell within the scope of the review of Board effectiveness
performed during the year as mentioned on page 39.
Audit
Committee
Report
Farah Buckley
Chair of the
Audit Committee
7 April 2025
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Annual Report Governance continued 55
Governance
Work of the Audit Committee
During the year ended 31 December 2024 the Committee:
• Reviewed the Audit Committee terms of reference and the Company’s accounting
policies;
• Reviewed and recommended to the Board for Approval the Annual Report and
financial statements for the year to 31 December 2023;
• reviewed and recommended to the Board for Approval the Half-yearly Report for the
six months to 30 June 2024;
• In relation to the financial statements, agreed the valuations of the Company’s
portfolio of investments and considered significant accounting matters including
going concern;
• Considered the Company’s exposure to illiquid investments;
• Met with the external auditor without management present;
• Reviewed and approved the audit plan with respect to the 31 December 2024 year
end audit;
• Discussed and approved the audit fee;
• Reviewed the Company’s key risks and internal controls, including reviewing the
internal control reports of its key service providers; and
• Assessed whether there was a need for an internal audit function.
Internal Controls and Risk Management
The Board has overall responsibility for risk management and for the review of the
internal controls of the Company.
The Audit Committee, on behalf of the Board, reviews the key business, operational,
compliance and financial risks facing the Company. In arriving at its judgement of what
risks the Company faces, the Committee and the Board have considered the Company’s
operations in light of the following factors:
• the nature of the Company, with all management functions outsourced to thirdparty
service providers;
• the nature and extent of risks which it regards as acceptable for the Company to
bear within its overall investment objective;
• the likelihood of such risks crystallising; and
• the Company’s ability to reduce the likelihood and impact of such risk.
A summary of the principal risks facing the Company is provided in the Strategic Report
on pages 24 to 26.
Against this background, a risk matrix has been developed which covers the key risks
the Company faces, the likelihood of their occurrence and their potential impact, how
these risks are monitored and the mitigating controls in place.
The Board has delegated to the Audit Committee responsibility for the review and
maintenance of the risk matrix and it reviews, in detail, the risk matrix each time it
meets, bearing in mind emerging risks and any changes to the Company, its
environment or service providers since the last review. Any significant changes to the
risk matrix are discussed with the whole Board.
There were no changes to the Company’s risk management processes during the year
and no significant failings or weaknesses were identified from the Committee’s most
recent risk review.
The Committee reviews internal controls reports from its principal service providers on
an annual basis. The Committee is satisfied that appropriate systems have been in
place for the year under review and up to the date of approval of this report.
Audit
Committee
Report
Continued
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56 Annual Report Governance continued
Financial statements and significant accounting matters
The Audit Committee considered the following significant accounting matters in relation
to the Company’s financial statements for the year ended 31 December 2024:
Performance fee
No performance fee was earned for the performance period from 1 January 2024 to
31December 2024. The clawback period in relation to the performance fee for the year
to 31 December 2021 ended on 31 December 2024 and this resulted in an entitlement
for the Company to claw back 89,096 shares from Phoenix. These shares were duly
delivered to the Company and cancelled in January 2024. This claw back was treated in
the financial statements for the year ended 31 December 2024 as having occurred as at
31 December 2024. Performance fees have been accounted for under IFRS 2 Share-
based Payment in the Company’s financial statements on the basis of accounting
advice sought in 2022. This varies from the treatment used for the purpose of the
unaudited net asset values per share released daily by the Company because the Board
believes that for that purpose recognising performance fee charges and any subsequent
clawback on aliability basis i.e. divergent from IFRS 2, better represents the related
economic impacts and is more informative to investors.
Valuation of investments
The Company holds most of its assets in quoted investments. The valuation of these
investments is the most material matter in the production of the financial statements.
The Audit Committee reviewed the procedures in place for ensuring accurate valuation
of investments and discussed the valuation of the Company’s investments at the year
end with the Investment Manager and the Administrator. The results of the audit in this
area were discussed with the external auditor, with no significant issues arising.
The Company holds a small proportion of the portfolio in unquoted companies. These
were predominantly holdings transferred to the Company from ATS and, given the
proximity of the transfer to the Company's year end, these investments have been
valued at the values ascribed for the purposes of the transaction. The valuations of the
unquoted holdings were discussed with the external auditor.
Going concern
The Audit Committee reviewed the Company’s financial resources and concluded that it
is appropriate for the Company’s financial statements to be prepared on a going
concern basis as described in the Directors’ Report.
External Auditor
Chris Meyrick was the audit partner for the financial year under review, which was the
third audit of the Company’s financial statements conducted by BDO LLP since their
appointment. He confirmed BDO LLP’s willingness to continue to act as Auditor to the
Company for the forthcoming financial year. The re-appointment of BDO will be put to
shareholders at the forthcoming AGM.
Audit
Committee
Report
Continued
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Annual Report Governance continued 57
Governance
Conclusion with respect to the Annual Report and financial
statements
The Audit Committee has concluded that the Annual Report for the year ended
31December 2024, taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company’s position and
performance, business model and strategy. The Audit Committee has reported its
conclusions to the Board of Directors. The Audit Committee reached this conclusion
through a process of review of the document and enquiries to the various parties
involved in the production of the annual report.
Provision of non-audit services
The Audit Committee has put in place a non-audit services policy to ensure that the
auditor’s independence and objectivity are not impaired. The Company has appointed
Ernst & Young to provide tax compliance services. No non-audit work was performed for
the Company by the auditor during the year ended 31 December 2024 and the Committee
has no current plans to seek any non-audit services from the auditor.
Effectiveness of external audit
The Audit Committee is responsible for reviewing the effectiveness of the external audit
process. The Committee undertook a formal evaluation of the audit process following
completion of the December 2023 year end audit. The Committee was, and continues to
be, satisfied with the Auditor’s independence and the effectiveness of the audit process,
together with the degree of diligence and professional scepticism brought to bear. The
Audit Committee received a presentation of the audit plan for the December 2024 year
end audit from the external auditor prior to its commencement and a presentation of the
results of the audit following completion of the main audit testing.
Farah Buckley
Chair of the Audit Committee
7 April 2025
Audit
Committee
Report
Continued
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58 Annual Report Governance continued
Independent
Auditor’s
Report to the
Members of
Aurora
Investment
Trust plc
Chris Meyrick
Senior Statutory Auditor
for and on behalf of
BDO LLP
Statutory Auditor,
Chartered Accountants
London
7 April 2025
Opinion on the financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s affairs as at 31 December
2024 and of its net return for the year then ended;
• have been properly prepared in accordance with UK adopted international
accounting standards; and
• have been prepared in accordance with the requirements of the Companies Act
2006.
We have audited the financial statements of Aurora UK Alpha plc (the ‘Company’) for the
year ended 31 December 2024 which comprise the Income Statement, the Statement of
Financial Position, the Statement of Changes in Equity, the Cash Flow Statement and
notes to the financial statements, including a summary of material accounting policies.
The financial reporting framework that has been applied in their preparation is applicable
law and UK adopted international accounting standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK)
(ISAs (UK)) and applicable law. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion. Our audit opinion is consistent with
the additional report to the Audit Committee.
Independence
Following the recommendation of the Audit Committee, we were appointed by the Board
of Directors on 20 September 2022 to audit the financial statements for the year ended
31 December 2022 and subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is three years, covering the years
ended 31 December 2022 to 31 December 2024. We remain independent of the
Company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to
listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. The non-audit services prohibited by that standard
were not provided to the Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the
going concern basis of accounting in the preparation of the financial statements is
appropriate. Our evaluation of the Directors’ assessment of the Company’s ability to
continue to adopt the going concern basis of accounting included:
• Evaluating the appropriateness of the Directors’ method of assessing the going
concern in light of economic and market conditions by reviewing the information
used by the Directors in completing their assessment;
• Assessing the appropriateness of the Directors’ assumptions and judgements made
by comparing the prior year forecasted costs to the actual costs incurred to assess
the accuracy of historical forecasting;
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Annual Report Governance continued 59
Governance
• Assessing the appropriateness of the Directors’ assumptions and judgements made
in their base case and stress tested forecasts, including consideration of the
available cash resources relative to forecast expenditure and commitments;
• Reviewing the wording of the going concern disclosures, and assessed its
consistency with the directors’ assessment of going concern, including underlying
management forecasts;
• Challenging the Directors’ assumptions and judgements made in their forecasts
including performing an independent analysis of the liquidity of the portfolio; and
• Reviewing the Directors’ assessment of the likelihood of the passing of the
upcoming continuation vote, including consideration of engagement with major
shareholders and historic records.
Based on the work we have performed, we have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant
doubt on the Company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
In relation to the Company’s reporting on how it has applied the UK Corporate
Governance Code, we have nothing material to add or draw attention to in relation to the
Directors’ statement in the financial statements about whether the Directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern
are described in the relevant sections of this report.
Overview
2024 2023
Key audit matters Valuation and ownership of listed and
unlisted investments
Materiality Company financial statements as a whole:
£3.00 million (2023: £2.10 million) based on 1% (2023: 1%) of net
assets.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and its
environment, including the Company’s system of internal control, and assessing the
risks of material misstatement in the financial statements. We also addressed the risk
of management override of internal controls, including assessing whether there was
evidence of bias by the Directors that may have represented a risk of material
misstatement.
Independent
Auditor’s
Report
Continued
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60 Annual Report Governance continued
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period and include the
most significant assessed risks of material misstatement (whether or not due to fraud)
that we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit, and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
How the scope of our audit addressed the key
Key audit matter audit matter
We responded to this matter by testing the
valuation and ownership of the portfolio of
listed and unlisted investments.
In respect of the listed investments, we have
performed the following procedures:
• Assessed the design and implementation
of controls surrounding the valuation of
the listed investments;
• Confirmed the year-end bid price was
used by agreeing to externally quoted
prices;
• Assessed if there were contra indicators,
such as liquidity considerations, to
suggest bid price is not the most
appropriate indication of fair value by
considering the realisation period for
individual holdings;
• Obtained direct confirmation of the
number of shares held per equity
investment from the custodian regarding
all investments held at the balance sheet
date; and
• Recalculated the valuation by multiplying
the number of shares held per the
statement obtained from the custodian
by the valuation per share.
In respect of the unlisted investments, we
have performed the following procedures:
• Assessed the design and implementation
of controls surrounding the valuation of
the unlisted investments.
• Challenged whether the valuation
methodology was the most appropriate
in the circumstances under the
International Private Equity and Venture
Capital Valuation (“IPEV”) Guidelines and
the applicable accounting standards.
The investment portfolio at the
year-end comprised of listed
and unlisted investments, of
£272.1m and £4.8m
respectively, held at fair value
through profit or loss.
We considered the valuation
and ownership of investments
to be a significant audit area
as investments represent the
most significant balance in the
financial statements and
underpins the principal activity
of the entity.
There is a risk that the prices
used for the listed investments
held by the Company are not
reflective of fair value. We do
not consider the use of bid
price for listed investments to
be subject to significant
estimation uncertainty.
The unlisted investments may
have significant judgement
involved in selecting a
valuation methodology and
estimation uncertainty
involved in determining their
valuations.
There is also a risk of error in
the recording of investment
holdings such that those
recordings do not
appropriately reflect the
property of the Company.
Valuation and
ownership of listed
and unlisted
investments
(Note 1(c) and
Note2 to the
financial
statements
Independent
Auditor’s
Report
Continued
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Annual Report Governance continued 61
Governance
How the scope of our audit addressed the key
Key audit matter audit matter
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in
evaluating the effect of misstatements. We consider materiality to be the magnitude by
which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements
exceed materiality, we use a lower materiality level, performance materiality, to
determine the extent of testing needed. Importantly, misstatements below these levels
will not necessarily be evaluated as immaterial as we also take account of the nature of
identified misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
For these reasons and given
the materiality of the balance
to the financial statements as
a whole, we considered this to
be a Key Audit Matter.
• Verified the cost or price of recent
investments to supporting
documentation;
• Considered whether the investment was
an arm’s length transaction through
reviewing the parties involved in the
transaction and checking whether or not
they were already investors of the
investee Company; and
• Considered whether there were any
indications that the cost or price of
recent investment was no longer
representative of fair value considering,
inter alia, the current performance of the
investee company and the milestones
and assumptions set out in the
investment proposal.
Key observations:
Based on our procedures performed we are
satisfied that the valuation and ownership of
investments are not materially misstated.
Independent
Auditor’s
Report
Continued
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62 Annual Report Governance continued
Based on our professional judgement, we determined materiality for the financial
statements as a whole and performance materiality as follows:
Company Financial Statements
2024 2023
£million £million
Materiality 3.00 2.10
Basis for
determining 1% of net assets 1% of net assets
materiality
Rationale for the As an investment trust, the net asset value is the key measure of
benchmark applied performance for users of the financial statements.
Performance
materiality
2.25 1.57
Basis for determining
performance 75% of materiality 70% of materiality
materiality
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit
differences in excess of £150,000 (2023: £105,000). We also agreed to report
differences below this threshold that, in our view, warranted reporting on qualitative
grounds.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the Annual Report other than the financial
statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements, or our
knowledge obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
The level of performance materiality applied was set after having
considered a number of factors including the expected total value
of known and likely misstatements and the level of transactions in
the year.
Rationale for the
percentage applied
for performance
materiality
Independent
Auditor’s
Report
Continued
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Annual Report Governance continued 63
Governance
Corporate Governance Statement
The Listing Rules require us to review the Directors’ statement in relation to going
concern, longer-term viability and that part of the Corporate Governance Statement
relating to the Company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the Corporate Governance Statement is materially consistent with
the financial statements, or our knowledge obtained during the audit.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the
course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report
on certain opinions and matters as described below.
• The Directors' statement with regards to the appropriateness of
adopting the going concern basis of accounting and any
material uncertainties identified set out on pages 37 and 38;
and
• The Directors’ explanation as to their assessment of the
Company’s prospects, the period this assessment covers and
why the period is appropriate set out on pages 26 and 27.
Going concern and
longer-term
viability
• Directors' statement on fair, balanced and understandable set
out on page 53;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page24;
• The section of the annual report that describes the review of
effectiveness of risk management and internal control systems
set out on page 46; and
• The section describing the work of the audit committee set out
on page 55.
Other Code
provisions
In our opinion, based on the work undertaken in the course of the
audit:
• the information given in the Strategic report and the Directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been
prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or the
Directors’ report.
Strategic report
and Directors’
report
In our opinion, the part of the Directors’ remuneration report to be
audited has been properly prepared in accordance with the
Companies Act 2006.
Directors’
remuneration
Independent
Auditor’s
Report
Continued
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64 Annual Report Governance continued
Responsibilities of Directors
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are
responsible for the preparation of the financial statements and for being satisfied that
they give a true and fair view, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
• adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches
not visited by us; or
• the financial statements and the part of the Directors’
remuneration report to be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
Matters on which
we are required to
report by
exception
Independent
Auditor’s
Report
Continued
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Annual Report Governance continued 65
Governance
Extent to which the audit was capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
• Our understanding of the Company and the industry in which it operates;
• Discussion with the Investment Manager, Administrator and the Audit Committee;
• Obtaining an understanding of the Company’s policies and procedures regarding
compliance with laws and regulations; and
• Review of any legal correspondence.
We considered the significant laws and regulations to be Companies Act 2006, the FCA
listing and DTR rules, the principles of the AIC Code of Corporate Governance, industry
practice represented by the AIC SORP, International Financial Reporting Standards
(“IFRS”), and the Company’s qualification as an Investment Trust under UK tax
legislation as any non-compliance of this would lead to the Company losing various
deductions and exemptions from corporation tax.
Our procedures in respect of the above included:
• Agreement of the financial statement disclosures to underlying supporting
documentation;
• Enquiries of the Investment Manager, Administrator and Audit Committee relating to
the existence of any non-compliance with laws and regulations;
• Review of a selection of legal invoices to understand the nature of legal costs
incurred;
• Reviewing minutes of meeting of Those Charged With Governance throughout the
period for instances of non-compliance with laws and regulations; and
• Reviewing the assessment in relation to Investment Trust compliance to check that
the Company was meeting its requirements to retain their Investment Trust Status.
Independent
Auditor’s
Report
Continued
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66 Annual Report Governance continued
Fraud
We assessed the susceptibility of the financial statements to material misstatement
including fraud.
Our risk assessment procedures included:
• Enquiry with the Investment Manager, Administrator and the Audit Committee
regarding any known or suspected instances of fraud;
• Review of minutes of meetings of the Audit Committee for any known or suspected
instances of fraud; and
• Discussion amongst the engagement team as to how and where fraud might occur
in the financial statements.
Based on our risk assessment, we considered the areas most susceptible to be
management override of controls.
In addressing the risk of management override of control, we:
• With respect to the estimates and judgements involved in the valuation of the
unlisted investments, the procedures set out in the Key Audit Matter section in our
report were performed;
• With respect to the estimates and judgements applied by management in the
accounting of the performance fee assessed their appropriateness and the
existence of any systematic bias;
• Considered the opportunity and incentive to manipulate accounting entries and
assessed the reasonableness of relevant adjustments made in the period end
financial reporting process;
• Reviewed for significant transactions outside the normal course of business;
• Incorporated an element of unpredictability in the nature, timing and extent of audit
procedures; and
• Performed a review of unadjusted audit differences, if any, for indications of bias or
deliberate misstatement.
We also communicated relevant identified laws and regulations and potential fraud risks
to all engagement team members, who were deemed to have the appropriate
competence and capabilities and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the
financial statements, recognising that the risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery, misrepresentations or
through collusion. There are inherent limitations in the audit procedures performed and
the further removed non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely we are to become
aware of it.
A further description of our responsibilities is available on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
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Annual Report Governance continued 67
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Chris Meyrick (Senior Statutory Auditor)
For and on behalf of BDO LLP Statutory Auditor
55 Baker Street
London
W1U 7EU
7 April 2025
BDO LLP is a limited liability partnership registered in England and Wales (with
registered number OC305127).
Governance
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68 Annual Report Financial Statements
Financial
Statements
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Annual Report Financial Statements 69
Financial Statements
Year ended Year ended
31 December 2024 31 December 2023
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
2 (Losses)/gains on – (13,648) (13,648) – 53,535 53,535
investments
Gains on currency – 202 202 – – –
3 Income 3,568 – 3,568 3,459 – 3,459
Gross return 3,568 (13,446) (9,878) 3,459 53,535 56,994
4 Investment – 166 166 – (2,824) (2,824)
performance fee
clawback/(charge)
4 Other expenses (966) 14 (952) (749) – (749)
Net return before 2,602 (13,266) (10,664) 2,710 50,711 53,421
tax
5 Tax (46) – (46) (49) – (49)
Net return 2,556 (13,266) (10,710) 2,661 50,711 53,372
for the year
8 Return per share –
basic and diluted 3.21p (16.66)p (13.45)p 3.50p 66.66p 70.16p
The total column represents the Income Statement of the Company, prepared in
accordance with International Financial Reporting Standards (“IFRSs”) as adopted by
the United Kingdom.
The revenue and capital columns, including the revenue and capital earnings per
ordinary share data, are supplementary information prepared under guidance published
by the AIC.
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the period.
The Company does not have any other comprehensive income. Therefore, no separate
Statement of Comprehensive Income has been presented.
The notes on pages 74 to 92 form part of these accounts.
Income Statement
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70 Annual Report Financial Statements continued
31 December 31 December
2024 2023
Notes £’000 £’000
NON-CURRENT ASSETS
2 Investments held at fair value through profit or loss 276,922 202,209
CURRENT ASSETS
6 Trade and other receivables 1,109 372
Cash and cash equivalents 17,076 6,248
18,185 6,620
TOTAL ASSETS 295,107 208,829
CURRENT LIABILITIES:
Other payables (1,606) (115)
(1,606) (115)
NET ASSETS 293,501 208,714
EQUITY
9 Called up share capital 28,665 19,019
Share premium account 202,665 111,166
Capital redemption reserve 312 312
Treasury shares (22) –
9 Other reserve (559) (219)
9 Share-based – 166
payment reserve
9 Capital reserve 61,534 74,999
Revenue reserve 906 3,271
TOTAL EQUITY 293,501 208,714
9 Number of voting shares in issue 114,572,742 76,078,460
10 NAV per share 256.17p 274.34p
The notes on pages 74 to 92 form part of these accounts.
Statement of Financial Position
Approved by the Board of
Directors on 7 April 2025 and
signed on its behalf by:
Lucy Walker
Chair of the Board
Company no. 03300814
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Annual Report Financial Statements continued 71
Financial Statements
Called up Share Capital Treasury Other Share- Capital Revenue Total
share premium redemption shares reserve based reserve reserve
capital account reserve payment
reserve
Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening equity 19,019 111,166 312 – (219) 166 74,999 3,271 208,714
Net return for the year – – – – – – (13,432) 2,556 (10,876)
9 Share-based payment credit – – – – – (166) 166 – –
4 Performance fee clawback in
relation to performance
year 2021 – – – (22) 221 – (199) – –
4 Share issuance in
relation to 2023
performance fee 54 507 – – (561) – – – –
7 Dividends paid – – – – – – – (4,921) (4,921)
Issue of new Ordinary Shares
on the combination with
Artemis Alpha Trust plc 9,592 90,992 – – – – – – 100,584
Closing equity 28,665 202,665 312 (22) (559) – 61,534 906 293,501
The notes on pages 74 to 92 form part of these accounts.
Statement of Changes in Equity
Year to 31 December 2024
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72 Annual Report Financial Statements continued
Called up Share Capital Treasury Other Share- Capital Revenue Total
share premium redemption shares reserve based reserve reserve
capital account reserve payment
reserve
Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Opening equity 19,152 111,166 179 (133) (2,877) – 24,421 2,870 154,778
Net return for the year – – – – – – 53,369 2,661 56,030
9 Shares cancelled in relation
to 2021 performance fee
clawback (crystallised) (133) – 133 133 – – (133) – –
4 Performance fee in relation
to performance year 2020
(crystallised) – – – – 2,658 – (2,658) – –
4 Performance fee charge in
relation to performance
year 2021 – – – – – 166 – – 166
7 Dividends paid – – – – – – – (2,260) (2,260)
Closing equity 19,019 111,166 312 – (219) 166 74,999 3,271 208,714
The notes on pages 74 to 92 form part of these accounts.
Statement of Changes in Equity
Year to 31 December 2023
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Annual Report Financial Statements continued 73
Financial Statements
Year to Year to
31 December 31 December
Note 2024 2023
£’000 £’000
Net cash inflow from operating activities 11 3,324 2,607
Investing activities
Payments to acquire non-current asset investments 2 (29,265) (11,503)
Receipts on disposal of non-current asset investments 2 41,488 12,056
Net cash inflow from investing activities 12,223 553
Financing activities
Dividends paid 7 (4,921) (2,260)
Net cash outflow from financing activities (4,921) (2,260)
Increase in cash and cash equivalents 10,626 900
Cash and cash equivalents at beginning of year 6,248 5,348
Gains on currency 202 –
Cash and cash equivalents at the end of the year 17,076 6,248
The notes on pages 74 to 92 form part of these accounts.
Cash Flow Statement
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74 Annual Report Financial Statements continued
Notes to the
Financial
Statements
1. Reporting entity
The Company is a closed-ended investment company, registered in England and Wales
on 10 January 1997 with Company number 03300814. The Company’s registered office
is 25 Southampton Buildings, London WC2A 1AL.
Details of the Directors, Investment Manager and Advisers can be found on pages29
to31.
Basis of Accounting
The financial statements of the Company have been prepared in accordance with UK-
adopted International Accounting Standards (“IFRS”) and the applicable legal
requirements of the Companies Act 2006.
The annual financial statements have also been prepared in accordance with the
Association of Investment Companies (“AIC”) Statement of Recommended Practice
(“SORP”) for the financial statements of investment trust companies and venture capital
trusts, except to any extent where it is not consistent with the requirements of IFRS, then
this will be noted and explained.
In order to better reflect the activities of an investment trust company and in
accordance with guidance issued by the AIC, supplementary information which
analyses the Income Statement between items of a revenue and capital nature has been
prepared alongside the Income Statement.
The functional currency of the Company is Sterling because this is the currency of the
primary economic environment in which the Company operates. The financial
statements are presented in Sterling rounded to the nearest thousand, except where
otherwise indicated.
Going concern
The financial statements have been prepared on the going concern basis. The Directors
have a reasonable expectation, after making enquiries, that the Company has adequate
resources to continue in existence for at least 12 months from the date of approval of
this Annual Report.
In reaching this conclusion, the Directors have considered the liquidity of the Company’s
portfolio of investments as well as its latest financial position and forecast of income
and expenses.
As at 31 December 2024, the Company held £17,076,000 (2023: £6,248,000) in cash
andcash equivalents, £272,105,000 (2023: £200,733,000) in quoted investments and
£4,817,000 (2023: £1,476,000) in unquoted investments. The total ongoing operating
expenses for the year ended 31 December 2024 were £966,000 (2023: £817,000). It is
estimated that 39.0% of the Company’s latest portfolio could be liquidated in a non-
market impacting way within 7days, using 25% of historic three-month average daily
volume. This approach is considered conservative as it does not include the Company’s
ability to access liquidity through block trades.
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Annual Report Financial Statements continued 75
Financial Statements
The management has assessed the Company’s going concern status under stress
scenarios, which incorporated key assumptions such as significant falls in the
Company’s investment portfolio and investment income. These scenario tests
encompassed possible impacts from factors such as the existing and potential further
risks arising from the conflicts in the Middle East and Ukraine. A prolonged and deep
market decline could lead to falling investment values or interruptions to cash flow,
however the Company currently has more than sufficient liquidity to meet any liabilities
when they fall due in the foreseeable future. The Board is keeping the development of
external risk factors under close scrutiny and does not believe that these will have any
impact on the Company’s going concern status.
The Board notes that at the date of approval of this Annual Report, the aggregate of the
Company’s cash and cash equivalents balance and investments held is well in excess of
the estimated level of liabilities, and the Company has substantial operating expenses
cover.
The next continuation vote will take place at the Company’s AGM on 11 June 2025.
Given the positive support for the Company in the recent corporate transaction, the
Board expects the resolution to be passed and not impact the Company’s going concern
status.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment being
an investment business in accordance with its Investment Objective and Policy.
Material accounting policies
The material accounting policies adopted are described below:
a. Accounting Convention
The accounts are prepared under the historical cost basis, except for the measurement
at fair value of investments and measurement of performance fees awarded.
b. Issue of Shares Pursuant to the Combination of Artemis Alpha Trust plc
(“ATS”) with the Company
On 29 November 2024, the Company issued new ordinary shares to shareholders of ATS
in consideration for the receipt by the Company of assets pursuant to the combination
with ATS (see page 4 for more information). The cost to acquire the assets and liabilities
of ATS has been allocated between the acquired identifiable assets and liabilities based
on their relative fair values on the acquisition date without attributing any amount to
goodwill or to deferred taxes. Investments, cash and other assets were transferred from
ATS. All assets were acquired at their fair value. The value of the assets received, in
exchange for shares issued by the Company, have been recognised in share capital and
share premium, as shown in the Statement of Changes in Equity. Listing costs in respect
of the shares issued have been recognised in share premium, whereas other costs in
relation to the combination have been recognised through capital in the Income
Statement.
c. Investments
Investments are measured at fair value through profit or loss. Gains or losses on
investments and transaction costs on acquisition or disposal of investments are
included in the Income Statement as a capital item.
Notes to the
Financial
Statements
Continued
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76 Annual Report Financial Statements continued
Notes to the
Financial
Statements
Continued
1. Reporting entity continued
For investments that are actively traded in organised financial markets, fair value is
determined by reference to stock exchange quoted market bid prices at the close of
business on the year-end date. All purchases and sales of investments are recognised
on the trade date, i.e. the date that the Company commits to purchase or sell an asset.
Unquoted investments are measured at fair value in accordance with the International
Private Equity and Venture Capital valuation guidelines and IFRS 13. Further details on
the valuation of unquoted investments may be found in Notes 1(g) and 13.
d. Income from Investments
Special Dividends are assessed on their individual merits and are credited to the capital
column of the Income Statement if the substance of the payment is a return of capital.
All other investment income is taken to the revenue column of the Income Statement.
e. Share Capital and Reserves
The share capital represents the nominal value of equity shares.
The share premium account represents the accumulated premium paid for shares
issued above their nominal value less issue expenses. This reserve is not distributable.
The capital redemption reserve arises when shares are bought back by the Company or
returned by the Investment Manager under the performance fee clawback arrangement,
and subsequently cancelled, at which point an amount equal to the par value of the shares
is transferred from share capital to this reserve. This reserve is not distributable.
Other reserve represents the restricted shares issued in settlement of performance fees
that are still within a lock-in period. This reserve is not distributable.
The share-based payment reserve represents the cumulative share-based payment
expenses in relation to performance fees earned. Upon vesting, the relevant share-based
payment reserve balance will be transferred to the realised capital reserve. This reserve
is not distributable.
The capital reserve represents realised and unrealised capital and exchange gains and
losses on the disposal and revaluation of investments and of foreign currency items.
Inaddition, performance fee costs are allocated to the capital reserve. The amount
within the capital reserve less unrealised gains (those on investments not readily
convertible to cash) is available for distribution. The realised gains within the capital
reserve amounted to £56,397,000 as at 31 December 2024 (2023: £43,101,000). The
Company may use this reserve for share buybacks, but otherwise has no intention to
make distributions out of its capital reserve.
The revenue reserve represents the surplus of accumulated revenue profits, being the
excess of income derived from holding investments less the costs associated with
running the Company. This reserve may be distributed by way of dividends, to the extent
realised.
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Annual Report Financial Statements continued 77
Financial Statements
f. Expenses
All expenses are charged through the revenue column of the Income Statement except
the following:
• expenses that are incidental to the acquisition or disposal of an investment are
charged to the capital column of the Income Statement; and
• expenses are charged to the capital column of the Income Statement where
aconnection with the maintenance or enhancement of the value of the investments
can be demonstrated. In this respect the performance fees have been charged to the
Income Statement in line with the Board’s expected long-term returns, in the form of
capital gains, from the Company’s portfolio.
g. Critical Judgements, Estimations or Assumptions
The Directors have reviewed matters requiring judgements, estimations or assumptions.
The preparation of the financial statements requires management to make judgements,
estimations or assumptions that affect the amounts reported for assets and liabilities
as at the year end date and the amounts reported for revenue and expenses during the
year. However, the nature of the estimation means that actual outcomes could differ
from those estimates.
Performance fees
The performance fee is calculated on the Company’s NAV outperformance against its
benchmark. Performance fees, if earned, are settled by the issue of shares in the
Company, which are subject to a fixed three-year clawback period. If the
outperformance versus the index reverses on the third-year anniversary the Company is
entitled to recover and cancel the shares.
In measuring the performance fee, the Board has made judgements in relation to the
service period, which it considers to be the current year of service plus the further
threeyear clawback period. The Board has made the judgement that the performance
fee contains a non-market based performance condition since the hurdle is based on
the outperformance of the Company’s NAV against its benchmark.
However, as the performance fee is calculated as a fixed amount which is settled by
avariable number of shares, the cumulative charge over the vesting period will equate to
either the amount calculated at the end of the first year where the performance of the
Investment Manager remains on target, or a lower amount where it is considered that
the clawback will take effect. This is as a result of the performance fee charge being
adjusted during the service period, which is a requirement of IFRS 2 where there is
anon-market based performance condition.
The performance fee is recognised on a straight line basis in the Income Statement and
is based on the outcome of the performance fee calculation as stated in the Investment
Management Agreement. This amount excludes the projection of whether a clawback
may occur at the end of the performance period. Clawbacks are adjusted based on the
management’s expectation in terms of the number of restricted shares that will
ultimately vest at each reporting date, and if applicable, credited back to the Income
Statement.
The Board has considered it necessary to make certain judgements in relation to the
recognition and measurement of the performance fee, which it considers are reasonable
and supportable. However, it is acknowledged that if alternative judgements were made,
for accounting purposes, the measurement of the performance fee charge to the
income statement may be significantly different in timing within the service period.
Notes to the
Financial
Statements
Continued
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78 Annual Report Financial Statements continued
1. Reporting entity continued
The Investment Manager earned a performance fee of £560,903 in 2023 and this was
settled by the issuance of 214,264 shares. As at 31 December 2024, based on estimates
produced by the Company’s in-house assessment model, it is expected that no shares
issued in relation to 2023 will ultimately vest at the end of the clawback period on
31December 2026, and therefore no IFRS 2 expenses have been charged in the Income
Statement.
No performance fee was earned during 2024 and the fee assessment period has been
extended to 2025.
The performance fee earned during 2021 crystallised on 31 December 2024. Due to the
Company underperformance versus the benchmark over the three-year clawback
period, 100% of the 89,096 shares issued to the Investment Manager were clawed back
as at 31 December and have subsequently been cancelled.
Valuation of Unquoted Investments
The Company has six unquoted investments, two of which are nil valued. These are
classified as Level 3 investments under the fair value hierarchy, please refer to Note 13
for definitions of fair value hierarchy. Their fair value as at 31 December 2024 is
£4,817,000 or 1.6% of NAV (2023: three unquoted investments, two of which were nil
valued, representing £1,476,000 or 0.7% of NAV).
The investments are valued in accordance with the Company’s accounting policy set out
in 1c. For each unlisted investment, one or more of the following valuation techniques is
used:
Market Approach: Based on recent investment price, market multiples, or industry
benchmarks.
Net Assets Approach: Based on the value of the investment’s underlying assets.
Price of Recent Investment: If a recent transaction has occurred, its price may indicate
fair value, though this is not automatic. Fair value is reassessed at each reporting date
for changes since the transaction.
Multiple Methodology: A revenue, EBITDA, or earnings multiple is applied to the
investee’s maintainable earnings or revenue.
Net Assets: Fair value is based on the proportionate share of the reported net asset
value, using valuation reports from the manager or general partner, adjusted for any
changes or new information up to the reporting date.
Observable market data is preferred when assessing the appropriate methodology.
In making the judgment that the valuation method is appropriate, the Board considers
additional information, including an independent valuation review report produced by
Kroll Advisory Ltd where available, and published financial statements.
A 10% reduction of the unquoted valuations would have a negative impact of £481,700
(2023: £147,600) on the Company’s NAV as at 31 December 2024 and a 10% increase
of the unquoted valuation would have the exact opposite impact.
Notes to the
Financial
Statements
Continued
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Annual Report Financial Statements continued 79
2. Investments held at Fair Value Through Profit or Loss
Year to Year to
31 December 31 December
2024 2023
£’000 £’000
Listed securities 272,105 200,733
Unquoted securities 4,817 1,476
Total non-current investments held at fair value
through profit or loss 276,922 202,209
Movements during the year:
Opening balance of investments, at cost 170,145 170,415
Additions, at cost 129,849 11,503
Disposals – proceeds received or receivable* (41,488) (12,056)
– realised profits 13,445 283
– at cost (28,043) (11,773)
Cost of investments held at fair value through profit
or loss at 31 December 271,951 170,145
Revaluation of investments to market value:
Opening balance 32,064 (21,188)
Unrealised (losses)/gains (27,093) 53,252
Balance at 31 December 4,971 32,064
Market value of non-current investments held at fair
value through profit or loss at 31 December 276,922 202,209
* These investments have been revalued over time and until they were sold any unrealised gains/losses were
included in the fair value of the investments.
Financial Statements
Notes to the
Financial
Statements
Continued
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80 Annual Report Financial Statements continued
2. Investments held at Fair Value Through Profit or Loss continued
Gains/(losses) on investments
Year to Year to
31 December 31 December
2024 2023
£’000 £’000
Realised gains on disposal of investments 13,445 283
Movement in unrealised (losses)/gains on investments held (27,093) 53,252
Total (losses)/gains on investments (13,648) 53,535
Transaction costs on investment purchases and sales for the year ended 31 December
2024 are disclosed in the following table.
Transaction costs
Year to Year to
31 December 31 December
2024 2023
£’000 £’000
Transaction costs on purchases of investments 127 16
Transaction costs on disposals of investments 21 9
Total transaction costs included in gains or losses on
investments at fair value through profit or loss 148 25
3. Income
Year to Year to
31 December 31 December
2024 2023
£’000 £’000
Income from investments:
UK dividends 2,396 3,017
Overseas dividends 695 370
Other income:
Deposit interest 477 72
Total income 3,568 3,459
Notes to the
Financial
Statements
Continued
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Annual Report Financial Statements continued 81
4. Investment Management Performance Fees and Other
Expenses
Year ended 31 December 2024 Year ended 31 December 2023
Revenue* Capital Total Revenue* Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management
performance fee
(clawback)/charge – (166) (166) – 2,824 2,824
Administration fees 350 – 350 279 – 279
Depositary and Custody fees 74 – 74 64 – 64
Registrar’s fees 43 – 43 36 – 36
Directors’ fees 140 – 140 139 – 139
Audit fees** 84 – 84 68 – 68
Printing 16 – 16 19 – 19
Broker’s fees 48 – 48 48 – 48
Professional fees 90 – 90 34 – 34
Consultancy fees 13 – 13 14 – 14
Miscellaneous expenses*** 108 – 108 48 – 48
Combination related expenses**** – (14) (14) – – –
Total other expenses 966 (180) 786 749 2,824 3,573
* All expenses include any relevant irrecoverable VAT.
** The amounts excluding VAT paid or accrued for the audit of the Company are £70,000 (2023: £57,000).
*** The 2023 miscellaneous expenses figure included £68,000 of credits in respect of historic periods received
by the Company during the year. No historic credits are included for 2024.
**** As part of the combination between the Company and Artemis Alpha Trust plc that took place on 29
November 2024, the Company incurred £735,000 of costs which have been charged to capital. Within the
terms of the combination, Phoenix will contribute £750,000 towards the offsetting of the direct costs related
to the transaction. The contribution will be made by way of a reduction in the performance fee payable to
Phoenix by the Company in respect of the financial years ending 31 December 2024, 31December 2025 and
31 December 2026. The fee reduction will constitute a waiver of the performance fee of £750,000. As no
performance fee was earnt in relation to this year end, a £750,000 receivable is recognised as at
31December 2024.
Investment Management Performance Fees
The Company’s Investment Manager does not earn an ongoing annual management
fee, but will be paid a performance fee equal to one third of any outperformance of the
Company’s NAV per share total return (including dividends and adjusted for the impact
of share buybacks and the issue of new shares) over the FTSE All-Share Index (total
return) for each financial year or, if applicable, extended performance period.
The total annual performance fee is capped at 4% per annum of the NAV of the
Company at the end of the relevant financial year, in the event that the NAV per Ordinary
Share has increased in absolute terms over the period, and 2% in the event that the NAV
per Ordinary Share has decreased in absolute terms over the period. Any
outperformance that exceeds these caps will be carried forward and only paid if the
Company outperforms, and the annual cap is not exceeded, in subsequent years.
The performance fee is subject to a high-water mark so that no fee will be payable in
any following year until all underperformance of the Company’s NAV since the last
performance fee was paid has been made up.
Performance fees are settled by issuance of new shares. Such shares are issued at the
NAV per share prevailing at the date of issue, so that the then current value of the shares
equates in terms of NAV to the performance fees calculated at the end of the relevant
financial period.
Financial Statements
Notes to the
Financial
Statements
Continued
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82 Annual Report Financial Statements continued
4. Investment Management Performance Fees and Other
Expenses continued
Any part of the performance fee that relates to the performance of Phoenix SG will be
accrued but will not be paid until such time as the Company’s investment in Phoenix SG
has been realised or is capable of realisation. The position will be reviewed at that time
by reference to the realised proceeds of sale or the fully realisable value of Phoenix SG
as compared to the original cost of acquisition.
Performance fees are calculated annually and, if earned, settled by way of share
issuance by the Company, 80% is settled shortly after the year end date and the
remaining 20% issettled upon approval of the Company’s Annual Report. Shares issued
to the Investment Manager are subject to a 3-year clawback period, during which the
Investment Manager is not entitled to sell, pledge or transfer the shares, but is entitled to
dividends and voting rights. If the Company’s NAV underperforms its benchmark index
on a total return basis over the clawback period, shares issued to the Investment
Manager will be proportionally or entirely clawed back and cancelled by the Company.
Share-based Payment
The performance fee arrangement is recognised as an equity settled share-based
payment under IFRS 2, and the related expenses are charged or credited in the Income
Statement on a straight-line basis over a vesting period of the performance fee
calculation period followed by 3 years of clawback period.
At the end of each reporting period, the Company reviews cumulative total returns
between the Company’s NAV and its benchmark index in relation to each performance
year in which a performance fee was earned and adjusts the cumulative charges of
share-based payment expenses accordingly.
A total share-based payment clawback of £166,000 has been recognised in the
Company’s Income Statement for the year ended 31 December 2024.
Notes to the
Financial
Statements
Continued
Year to Year to
31 December 2024 31 December 2023
Income Income
Fees Shares Vesting Statement Statement
Performance earned issued period charge/(credit) charge/(credit)
year (£) (Number of) (Years) Vesting status (£) (£)
2021 22,195 89,096 4 Fully clawed back on
31 December 2024 (165,896) 165,896
2022* – – n/a n/a n/a n/a
2023 560,903 172,373 5 Vesting period ends on
31 December 2026 – –
2024** – – n/a n/a n/a n/a
* No performance fee was earned during 2022 and the fee assessment period was extended to 2023.
** No performance fee was earned during 2024 and the fee assessment period has been extended to 2025.
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Annual Report Financial Statements continued 83
Share-based Payment Sensitivity Analysis
Performance fee period to
31 December
2022 and 2023
End date for clawback period 31 December
2026
As at 31 December 2024 %
Company cumulative NAV returns a (3.9)
Cumulative index returns b 4.6
Under performance (1+a)/(1+b)–1 (8.2)
Impact on the Company’s profit after tax for the year ended 31 December 2024, if the
Company’s underperformance changes by:
31 December
In relation to performance fee period 2022 and 2023
Percentage £’000
–10% –
–5% –
–1% –
+1% –
+5% –
+10% (281)
5. Taxation
Year to 31 December 2024 Year to 31 December 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Corporation tax – – – – – –
Overseas withholding tax 46 – 46 49 – 49
Tax charge in respect of the
current year 46 – 46 49 – 49
Financial Statements
Notes to the
Financial
Statements
Continued
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84 Annual Report Financial Statements continued
5. Taxation continued
Current taxation
The taxation charge for the year is different from the standard rate of corporation tax in
the UK of 25.0% (2023: 23.5%). The differences are explained below:
Year to Year to
31 December 31 December
2024 2023
£’000 £’000
Net return before tax (10,664) 53,421
Theoretical tax at UK corporation tax rate of 25.0%
(2023: 23.5%) (2,666) 12,554
Effects of:
Capital losses/(gains) that are not taxable 3,412 (12,581)
UK dividends which are not taxable (599) (709)
Overseas withholding tax 46 49
Overseas dividends that are not taxable (174) (87)
Excess management expenses 27 823
Tax charge in respect of the current year 46 49
Due to the Company’s status as an investment trust and its intention to continue
meeting the conditions required to maintain its status in the foreseeable future, the
Company has not provided deferred tax on any capital gains and losses arising on the
revaluation or disposal of investments.
Deferred Tax
The Company has £14,681,000 (2023: £14,524,000) in respect of excess unutilised
management expenses, equivalent to a potential tax saving of £4,000,000 (2023:
£3,631,000) at the prospective tax rate of 25% (2023: 25%) and £1,491,000 (2023:
£1,491,000) in respect of loan interest, equivalent to a potential tax saving of £373,000
(2023: £373,000) at the prospective tax rate of 25% (2023: 25%).
These amounts could be utilised to the extent that the Company has sufficient future
taxable revenue. A deferred tax asset has not been recognised in respect of these expenses.
6. Trade and other receivables
At At
31 December 31 December
2024 2023
Phoenix contribution receivable 750 –
Other receivables 359 372
Total trade and other receivables 1,109 372
The £750,000 contribution receivable (2023: £nil) from Phoenix Asset Management
Partners Limited ("Phoenix"), relates to the Manager’s contribution towards offsetting
the costs directly related to the ATS combination during the period. Please refer to
Note4 for further detail.
Notes to the
Financial
Statements
Continued
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Annual Report Financial Statements continued 85
7. Ordinary Dividends
Year to Year to
31 December 31 December
2024 2023
£’000 £’000
Dividends reflected in the financial statements:
Final dividend paid for the year ended 31 December 2023
at 3.45p per share (2022: 2.97p) 2,632 2,260
Interim dividend paid for the year ended 31 December 2024
at 3.00p per share (2023: nil) 2,289 –
Dividends not reflected in the financial statements:
No final dividend for the year ended 31 December 2024
(2023: 3.45p per share) – 2,632
8. Earnings Per Share
Earnings per share are based on the loss of £10,710,000 (2023: profit of £53,372,000)
attributable to the weighted average of 79,629,980 (2023: 76,078,460) ordinary shares of
25p in issue during the year.
Supplementary information is provided as follows: revenue earnings per share are based
on the revenue profit of £2,556,000 (2023: profit of £2,661,000); capital earnings per
share are based on the net capital loss of £13,266,000 (2023: profit of £50,711,000),
attributable to the weighted average of 79,629,980 (2023: 76,078,460) ordinary voting
shares of 25p. There is no difference between the weighted average diluted and
undiluted number of shares. There is no difference between basic and diluted earnings
per share as there are no dilutive instruments.
9. Share Capital and Reserves
At At
31 December 31 December
2024 2023
Allotted, called up and fully paid
Ordinary shares in issue at 1 January (Number) 76,078,460 76,608,771
Shares issued 38,583,378 –
Shares cancelled – (530,311)
Ordinary shares in issue at 31 December (Number) 114,661,838 76,078,460
Ordinary Shares of 25p at 31 December (£’000) 28,665 19,019
Ordinary shares clawed back and held in treasury (89,096) –
Shares with voting rights at 31 December (Number) 114,572,742 76,078,460
Financial Statements
Notes to the
Financial
Statements
Continued
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86 Annual Report Financial Statements continued
9. Share Capital and Reserves continued
At 31 December 2024, the Company had 114,661,838 ordinary shares in issue, of which
89,096 shares were held in Treasury (2023: 76,078,460 shares in issue, with no shares
held in Treasury). The number of voting shares at 31 December 2024 was 114,572,742
(2023: 76,078,460), being the number of ordinary shares in issue less the number of
shares held in Treasury.
Movement in share capital during the period
On 17 January 2024 the Company issued to the Investment Manager 172,373 ordinary
shares, at a price of 260.32 pence per share, and on 29 April 2024 issued a further
41,891 ordinary shares, at a price of 267.79 pence per share, to settle performance fees
earned in the year to 31 December 2023.
In connection with the ATS corporate transaction the Company issued on 29 November
2024 38,369,114 ordinary shares to ATS shareholders at a deemed price of 262.58
pence per share, in consideration for the transfer to the Company of approximately
£101million of net assets from ATS.
On 31 December 2024, the clawback period on restricted shares issued to the
Investment Manager in relation to the performance period ended 31 December 2021
ended. All of the 89,096 shares originally issued to the Investment Manager were clawed
back by the Company. These were held in Treasury as at 31 December 2024 and
subsequently cancelled on 15 January 2025.
Other Reserve
The other reserve balance represents the restricted shares issued in settlement of
performance fees that are still within a lock-in period.
The clawback period for the performance fee earned during the year ended 31
December 2021 ended on 31 December 2024. The Company’s cumulative NAV total
return underperformed that of the benchmark index over the vesting period. As a result,
the 89,096 restricted shares originally issued in settlement of the £221,219 performance
fee earned were clawed back as at 31 December 2024.
Share-based Payment Reserve
The share-based payment reserve represents the cumulative share-based payment
expenses in relation to performance fees earned. A total share-based payment clawback
of £166,000 has been recognised in relation to the 2021 performance fee which
crystallised on 31 December 2024, resulting in a nil balance as at year end. No expenses
have been charged for the combined performance period of 2023 and 2024 as no
shares issued in settlement of the fee earned during this period are expected to
ultimately vest based on the estimates produced by the Company’s in-house model.
This is subject to review and change at the Company’s future reporting dates. Further
details can be found in Note 4.
10. Net Assets Per Ordinary Share
The figure for Net Assets per Ordinary Share is based on Net Assets of £293,501,000
(2023: £208,714,000) divided by 114,572,742 voting ordinary shares in issue at
31December 2024 (2023:76,078,460).
Notes to the
Financial
Statements
Continued
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Annual Report Financial Statements continued 87
11. Reconciliation of Net Cash Flow from Operating Activities
Year to Year to
31 December 31 December
2024 2023
£’000 £’000
Net return after tax (10,710) 53,372
Losses/(gains) on investments 13,446 (53,535)
Increase in trade and other receivables (737) (62)
Increase in other payables 1,491 8
Investment performance fee (clawback)/charge (166) 2,824
Net cash inflow from operating activities 3,324 2,607
12. Transactions with Related Parties and Investment Manager
Details of the management, administration and secretarial contracts can be found in the
Directors’ Report.
There were no transactions with Directors other than as disclosed in the Directors’
Remuneration Report on pages 47 to 51 and in Note 4 on page 81. No fees payable to
the Directors were outstanding as at 31December 2024.
Phoenix Asset Management Partners Limited (“Phoenix”), the Company’s AIFM and
Investment Manager, and Castelnau Group Limited (“Castelnau”) are considered to be
related parties under the Listing Rules. Details of transactions with Phoenix can be
found in Note 4 beginning on page 81.
Castelnau is a related party as the Company is a substantial shareholder under the UK
Listing Rules. The Company’s holding of Castelnau shares increased during the year as
a consequence of the Artemis Alpha Trust plc combination, since that company also
held Castelnau shares. As at 31December 2024, the Company held 15.8% (2023: 11.4%)
of the issued share capital in Castelnau. There were no transactions with Castelnau
itself during the year and there were no balances outstanding with Castelnau as at
31December 2024.
As part of the terms of the combination between the Company and Artemis Alpha Trust
plc that took place on 29 November 2024, Phoenix will contribute £750,000 towards the
offsetting of the direct costs related to the transaction. The contribution will be made by
way of a reduction in the performance fee payable to Phoenix by the Company in
respect of the financial years ending 31 December 2024, 31December 2025 and
31December 2026. The fee reduction will constitute a waiver of the performance fee
of£750,000. A £750,000 receivable from Phoenix has been recognised as at
31December 2024.
Financial Statements
Notes to the
Financial
Statements
Continued
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88 Annual Report Financial Statements continued
13. Financial Instruments
Investments are carried in the balance sheet at fair value. For other financial assets and
financial liabilities, the balance sheet value is considered to be a reasonable
approximation of fair value.
Financial assets
The Company’s financial assets may include equity investments, fixed interest
securities, short-term receivables and cash and cash equivalents balances. The
currency and cash-flow profile of those financial assets was:
2024 2023
Non- Non-
Interest interest Interest interest
bearing bearing Total bearing bearing Total
£’000 £’000 £’000 £’000 £’000 £’000
Non-current equity investments
at fair value through profit or loss:
£ sterling denominated security
holdings – 228,871 228,871 – 169,963 169,963
€ euro denominated security
holdings – 25,492 25,492 – 15,349 15,349
$ usd denominated security
holdings – 22,511 22,511 – 16,897 16,897
kr sek denominated security
holdings – 48 48 – – –
– 276,922 276,922 – 202,209 202,209
Cash at bank and cash equivalents:
Floating rate – £ sterling 17,156 – 17,156 6,248 – 6,248
Floating rate – € euro (80) – (80) – – –
17,076 – 17,076 6,248 – 6,248
Current assets:
Receivables – 1,109 1,109 – 372 372
17,076 278,031 295,107 6,248 202,581 208,829
The cash and equivalents balance comprises of cash at bank of £9,169,000 (2023:
£6,248,000) held by the Company’s Depositary, Northern Trust Investor Services Ltd,
and UK Treasury Bills of £7,907,000 (2023: £nil).
Financial liabilities
The Company finances its investment activities through its ordinary share capital and
reserves. It has discontinued the use of borrowing for such purposes. The Company’s
financial liabilities comprise short-term trade payables. Foreign currency balances are
stated in the accounts in sterling at the exchange rate as at the Balance Sheet date.
There were no short-term trade payables (other than accrued expenses).
Notes to the
Financial
Statements
Continued
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Annual Report Financial Statements continued 89
Fair Value Hierarchy
Under IFRS 13 investment companies are required to disclose the fair value hierarchy
that classifies financial instruments measured at fair value at one of three levels
according to the relative reliability of the inputs used to estimate the fair values.
Classification Input
Level 1 Valued using quoted prices in active markets for identical assets
Level 2 Valued by reference to valuation techniques using observable inputs
other than quoted prices included within Level 1
Level 3 Valued by reference to valuation techniques using inputs that are
not based on observable market data
Categorisation within the hierarchy has been determined on the basis of the lowest level
input that is significant to the fair value measurement of the relevant asset.
Year to Year to
31 December 31 December
Classification 2024 2023
£’000 £’000
Level 1 272,105 200,733
Level 2 – –
Level 3 4,817 1,476
Total non-current investments held at ‘FVTPL’ 276,922 202,209
There were no transfers between levels during the year.
As part of the ATS combination, £95,876,000 of assets were acquired in Level 1 holdings
and £4,681,000 in Level 3 holdings.
The movement in the Level 3 unquoted investments during the year is shown below:
Year to Year to
31 December 31 December
2024 2023
£’000 £’000
Opening balance 1,476 2,871
Additions during the year* 4,681 –
Unrealised losses (1,340) (1,395)
Closing balance 4,817 1,476
* Additions to the Level 3 unquoted investments during 2024 related to the ATS combination. No other
unquoted assets were acquired during the year.
Financial Statements
Notes to the
Financial
Statements
Continued
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90 Annual Report Financial Statements continued
13. Financial Instruments continued
Fair Value Hierarchy continued
The Level 3 unquoted investment balance represents the Company’s investment in
sixunquoted investments, two of which are valued at nil value. The fair value estimate of
the investment in Phoenix SG isbased on the attributable proportion of the reported net
asset value of the Level 3 investment derived from the fair value of the underlying
investments. Valuation reports provided by the fund manager are used to calculate fair
value where there is evidence that the valuation is derived using fair value principles that
are consistent with the Company’s accounting policies and valuation methods. Such
valuation reports may be adjusted to take account of changes or events to the reporting
date, or other facts and circumstances which might impact the underlying value.
Unquoted investments that were acquired during the period as a result of the ATS
combination are valued at the cost ascribed for the purposes of the transaction, given
the close proximity of the transfer to the Company’s year end.
The transaction valuations were prepared in line with the valuation methodology
described in the accounting policy for the Valuation of Unquoted Investments, as
detailed in Note 1g.
Risk Analysis
The general risk analysis undertaken by the Board and its overall policy approach to risk
management are set out in the Strategic Report. Issues associated with portfolio
distribution and concentration risk are discussed in the Investment Policy section of the
Strategic Report. This note, which is incorporated in accordance with accounting
standard IFRS 7, examines in greater detail the identification, measurement and
management of risks potentially affecting the value of financial instruments and how
those risks potentially affect the performance and financial position of the Company.
The risks concerned are categorised as follows:
a. Potential Market Risks, which are principally:
i. Currency Risk
ii. Interest Rate Risk and
iii. Other Price Risk.
b. Liquidity Risk
c. Credit Risk
Each is considered in turn below:
A (i) Currency Risk
The portfolio as at 31 December 2024 was invested predominantly in sterling
denominated securities and there was limited currency risk arising from the possibility
of afallin the value of sterling impacting upon the value of investments or income.
The Company had no foreign currency borrowings at 31 December 2024 or
31December 2023.
The Company does not hedge its currency exposures currently, but under its investment
policy and restrictions, derivative or similar financial instruments can be employed if
considered necessary for the purpose of capital preservation.
Notes to the
Financial
Statements
Continued
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Annual Report Financial Statements continued 91
Currency sensitivity
The table below shows the impact on the Company’s profit after taxation for the year
ended and net assets as at 31 December 2024, if sterling had strengthened/weakened
by 10% against Euro, USD and SEK.
2024 2023
£’000 £’000
Euro (2,310)/2,824 (1,395)/1,705
USD (2,046)/2,501 (1,536)/1,877
SEK (4)/5 –
A (ii) Interest Rate Risk
The Company held £7,907,000 of UK Treasury Bills at 31 December 2024 (31 December
2023: none).
With the exception of cash and cash equivalents, no interest rate risks arise in respect of
any current asset. All cash and cash equivalents held as a current asset is sterling
denominated, earning interest at the bank’s or custodian’s variable interest rates.
The Company had no borrowings at 31 December 2024 or 31 December 2023.
A (iii) Other Price Risk
The principal price risk for the Company is the price volatility of shares that are owned
by the Company. As described in the Investment Manager’s Review, the Company
spreads its investments across different sectors and geographies, but as shown by the
Portfolio Analysis on page 12, the Company may maintain relatively strong
concentrations in particular sectors selected by the Investment Manager.
The Board manages these risks through the use of investment limits and guidelines as
set out in the Company’s investment policy and restrictions, and monitors the risks
through regular financial and compliance reports provided by the Company’s key service
providers.
The effect on the portfolio of a 10.0% increase or decrease in market prices would have
resulted in an increase or decrease of £27,692,000 (2023: £20,221,000) in the
investments held at fair value through profit or loss at the period end, which is
equivalent to 9.4% (2023: 9.7%) in the net assets attributable to equity holders. This
analysis assumes that all other variables remain constant.
B Liquidity Risk
Liquidity Risk is considered to be small, because most of the portfolio is invested in
readily realisable securities. As a consequence, cash flow risks are also considered to be
immaterial. The Investment Manager estimates that, under normal market conditions
and without causing excessive disturbance to the prices of the securities concerned,
39.0% (2023: 31.2%) of the portfolio could be liquidated in a non-market impacting way
within seven days, based on 25% of average daily volume. This is conservative as it does
not include the ability to access liquidity through block trades.
Financial Statements
Notes to the
Financial
Statements
Continued
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92 Annual Report Financial Statements continued
13. Financial Instruments continued
C Credit Risk
The Company invests in quoted and unquoted equities in line with its investment
objective and policy. The Company’s investments are held by Northern Trust Investor
Services Ltd (“the Depositary”), which is a large and reputable international banking
institution. The Company’s normal practice is to remain fully invested at most times and
not to hold large quantities of cash. At 31 December 2024, cash at bank comprised
£9,242,000 (2023: £6,248,000) held by the Depositary. In addition to cash held with the
Depositary, the Company also held £7,907,000 in UK Treasury Bills as at 31 December
2024 (2023: £nil).
Credit Risk arising on transactions with brokers relates to transactions awaiting
settlement. This risk is considered to be very low because transactions are almost
always undertaken on a delivery versus payment basis with member firms of the
London Stock Exchange.
A credit risk also arises due to the £750,000 payable from Phoenix in relation to the
combination expenses costs, as detailed in Note 12. The credit risk in relation to this
receivable is deemed to be low.
D Capital management policies and procedures
The Company’s capital management objectives are:
• to ensure the Company’s ability to continue as a going concern; and
• to provide an adequate return to shareholders
by pursuing investment policies commensurate with the level of risk.
The Company considers its capital to be issued share capital and reserves, and monitors
capital on the basis of the carrying amount of equity, less cash as presented on the face of
the statement of financial position.
The Company sets the amount of capital in proportion to its overall financing structure,
i.e. equity and financial liabilities. The Company does not currently intend to use gearing,
but as set out in its investment objective and policy, borrowings of up to 30% of the
aggregate of the paid-up nominal capital plus the capital and revenue reserves are
permitted.
The Company manages the capital structure and makes adjustments to it in the light of
changes in economic conditions and the risk characteristics of the underlying assets. In
order to maintain or adjust the capital structure, the Company may adjust the amount of
dividends paid to shareholders (within the statutory limits applying to investment trusts),
return capital to shareholders, issue new shares, or sell assets.
14. Post Year End Events
On 31 December 2024, the clawback period on restricted shares issued to the
Investment Manager in relation to the performance period ended 31 December 2021
ended. All of the 89,096 restricted shares originally issued to the Investment Manager
were returned to the Company and held in Treasury. These shares were subsequently
cancelled on 15 January 2025.
Notes to the
Financial
Statements
Continued
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Annual Report Financial Statements continued 93
An APM is a financial measure of historical or future financial performance, financial
position, or cash flows, other than a financial measure defined or specified in the
applicable financial reporting framework. Definitions of these APMs together with how
these measures have been calculated follow:
Share price discount to NAV per share (APM)
The amount, expressed as a percentage, by which the share price is less that the NAV
per share.
As at As at
31 December 31 December
2024 2023
NAV per share a 256.17 274.34
Share price b 227.00 247.00
Discount (b÷a)-1 (11.4)% (10.0)%
Ongoing charges ratio (APM)
A measure of the regular, recurring annual costs of running an investment company,
expressed as a percentage of average net assets. The measure is calculated by
expressing the regular expenses of the year as a percentage of the average net assets
during the year. Charges relating to performance fees are excluded from the calculation.
As at As at
31 December 31 December
2024 2023
£’000 £’000
Average NAV a 215,951 181,978
Annual expenses b 1,118 749
Adjusting for non-recurring
expenses/(credits)* c 152 (68)
Annual ongoing expenses d=b-c 966 817
Ongoing charges figure d÷a 0.45% 0.45%
* Non-recurring items relates to costs incurred on the combination of Artemis Alpha Trust plc with the
Company, which completed on 29 November 2024 (2023: relate to credits of a one-off nature received in
respect of historic periods).
Financial Statements
Alternative
Performance
Measures
(“APMs”)
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94 Annual Report Financial Statements continued
Total returns (APM)
A measure of performance that includes both income and capital returns. This takes
into account capital gains and reinvestment of dividends paid out by the Company on
the ex-dividend date.
31 December 2024 31 December 2023
NAV per Share NAV per Share
Year ended 31 December share price share price
Opening at 1 January a 274.34p 247.00p 203.45p 194.50p
Closing at 31 December b 256.17p 227.00p 274.34p 247.00p
Price movement c=(b÷a)–1 (6.6%) (8.1%) 34.8% 27.0%
Impact of dividend reinvestment
(as a percentage of opening
balances) d 2.4% 2.6% 1.5% 1.5%
Total return c+d (4.3%) (5.5%) 36.3% 28.5%
Alternative
Performance
Measures
(“APMs”)
Continued
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Annual Report Financial Statements continued 95
Financial Statements
AIC Association of Investment Companies.
Alternative Investment An investment vehicle under UK AIFMD. (see below)
Fund or “AIF” and the Company is classified as an AIF.
Alternative Investment A directive agreed by the European Parliament and the
Fund Managers Council of the EU and transposed into UK legislation, the
Regulations UK AIFMD classifies certain investment vehicles, including
(“UK AIFMD”) investment companies, as Alternative Investment Funds
(“AIFs”) and requires them to appoint an Alternative
Investment Fund Manager (“AIFM”) and depositary to
manage and oversee the operations of the investment
vehicle. The Board of the Company retains responsibility for
strategy, operations and compliance and the Directors retain
a fiduciary duty to shareholders.
Annual General A meeting held once a year which shareholders can attend
Meeting or AGM and where they can vote on resolutions put forward at the
meeting and ask Directors questions about the company in
which they are invested.
Alternative See definitions of each APM on pages 93 and 94.
Performance
Measures (“APMs”)
Articles The Company’s Articles of Association adopted on 10 June
2019.
Company Secretary or Frostrow Capital LLP.
Administrator
Custodian An entity that is appointed to safeguard a company’s assets.
Discount The amount, expressed as a percentage, by which the share
price is less than the net asset value per share.
Depositary Certain AIFs must appoint depositaries under the
requirements of UK AIFMD. A depositary’s duties include,
interalia, safekeeping of the Company’s assets and cash
monitoring. Under UK AIFMD the depositary is appointed
under a strict liability regime.
Dividend Income receivable from an investment in shares.
Ex-dividend date The date from which a purchaser of shares is not entitled to
receive adividend which has been declared and is due to be
paid toshareholders.
Financial Conduct The independent body that regulates the financial services
Authority or “FCA” industry in the UK.
Index A basket of stocks which is considered to replicate
aparticular stock market or sector.
Investment company A company formed to invest in a diversified portfolio of
assets.
Investment Manager Phoenix Asset Management Partners Limited.
Investment Trust An investment company based in the UK which meets
certain tax conditions that enable it to be exempt from
UKcorporation tax on its capital gains. The Company is an
investment trust.
Glossary
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96 Annual Report Financial Statements continued
Leverage An alternative word for “Gearing”. Under UK AIFMD, leverage
is any method by which the exposure of an AIF is increased
through borrowing of cash or securities or leverage
embedded in derivative positions. Under UK AIFMD, leverage
isbroadly similar to gearing, but is expressed as a ratio
between the assets (excluding borrowings) and the net
assets (after taking account of borrowing). Under the gross
method, exposure represents the sum of the Company’s
positions after deduction of cash balances, without taking
account of any hedging or netting arrangements. Under the
commitment method, exposure is calculated without the
deduction of cash balances and after certain hedging and
netting positions are offset against each other.
Liquidity The extent to which assets can be converted into cash at
short notice.
Net assets An investment company’s assets less its liabilities.
Net asset value The Company’s net assets divided by the number of shares
per share in issue (excluding any shares held in Treasury).
(NAV per share)
Portfolio A collection of different investments held in order to deliver
returns to shareholders and to spread risk.
Share buyback A purchase of a company’s own shares. Shares can either be
bought back for cancellation or held in Treasury.
Share price The price of a share as determined by a relevant stock
market.
Treasury shares A company’s issued shares owned by itself which are
available to be sold by thecompany to raise funds.
Volatility A measure of how much a share moves up and down in
price over a period of time.
Glossary
Continued
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Annual Report Notice of Meeting 97
Notice of Meeting
Notice of
Meeting
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98 Annual Report Notice of Meeting
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If
you are in any doubt as to any matter referred to in this document or as to the action
you should take, you are recommended to seek your own financial advice immediately
from an independent financial adviser who is authorised under the Financial Services
and Markets Act 2000 (as amended) (“FSMA”) if you are in the United Kingdom, or
from another appropriately authorised independent financial adviser if you are in a
territory outside the United Kingdom.
If you have sold or otherwise transferred all of your ordinary shares, please send this
document at once to the purchaser or transferee or to the bank, stockbroker or other
agent through whom or by whom the sale or transfer was made, for delivery to the
purchaser or transferee. However, the distribution of this document in jurisdictions
other than the United Kingdom may be restricted by law and therefore persons into
whose possession this document comes should inform themselves about and
observe those restrictions. Any failure to comply with any of those restrictions may
constitute a violation of the securities laws of any such jurisdiction.
Notice is hereby given that the Annual General Meeting (“AGM”) of Aurora UK Alpha
plc will be held at 25 Southampton Buildings, London WC2A 1AL on 11June 2025 at
1 p.m.
The AGM is being called for the following purposes:
To consider, and if thought fit to pass, the following resolutions, of which resolutions 1
to 10 inclusive will be proposed as ordinary resolutions and resolutions 11 to 13 will be
proposed as special resolutions.
ORDINARY RESOLUTIONS
1. To receive the Annual Report for the year ended 31 December 2024, including the
financial statements and the Directors’ and Auditor’s reports thereon.
2. To approve the continuation of the Company as an investment trust for a further
period of three years.
3. To approve the Remuneration Policy Implementation Report for 2024.
4. To re-elect Lucy Walker as a Director of the Company.
5. To re-elect Farah Buckley as a Director of the Company.
6. To re-elect Lady Rachael Robathan as a Director of the Company.
7. To re-elect David Stevenson as a Director of the Company.
8. To re-appoint BDO as Auditor to the Company and to authorise the Audit Committee
to fix the Auditor’s remuneration.
9. To ratify changes to the Company’s Investment Objective and Policy made during
2024, as set out in the Chair’s Statement in the Company’s annual report for the year
ended 31 December 2024.
10. THAT in substitution for any pre-existing power to allot or grant rights to subscribe for
or convert any securities into ordinary shares in the Company the Directors be and
are hereby generally and unconditionally authorised, pursuant to and in accordance
with section 551 of the Companies Act 2006 (the “Act”) to exercise all powers of the
Company to allot ordinary shares in the Company up to a maximum of 20% of the
issued share capital in the Company as at the date of passing this resolution. This
authority shall expire (unless previously varied, revoked or renewed by the Company
in general meeting) 15 months after the date of the passing of this resolution or at
the conclusion of the next Annual General Meeting of the Company after the passing
of this resolution, whichever should first occur, save that the Company may before
such expiry make an offer or enter into an agreement which would or might require
relevant securities to be allotted after such expiry and the Directors may allot relevant
securities in pursuance of such an offer or enter into an agreement as if the authority
conferred hereby had not expired.
Frostrow Capital LLP
Company Secretary
Registered Office:
25 Southampton Buildings
London WC2A 1AL
7 April 2025
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Annual Report Notice of Meeting continued 99
Notice of Meeting
SPECIAL RESOLUTIONS
11. THAT, subject to the passing of resolution 10, and in addition to all existing powers,
the Directors be and are hereby empowered, pursuant to section 570 of the Act, to
allot equity securities (as defined in section 560 of the Act) for cash either pursuant
to the authority conferred by resolution 10 or by way of a sale of Treasury shares, as
if section 561 of the Act did not apply to any such allotment or sale, provided that
this power:
a. shall expire (unless previously varied, revoked or renewed by the Company in general
meeting) 15 months from the passing of this resolution, or at the conclusion of the
next Annual General Meeting of the Company after the passing of this resolution,
whichever is earlier, save that the Company may before such expiry make an
agreement which would or might require relevant securities to be allotted after such
expiry and the Directors may allot equity securities (including by way of sale of
Treasury shares) as if such expiry had not occurred; and
b. shall be limited to the allotment of equity securities up to a maximum of 20% of the
issued share capital of the Company as at the date of passing this resolution.
12. THAT, in substitution for any pre-existing authority that will have expired on the date
hereof, but without prejudice to the exercise of such authority prior to the date
hereof, the Company be and is hereby generally and unconditionally authorised in
accordance with section 701 of the Companies Act 2006 (“the Act”) to make market
purchases (within the meaning of section 693(4) of the Act) of ordinary shares of
25p each in the capital of the Company (“ordinary shares”) provided that:
a. the maximum aggregate number of ordinary shares hereby authorised to be
purchased shall be 14.99% of the issued share capital of the Company at the date of
passing this resolution;
b. the minimum price which may be paid for an ordinary share is 25p;
c. the maximum price which may be paid for an ordinary share is an amount equal to
the higher of (i) 105% of the average of the middle market quotations for an ordinary
share taken from the Daily Official List of the UK Listing Authority for the 5 business
days immediately preceding the day on which the ordinary share is purchased; and
(ii) the higher of the price of the last independent trade in ordinary shares and the
highest then current independent bid for ordinary shares on the London Stock
Exchange; and
d. unless varied, revoked or renewed the authority hereby conferred shall expire at the
conclusion of the Annual General Meeting of the Company in 2026 or, if earlier, on
the expiry of 15 months from the passing of this resolution, save that the Company
may at any time prior to such expiry, enter into a contract or contracts to purchase
ordinary shares under such authority which would or might be completed or
executed wholly or partly after the expiration of such authority and may make
apurchase of ordinary shares pursuant to any such contract or contracts as if the
authority conferred hereby had not expired.
13. THAT the period of notice required for general meetings of the Company (other than
Annual General Meetings) shall be not less than 14 days.
By order of the Board
For and on behalf of Frostrow Capital LLP
Company Secretary
25 Southampton Buildings
London WC2A 1AL
7 April 2025
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100 Annual Report Notice of Meeting continued
Notes
1. Proxies
Members are entitled to appoint a proxy to exercise all or any of their rights to attend,
speak and vote on their behalf at the meeting. A member may appoint more than one
proxy provided that each proxy is appointed to exercise the rights attached to a different
share or shares held by that member. A proxy need not be a member of the Company,
but must attend the meeting for your votes to be counted. Appointing the Chair of the
AGM as your proxy will ensure that your votes are cast in accordance with your wishes.
2. Voting by proxy
Hard copy forms of proxy have not been included with this notice. Members are strongly
urged to vote electronically, by logging onto
https://uk.investorcentre.mpms.mufg.com/login and following the instructions.
However, you can request a hard copy proxy form directly from our Registrar, MUFG
Corporate Markets, via telephone on +44 (0) 371 664 0300 or via email at:
shareholderenquiries@cm.mpms.mufg.com. To be valid, the form of proxy, together
with the power of attorney or other authority (if any) under which it is signed or a
notarially certified or office copy of the same, must be completed and returned to the
office of theCompany’s registrar, MUFG Corporate Markets, PXS 1, Central Square, 29
Wellington Street, Leeds LS1 4DL, not later than 1 p.m. on 9June 2025. In the case of a
member that is a company, the instrument appointing a proxy must be executed under
its seal or signed on its behalf by a duly authorised officer or attorney or other person
authorised to sign. Any power of attorney or other authority under which the instrument
is signed (or a certified copy of it) must be included with the instrument.
Members who wish to change their proxy instructions should submit a new proxy
appointment using the methods set out above. Note that the cut-off time for receipt of
proxy appointments (see above) also applies in relation to amended instructions; any
amended proxy appointment received after the relevant cut-off time will be disregarded.
If a member submits more than one valid proxy appointment, the appointment received
last before the latest time for the receipt of proxies will take precedence. CREST
members may register votes by utilising the CREST electronic proxy appointment
service in accordance with the procedures set out below.
If you are an institutional investor you may be able to appoint a proxy electronically via
the Proxymity platform, a process which has been agreed by the Company and
approved by the Registrar. For further information regarding Proxymity, please go to
www.proxymity.io. Your proxy must be lodged by 1 p.m. on 9June 2025 in order to be
considered valid. Before you can appoint a proxy via this process, you will need to have
agreed to Proxymity’s associated terms and conditions. It is important that you read
these carefully as you will be bound by them and they will govern the electronic
appointment of your proxy.
Appointing a proxy will not prevent a member from attending the meeting and voting in
person.
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Annual Report Notice of Meeting continued 101
Notice of Meeting
3. Revoking instructions
In order to revoke a proxy instruction, members will need to inform the Company.
Members should send a signed hard copy notice clearly stating their intention to revoke
a proxy appointment to MUFG Corporate Markets, PXS 1, Central Square, 29 Wellington
Street, Leeds LS1 4DL.
In the case of a member that is a company, the revocation notice must be executed
under its common seal or signed on its behalf by an officer of the company or an
attorney for the company. Any power of attorney or any other authority under which the
revocation notice is signed (or a duly certified copy of such power of attorney) must be
included with the revocation notice. If a member attempts to revoke their proxy
appointment but the revocation is received after the time for receipt of proxy
appointments then, subject to paragraph 2, the proxy appointment will remain valid.
4. Right to attend and vote
Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the
Company specifies that in order to have the right to attend and vote at the meeting
(andalso for the purpose of determining how many votes a person entitled to attend and
vote may cast), a person must be entered on the register of members of the Company at
close of business on 9 June 2025 or, in the event of any adjournment, at close of
business on the date which is two business days before the day of the adjourned
meeting. Changes to entries on the register of members after this time shall be
disregarded in determining the rights of any person to attend or vote at the meeting.
5. Corporate members
Any corporation which is a shareholder can appoint one or more corporate
representatives who may exercise on its behalf all of its powers as a shareholder
provided that they do not do so in relation to the same shares.
6. Nominated persons
Any person to whom this notice is sent who is a person nominated under section 146 of
the Companies Act 2006 to enjoy information rights (a “Nominated Person”) may have
aright, under an agreement between him/her and the member by whom he/she was
nominated, to be appointed (or to have someone else appointed) as a proxy for the
meeting. If a Nominated Person has no such proxy appointment right or does not wish
to exercise it, he/she may have a right, under such an agreement, to give instructions to
the member as to the exercise of voting rights.
The statement of the above rights of the members in relation to the appointment of
proxies does not apply to Nominated Persons. Those rights can only be exercised by
shareholders of the Company.
7. Total number of shares and voting rights
As at 7 April 2025 (being the last practicable business day prior to the publication of this
notice) the Company’s issued share capital consists of 114,572,742 ordinary shares,
carrying one vote each. No shares are held in Treasury. The total available voting rights
in the Company as at that date are 114,572,742.
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102 Annual Report Notice of Meeting continued
8. Website
Further information regarding the meeting which the Company is required by
section311A of the Companies Act 2006 to publish on a website in advance of the
meeting can be accessed at www.auroraukalpha.com.
9. Joint Shareholders
In the case of joint holders, the vote of the senior holder who tenders a vote whether in
person or by proxy shall be accepted to the exclusion of the votes of the other joint
holders and, for this purpose, seniority will be determined by the order in which the
names stand in the register of members of the Company in respect of the relevant joint
holding.
10. CREST Shareholders
Shareholders who hold their shares electronically may submit their votes through
CREST, by submitting the appropriate and authenticated CREST message so as to be
received by the Company’s registrar by not later than 48 hours before the start of the
meeting. Instructions on how to vote through CREST can be found by accessing the
following website: euroclear.com. Shareholders are advised that CREST and the internet
are the only methods by which completed proxies can be submitted electronically.
If you are a CREST system user (including a CREST personal member) you can appoint
one or more proxies or give an instruction to a proxy by having an appropriate CREST
message transmitted. To appoint one or more proxies or to give an instruction to a proxy
(whether previously appointed or otherwise) via the CREST system, CREST messages
must be received by MUFG Corporate Markets (ID number RA10) not later than 48hours
before the start of the meeting. For this purpose, the time of receipt will be taken to be
the time (as determined by the timestamp generated by the CREST system) from which
MUFG Corporate Markets is able to retrieve the message. CREST personal members or
other CREST sponsored members should contact their CREST sponsor for assistance
with appointing proxies via CREST. For further information on CREST procedures,
limitations and system timings please refer to the CREST manual. The Company may
treat as invalid a proxy appointment sent by CREST in the circumstances set out in
Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
11. Withheld votes and votes at discretion
A vote withheld is not a vote in law, which means that the vote will not be counted in the
calculation of votes for or against the resolutions. If no voting indication is given, aproxy
may vote or abstain from voting at their discretion. A proxy may vote (or abstain from
voting) as they think fit in relation to any other matter that is put before the meeting.
12. Questions
Any member attending the AGM has the right to ask questions. The Company must
cause to be answered any such question relating to the business being dealt with at the
AGM but no such answer need be given if: (a) to do so would interfere unduly with the
preparation for the AGM or involve the disclosure of confidential information; (b)the
answer has already been given on a website in the form of an answer to a question; or
(c) it is undesirable in the interests of the Company or the good order of the AGM that
the question be answered.
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Annual Report Notice of Meeting continued 103
Notice of Meeting
Questions may be tendered ahead of the meeting, by email to: info@frostrow.com, or by
writing to the Company Secretary at the Company’s Registered address, which is set out
on page 31.
13. Website statements from Shareholders
Under section 527 of the Companies Act 2006, members meeting the threshold
requirements set out in that section have the right to require the Company to publish on
a website a statement setting out any matter relating to:
(i) the audit of the Company’s accounts (including the Auditor’s report and the
conduct of the audit) that are laid before the meeting; or
(ii) any circumstance connected with an Auditor of the Company ceasing to hold
office since the previous meeting at which annual accounts and reports were laid
in accordance with section 437 of the Companies Act 2006.
The Company may not require the members requesting any such website publication to
pay its expenses in complying with sections 527 or 528 of the Companies Act2006.
Where the Company is required to place a statement on a website under section 527 of
the Companies Act 2006, it must forward the statement to the Company’s Auditor not
later than the time when it makes the statement available on the website. The business
which may be dealt with at the meeting includes any statement that the Company has
been required under section 527 of the Companies Act 2006 to publish on a website.
14. Shareholder resolutions
Under sections 338 and 338A of the Companies Act 2006, members meeting the
threshold requirements in those sections have the right to require the Company:
(i) to give, to members of the Company entitled to receive notice of the meeting,
notice of a resolution which may properly be moved and is intended to be moved
at the meeting; and/or
(ii) to include in the business to be dealt with at the meeting any matter (other than
a proposed resolution) which may be properly included in the business.
A resolution may properly be moved or a matter may properly be included in the
business unless:
(a) (in the case of a resolution only) it would, if passed, be ineffective (whether by
reason of inconsistency with any enactment or the Company’s constitution or
otherwise);
(b) it is defamatory of any person; or
(c) it is frivolous or vexatious.
Such a request may be in hard copy form or in electronic form, and must identify the
resolution of which notice is to be given or the matter to be included in the business,
must be authorised by the person or persons making it, must be received by the
Company not later than 30 April 2025, being the date six clear weeks before the
meeting, and (in the case of a matter to be included in the business only) must be
accompanied by a statement setting out the grounds for the request.
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104 Annual Report Notice of Meeting continued
Explanatory Notes to the Resolutions
Resolution 1 – To receive the Annual Report
The principal purpose for an annual general meeting is for members to formally receive
the Company’s annual report and financial statements. The Annual Report for the year
ended 31 December 2024, incorporating the financial statements and this Notice of
Meeting, will be presented at the AGM and shareholders will have the opportunity to ask
questions relating to it.
Resolution 2 – Continuation
Article 5 of the Company’s Articles of Association requires the Board to propose an
Ordinary Resolution at every third annual general meeting to approve the continuation of
the Company as an investment trust.
Resolution 3 – Remuneration Policy Implementation Report
It is mandatory for listed companies to put their report on the implementation of the
remuneration policy to an advisory shareholder vote every year. The Remuneration
Policy Implementation Report is set out on page 48 of this Annual Report.
Resolutions 4 to 7 – Re-election of Directors
Resolutions 4 to 7 deal with the re-election of the Directors. Biographies of each of the
Directors can be found on pages 29 and 30 of this Annual Report.
Specific reasons why (in the Board’s opinion) each Directors’ contribution is, and
continues to be, important to the Company’s long-term success are as follows:
Lucy Walker
Lucy brings deep investment management experience, enabling her to engage with the
Investment Manager on portfolio and strategy, as well as a first-hand understanding of
the Company’s investor base.
Farah Buckley
Farah brings extensive experience of growth, innovation and strategy gained from over
23years in financial services across audit, mergers & acquisitions and private equity,
allowing effective oversight of the investment activities of the Company and
complementing the perspectives and experience of the other Directors.
Lady Rachael Robathan
Rachael has over 20 years’ experience as an investment manager as well as a broad
range of skills from her leadership of a major Local Authority and other Board roles.
David Stevenson
David has extensive fintech and financial services experience and as an investment
columnist for over 20 years has a deep understanding of the Company’s investor base.
He spends a vast amount of time talking to investors, both professional and private,
about funds and asset allocation. He is additionally a very experienced fund
non-executive director and chair.
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Annual Report Notice of Meeting continued 105
Notice of Meeting
Resolution 8 – Re-appointment of the Auditor and the determination of their
remuneration
Resolution 8 is for the re-appointment of BDO LLP as the Company’s independent Auditor
to hold office until the next AGM of the Company and also authorises the AuditCommittee
to set their remuneration. Following the implementation of the Competition and Markets
Authority order on Statutory Audit Services, only the AuditCommittee may negotiate and
agree the terms of the Auditor’s service agreement.
Resolution 9 - Ratification of Investment Objective and Policy Changes
As explained in the Chair’s Statement on page 4 certain non-material changes were made
to the Company’s Investment Objective and Policy during the course of 2024 and the Board
has resolved, for good order, to seek ratification of these changes from shareholders.
Resolutions 10 and 11 – Issue of Shares
Ordinary Resolution 10 in the Notice of Annual General Meeting is to renew the authority
to allot new ordinary shares up to an aggregate of 20% of the Company’s existing issued
share capital at the date of the Annual General Meeting. As at the date of this annual
report this amounted to 22,914,548 shares. This authority (if granted) will expire on the
date of the next Annual General Meeting or after a period of 15months from the date of
the passing of the resolution, whichever is earlier. This means that the authority will have
to be renewed at the next Annual General Meeting unless previously renewed.
When shares are to be allotted, Section 551 of the Companies Act 2006 (the “Act”)
provides that existing shareholders have pre-emption rights and that the new shares
must be offered first to such shareholders in proportion to their existing holding of
shares. However, shareholders can, by special resolution, authorise the Directors to allot
shares otherwise than by a pro rata issue to existing shareholders. Special Resolution
11 will, if passed, give the Directors power to allot (and/or sell from Treasury) for cash
equity securities up to the equivalent of 20% of the Company’s existing share capital, as
if Section 551 of the Act does not apply. This is the same nominal amount of share
capital that the Directors are seeking the authority to allot pursuant to Resolution 10.
This authority will also expire on the date of the next Annual General Meeting or after
aperiod of 15 months, whichever is earlier. This authority will not be used in connection
with a rights issue by the Company.
The Directors intend to use the authority given by Resolutions 10 and 11 to allot shares
and disapply pre-emption rights only in circumstances where this will be clearly
beneficial to shareholders as a whole. The issue proceeds would be available for
investment in line with the Company’s investment policy. No issue of shares will be
made which would effectively alter the control of the Company without the prior
approval of shareholders in general meeting.
Resolution 12 – Share Repurchases
The principal aim of a share buy-back facility is to enhance shareholder value by
acquiring shares at a discount to net asset value, as and when the Directors consider
this to be appropriate. The purchase of shares when they are trading at a discount to net
asset value per share should result in an increase in the net asset value per share for the
remaining shareholders. This authority, if conferred, will only be exercised if to do so
would result in an increase in the net asset value per share for the remaining
shareholders and if it is considered to be in the best interests of shareholders generally.
Any purchase of shares will be made within guidelines established from time to time by
the Board.
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Under the current Listing Rules, the maximum price that may be paid on the exercise of
this authority must not exceed the higher of (i) 105% of the average of the middle
market quotations for the shares over the five business days immediately preceding the
date of purchase and (ii) the higher of the last independent trade and the highest current
independent bid on the trading venue where the purchase is carried out. The minimum
price which may be paid is 25p per share.
Special Resolution 12 in the Notice of Annual General Meeting seeks to renew the
authority to purchase in the market a maximum of 14.99% of shares in issue
(amounting to 17,174,454 shares at the date of this Annual Report). The authority
(ifgranted) will expire on the date of the next Annual General Meeting or after a period of
15months from the date of passing of the resolution, whichever is earlier. This means in
effect that the authority will have to be renewed at the next Annual General Meeting or
earlier if the authority has been exhausted.
Resolution 13 – General Meetings
Special Resolution 13 seeks shareholder approval for the Company to hold General
Meetings (other than the AGM) on 14 clear days’ notice, which is the minimum notice
period permitted by the Companies Act 2006. This is a routine resolution necessitated
by the EU Shareholder Rights Directive, which has been transcribed into UK law.
The Company will only use this shorter notice period where it is merited by the purpose
of the meeting and will endeavour to give at least 14 working days’ notice if possible.
Recommendation
The Board considers that the resolutions relating to the above items are in the best
interests of shareholders as a whole. Accordingly, the Board unanimously recommends
to shareholders that they vote in favour of the above resolutions, as the Directors intend
to do in respect of their own beneficial holdings totalling 68,900shares.
106 Annual Report Notice of Meeting continued
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