7 31 March ## 2024 ## Compounding wealth long-term ### Rockwood Strategic Plc ### Report and Accounts for the year ended 31 March 2024 ## Rockwood Strategic plc (“RKW”) is an Investment Overview ## Trust managed by Harwood Capital LLP, listed on the 02 Chairman’s Statement ## 03 Board of Directors premium segment of the Main Market of the London 04 Investment Manager’s Report ## Stock Exchange that invests in a focused portfolio of 10 About the Investment Manager ## 11 Strategic Report 2024  ## undervalued investment opportunities, where the Governance ## potential exists to improve returns and where the 19 Corporate Governance Report ## 22 Audit Committee Report company 23 Directors’ Remuneration Report ## strategic or management changes. These unlock, create 25 Directors’ Remuneration Policy ## or realise value for investors. 26 Directors’ Report 28 Directors’ Responsibility Statement ## Harwood Capital LLP (“HC LLP”) was incorporated in 2003 29 Independent Auditor’s Report ## and is the Investment Manager for Rockwood Strategic Financial Statements ## Plc and Harwood Private Clients. 35 Statement of Comprehensive Income ## 36 Statement of Financial Position HC LLP is a wholly owned subsidiary of Harwood Capital 37 Statement of Cash Flows ## Management Limited and is authorised and regulated 38 Statement of Changes in Equity ## by the Financial Conduct Authority (“FCA”), authorisation 39 Notes to the Financial Statements ## number 224915 and is led by Christopher Mills. The funds Other Information ## managed and advised by HC LLP follow an active, value 52 Notice of Annual General Meeting ## 55 Corporate Information approach towards the businesses in which they invest. ## Mr Mills is a member of the Rockwood Strategic Plc Throughout this report we use the more ## Investment Advisory Group. concise terms RKW or the Company. Rockwood Strategic Plc Overview Governance Financial Statements Other Information # Highlights Highlights for the period include: → NAV Total Return performance in the twelve months to 31 March 2024 of 5.1% to 206.04p/share*, which compares to a decline in the FTSE Aim All-Share of 8.6% and a rise in the FTSE Small Cap (ex-ITs) of 7.1%. → The Total Shareholder Return in this period was 15.4%*. → NAV Total Return performance in the three years to 31 March 2024 of 57.0%*, which compares to the FTSE Small Cap (ex-ITs) of -6.8% and the FTSE Aim All-Share of -38.5%. The Total Shareholder Return in this period was 70.1%*. → Price of shares moved from a discount to NAV of 7.1% to a premium of 1.9%*. → Significant new investor demand resulted in issuance of 5,778,630 new shares, increasing share count by 22.7% and, alongside performance, growing NAV to £64.3m. NAV has now grown 58.0% in the last two years, building scale. → Five new portfolio investments purchased during the period, as funds received from four takeovers and stock issuance were re-deployed. → Conducted 10 for 1 stock split during period. * These are considered to be Alternative performance Measures (APMs). See APMs on page 51. Reviewed Strategic Plan 01 ## Chairman’s ## Statement Noel Lamb Chairman Rockwood Strategic Plc Dear Shareholder, | I am pleased to report a successful year for | engagement’ in existing investments and a | delighted to report that the shares have been | | --- | --- | --- | | Rockwood Strategic plc (“RKW”), achieved | plethora of marketing and investor education | trading at a 1.9% premium to NAV, unwinding | | against challenging U.K. equity market | initiatives. Of the 20 companies in the portfolio, | last year’s closing discount of 7.1%. This has | | conditions. Whilst some in our sector are | 15 have been initiated since 2022. With a 3-to- | allowed RKW under its authorities to issue | | struggling to survive with the recent exodus | 5-year typical investment thesis, the Board | £11.5m worth of new shares to new investors | | from our domestic market, RKW has grown Net | anticipates a fruitful period ahead. Shareholder | satisfying demand. Issuance accelerated | | Asset Value (“NAV”) per share, increased assets | value realisation is expected as operational | during the financial year and the Trust has | | through new issuance and improved the share | turnarounds are delivered, strategic initiatives | reached its 20.0% rolling annual limit. This is | | price from a discount to a premium to NAV. In | actioned and our investments mature under | no mean feat given 34 months of consecutive | | short, RKW has been the best performing UK | new or evolved management and boards. It is | monthly UK fund outflows at a sector level | | small companies fund according to Association | worth remembering that performance in any | and the general level of sentiment towards | | of Investment Companies data for the previous | short period under review will be primarily due | UK equities, illustrated by the almost entire | | three and five years ended 31 March 2024. | to the individual performances of a handful of | absence of IPOs, during the period. We warmly | | | our holdings. | welcome all our new fellow shareholders, who | | NAV Total Return performance in the twelve | | see the investment opportunity this market | 1 | months to 31 March 2024 was 5.1% | which | The Board shares the view of the manager that | and strategy offers. | | --- | --- | --- | --- | | compares to an increase in the FTSE Small Cap | | the UK small companies market continues to | | | (ex-ITs) of 7.1% and a fall in the AIM All-Share | | provide a significant investment opportunity, | The Board believes that, until the Company | | Index of 8.6%. The Total Shareholder Return | | due to the inefficient pricing of poorly | has gained greater scale, it will retain the | 1 | in this period was 15.4% | . The differentiated, | researched or misunderstood companies | maximum capital allowable to maximise the | | --- | --- | --- | --- | | stock-specific driven approach of the | | trading at historically low valuations, further | compounding of NAV growth. The portfolio | | strategy has shown that positive returns are | | depressed by industry outflow driven selling. | has generated good income though, including | | possible despite negative macroeconomic | | The Investment Manager is using their long | receiving two special dividends, and RKW will | | and market conditions or wider geo-political | | experience and specialist insight to identify a | thus return to the dividend list in a modest way | | developments. Management fees were charged | | small number of the very best opportunities | with a 0.6p final payment. Our AGM will be held | | at a fixed fee of £120,000 per annum whilst the | | which, if unrecognised by domestic market | on 31 July for those that would like to meet the | | assets were below £60m, yet having recently | | participants, will inevitably be on the receiving | Board members and Investment Manager in | | exceeded this level, due to sustained absolute | | end of corporate interest; indeed during the | person. Finally, I would like to extend, on behalf | | performance and new issuance, switched | | year RKW received 4 takeover approaches for | of all our shareholders, the Board’s thanks | | to 1.0% per annum under the terms of the | | its portfolio companies. | to Mr Richard Staveley and all the team at | | Investment Management Agreement. This is | | | Harwood Capital who have delivered so well in | | competitive with other specialist investment | | Our shareholders voted for the Board’s | the period under review. | | fund mandates. Long term shareholders may | | recommendation for a 10 for 1 stock split during | | | recall the previous manager’s fee level was | | the first half of the year, a measure which | Yours sincerely, | | 1.5%. The hurdle for a performance fee was not | | often improves liquidity. Growing the NAV | | | met. | | remains a priority for the Trust. This will open | | up a wider set of investment opportunities in | Our Investment Manager has been industrious | the targeted part of the UK small cap market | Noel Lamb | | --- | --- | --- | | as evidenced by 6 new holdings, a number | where the manager can purchase significant | Chairman RKW | | of positive outcomes from ‘constructive | investee company ownership stakes. I am also | | 18 June 2024 1 These are considered to be Alternative performance Measures (APMs). See APMs on page 51. ## 02 Rockwood Strategic Plc Financial Other Overview Governance Statements Information ## Board of Directors Noel Lamb Kenneth Lever Paul Dudley Independent, Non-Executive Chairman Senior Non-Executive Director Non-Executive Director Chairman of the Audit Committee | Noel graduated from Exeter College, Oxford | | Paul Dudley is a Fellow of the Institute of | | --- | --- | --- | | and is a barrister-at-law. Commissioned into | Ken is Chair of the Audit Committee at | Chartered Accountants of England and Wales | | the 5th Royal Inniskilling Dragoon Guards, he | Rockwood Strategic, Chairman of Cirata plc, | and is a Member of the UK’s Chartered Institute | | served as ADC to the Commandant of the Royal | NED of Vertu Motors plc and Deputy Chairman | of Securities and Investment. Paul founded Aer | | Military Academy Sandhurst and Adjutant of the | and NED of Rainier Developments Limited. Ken | Ventures in 2011, where he is Managing Partner, | | North Irish Horse. He joined Lazard Brothers | was previously Chief Executive of Xchanging plc | a corporate advisory business that is Authorised | | & Co Limited in 1987 and from 1990 to 1997 he | and during his career has held listed company | and Regulated by the UK’s Financial Conduct | | was the managing director of Lazard Japan | executive board positions with Tomkins plc, | Authority. Previously he worked at stockbroking | | Asset Management where he was the fund | Albright and Wilson plc, Alfred McAlpine plc and | firm WH Ireland where he was approved as a | | manager for their Japanese equities. In 1997, he | private equity owned Numonyx BV. | Qualified Executive acting as the Corporate | | moved to the Russell Investment Group where | | Finance adviser on AIM corporate transactions. | In his early career Ken qualified as a Chartered he established the investment management Accountant and became a partner in Arthur Paul graduated from Durham University and capability of Russell in London. In 2002, he was Andersen. Until 2014 Ken was a member of began his career at PricewaterhouseCoopers. promoted to Chief Investment Officer in North the UK Accounting Standards Board. He is He is currently a director of a number of public America where he managed assets of $150bn Chairman of the Advisory Board of the Alliance and private companies including Celsius until his departure in 2008. Noel is also currently Manchester Business School. Ken graduated Resources Ltd, Watercycle Technologies Ltd a director of Nippon Active Value Fund and a from the University of Manchester with a degree and Pyne Gould Corporation Ltd. director of Guinness Asset Management Funds. in Management Sciences. ## 03Rockwood Strategic Plc ## Investment Manager’s ## Report Richard Staveley Lead Fund Manager | Highlights | | the highest for 15 years, it is not surprising | | --- | --- | --- | |  NAV Total Return performance in the | | sentiment has been weak. CPI inflation | | | twelve months to 31 March 2024 of 5.1% | started the year at an annual rate of 8.9%. The | | | to 206.04p/share, which compares to a | contrast has been exceptionally strong stock | | | decline in the FTSE Aim All-Share of 8.6% | market performances from US household | | | and a rise in the FTSE Small Cap (ex-ITs) | name technology companies; Amazon, Google | | | of 7.1%. | (Meta), Microsoft and Apple alongside the | phenomenon which is Nvidia. These stocks are  The Total Shareholder Return in this period freely available to purchase now for the average was 15.4%*. individual investor, ‘benchmark chasing’ fund |  NAV Total Return performance in the three | | manager and ‘non-thinking’ tracker or ETF | | --- | --- | --- | | | years to 31 March 2024 of 57.0%, which | fund. It is not difficult to see how a ‘broken’ | | | compares to the FTSE Small Cap (ex-ITs) | UK narrative is leading to shunned domestic | | | of -6.8% and the FTSE Aim All-Share of | investment and the alternative attractions of | | | -38.5%. The Total Shareholder Return in | momentum and Ai. John Templeton’s great | Nicholas Mills this period was 70.1%*. insight into markets, though, springs to mind: Assistant Fund Manager “Bull markets are born on pessimism, grow on  Price of shares moved from a discount to scepticism, mature on optimism and die on NAV of 7.1% to a premium of 1.9%*. euphoria. The time of maximum pessimism is |  Significant new investor demand resulted | | the best time to buy”. How might this statement | | --- | --- | --- | | | in issuance of 5,778,630 new shares, | be applied to the ‘Magnificent 7‘ and UK small | | | increasing share count by 22.7% and, | cap equities? | alongside performance, growing NAV to £64.3m. NAV has now grown 58.0% in the What should cheer everyone up? Or maybe, last two years, building scale. more importantly, what could stop the selling, or, we dare to ask, support the buying of  Five new portfolio investments purchased UK equities, particularly small ones? The during the period, as funds received from positive market backdrop factors appear to four takeovers and stock issuance were be as follows: The UK inflation rate has been re-deployed. consistently falling, to lower than half the  Conducted 10 for 1 stock split during rate a year ago. It appears on track now for period. the approximate target Bank of England rate and thus interest rates should start to fall Market backdrop during the next year. Unemployment is near Christopher Mills This was yet another challenging period for UK multi-decade lows at 3.9% and consumer Advisory Group Member small company investors with material mood confidence in increasing, unsurprisingly CIO Harwood Capital LLP | swings through the year and rising media | when real income growth has turned positive. | | --- | --- | | coverage about a weakening domestic capital | Market M&A is building as professional external | | market environment. With a moribund lack | parties, both trade buyers and private equity | | of new issues, sustained retail outflows from | act on opportunities within the UK market, | | UK funds, a stagnant (at best) economy and | signalling value. Sceptics will chuckle, but the | | interest rates rising a further 1.0% to 5.25%, | announcement of the Mansion House reforms, | * These are considered to be Alternative performance Measures (APMs). See APMs on page 51 ## 04 Rockwood Strategic Plc Financial Other Overview Governance Statements Information | where a number of huge asset managers | | when the proceeds from the Crestchic | stock market doesn’t fairly value or provide | | | --- | --- | --- | --- | --- | | committed to increased UK investment, | | takeover had increased cash to 21.1% of | growth capital to UK listed small companies | | | including the AIM and the creation of a British | | NAV: We have had a number of takeover | then alternative solutions for shareholders will | | | ISA, do imply politicians are now conscious | | bids in the year, validating our approach to | emerge. This dynamic should deliver material, | | | that help is needed to stimulate demand for | | identifying unrecognised value, which has | absolute NAV growth for the current portfolio | | | small listed equities. Indeed, without them the | | also been re-invested. We have also had | holdings as it did during the year. Whilst a dead | | | country will not end up with medium sized or | | the proceeds of new issuance to invest. | IPO market is not ‘re-populating’ the UK market, | | | large ones. These are, modest steps and will | | Cumulatively this has meant we have | we expect this to eventually pick up again as | | | take time to impact investor flows, but are a | | been able to buy more of our maturing | broader confidence improves. | | | good base to build upon from a policy direction | | investments at favourable prices and also | | | | perspective. | | we have, in a buyer’s market, been able | We ended with 7 ‘Core’ holdings and 12 | | | | | to purchase 6 new investments, all of | ‘Springboard Opportunities’ with the top ten | | | The other key aspects of the market backdrop | | which we target at least 100.0% upside, | holdings accounting for almost the same as the | | | remain a robust US economy, creating | | and represented 24.0% of the portfolio at | prior year end at 64.3% of NAV. | | | headwinds for the timing of a reduction in their | | period end. | | | | interest rates and a weak Chinese economy, | | | Investment Philosophy | | | where the effects of poor capital investment | An understanding of the maturity stage | |  ‘Value’ investor mindset and free cash flow | | | and lending discipline are unwinding. High | of the portfolio holdings is paramount to | | | focused | | profile conflicts in Ukraine and the Middle | the confidence which underpins our view | | | |  Seek proven businesses, identifiable East have increased ‘tail-risks’, which when of the future NAV growth opportunity. To assets | combined with Central Bank buying and | simply illustrate, Flowtech Fluidpower’s new | | | | --- | --- | --- | --- | | anticipation of looser monetary policy, have | management team is now fully in place with |  Establish mean reversion potential | | | provided support for Gold. Housing and | initiatives to improve returns underway. In | | (profitability, balance sheet and valuation | | property markets are weak as they adjust | 2023 they generated 5.3% operating margins. | | re-rating) | | to higher interest rates and tighter credit | Management are targeting “mid-teens”. At | | |  Identify catalysts for change | markets. | RM, their new strategy and cost savings were | | | | --- | --- | --- | --- | | | unveiled by the new management team, in |  Develop exit thesis to mitigate illiquidity | | | Outlook | which they stated their new goal to quintuple | | risks (3–5-year time horizon) | | We have provided a ‘market-backdrop’ section | 2023 EBITDA. At Trifast the operating margin | | |  Engage with all stakeholders to de-risk and above, but as we have previously stated, over in the year to March 2024 is expected to add value the medium-term, market factors will not be c.5.0%. The company target is 10.0%, be the primary determinant of Rockwood’s re-committed to by the new management team. We believe that investment returns are returns, it will be stock-specific risk and All three stocks fell in value during the period. generated by purchasing a share for less return. In this regard, we would express strong We bought more of all three stocks. During the than the intrinsic worth of the company, (a confidence in the portfolio. This is predicated year our proposed candidate for the Board was ‘value’ philosophy), which is enhanced by on three contributing factors: appointed to RM and Nick Mills of Harwood identifying companies which can increase joined the Board of Trifast. Already, Jamie their fundamental intrinsic worth over time,  Firstly the current valuations of our Brooke of the Rockwood Investment Advisory thus avoiding ‘value traps’. We seek to optimise holdings are materially below our estimate Group is on the Board of Flowtech Fluidpower. the IRR by identifying ‘catalysts’ which will of their combined intrinsic value. Low The main virtue required now is patience. unlock the share’s discount to the business’s starting valuations are critical to future Material profit recovery is likely at all of these worth or accelerate value creation. For ‘core’ positive returns. key holdings above, alongside many others. investments we ourselves may be the ‘catalyst’  Secondly, and rather frustratingly, a through the provision of capital, insight and Overall, the portfolio holdings are well-financed number of our investments have fallen personnel through constructive engagement with strong balance sheets in almost all cases, in price during the year despite their with the Board, management and other or are de-leveraging quickly in the remainder. fundamentals actually improving or stakeholders. We finished the year with £3.9m of net current management and Board evolutions having assets, 6.1% of NAV. We expect a hasty reversal been completed. In essence, these stocks of negative sentiment when interest rates are on track with our medium-term theses, start falling. Our pipeline of new investments indeed further up the maturity curve remains busy with due diligence finished on towards shareholder value delivery, yet the some, where we wait patiently for an optimised current malaise in markets has led to lower entry point and is on-going on others, where we prices than a year ago. Our experience feel no rush to execute until we have sufficient suggests this will be a temporary clarity on the ‘margin of safety’. dislocation.  Thirdly, during the year we deployed We expect the pickup in trade buyer acquisition a material amount of capital into new activity and public-to-private transactions holdings. This has been even more than to accelerate in the coming years for our we anticipated at the start of the year targeted part of the UK stock market. If the ## 05Rockwood Strategic Plc ## Investment Manager's Report (continued) ### Top 10 Holdings as % of NAV | Company | Sector | % | | --- | --- | --- | | RM plc | Education services | 9.4 | | Trifast | Industrials | 8.4 | | M&C Saatchi | Media | 8.1 | | Funding Circle | Financial Services | 6.8 | | Filtronic | Technology | 6.7 | | STV Group | Media | 5.3 | | Centaur Media | Media | 5.2 | | Pressure Technologies | Industrials | 4.8 | | Argentex Group | Financial Services | 4.8 | | Flowtech Fluidpower | Distribution | 4.8 | | **Total** | | **64.3** | | Cash and equivalents | Cash and equivalents | 6.1 | ### Top 5 Investment Portfolio Holdings Commentary #### RM Plc 9.4% Net Assets ('Core') **Cost: £4.96m, Value as at 31 March 2024, £6.07m, IRR to date 23.4%** The company is an established and leading supplier to the education market. It has three divisions: firstly an educational supplies business which reaches 90.0% of UK Primary schools selling everything from basic supplies to bespoke teaching aids, often encouraged by the curriculum. The second is a leading assessment business which marks exams from the International Baccalaureate to A-levels both in the UK and abroad. The final division provides outsourced technology services to groups of schools. During the year the company's lenders extended their facilities to the company, which is important given elevated debt levels. The new CEO completed a number of senior hires, including a new CFO and we were very pleased to see Christopher Humphries appointed Senior Independent Director. The new strategy has been unveiled which rightly targets improved focus and we believe strongly that RM should move to a single division business, paying off its debt in the process. The business which has a long history of cash generation, now stabilised after the recent collapse in profitability and we expect material profit growth over the coming years, indeed management are targeting 5x the 2023 EBITDA outcome. We believe that the shares have a 'sum-of-the-parts' valuation materially above the current share price and expect the evolved Board and new management team to create and realise considerable shareholder value through a well-managed divisional disposal process and operational turnaround. #### Trifast 8.4% Net Assets ('Core') **Cost: £5.64m, Value as at 31 March 2024, £5.38m, IRR to date -4.6%** The company is an international manufacturer (30.0%) and distributor (70.0%) of fasteners (nuts 'n' bolts) and has been established for a number of decades. With 34 locations, of which 7 are high volume manufacturing sites, 15 billion parts are sold per year and over 1200 employees. Sales exceed £240m with a long history of profitability and cash generation. The company has material net assets and is well invested in plant and machinery. However, returns have fallen and Return on Capital Employed ('ROCE') is poor. The operating margin is depressed vs its long history and competitors and a management and Board evolution has now been completed. This included the appointment of Nick Mills from Harwood as a Non-Executive Director ('NED'). A restructuring program to deliver savings is underway and we expect progress from a c.5.0% operating margin to a 10.0% operating margin over the next 2-3 years, 75.0% of sales are customer-specific branded products with an 18-year average tenure of the top ten customers, the largest being <7.5% sales. Net Debt had become elevated not least due to a bulging inventory position of over £100m, which is now unwinding. We can identify a significant multi-year turnaround and recovery opportunity with scope to materially increase cash generation, improve returns and profits leading to a normalisation and expansion of the valuation. #### M&C Saatchi 8.1% Net Assets ('Springboard/Opportunity') **Cost: £3.32m, Value as at 31 March 2024, £5.22m, IRR to date 22.8%** The company is one or the world's best known global advertising and communications advice agencies with clients stretching from governments to supra-national organisations (e.g. The World Bank) to the world's leading consumer brands (e.g. Samsung) and social media sites (e.g. TikTok). Following a period of turmoil, the Board and management team have undergone significant change. Under the dynamic new Chair, the business has been making considerable operating savings, disposing of loss-making operations and streamlining the business, including the move to shared services. H2 2023 results demonstrated a turnaround is underway, which as it matures should highlight a growing, high margin, low capital intense, highly cash generative, international business. They also clearly expose the exciting activities the business undertakes in 'Passion' sectors, such as sport, alongside their almost unique 'world issues' non-cyclical division which advises a range of governments and supra-national organisations. The upside to our view of fair value is considerable. Profit progress should be made in 2024 irrespective of the tough end market conditions, however when these inevitably pick-up, the profit recovery potential will be supercharged. The company has almost finished buying out its minority partners, has now put in place a new CEO, CFO, co-Creative Directors and has net cash. The shares still remain below the rejected level of the 2022 takeover offer. #### Funding Circle (New Holding) 6.8% Net Assets ('Springboard/Opportunity') **Cost: £3.48m, Value as at 31 March 2024, £4.34m, IRR to date 303.0%** (Note the IRR is unhelpful for evaluation purposes, due to the mathematical extrapolation and annualisation of a strong initial performance after a very short holding period) The company has developed a leading UK and US Small and medium ('SME') sized company lending platform matching professional lending demand with SME financing leads where they are poorly served by the mainstream banks. The platform generates income in fees for arranging the loans and servicing them, of which there are c.£3.5bn currently under 06 Rockwood Strategic Plc Financial Other Overview Governance Statements Information | management. To date 140,000 businesses have | Filtronic has been winning contracts to supply | Argentex 4.8% Net Assets (‘Springboard/ | | --- | --- | --- | | successfully borrowed over $16bn, enhancing | components for the ground stations of its | Opportunity’) | | a huge ‘data lake’ of over 2bn data points | customer and is in trials for being within the | Cost: £3.71m, Value as at 31 March 2024, | | on 29 million businesses, feeding the fast | satellite itself. The company has net cash | £3.08m, IRR to date -20.6% | | approval process. The impairment record has | and potentially a very bright future as other | | | been in-line with expectations for the type of | constellation projects mature, existing clients | This investment has not performed to our | | loan risk, initial expectations that ‘peer-to-peer’ | grow and achieves scale. | thesis over the medium term. Frustratingly, | | lending would nourish the platform have not | | following our initial investment the shares | | been met and the company has steadily built | Portfolio Activity | performed strongly as a new management | | income from professional capital sources. | | team was put in place to take the business | Purchases However, it has been loss-making to date. The forward after a co-founder/CEO departed. We added materially to our shareholdings in a company was valued at c.£1.5bn in its 2018 However, the team failed to calibrate cost number of existing investments increasing the IPO. We have established an investment at a investment effectively and insufficient number of shares held, the largest are shown in c.£110m market capitalisation, a deep discount growth in their FX services was delivered, only the following table: | to book value as we note the company has | temporarily helped by the volatility around | | --- | --- | | £173m of unrestricted cash, £50m of regulatory | the Liz Truss Prime Ministerial phase and our | | driven restricted cash, and over £60m of loans, | gains were more than fully reversed. A new | % increase in shareholding made to facilitate the platform. Since our Company during the year Chair has been appointed and a full new team purchase the company has started evolving is now being created (CEO, CFO, CTO). We still RM 45.4 | the Board, announced a £25m buy-back and | | standby by our original thesis that the business | | --- | --- | --- | | that they are in discussions to sell the US | Trifast 190.9 | is inherently profitable, lacks capital intensity, | | business to focus on the UK activities. We are | | has huge growth potential both domestically | M&C Saatchi 42.8 | in support of all these initiatives, yet desire | | and overseas and is cash generative, however | | --- | --- | --- | | some cost-cutting and restructuring to ensure | Titon Group 218.7 | a reset of leadership and some evolution of | | the UK business is stand-alone profitable. Once | | strategy is necessary to recover and build | Argentex 336.5 achieved, the value of this platform, if it can shareholder value. We are awaiting these plans continue to grow, will be very significant. Hostmore 256.2 from the new team. It is now 2 years from the initial purchase, and thus we desire a ruthless | Filtronic 6.7% Net Assets (‘Springboard/ | Titon 3.6% Net Assets (‘Core’) | focus on shareholder value in order to meet our | | --- | --- | --- | | Opportunity’) | Cost: £2.32m, Value as at 31 March 2024, | target returns over an acceptable time period. | | Cost: £1.53m, Value as at 31 March 2024, | £2.34m, IRR to date 1.6% | | | £4.29m, IRR to date 257.6% | | New holdings | | | The company has migrated from ‘Springboard’ | The Investment Team have been actively | | The company is an independent, world leader | to ‘Core’ as we purchased over 27.0% of the | deploying capital during these depressed | | in Radio Frequency (“RF”) applications and | company’s equity during the year. A leading | market conditions to seed returns for | | technology. This is the art of converting | UK manufacturer of building ventilation | shareholders over the medium term. | | analogue to digital signals and mastering | products and supplier of other door and | | | the various wavelengths on the spectrum to | window hardware, the company has had | | STV 5.3% NAV, Market capitalisation £109m communicate data effectively. The business a succession of CEOs, falling profitability The company is the No.1 Scottish commercial has been in existence for many years and and lacked strategic focus in recent years. broadcaster, recently being re-awarded a works with world leading clients in its sectors, However, the company is very asset rich further 10 year license, which incorporates historically Telecommunications (5G rollout with cash on the balance sheet, (too much) its leading digital platform, the ‘STV Player’. for instance), Defence (Radar applications stock, a large freehold asset site, and has In recent years the company has expanded for example) and critical communications. a growing mechanical ventilation business its content production capabilities and is the The business disposed of a lot of activities where competitors deliver attractive levels largest regional UK studios business with over a number of years ago and now operates of profitability. This industry has strong 40 ‘returning’ series. As the most popular peak profitably in its niches, but lacks scale. The growth prospects and regulatory drivers. Our time TV channel in Scotland, STV reaches 3 opportunity for shareholders centres on the investment has been made at a substantial out of 4 Scottish adults every month (2.9m) opening up of a new, potentially huge market discount to book value. We successfully and attracts 3x the audience of its nearest for Filtronic that would transform sales and proposed Jamie Brooke, of Rockwood’s commercial competitor. Remaining profitable, profitability of the company and create Investment Advisory Group, replace the long- the difficult and cyclical advertising spend strategic value within the supply chain. The standing Chairman and we expect significant environment has impacted recent performance market is ‘Space’. The company has started improvements in focus, strategic clarity, yet has scope for meaningful recovery. The to win important contracts with “the world’s and profitability going forward. A new CEO digital activities are very high margin and have leading Low Earth Orbit satellite company” as joins shortly with experience in improving been consistently growing with millions of well as the European Space Agency. The US operations and we see scope for material registered and active users who can be served company SpaceX has been transforming the shareholder value creation and realisation. better targeted and thus higher value adverts. economics of space travel allowing many more Debt levels are conservative but the company launches and the creation of huge satellite is saddled with a legacy pension scheme networks, the largest of which is Starlink. ## 07Rockwood Strategic Plc ## Investment Manager’s Report (continued) with a large deficit, which is consuming a lot metals, it still retains a bias to Gold. We expect Youngs & Co. They will benefit from the removal | of cashflow to resolve. In time this will stop | further growth in its key projects, realisations | of duplicate central costs, management | | --- | --- | --- | | and we would expect the Board of STV to be | from its strategic equity stakes in early-stage | synergies, improved buying terms and gain a | | accelerating this process if it made sense for | clients and an eventual realisation of value in | high quality, well located, estate. Their offer at | | shareholders. We believe the low valuation | the laboratories business. The valuation looks | a 46.0% premium was mainly cash and some | | reflects an out of date perception of business | anomalous given the ROCE and growth record, | Young & Co shares, which remained in the | | mix, as the content business is now larger | its asset base and prospects. | portfolio at year-end. | than linear TV activities and has been recently | announcing new production wins with Apple, | James Fisher & Sons 4.0% NAV, Market | Onthemarket.com – realised IRR 94.0%, gain | | --- | --- | --- | | NBC, the BBC and Netflix implying solid | capitalisation £130m | £928,000 | | growth prospects and creative reputational | Unlike the other four new holdings above, | Also on the receiving end of an attractive | | momentum. | James Fisher shares have fallen since our | takeover offer, Onthemarket.com, the UK | | | initial purchase. We expect a full recovery of | property portal, was introduced to the portfolio | | Restore 4.2% NAV, Market capitalisation | our investment, indeed have high confidence | in February 2023. Our thesis centred on the | | £296m | in, at least, meeting our target returns over | progress the company had made in recent | | Restore dropped significantly below our | the next 3-5 years. This quality marine, energy | years, moving into attractive free cash flow | | maximum market cap for initial purchases of | and defence group with a very long corporate | generation and with scope for price rises | | £250m during the period, following a profit | history had lost focus, capital discipline | given the huge discount charged relative to | | warning, resulting in a fantastic investment | and stressed the balance sheet. The new | the dominant market leader, Rightmove. The | | opportunity in this unique services business. | management team is already simplifying | low valuation appeared at odds with future | | The company manages over 22m boxes of | the group, taking out costs and has released | potential and the company’s strong balance | | paper records for a wide range of businesses, | conservative medium-term financial targets, | sheet. However, a multi-billion dollar US | | including 80.0% of the FTSE 100, which is a | which would result in much higher levels of | company with expertise in the sector, has cut | | highly profitable activity generating over 30.0% | profitability and returns on capital. We entered | short our expected holding period with a cash | | profit margins. Over the years, complimentary | this investment with known risk around their | takeover offer at a 56.0% premium. | | activities have been developed and the | high debt levels, but just prior to period end, a | | | company is now UK No.1 in shredding, office | large proposed disposal was announced which | Finsbury Food Group – realised IRR 33.4%, | | technology destruction/recycling, scanning, | will radically de-gear the company, allowing | gain £554,000 | | and office relocations. The long-time CEO | the operational recovery to unfold. Within | A significant UK manufacturer of cakes and | | has returned to the group after a period of | the remaining activities are leading edge | Bread products with particularly high market | | underperformance of the business and we | specialist diving expertise, growing services to | share in branded ‘celebration’ cakes such as | | expect renewed vigour, growth and improved | global offshore wind farms, emergent defence | Birthday cakes branded Disney, Minions, Mary | | profitability to emerge. Despite recovering well | products and cash generative shipping related | Berry etc. We flagged in last year’s annual | | since our investment the valuation remains on | services. We expect considerable valuation | report that the company’s M&A ambitions | | a deep discount to history and its prodigious | upside as the turnaround progresses and | were “somewhat constrained by a seemingly | | cash flows and we expect further significant | risksabate. | inappropriately low stock market multiple” | | progress. | | and that Private Equity may find the situation | | | Sales | attractive. We were therefore not surprised | | Capital Limited 3.2% NAV, Market | We exited 4 material holdings and received | when a takeover offer emerged. Frustratingly, | | capitalisation £174m | a capital return from Bonhill prior to its | the premium was modest and the valuation | | The company’s two key founders remain | de-listing. We await a final modest payment | placed on the group was below our view | | heavily involved and invested in the business | to shareholders. We also received special | of fair value. However, the long-standing | | they have successfully created over the last | dividends from Centaur Media and Galliford Try. | management team supported the move off | | 15 years. The company started out providing | | market and other shareholders accepted the | | drilling services to small African based mining | City Pub Company – realised IRR 43.4%, gain | offer or sold to arbitrageurs who did and the | | companies and, having developed a reputation | £1.49m | approach was successful. We did achieve | | of best in class health and safety, service | This represented a very clear ‘opportunity’ | over double our target IRR in this investment | | levels and efficiency, has gradually built a | for Rockwood, when we began buying in May | and have found lots of opportunity for | | diversified client base including a number of | 2022. The carefully put together group of over | reinvestmentsince. | | world’s major mining companies. The rig fleet | 50, mainly freehold, pubs has been led by the | | | is now deployed across several continents and | proven industry expert, Clive Watson. The | Smoove – realised IRR 2.0%, gain £246,000 | | is complimented by other services, the most | pubs experienced a sustained period of stress | A protracted bid process also occurred for | | important for our thesis being the ‘laboratory | due to the COVID-19 impact on leisure activity | our investment in Smoove, originally ULS | | services’ division which is providing leading | and then the cost of living squeeze, so trading | Technology, during the period. In this instance | | edge, environmentally friendly assays and | has been challenging. However, independent | the bidder was Pexa Group, an Australian | | sample testing to its clients. Capital’s strong | assessment of the value of the pubs, despite | listed group. This investment has not met our | | margins, and attractive returns on capital | this context, was much greater than the value | target returns, primarily, in our view, due to the | | will be enhanced by the strong growth of this | placed on the shares by the stock market. | decision to invest a lot of the cash proceeds | | division, competitors are valued very highly. | This opportunity proved attractive to the | received from a divisional disposal in 2022, | | Whilst Capital has activities across a number of | highly regarded and (much) older pub group of | alongside further P&L investment (losses), | ## 08 Rockwood Strategic Plc Financial Other Overview Governance Statements Information | into an expensive technology refresh project. | Conclusion | | --- | --- | | Harwood built a larger stake in the business | As managers we have invested more of | | and engaged with the Board to reassess what | our own personal money in the shares of | | was best for shareholders. The eventual offer | Rockwood Strategic during the year and have a | | received was at a 69.0% premium, which | management contract which rewards success. | | meant we made a modest positive return on | We see a real opportunity to compound wealth | | investment, however due to the elongated | for all shareholders over the long-term and | | process and losses racked up by the new | the potential for a revitalised but inefficient | | management team, our original thesis was not | stock market full of opportunities to deliver our | | successful in achieving our target returns. | target returns. | | Update on Pressure Technologies | During the year the great Charlie Munger and | the legendary behavioural finance pioneer | Pressure Technologies | | Daniel Kahneman passed away, both have had a | | --- | --- | --- | | Equity: 20.0% of Issued Share capital, | | significant influence on how your manager has | | | 4.8% Net Assets (“Core”) | developed Rockwood’s approach to successful | stock market investing. Charlie would hopefully Cost: £4.26m, Value as at 31 March be pleased with Rockwood’s concentrated 2024, £3.1m, IRR to date -8.4% approach, valuation discipline, and focus on Loan: £750,000, IRR to date 25.0% cash generation, whilst Daniel would urge us Warrants: 966,679. Maturity 2028. to keep reminding ourselves of the various Exercise price 32p biases we will continue to succumb to as active investors. Both advocate the importance The company has two divisions; the industry of patience, increasingly in short supply we leading Chesterfield Special Cylinders (“CSC”) would argue, yet critical for the success of which manufactures and services a range of our investments in Rockwood and also for high-end industries and customers including shareholders who want to benefit from this the Ministry of Defence and the emergent strategy. Hydrogen economy. Secondly, the Precision Machined Components division (“PMC”), which manufactures high specification parts primarily for the oil and gas industry. The Richard Staveley investment was initiated in early 2019, however cash generation has not been as expected and the company has required a number of external capital injections. During the period, Richard Staveley joined the Board as a NED and subsequently Rockwood arranged a loan to the company at a 14.25% interest rate, with a 3.0% arrangement fee, and some warrants with full security over the company’s assets. The loan is ‘bridging’ in nature as the company has pleasingly agreed to exit the PMC division. If successful, this process should bring in sufficient cash resources to both repay the loan and provide future funding for CSC. The PMC division is benefitting from the improved oil and gas pricing environment resulting in recovering activity levels. We expect a successful sale to result in a focused business which should lead to a fairer valuation of its qualities and potential. ## 09Rockwood Strategic Plc ## About the Investment Manager Harwood Capital LLP (“HC LLP”) was incorporated in 2003 and is the Investment Manager for Rockwood Strategic Plc and Harwood Private Clients. HCLLP is a wholly owned subsidiary of Harwood Capital Management Limited and is authorised and regulated by the Financial Conduct Authority (“FCA”), authorisation number 224915 and is led by Christopher Mills. The funds managed and advised by HC LLP follow an active, value approach towards the businesses in which they invest. Mr Mills is a member of the Rockwood Strategic Plc Investment Advisory Group. | Richard Staveley | Nicholas Mills | Christopher Mills | | --- | --- | --- | | Lead Fund Manager | Assistant Fund Manager | CIO Harwood Capital LLP | | Richard has over twenty four years’ experience | Nicholas is a Director of Harwood Capital | Christopher has over 50 years investment | | of equity investment and fund management. | Management Ltd and joined Harwood Capital | experience and has been the Chief Executive | | Having qualified as a chartered accountant | LLP in 2019. He has ten years of equity | Officer and principal shareholder of Harwood | | at PricewaterhouseCoopers, Richard joined | investment experience, initially at Gabelli Asset | Capital Management since 2011. He founded | | Bradshaw Asset Management, as assistant | Management in New York where he spent | JO Hambro Capital Management with Jamie | | fund manager in 1999. He subsequently joined | five years as a Research Analyst covering the | Hambro in 1993 acting as Chief Investment | | Société Générale Asset Management where | industrial sector and gaining experience in | Officer and Harwood Wealth with Alan Durant in | | he became Head of UK Small Companies and | Merger Arbitrage strategies and the marketing | 2013 until their respective sales in 2011 and 2020. | | a CFA charterholder. In 2006, he co-founded | of Closed End Funds. He joined Harwood | He is CEO of North Atlantic Smaller Companies | | River and Mercantile Asset Management where | Capital LLP in 2019 and has since performed UK | Investment Trust (“NASCIT”) which he has | | he launched both the UK Small Company | equity analysis and fund management roles for | managed since 1982 and Executive Director of | | Fund, the UK Income Fund and was Head of | Oryx International Growth Fund and the North | Oryx International Growth Fund which he has | | Research. In 2013, he joined Majedie Asset | Atlantic Smaller Companies Investment Trust. | managed since 1995. NASCIT has delivered a | | Management to co-manage and subsequently | He has a Bachelor of Science Degree from | total NAV per share of nearly 200x under Mr. | | solely manage the UK small company | Boston College’s Carroll School of Management. | Mills’ management. He has sat on the Board of | | investments. In 2019 he joined Gresham House | He is currently a Non-Executive Director at Niox | over 100 companies during his career including | | Plc as fund manager for Gresham House | Plc, Hargeaves Services Plc and Trifast Plc. | most recently Augean, MJ Gleeson, SureServe, | | Strategic Plc, the Strategic Public Equity LP | He was previously Non-Executive Director at | Frenkel Topping, Assetco, Ten Entertainment, | | and eventually the Gresham House UK Small | Crestchic Plc. | Bigblu Broadband, SourceBio International and | | Companies Fund. In 2021, Harwood Capital LLP | | is currently Chairman of EKF Diagnostics and | | were awarded the management contract for | | Renalytix AI. | Gresham House Strategic Plc which Richard subsequently joined to continue his role under its new name Rockwood Strategic Plc. He currently sits as Non-Executive Director on the boards of Pressure Technologies Plc and . Investment Advisory Group Harwood Capital LLP has formed an Investment Advisory Group (IAG) to support the Investment Team for Rockwood Strategic Plc. The members are experienced financial professionals with relevant experience, their details are disclosed on the www.rockwoodstrategic.co.uk website. The IAG members are provided with details of pipeline ‘core’ investments for the strategy prior to the completion of the research process. Their insights, relevant contacts and investment views are incorporated into the Investment Team’s subsequent due diligence. On completion of due diligence, research is shared with the IAG members and their perspectives actively considered prior to any investment decision by the Investment Team. ## 10 Rockwood Strategic Plc Financial Other Overview Governance Statements Information ## Strategic Report 2024 | The Directors present their Strategic Report | it to continue to qualify for such approval. | Board Focus and Responsibilities | | | --- | --- | --- | --- | | for the period ended 31 March 2024. Details | The Company’s shares have a listing on the | With the day to day management of the | | | of the Directors who held office during the | premium segment of the Official List of the | Company outsourced to service providers the | | | period and as at the date of this report are | Financial Conduct Authority (“FCA”) and trade | Board’s primary focus at each Board meeting | | | given on page 3 of the Annual Report and | on the London Stock Exchange’s (“LSE”) Main | is reviewing the investment performance and | | | Accounts. This Strategic Report has been | Market for listed securities. The Company is | associated matters, such as, inter alia, future | | | prepared in accordance with the requirements | a member of the Association of Investment | outlook and strategy, gearing, asset allocation, | | | of Section 414 of the Companies Act 2006 | Companies (“AIC”), a trade body which promotes | investor relations, marketing, and industry | | | and best practice. Its purpose is to inform the | investment companies and also develops best | issues. In line with its primary focus, the Board | | | shareholders of the Company and help them to | practice for its members. | retains responsibility for all the key elements | | | assess how the Directors have performed their | | of the Company’s strategy and business model, | | | duty to promote the success of the Company, in | Strategy for the year ended 31 March 2024 | including: | | | accordance with Section 172 of the Companies | and Strategic Review | | | | Act 2006. | During the year ended 31 March 2024, the |  Investment Objective and Policy, | | | | Company continued to follow its investment | | incorporating the investment guidelines | | The Strategic Report contains certain forward- | objective and policy. During the year, the Board | | and limits, and changes to these; | | looking statements. These statements are | made all strategic decisions for the Company. | | |  review of performance against the made by the Directors in good faith based on Harwood Capital LLP undertook all strategic Company’s key performance indicators the information available to them up to the and administrative activities on behalf of the (“KPIs”); date of this report and such statements should Board, which retained overall responsibility. be treated with caution due to the inherent  whether the Manager should be uncertainties, including both economic and Purpose authorised to gear the portfolio up to business risk factors, underlying any such The purpose of the Company is to achieve a pre-determined limit (currently no forward-looking information. predominantly capital growth in our leverage is used or planned to be used); shareholders’ wealth over time. It aims  review of the performance and continuing The Company’s business review, developments to achieve this by using its closed-ended appointment of service providers; and during the year and a detailed discussion of structure to invest in a concentrated number the individual asset performance together with of smaller quoted companies, which the  maintenance of an effective system future outlook are covered in the Chairman’s Investment Manager believes are undervalued of oversight, risk management and Statement and the Investment Manager’s and could be generating higher returns for corporate governance. Report. their shareholders. The long-term nature of the Company’s capital enables the Investment Key Performance Indicators Business Model Manager to undertake constructive corporate At each Board meeting, the Directors consider engagement with the underlying portfolio the performance measures to assess the Status of the Company companies and their stakeholders, on financial Company’s success in meeting its objectives. The Company is registered in England and and operating performance, strategy and The Board believes the Company’s key Wales as a public limited company and is governance. performance indicators are: an investment company within the terms of | section 833 of the Companies Act 2006. The | The Board |  Net Asset Value Total Return: the sum | | | --- | --- | --- | --- | | principal activity of the Company is to carry on | The Board of the Company comprises Noel | | of NAV per Ordinary Share growth and | | business as an investment trust. The Company | Lamb (Chairman), Ken Lever and Paul Dudley, | | cumulative dividends paid. This measure | | has been approved by HM Revenue & Customs | all of whom are independent non-executive | | incorporates investment performance | | as an authorised investment trust under | Directors and male. All Directors will stand for | | and Company expenses. The investment | | sections 1158 and 1159 of the Corporation Tax | re-election at the forthcoming Annual General | | objective is to make investments capable | | Act 2010, subject to there being no subsequent | Meeting. Further information on the Directors | | of delivering 15.0% Internal Rates of | | serious breaches of regulations, from 1 April | can be found on page 3. | | Return (IRR) over the medium term. This | | 2023. In the opinion of the Directors, the | | | was 5.1% in the current and 21.4% in the | | Company is directing its affairs so as to enable | | | prior year. | ## 11Rockwood Strategic Plc ## Strategic Report (continued) |  Rockwood Strategic Plc Total Shareholder | | Additional risks – as mentioned under the | Regulations 2018, the Company explains how | | --- | --- | --- | --- | | | Return: RKW cumulative share price return | Corporate Governance section, the Board | the Directors have discharged their duty under | | | for the year and cumulative dividends paid. | maintains a register, and in addition to | Section 172 below. | | | Implicit in this measure is any movement | comments above, risks managed there | | | | in the share price discount or premium to | include, among others: the management of key | The Directors have continued access to the | | | NAV which is also measured. The discount | operational and financial controls; risk of key | advice and services of the Company Secretary, | | | to the NAV moved during the period to | personnel being unavailable; and maintaining | and when deemed necessary, the Directors | | | a premium. The TSR was 15.4% in the | regulatory permissions. | can seek independent professional advice. | | | current year and 28.2% in the prior year. | | The Terms of Reference of any Committees | | | | Liquidity is not considered a risk as this is a | are reviewed on a regular basis and further |  Ongoing charges: ensuring the costs of closed-end fund and does not have redemption describe Directors’ responsibilities and running the strategy are appropriate and provisions, as seen in the open-ended fund obligations and include any statutory and proportionate. The ongoing charges ratio sector. regulatory duties. The Audit Committee has for 2024 was 1.58% (see APMs on the responsibility for the ongoing review of page 51). The principal risks to shareholders are the Company’s risk management systems and the performance of the portfolio and the internal controls and, to the extent that they The Directors draw attention to the Investment competence of the manager in pursing the are applicable, risks related to the matters Manager’s Report (pages 4 to 9 of the strategy. set out in Section 172 are included in the annualreport). Company’s risk register and are subject to Custodian periodic review. Business review Caceis Bank (previously RBC Investor Services The Directors are of the view the investment Trust) was appointed as the Company’s Further details on Section 172 reporting can be strategy has performed very well, given the Custodian pursuant to an agreement dated found in the S172 Statement on pages 14 to 16. challenging UK smaller companies market 8 June 2022. Caceis is in charge of, inter alia, conditions experienced during the year. safekeeping and custody of the Company’s Stakeholders assets, investments and cash, processing A company’s stakeholders are normally Principal Risks and Uncertainties transactions and foreign exchange services, as considered to comprise its shareholders, its The Board, on behalf of the shareholders, required. employees, its customers, its suppliers as well manages a range of risks that might impact the as the wider community in which the company financial position of the Company, the principal Stakeholder Engagement and Statement operates and impacts. The Company is risks are as follows: under Section 172 different in that as an investment trust it has no The Board recognises that the Company should employees and, significantly, its customers are  Investment value - The risk that the value be run for the benefit of shareholders, but synonymous with its shareholders. In terms of of the Company’s investments might fall. that the long term success of a business is suppliers, the Company receives professional See note 13 to the Financial Statements dependent on maintaining relationships with services from a number of different providers, for further details on this, specifically note stakeholders and considering the external principal among them being the Investment 13a “Market Risk”. Our mitigation, as set impact of the Company’s activities. Manager. The Board believes that the wider out in the Investment Manager’s Report, community in which the Company operates is to manage a diverse portfolio and for Overview encompasses its portfolio of investee the manager to operate with controls and The Directors’ overarching duty is to act in companies and the communities in which they diligence around new investments. | | | good faith and in a way that is the most likely | operate. | | --- | --- | --- | --- | |  The Board reviews and discusses the | | to promote the success of the Company as | | | | Company’s performance against its | set out in Section 172 of the Companies Act | Shareholders | | | investment objective and policy, and | 2006. In doing so, Directors must take into | Continued shareholder support and | | | assesses performance in comparison | consideration the interests of the various | engagement are critical to existence of the | | | to industry peers and the broader | stakeholders of the Company, the impact | business and the delivery of the long term | | | comparative market. The Board also | the Company has on the community and | strategy of the Company. | | | keeps the performance of the Investment | the environment, take a long-term view on | | | | Manager under continual review, along | consequences of the decisions they make | The Board is committed to maintaining open | | | with a review of significant investment | as well as aim to maintaining a reputation | channels of communication and to engage with | | | decisions and the overall rationale for | for high standards of business conduct and | shareholders in a manner which they find most | | | holding the current portfolio. | fair treatment between the members of the | meaningful, in order to gain an understanding | | | | Company. | of the views of shareholders. These include: |  Investment Manager – the Company is reliant on the Investment Manager Fulfilling this duty naturally supports the  Annual General Meeting (“AGM”) – The to implement the investment strategy Company in achieving its investment objective Company welcomes and encourages successfully and the risk that this and helps to ensure that all decisions are attendance, voting and participation might not continue is managed by the made in a responsible and sustainable way. from shareholders at the AGM, during Board through regular and detailed In accordance with the requirements of the which the Directors and the Investment engagement with, and oversight of, the Companies (Miscellaneous Reporting) Manager are available to discuss issues manager together with the manager’s own affecting the Company and answer any comprehensive investment and operating questions. The Company values any processes. feedback and questions it may receive ## 12 Rockwood Strategic Plc Financial Other Overview Governance Statements Information from shareholders ahead of and during the Board to gauge how the Company is In addition to the management fee, the the AGM. meeting its objectives and suggests a Investment Manager also receives a presence of a healthy corporate culture. performance fee if certain circumstances are  Publications – The Annual and Interim met. In respect of the year ended 31 March Reports of the Company are made The Investment Manager 2024, no performance fee has been accrued. available on its website. These reports The Investment Manager’s performance is provide shareholders with a clear critical for the Company to successfully deliver Other service providers understanding of the Company’s portfolio its investment strategy and meet its objective In order to function as an investment trust with and financial position. This information to provide shareholders with attractive total a Main Market listing on the LSE, the Company is supplemented by a quarterly factsheet return over a long-term period. relies on a diverse range of reputable advisors and regular presentations which are for support in meeting all relevant obligations. available on the website. Feedback and/ The management of the Company’s portfolio or questions the Company receives from is delegated to the Investment Manager, The Company’s main functions are delegated to the shareholders help the Company evolve which manages the assets in accordance a number of service providers, each engaged its reporting, aiming to render the reports with the Company’s objectives and policies. under separate contracts. The Board, together and updates transparent and informative. At each Board meeting, representatives from with the Company Secretary, and Investment  Shareholder meetings – The Investment the Investment Manager are in attendance Manager maintains regular contact with its Manager and the Company’s Broker are in to present reports to the Directors covering key external providers and receives regular regular contact with major shareholders. the Company’s current and future activities, reporting from them, both through the Board The Chairman and the other Directors portfolio of assets and its investment and Committee meetings, as well as outside are available to meet with shareholders performance over the preceding period. of the regular meeting cycle. Their advice and to understand their views on governance views are routinely taken into account. This and the Company’s performance where Maintaining a close and constructive working regular interaction provides an environment they wish to do so. The results from relationship with the Investment Manager is where issues and business developments all meetings between the Investment crucial as the Board and Harwood Capital both needs can be dealt with efficiently and Manager, the Broker and shareholders, aim to continue to achieve long-term returns collegiately. The Audit Committee reviews and the views of the shareholders are in line with its investment objective. Important and evaluates the financial reporting control reported to the Board on a regular basis. components in the collaboration with the environments in place at each service provider. Investment Manager, representative of the The Board formally assesses performance,  Shareholder concerns – In the event Company’s culture, are: fees and continuing appointment annually to shareholders wish to raise issues or ensure that the key service providers continue concerns with the Directors, they are  Operating in a fully supportive, to function at an acceptable level and are welcome to do so at any time by writing co-operative and open environment and appropriately remunerated to deliver the to the Chairman. Other members of the maintaining ongoing communication with expected level of service. Board are also available to shareholders the Board between formal meetings; if they have concerns that have not been Employees, human rights, social and addressed through the normal channels.  Encouraging open discussion with the community issues Shareholders wishing to communicate Investment Manager, allowing time and The Board recognises the requirement under directly with the Board should contact space for original and innovative thinking; Companies Act 2006 to detail information the Company Secretary at the registered  Recognising that the interests of about human rights, employees and community office address on page 55. shareholders and the Investment Manager issues, including information about any  Investor relations updates – At every are for the most part well aligned, policies it has in relation to these matters and Board meeting, the Directors receive adopting a tone of constructive challenge; the effectiveness of these policies. These updates from the Company’s Broker on requirements do not apply to the Company  Drawing on Board members’ individual the share trading activity, share price as it has no employees, all the Directors are experience and knowledge to support performance and any shareholders’ non-executive and it has outsourced all its the Investment Manager in its monitoring feedback, as well as updates from the functions to third-party service providers. The of and engagement with portfolio Investment Manager. To gain a deeper Company has therefore not reported further companies; understanding of the views of its in respect of these provisions, however, it shareholders and potential investors,  Willingness to make the Board members’ does expect its service providers and portfolio the Investment Manager also meet experience available to support the companies to respect these requirements. regularly with shareholders. Any pertinent Investment Manager in the sound feedback is taken into account when long- term development of its business Integrity and business ethics Directors discuss the share capital and resources, recognising that the The Company is committed to carrying out and any possible new share issuance long-term health of the Investment business in an honest and fair manner with under the Block Listing application. The Manager is in the interests of a zero-tolerance approach to bribery, tax willingness of the shareholders, including shareholders in the Company. evasion and corruption. As such, policies and the partners and staff of the Investment procedures are in place to prevent the above. Manager, to maintain their holdings over The Board’s expectations are that its principal the long term period is another way for service providers have similar governance ## 13Rockwood Strategic Plc ## Strategic Report (continued) | policies in place. The Company Secretary, on | long-term nature and outlook adopted by the | | as the Company has sufficient cash liquidity | | --- | --- | --- | --- | | behalf of the Board, will seek assurances from | Investment Manager when making investment | | to pay its liabilities as and when they fall due | | service providers on a regular basis. | decisions. To make this assessment and | | and also to invest in new opportunities as | | | in reaching this conclusion, the Board has | | they arise. The cash and publicly tradeable | | Environmental, social and governance issues | considered the Company’s financial position | | investments when compared to the non- | | The Company has no employees, property or | and its ability to liquidate its portfolio and meet | | discretionary cash outflows of the Company | | activities other than investments, so its direct | its liabilities as they fall due: | | are more than sufficient to allow the Company | | environmental impact is minimal. In carrying | | | to continue to meet these commitments, even | | out its activities and in its relationships |  the portfolio is comprised of investments | | if investee companies cease to be able to pay | | with service providers, the Company aims | | listed and traded on stock exchanges. | dividends or loan stock interest. This has been | | to conduct itself responsibly, ethically and | | These are actively traded and, whilst | further discussed in Note 1 to the Financial | | fairly. The Board is comprised entirely of | | perhaps less liquid than larger quoted | Statements. | | non-executive Directors and the day-to-day | | companies, the portfolio is well | | | management of the Company’s business is | | diversified; | Section 172 Statement | | delegated to the Investment Manager. The | | | Section 172 of the Companies Act 2006 (the |  the portfolio is run with a net cash Investment Manager aims to be a responsible ‘Act’) requires Directors to act in good faith and position and as a result there is ample investor and considers environmental, in a way that is the most likely to promote the liquidity on a day-to-day basis for the ethical and social issues with regards to their success of the Company. In doing so, Directors Company to meet its obligations; investments. must take into consideration the interests  the expenses of the Company are of the Company’s various stakeholders, the The Directors believe that proxy voting is an predictable and modest in comparison impact on the wider community and the important part of the corporate governance with the assets and there are no capital environment when making decisions. process. It is the policy of the Company to commitments foreseen which would alter vote at all shareholder meetings of investee that position; and The Company has no employees and delegates companies, and the Board has delegated voting its day-to-day management and administration  the Company has no employees, only its activities to the Investment Manager. Whilst to third parties. The Board considers its non-executive Directors. Consequently, there is no specific policy, Investment Manager key stakeholders to be its shareholders, it does not have redundancy or other follows relevant regulatory requirements with its Investment Manager and its third-party employment related liabilities or an aim to make voting decisions which will best service providers while also taking into responsibilities. support growth in shareholder value and will account the Company’s responsibilities to commonly take into account best practices regulators and the wider community. Given As well as considering the potential impact regarding corporate governance, Board the out-sourced nature of the Company’s of the Company’s principal risks and various composition, remuneration and Environment, operations, the Company has very little direct downside scenarios, such as a withdrawal Social and Governance (“ESG”) issues. impact on the community or the environment. of shareholder interest in the niche asset However, the Directors recognise that class of UK smaller companies, the Board has Modern Slavery Act 2015 the Investment Manager can influence an also considered the following assumptions The Company does not provide goods or investee company’s approach to ESG matters. in considering the Company’s longer-term services in the normal course of business, and The Investment Manager is committed viability: as a financial investment vehicle does not have to operating responsibly. The Investment customers. The Directors do not therefore Manager also recognises that the integration  there will continue to be demand for consider that the Company is required to make of ESG considerations into its investment investment trusts; | a statement under the Modern Slavery Act 2015 | | | assessments is important and that when these | | --- | --- | --- | --- | | in relation to slavery or human trafficking. The |  the Board and the Investment Manager | | factors are addressed well they can have a | | Company’s suppliers are typically professional | | will continue to adopt a long-term view | positive impact on the financial performance | | advisers and the Company’s supply chains are | | when making investments; | of the fund investments. | considered to be low risk in this regard. In light  the Company invests principally in the of the nature of the Company’s business there The Investment Manager assesses ESG securities of UK listed companies to are no relevant human rights issues and the factors during due diligence and incorporates which investors will wish to continue to Company does not have a human rights policy. conclusions into its engagement, strategic have exposure; and operational plan, investment thesis and Long Term Viability Statement  regulation will not increase to a level investment risk assessment. They continue to In accordance with the UK Corporate that makes running the Company monitor factors post-investment and engage Governance Code, the Directors have carefully uneconomical; and when appropriate. The Investment Manager assessed the Company’s position and expects companies to be minimising their  the performance of the Company will prospects as well as the principal risks and environmental footprint, without damaging continue to be satisfactory. have formed a reasonable expectation that the the outlook for cash earnings and will engage Company will be able to continue in operation where necessary to address lack of active Going Concern and meet its liabilities as they fall due over attention in this area. The Investment Manager The Directors consider the Company to be well the next three financial years. The Board has believes successful companies incorporate the placed to operate for at least twelve months chosen a three-year horizon in view of the interests of multiple stakeholders into their (18 June 2025) from the date of this report, ## 14 Rockwood Strategic Plc Financial Other Overview Governance Statements Information business operations and their strategy for maximising shareholder value. The governance factor is most important to our manager and investment strategy, enabling effective approaches to environmental and social factors. The manager actively engages with companies as an integrated part of their philosophy and process. This is often including through Board representation, which helps ensure corporate governance is structured appropriately, ‘groupthink’ is avoided and the Board is working effectively to deliver shareholder value. Stakeholder Engagement The following provides specifics on how the Board evaluates the needs and priorities of the Company’s stakeholders and how these are taken into account in all of its conversations and decision-making processes. All discussions includes a thorough analysis of the decisions’ long-term effects and stakeholders’ implications. Stakeholder Importance of group engagement Key methods of engagement Topics of engagement Outcome and actions Shareholders Shareholders remain central The Company communicates N/A N/A to the Company’s ability to with its shareholders in a access capital to support its number of ways including: strategic objectives and goals and in ensuring the long-term  Through its annual and success of the business. half-yearly reports  Regulatory The Board is committed announcements to ensuring that there is open and effective  Website – the website communication with the provides all existing and Company’s shareholders on potential shareholders a range of matters including: with information governance, strategy and about the Company, performance against the its investment policy Company’s investment and performance to objective and policy to ensure allow shareholders to that the Directors understand fully understand the the views of shareholders on risk/reward balance of such matters. holding shares in the Company  Informal meetings: the Chairman meets with the Company’s major shareholders annually if they wish to do so to discuss matters of governance, strategy and performance against the Company’s investment objective and policy  Annual General Meeting: this provides a further opportunity to communicate with shareholders who attend and for the Board to respond to their questions at the meeting. All shareholders are encouraged to attend and vote at the Company’s AGM, to be held on 31 July 2024 at 10.00am. ## 15Rockwood Strategic Plc ## Strategic Report (continued) Stakeholder Importance of group engagement Key methods of engagement Topics of engagement Outcome and actions Investment The Board has contractually The Board regularly engages Full annual review of all The Board will review key Manager delegated the management with the Investment aspects of the Investment investments and provide of the portfolio to the Manager and meets with Manager agreement and feedback. Investment Manager the Investment Manager on suitability of Manager. (Harwood Capital). The a quarterly basis and other performance of Harwood times throughout the year Harwood Capital provided a Capital is crucial to the enabling the Directors to quarterly report to the Board Company executing its discuss the performance which provides an update on investment strategy of the investee companies the investment portfolio and successfully and providing (amongst other matters) and future pipeline opportunities. attractive returns to probe further should there shareholders. be matters of concern or requirement for clarification Therefore, maintaining on certain matters. a close and constructive working relationship with The performance of the Harwood Capital remains Investment Manager is important to the Board and monitored and reviewed by the long-term success of the the Board as a whole in the Company. absence of a management and engagement Committee. In addition, an annual appraisal of the Investment Manager’s performance is undertaken as part of the Board evaluation process. It is the opinion of the Board that the continuing appointment of the Investment Manager is in the interests of shareholders as a whole. Service As an externally managed The Board maintains regular The Board assesses the The Investment Manager on providers and investment Company, RKW contact with its key external performance, fees and behalf of the Board continues relies on a diverse range providers and receives continuing appointment of to manage and monitor all suppliers of advisors to support the regular reporting from them, its service providers and service providers. Company in meeting all both through the Board and suppliers annually to ensure its relevant obligations Committee meetings, as that the key service providers including: the Company well as outside of the regular continue to function at an Secretary, administrator, meeting cycle. acceptable level and are auditors, registrar, depositary appropriately remunerated to and corporate advisor. deliver the expected level of service. | Regulators RKW can only operate with | | The Company continues | The Board reviewed its | No specific action required | | --- | --- | --- | --- | --- | | | the approval of its regulators | to monitor and ensure its | compliance with the AIC Code | | | | who have a legitimate interest | compliance with the relevant | of Governance published in | | | | in how the Company operates | regulatory, legal and statutory | February 2019 to assess the | | | | in the market and treats its | obligations along with | extent of its compliance and | | | | shareholders. | corporate governance best | identify any gaps. Regular | | | | | practice. | updates are received from | | the Company Secretary on governance matters to inform the Board of any changes in market practice or any legal or statutory obligations which could affect the Company. ## 16 Rockwood Strategic Plc Financial Other Overview Governance Statements Information Risk Matrix: Most of the day-to-day management functions A risk matrix helps to monitor the risks which of the Company are sub-contracted, and the have been identified and the controls in Directors therefore obtain regular assurances place to mitigate those risks. The risks are and information from key third-party suppliers assessed on the basis of the likelihood of them regarding the internal systems and controls happening, the impact on the business if they operating in their organisations. In addition, were to occur and the effectiveness of the each of the third parties is requested to controls in place to mitigate them. This risk provide a copy of its report on internal register is reviewed by the Audit Committee controls each year, which is reviewed by the regularly at every meeting. AuditCommittee. Risk Management Matrix Principal Risk and Uncertainties Key Mitigation Investment performance is not comparable to the expectations  Consistently poor performance could lead to a fall in the share price The Board reviews and discusses the Company’s performance against and a widening of the discount. The success of the Company depends its investment objective and policy, and assesses performance in on the Portfolio Manager’s ability to identify, acquire and realise comparison to industry peers and the broader comparative marker. investments in accordance with the Company’s investment policy. The Board also keeps the performance of the Portfolio Manager under This, in turn, depends on the ability of the Portfolio Manager to apply its continual review, along with a review of significant stock decisions and investment processes and identify suitable investments. the overall rationale for holding the current portfolio. In addition, the Management Engagement Committee/conducts an annual appraisal of the Portfolio Manager. Share price performance The market price of the Company’s shares, like shares in all investment The Board monitors the relationship between the share price and companies, may fluctuate independently of the NAV and therefore may the NAV, including regular review of the level of discount relative to not reflect the underlying NAV of the shares. The shares could trade at that of companies in the sector. The Company has taken powers to a discount or premium to NAV at different times, depending on factors re-purchase shares and will consider doing so to reduce the volatility of such as market conditions, investors’ perceptions of the merits of the any share price discount. The Company has also taken powers to issue Company’s objective and investment policy, supply and demand for the shares (only at a premium to NAV) to provide liquidity to the market to shares and the extent investors value the activities of the Company and/ meet investor demand by way of issue of further shares. or the Portfolio Manager. No share buybacks were undertaken during the year. The Company issued a total of 5,778,630 new shares through tap issuances. The Board and the portfolio management team all own shares in the Company, by way of aligning their own interests with those of all other shareholders. Portfolio Manager – loss of personnel or reputation The identification and selection of investment opportunities and the The Board maintains a good level of communication and has a good management of the day-to-day activities of the Company depends on relationship with the Portfolio Manager, and regularly reviews the the diligence, skill, judgement and business contacts of the Portfolio Portfolio Manager’s performance at Board meetings. The Portfolio Manager’s investment professionals and the information and deal Manager’s Compliance Officer also reports to the Board regularly and flow they generate during the normal course of their activities. The the Portfolio Manager would report to the Board immediately in the Company’s future success depends on the continuing ability of these event of any change in key personnel. individuals to provide services and the Portfolio Manager’s ability to strategically recruit, retain and motivate new talented personnel Harwood Capital LLP as Portfolio Manager has appointed an investment as required. The departure of some or all of the Portfolio Manager’s team consisting of Richard Staveley and Nicholas Mills, both of whom investment professionals could prevent the Company from achieving its are very experienced in managing the portfolio in accordance with the investment objective and give rise to a significant public perception risk Company’s principles and investment strategy. regarding the potential performance of the Company. Material changes within the Portfolio Manager’s organisation Material changes could occur within the Portfolio Manager’s The Portfolio Manager has advance notice of any material changes organisation or its affiliates which are to the detriment of the within its organisation and would report to the Board immediately in Company’s standing in respect of its competitors and its profitability. the event of any such changes, including within its organisation and affiliates or to its key personnel. ## 17Rockwood Strategic Plc ## Strategic Report (continued) Reliance on the performance of third party service providers The Company has no employees and the Directors have been appointed The Board has appointed third party service providers with relevant on a non-executive basis. The Company is reliant upon the performance experience. Each third party service provider is monitored by the Board of third party service providers for its executive function. Failure by and their roles are evaluated at least annually by the Audit Committee. any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a material adverse effect on the operation of the Company. UK Regulatory Risk The regulatory environment in which the Company operates changes The Board monitors regulatory changes with the assistance of the materially, affecting the Company’s modus operandi. Company Secretary and external professional advisers to ensure the at the Board is aware of any likely changes in the regulatory environment and will be able to adapt as required. UK Legal Risk The Company and/or the Directors fail to comply with legal The Board monitors regulatory change with the assistance of its requirements in relation to FCA dealing rules and procedures, the external professional advisers to ensure compliance with applicable AIFMD, the Listing Rules, the Companies Act 2006, relevant accounting laws and regulations including the Companies Act 2006, the AIFM standards, the Bribery Act 2010, the Criminal Finances Act 2017, GDPR, Rules, the Corporation Tax Act 2010 (“Section 1158”), the Market Abuse tax regulations or any other applicable regulations. Regulation (“MAR”), the Disclosure Guidance and Transparency Rules (“DTRs”) and the FCA’s Listing Rules. The Board reviews compliance reports and internal control reports provided by its service providers, as well as the Company’s financial statements and revenue forecasts Governance Risk Poor adherence to corporate governance best practice or errors or The Board reviews all information supplied to shareholders. irregularities in published information could lead to censure and/or result in reputational damage to the Company. Details of the Company’s compliance with corporate governance best practice, including information on relationships with shareholders, are set out in the Corporate Governance Report in the Annual Report. ESG and Climate Change Risk Risks related to the environment, social issues and governance (ESG) The Board challenges the Investment Manager on ESG matters to such as the impact of climate change or bad governance of portfolio ensure that the portfolio companies are acting in accordance with the companies could have an adverse impact on the portfolio companies’ Board’s ESG approach. operational performance. The Portfolio Manager supports the UK Stewardship Code and actively engages with portfolio companies on ESG matters including climate change, where appropriate. Furthermore, the Board has consideration to hold some of its meetings, when possible, not in person but via video conference, to save on travel and reduce the Directors’ carbon footprints on behalf of the Company. Noel Lamb Chairman RKW 18 June 2024 ## 18 Rockwood Strategic Plc Financial Other Overview Governance Statements Information ## Corporate Governance ## Report | AIC Code Statement of Compliance | The AIC Code is available on the AIC website | Directors continue to be independent in | | --- | --- | --- | | The Company maintained its compliance with | (www.theaic.co.uk). It includes an explanation | character and judgement and free from | | the AIC Code of Corporate Governance issued | of how the AIC Code adapts the Principles and | relationships or circumstances that could | | in February 2019 (the AIC Code), except as set | Provisions set out in the UK Code to make them | affect their judgement within the meaning | | out below: | relevant for investment companies. | of the AIC Code. The Board considers that all | Directors continue to be committed to their  The Directors do not consider it The Board of Directors roles and have sufficient time available to meet appropriate to establish a nomination, The Board is responsible for the effective their Board responsibilities. remuneration or a management and oversight and long-term sustainable success engagement Committee. The functions of the Company, generating value for Ken Lever is the Senior Independent Director of that carried out by these Committees shareholders and controlling of all aspects of the Company. He provides a sounding Board for are dealt with by the full Board, which is the Company’s affairs, notwithstanding any the Chairman and serves as an intermediary for comprised of non-executive Directors. delegation of responsibilities to third parties. the other Directors and shareholders. Mr Lever also provides a channel for any shareholder  As the Company has no employees and its The Board oversees the role of the Investment concerns regarding the Chairman and will functions are undertaken by third parties, Manager who are seeking to grow net asset take the lead in the annual evaluation of the the Audit Committee does not consider it value over the long-term by executing on the Chairman by the other independent Directors. necessary for the Company to establish its agreed investment policy. own internal audit function. From time to The names and responsibilities of the time, the Audit Committee will review the The Board consists of three independent Directors, together with their biographies and requirement of an internal audit function non-executive Directors, all whom are details of their significant commitments, are and material controls, and if established, independent of the Investment Manager. No set out on page 3. will carry out effectiveness reviews as one individual dominates the Board’s decision required under AIC Provision 34. | | | making. The Board have an Investment | Board and Committee meetings | | --- | --- | --- | --- | |  The Board will review on an annual basis | | Manager Agreement in place and this | The Board holds quarterly Board meetings (with | | | the Company’s application of the AIC Code | agreement is reviewed annually. | additional meetings arranged as necessary) | | | of Corporate Governance and whether it | | where it considers investment performance, | | | remains applicable for a company of this | The Board considers the required time | investor relations, share price performance and | | | size. | commitment annually and during the year | other relevant matters. Regular discussions are | | | | under review all Directors continued to devote | held with the manager and its advisers about | | The AIC Code is made up of 17 principles and 35 | | sufficient amount of time to the business of | the discount to NAV at which the shares trade | | provisions over five sections covering: | | RKW. The Directors possess a wide range of | and how this might be reduced. | skills, knowledge and experience relevant 1. Board Leadership and Purpose; to the leadership of the Company, including The Company Secretary and Investment financial, legal, and regulatory and industry Manager regularly provide the Board with 2. Division of Responsibilities; | | experience as well as the ability to provide | relevant statutory, regulatory and corporate | | --- | --- | --- | | 3. Composition, Succession and Evaluation; | constructive challenge to the views and | governance updates relating to the sector | | | assumptions of the Investment Manager and | in which the Company operates. At each | 4. Audit, Risk and Internal Control; and | | hold third-party service providers to account. | Board meeting, representatives from the | | --- | --- | --- | | 5. Remuneration. | | Investment Manager attend to present verbal | | | All members of the Board own shares in the | and written reports covering the Company’s | | Details of how the Company has complied | Company. Further detail on each of their | portfolio and investment performance over | | with the principles and provisions of the AIC | shareholding can be found on page 24. After | the period. Communication between the | | Code are set out its Corporate Governance | consideration of the above factors, and taking | Board and the Investment Manager and other | | Statement which can be found on the | into account guidance from the AIC, which | service providers is maintained between | | Company’s website. | encourages Directors owning shares, the |  | Board is of the view that all the Non-Executive ## 19Rockwood Strategic Plc ## Corporate Governance Report (continued) The Board reviews annually the performance, The appointment of any new Director is made Scheduled | services and the terms of its engagement | | | | | | on the basis of assessing the candidate’s merits | | --- | --- | --- | --- | --- | --- | --- | | | | Scheduled | | | Audit | | | with all the Company’s third-party providers | | | Board | Committee | | and measuring his or her skills and experience | | to ensure they continue to be competitive and | | Meetings | | Meetings | | against the criteria identified by the Board. | | effective. Strategy sessions are held annually, | | | | | | Whilst the Board has not put in place a policy | | | Current | | Number | | Number | | | and the Board may meet from time to time | | | | | | on diversity, the Board fully endorses the AIC | | | Directors | attended | | attended | | | | without the Investment Manager present, when | | | | | | Code principle to promote diversity of gender, | | considering the manager’s performance, fees | Noel Lamb* 5/5 n/a | | | | | social and ethnic backgrounds on the Board | | and contractual arrangements. | | | | | | and would always consider this when making | Kenneth Lever 4/5 2/2 any new Director appointments. | The Board has delegated certain | Paul Dudley 5/5 2/2 | | | --- | --- | --- | | responsibilities to its Audit Committee | | The Board recognises the importance of | | so that it can operate efficiently and give | * not a member of the Audit Committee | succession planning to refresh the Board and | | an appropriate level of attention and | | the AIC provisions relating to this. Succession | | consideration to relevant matters. Given | Conflicts of interest | plans are under review to address and review | | the size of the Board, the Directors do | The Company has effective procedures in place | the Board’s policy on tenure. Succession | | not consider it appropriate to establish a | to monitor and deal with conflicts of interest. | planning also features as an ongoing agenda | | nomination, remuneration or a management | A register has been set up to record all actual | item at Board meetings, it is envisaged that | | and engagement Committee. The functions | and potential conflict situations which have | should a Board member be unable to fulfil their | | that would normally be carried out the most | been declared. All declared conflicts have been | duties for a period of time, one of the other | | appropriate experience would step in to | approved by the Board. The Board is aware of | Directors with the most appropriate experience | | perform the role on an interim basis until a | the other commitments and interests of its | would step in to perform the role on an interim | | longer-term solution is identified. | Directors, and changes to these commitments | basis until a longer-term solution is identified. | and interests are reported to and, where | The Company considers annual re-election of | appropriate, agreed with the rest of the Board. | The Company considers annual re-election of | | --- | --- | --- | | the Directors to be good corporate governance | | the Directors to be good corporate governance | | and has therefore chosen to follow this practice. | Directors’ appointment and re-election | and has therefore chosen to follow this | | The Directors have considered the performance | All Non-Executive Directors are appointed on | practice. The Directors have considered the | | of each Director serving on the by these | the basis of letters of appointments which | performance of each Director serving on the | | Committees are dealt with by the full Board. | provide for a maximum of three months’ notice | Board, including the Chairman, and believe | | | of termination by the Director or the Company. | that each of the Directors continues to make a | | The Board and its Audit Committee are | The letters of appointment are available for | valuable contribution to Board discussions and | | supported by the Company Secretary who | inspection at each AGM. | decisions and supports their re-election at the | | ensures that appropriate policies and | | 2024 AGM. | | procedures are in place in order for the Board | The Board remains committed to uphold | | | to function effectively and efficiently. A formal | the principles set out in the AIC Code. We | Board evaluation | | agenda is produced for each meeting and | recognise the recommendation under Principle | The Board has formalised a process to conduct | | papers are distributed several days before | 13 that Board members should generally serve | a regular evaluation of its performance and that | | meetings take place allowing all Board members | no more than nine years to ensure ongoing | of individual Directors and its Audit Committee | | to contribute even if they are unable to attend. | independence and refreshment of the Board. | on an annual basis. This process is led by | | | However, we also understand the need for | the Chairman (supported by the Company | | The Directors have access to the advice | flexibility in certain circumstances to align | Secretary) and is conducted internally using | | and services of the Company Secretary | with the best interests of the Company and | a questionnaire designed to assess the | | and individual Directors are able to take | its shareholders. In cases where a Director’s | strengths and weaknesses of the Board | | independent legal and financial advice at the | continued service is deemed highly beneficial, | and its Committees, the composition of the | | Company’s expense when necessary to support | the Board will carefully assess their ongoing | Board, how effectively Board members work | | the performance of their duties as Directors. | independence, expertise, and contributions. | together. Each Director is required to complete | | During the year, the Chairman met regularly | In accordance with the AIC Code, should a | a questionnaire covering the assessment of | | with the Non-Executive Directors without the | Director’s tenure extend beyond the nine-year | the composition, functioning and operation | | manager present. | period we will provide a sufficient explanation | of the Board as a whole and a similar review of | | | detailing the rationale for such an extension. | the effectiveness of the Audit Committee and | | The table below sets out the attendance record | | Investment Manager is also carried out. During | | of individual Directors at the scheduled Board | | the year ended 31 March 2024, the performance | | and Committee meetings held during the year | | of the Board, the Audit Committee and | | ended 31 March 2024: | | individual Directors was evaluated through a | formal assessment process. This involved the circulation of a Board Evaluation questionnaire which is tailored to suit the nature of the Company. The results were discussed between the Chairman and each of the Directors. ## 20 Rockwood Strategic Plc Financial Other Overview Governance Statements Information The Chairman was satisfied that the structure and operation of the Board continued to be effective and relevant and that there is a satisfactory mix of skills, experience and knowledge of the Company. The Board had considered the position of all the Directors including the Chairman as part of the evaluation process and believes that it would be in the Company’s best interests to propose them for re-election. The Board does not consider it necessary at present to employ the services or to incur the additional expense of an external third-party to conduct the evaluation process but will keep this under review. Internal controls and risk management systems The Board has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. The Board maintains a risk register to identify any new risks and makes the necessary adjustments required to existing risks and the controls and mitigation measures in place in respect of these risks. The Company’s Ordinary Shares are quoted on the Main Market of the London Stock Exchange under reference RKW. Systems have been in place for the year under review and up to the date of approval of the annual report and accounts. UK Stewardship The Board and the Investment Manager support the UK Stewardship Code, issued by the FRC, which sets out the principles of effective stewardship by institutional investors. The Investment Manager has had extensive experience and a strong commitment to effective stewardship. SGH Company Secretaries Limited Company Secretary 18 June 2024 ## 21Rockwood Strategic Plc ## Audit Committee ## Report | The Audit Committee is chaired by Ken |  Review and make recommendations to | | Independent Auditor | | --- | --- | --- | --- | | Lever, the Senior Independent Director. The | | the Board relating to the content of the | BDO LLP has been the independent auditor | | other member is Paul Dudley. Ken Lever is a | | Financial Statements and accompanying | for the Company since 2013. The Auditor is | | Chartered Accountant and is also the Audit | | narrative included within the Annual | required to rotate the audit partner every five | | Committee Chair of Vertu Motors plc. The | | Report; | years and the current audit partner is Peter | | Chair is considered to have recent and relevant | | | Smith, who has been in place for four years. It |  Review and assess the independence, financial experience and the Audit Committee, is therefore anticipated that Peter Smith will objectivity and effectiveness of as a whole, has competence in the investment serve as audit partner for one more year until the external audit process and the company sector. The Chair of Rockwood completion of the audit process in 2025. No approach taken to the appointment or Strategic plc and the Investment Manager are tender for the audit of the Company has been reappointment of the independent auditor; not members of the Committee but are invited undertaken. The Committee will review the to attend meetings of the Committee from  Approve the remuneration of the continuing appointment of the Auditor on an time to time. Representatives of the Company’s independent auditors; and annual basis and give regular consideration auditor attend the Committee meetings to the Auditor’s fees and independence, along  Monitor and review the effectiveness of at which the draft half year and full year with matters raised during each audit. the Company’s internal financial controls, accounts are reviewed. The Auditor is given internal control and risk management the opportunity to speak to the Committee The breakdown of fees between audit and systems. members without the presence of the manager non-audit services paid to BDO LLP during and speaks directly with the Chair of the Audit the financial year is set out in note 4 of the Principal activities during the year Committee as required. Financial Statements.  Considered the independent auditor’s annual scope and report on the full year The Audit Committee operates within a accounts and the key areas of focus; scope and remit defined by specific terms of reference determined by the Board. The  Reviewed the full year and half-year results, Ken Lever Committee meets twice a year to review and including the underlying accounting Chair, Audit Committee discuss the Company’s half-year and full year issues, judgements and estimates and the 18 June 2024 accounts. processes underpinning the preparation of those documents; The principal areas of focus of the Committee  Considered the report prepared by are: third-party service providers with respect to the review of internal controls,  Monitor the integrity of the Financial accounting systems and processes used to Statements of the Company and any formal prepare the financial information; announcements relating to the Company’s financial performance;  Reviewed the information presented in the half-year and full year reports to assess  Review the significant issues/judgements whether, taken as a whole, the reports relating to the Financial Statements, and are fair, balanced and understandable how these issues were addressed; and the information presented enable the  Ensure that the Company has followed shareholders to assess the Company’s appropriate accounting standards performance and strategy; and made appropriate estimates and  Reviewed and recommended the judgements, taking into account the views reappointment of BDO LLP as the external of the external auditor; auditor for the Company and agreed the remuneration of the Auditor; and  Reviewed the need to establish or otherwise an internal audit function. ## 22 Rockwood Strategic Plc Financial Other Overview Governance Statements Information ## Directors’ Remuneration ## Report The report on Directors’ remuneration for the year ended 31 March 2024 is set out in the table below. As mentioned previously, the full Board undertake the role of the Remuneration Committee given the size of the Board. The fees paid to the Board are reviewed periodically and may also be reviewed when new non-executive Directors are recruited to the Board. The Directors’ fees were last reviewed and increased in 2023. The Directors Remuneration Policy can be found on page 25. The Company was not subject to requirement of having Remuneration Report voted on by shareholders and therefore this will be the first year of figures. The fees payable and the percentage change over the past five financial years in respect of each of the current Directors are as follows: Directors’ remuneration table (audited) 2024 2024 2023 2023 2022 2022 2021 2021 2020 2020 2019 Fees % changes Fees % changes Fees % changes Fees % changes Fees % changes Fees Noel Lamb 44,328 11 40,000 – 40,000 – – – – – – Kenneth Lever 28,814 5 27,500 – 27,500 – 27,500 7 25,624 2 25,000 Paul Dudley 28,814 80 16,042 – – – – – – – – The fees payable over the five financial years in respect of each of the Directors who served during those financial years are as follows: | 31 March | | 31 March | | 31 March | | 31 March | | 31 March | | 31 March | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | | (£) | | (£) | | (£) | | (£) | | (£) | | (£) | Noel Lamb 44,328 40,000 40,000 – – – Kenneth Lever 28,814 27,500 27,500 27,500 25,624 25,000 Paul Dudley 28,814 16,042 – – – – Graham Bird – 11,458 22,300 – – – David Potter – – 24,400 55,000 51,250 50,000 Charles Berry – – 25,900 27,500 25,624 25,000 Helen Sinclair – – 41,300 27,500 25,624 25,000 Simon Pyper – – 27,500 – – – Total annual fees payable as at the Year End 101,956 95,000 208,900 137,500 128,122 125,000 ## 23Rockwood Strategic Plc ## Directors’ Remuneration Report (continued) The total aggregate annual fees cap payable As at As at As at to Directors under the Company’s Articles of 18 June 31 March 31 March Association (Articles) is £250,000. As per the 2024 2024 2023 Company’s Articles, the Directors are entitled Noel Lamb 30,000 30,000 25,000* to be paid all reasonable expenses properly incurred in the performance of their duties as Kenneth Lever 35,550 35,550 35,550* Directors including their expenses travelling to Paul Dudley 15,210 15,210 5,210* and from Board and Committee meetings. * Restated using the new number of shares in issue As the Board is solely composed of following the ten for one share split. Independent Non-Executive Directors, the consideration of their remuneration does not Relative importance of spend on involve any variable or performance-related Directors’ fees bonuses, or other benefits such as pensions. The below table is required to be included in The level of remuneration has been set in order accordance with The Large and Medium-Sized to attract individuals of a calibre appropriate Companies and Groups (Accounts and Reports) to the future development of the Company and Regulations 2008. reflects the duties and responsibilities of the Directors and the value and amount of time 31 March 31 March committed to the Company’s affairs. 2024 2023 (£) (£) The Directors are aware of the requirement | to provide shareholders and other interested | Total | | --- | --- | | parties with an anlaysis of Directors’ | Directors’ | | Remuneration against the remuneration of | fees £101,956 £95,000 | employees or the amount of distribution to NAV £64,260,839 £49,793,321 shareholders. However, the Company has no employees. The Company is recommending The Directors’ fees as a percentage of NAV for a dividend of 0.6 per share to shareholders in the year to 31 March 2024 were 0.159% and for respect of the year ended 31 March 2024. If the year to 31 March 2023 were 0.232%. approved by shareholders at the 2024 Annual General Meeting, the dividend will be paid on  share register on 9 August 2024. Directors and their interests The Directors serving during the year-ended 31 March 2024 had the following interests in the share capital of the Company: Five year performance record The following graph provides the performance of the fund over a 5 year period. 2019 2020 2021 2022 2023 2024 250 200 150 100 50 0 ## 24 Rockwood Strategic Plc Financial Other Overview Governance Statements Information ## Directors’ Remuneration ## Policy | The Remuneration Policy (the “Policy”) was | entitled to be repaid all reasonable travelling, | | --- | --- | | initially approved by shareholders at the | hotel and other expenses properly incurred | | 2023 Annual General Meeting (“AGM”) of the | by them in or about the performance of their | | Company. The Remuneration Committee is not | duties as Director, including any expenses | | proposing to make any major changes to the | incurred in attending meetings of the Board | | existing Policy however in line with industry | or any Committee of the Board or general | | best practice and the three-year Policy cycle | meetings of the Company. Directors’ and | | the Company will be seeking shareholder | Officers’ liability insurance cover is maintained | | approval at the 2026 AGM. The effective date | by the Company on behalf of theDirectors. | of this Policy is the date on which the Policy is Fees are reviewed annually in accordance with approved by shareholders. the above policy. The fee for any new Director The Company follows the recommendation appointed to the Board will be determined on of the AIC Code that non-executive Directors’ the same basis. The Company is committed remuneration should reflect the time to ongoing shareholder dialogue and any commitment and responsibilities of the role. views expressed by shareholders on the fees The Board’s policy is that the remuneration being paid to Directors would be taken into of non-executive Directors should reflect the consideration by the Board when reviewing experience of the Board as a whole, and be the Directors’ remuneration policy and in the determined with reference to comparable annual review of Directors’ fees. Compensation organisations and appointments. All Directors will not be made upon early termination of are non-executive, appointed under the appointment. The Directors’ Remuneration terms of letters of appointment. There are no Report was approved by the Board and signed service contracts in place. The Company has on its behalf by: no employees. The fees for the non-executive Directors are determined within the limits Rate as at (not to exceed £250,000 per annum) set out in Component Role 31 March 2024 Purpose of Remuneration the Company’s Articles of Association, or any Annual Fee Chairman £48,000 Commitment as Chairman greater sum that may be determined by special resolution of the Company. Directors are not Independent Non- Commitment as eligible for bonuses, share options, long-term Annual Fee Executive Director £30,000 Non-Executive Director incentive schemes or other performance- For extra or special services related benefits as the Board does not believe performed in their role as a that this is appropriate for non-executive Additional Fee All Directors N/A Director Directors. There are no pension arrangements or retirement benefits in place for the Directors Reimbursement of expenses of the Company. Under the Company’s Articles incurred in the performance of Association, if any Director is called upon Expenses All Directors N/A of duties as a Director to perform or render any special duties or services outside their ordinary duties as a Director, they may be paid such reasonable additional remuneration as the Board, or any Noel Lamb Committee authorised by the Board, may from Chairman time to time determine. The Directors are 18 June 2024 ## 25Rockwood Strategic Plc ## Directors’ Report | The Directors present their Annual Report and | strategic or management changes. These | Qualifying Indemnity Provision | | --- | --- | --- | | the audited Financial Statements for the year- | unlock, create or realise shareholder value | The Company has maintained Directors’ and | | ended 31 March 2024. |  | Officers’ Liability Insurance on behalf of the | Directors, through a policy arranged by the | Activities | The Company has no employees but has a | manager, indemnifying the Directors in respect | | --- | --- | --- | | Rockwood Strategic plc (the Company) is | Board consisting of three non-executive | of certain liabilities which may be incurred | | a Main Market listed investment company | Directors. | by them in connection with the activities of | | invested in a focused portfolio of smaller UK | |  | | public companies. The strategy identifies | Directors | | | undervalued shares, where the potential exists | The Directors in office at the date of this | Acquisition of Own Shares | | to improve returns and where the Company is | Annual Report are shown on page 3. | There was no acquisition of own shares during | | benefitting, or will benefit, from operational, | | the year. | | Substantial shareholdings | | Share capital | | As at the date of this report, the Company has been notified of the following substantial interests | | As at 31 March 2024, the Company’s issued | | representing 2.8% or more of its total voting rights: | | share capital was 31,189,090 Ordinary Shares | of 5 pence each, of which none were held  % of total Shareholder voting rights Financial risk management Harwood Capital (London) 26.98 The principal risks and uncertainties regarding the Company’s future financial performance are Interactive Investor (Manchester) 8.57 set out in note 13 of the Financial Statements. Hargreaves Lansdown Asset Mgt (Bristol) 7.30 The Directors do not consider that the Company faces any significant credit risk, liquidity risk or Unicorn Asset Mgt (London) 4.38 cash flow risk. James Sharp & Co (Bolton) 4.33 Going Concern Charles Stanley (London) 3.22 The Directors consider the Company to be well placed to operate for at least twelve months A J Bell Securities (Tunbridge Wells) 2.90 (18 June 2025) from the date of this report, as the Company has sufficient cash liquidity to Dividends emissions producing sources under the pay its liabilities as and when they fall due and The Directors have recommended the payment Companies Act 2006 (Strategic Report and also to invest in new opportunities as they arise. of a final dividend of 0.6p per share in respect of Directors’ Report) Regulations 2013, including The cash and publicly tradeable investments the year ended 31 March 2024. The dividend will those within the Company’s underlying when compared to the non-discretionary be subject to shareholder approval at the 2024 investment portfolio. cash outflows of the Company are more Annual General Meeting, the dividend will be than sufficient to allow the Company to paid on 2 September 2024 to shareholders on Consequently, the Company consumed less continue to meet these commitments, even the share register on 9 August 2024. than 40,000 kWh of energy during the year if investee companies cease to be able to pay in respect of which the Directors’ Report is dividends or loan stock interest. This has been Global Greenhouse Gas Emissions for the Year prepared and therefore is exempt from the further discussed in Note 1 to the Financial ended 31 March 2024 disclosures required under the Streamlined Statements. The Company is an investment trust, with  neither employees nor premises, nor has it any financial or operational control of the Political Donations assets which it owns. It has no greenhouse The Company has not made any political gas emissions to report from its operations donations in the past, nor does it intend to do so nor does it have responsibility for any other in the future. ## 26 Rockwood Strategic Plc Financial Other Overview Governance Statements Information | Share price | Resolution 7: Auditor | The resolution sets minimum and maximum | | --- | --- | --- | | In the year, the share price reached a maximum | The re-appointment of BDO LLP as auditor and | prices. The Directors will only use this authority | | of 210.0p (1 decimal place) and a minimum of | a resolution allowing the Directors to determine | to undertake a further share buyback and | | 162.5p (1 decimal place). The closing share price | their remuneration. | consider it useful to retain the authority | | on 31 March 2024 was 210.0p (1 decimal place). | | for the future in case circumstances alter. | | | Resolution 8: Directors’ authority to allot shares | The Directors shall ensure that all legal and | | Post Balance Sheet Events | The Directors are seeking the usual authority | regulatory requirements associated with any | | The Company has issued for cash ordinary | to allot shares. Resolution 8 in the Notice of | future purchases of the Company’s own shares | | shares of 5 pence each in April and May | Annual General Meeting seeks authority to allot | are fulfilled including, in the event that the | | 2024 from its blocklisting facility, the details | Ordinary Shares up to an aggregate nominal | purchase would result in any shareholder being | | of which are set out in note 16. Future | amount of £536,581.43. 17 (being an amount | obliged to make an offer under Rule 9.1 of the | | Developments are covered in the Investments | equal to 33.0% of the total issued share capital | Takeover Code and the requirement to seek a | | Managers Report on page 5. | of the Company as at the date of this report). | waiver from the Takeover Panel. | The Directors have no present intention to | Audit information | exercise this authority. | The authorities contained in Resolutions 8, | | --- | --- | --- | | Each of the Directors who held office at the | | 9 and 10 will continue until the AGM of the | | date of approval of the Report of the Directors | Resolutions 9 & 10: Authority to allot shares | Company in 2025. It is intended that renewal of | | confirms that: | outside of pre-emption rights | these authorities will be sought at each AGM. | Subject to the passing of resolution 8, | 1. So far as the Director is aware, there is no | | resolutions 9 and 10 will allow the Company to | Resolution 12: THAT a general meeting other | | --- | --- | --- | --- | | | relevant audit information of which the | issue, in aggregate, up to 20.0% of the number | than an Annual General Meeting may be called | | | Company’s auditor is unaware; and | of Ordinary Shares in issue as at 31 March 2024, | on not less than 14 clear days’ notice during | | | | and to sell Ordinary Shares held in treasury for | the period from the date of the passing of this | | 2. The Director has taken all the steps that | | cash as if section 561 of the Companies Act | resolution until the conclusion of the next | | | they should have taken as a Director in | 2006 did not apply. The Directors recognise | Annual General Meeting of the Company. | | | order to make themselves aware of any | that this authority is beyond the standard | | | | relevant audit information and to establish | 10.0% sought by investment companies, but | Recommendation | | | that the Company’s auditor is aware of | believe that the passing of both resolution | The Board considers that the passing of the | | | that information. | 9 and resolution 10 is in the interests of | resolutions to be proposed at the AGM is in the | | | | Shareholders, given that the authority is | interests of the Company and its shareholders | | Annual General Meeting | | intended to be used to fund future acquisitions | as a whole and they unanimously recommend | | The Notice of Annual General Meeting to be | | of investments in line with the Company’s | that shareholders vote in favour of those | | held at 10.00am on Wednesday, 31 July 2024 | | investment policy, thereby mitigating the | resolutions. | | is set out on pages 52 to 54. Details of the | | potential dilution of investment returns for | | | business to be transacted are outlined below: | | existing Shareholders. Furthermore, new | Approved by the Board of Directors and signed | | | | Ordinary Shares issued under this authority | on its behalf | | Resolution 1: Report and accounts | | will only be issued at a minimum price equal | | | As required by company law, the annual report | | to the relevant prevailing net asset value per | | | and accounts will be laid before shareholders. | | share plus a premium to cover any expenses | | of the relevant issue and therefore should not | Resolutions 2: Remuneration Report | be dilutive to the net asset value (“NAV”) per | | | --- | --- | --- | | The Directors are seeking the authorisation to | existing share. | SGH Company Secretaries Limited | | approve the Directors Remuneration Report for | | Company Secretary | | the financial year ended 31 March 2024 as set | If resolution 9 is passed but resolution 10 is | | 18 June 2024 out on pages 23 to 24. not passed, Shareholders will only be granting Directors the authority to allot up 10.0% of the Resolution 3: THAT the final dividend for the existing issued Ordinary Share capital of the year ended 31 March 2024 of 0.6 pence per Company. ordinary share be and is hereby declared | payable on 2 September 2024 to Ordinary | Resolution 11: Authority to make market | | --- | --- | | Shareholders whose names appeared on the | purchases of the Company’s own shares | | Register of Members at the close of business | Resolution 11, which is a special resolution, will | | on 9 August 2024. | give the Company authority to make market | purchases of up to 4,829,233 Ordinary Shares. Resolutions 4-6: Re-election of Directors Each of the Directors will stand for re-election at the AGM. ## 27Rockwood Strategic Plc ## Directors’ Responsibility ## Statement The Directors are responsible for preparing the The Directors are responsible for keeping Directors’ Report and the Financial Statements adequate accounting records that are in accordance with applicable law and sufficient to show and explain the Company’s regulations. transactions and disclose with reasonable accuracy at any time the Financial Position Company law requires the Directors to prepare of the Company and enable them to ensure Financial Statements for each financial year. that the Financial Statements comply with the requirements of the Companies Act 2006. Under that law the Directors have elected to They are responsible for such internal control prepare the Company Financial Statements as they determine is necessary to enable the in accordance with UK adopted International preparation of financial statements that are Accounting Standards. Under company law free from material misstatement, whether the Directors must not approve the Financial due to fraud or error, and have general Statements unless they are satisfied that they responsibility for taking such steps as are give a true and fair view of the state of affairs reasonably open to them to safeguard the of the Company and of the profit or loss of the assets of the Company and to prevent and Company for that period. The Directors are also detect fraud and other irregularities. required to prepare Financial Statements in accordance with the rules of the London Stock The Directors are responsible for preparing the Exchange for companies trading securities on Annual Report in accordance with applicable the Alternative Investment Market. law and regulations. The Directors consider the Annual Report and the Financial Statements, In preparing these Financial Statements, the taken as a whole, provide the information Directors are required to: necessary to assess the Company’s position, performance and strategy and is fair, balanced  Select suitable accounting policies and and understandable. then apply them consistently; Website publication  Make judgements and accounting The Directors are responsible for ensuring that estimates that are reasonable and prudent; the Annual Report and Financial Statements  State whether they have been prepared in are made available on a website. Financial accordance with UK adopted International Statements are published on the Company’s Accounting Standards, subject to any website in accordance with legislation in the material departures disclosed and United Kingdom governing the preparation explained in the Financial Statements; and and dissemination of Financial Statements, which may vary from legislation in other  Prepare the Financial Statements jurisdictions. The maintenance and integrity on the going concern basis unless it of the Company’s website is the responsibility is inappropriate to presume that the of the Directors. The Directors’ responsibility Company will continue in business. also extends to the ongoing integrity of the Financial Statements contained herein. ## 28 Rockwood Strategic Plc Financial Other Overview Governance Statements Information ## Independent Auditor’s ## Report Independent auditor’s report to the members of Rockwood Strategic Plc | Opinion on the financial statements | | Independence |  Assessing the projected management fees | | | --- | --- | --- | --- | --- | | In our opinion the financial statements: | | Following the recommendation of the audit | | for the year to check that it was in line with | | | | committee, we were appointed by the Board of | | the current assets under management | |  give a true and fair view of the state of the | | Directors on 13 May 2013 to audit the financial | | levels and the projected market growth | | | Company’s affairs as at 31 March 2024 and | statements for the year ended 31 March 2013 | | forecasts for the following year; | | | of its profit for the year then ended; | and subsequent financial periods. The period | | |  Assessing the appropriateness of the of total uninterrupted engagement including  have been properly prepared in accordance Directors’ assumptions and judgements retenders and reappointments is 12 years, with UK adopted international accounting made in their base case and stress tested covering the years ended 31 March 2013 to standards; and forecasts including consideration of 31 March 2024. We remain independent of the available cash resources relative to  have been prepared in accordance with the the Company in accordance with the ethical forecast expenditure and commitments; | | requirements of the Companies Act 2006. | requirements that are relevant to our audit of | | | | --- | --- | --- | --- | --- | | | | the financial statements in the UK, including |  Challenging the Directors’ assumptions | | | We have audited the financial statements of | | the FRC’s Ethical Standard as applied to listed | | and judgements made in their forecasts | | Rockwood Strategic Plc (the ‘Company’) for | | public interest entities, and we have fulfilled | | including performing an independent | | the year ended 31 March 2024 which comprise | | our other ethical responsibilities in accordance | | analysis of the liquidity of the portfolio; and | | Statement of Comprehensive Income, | | with these requirements. The non-audit | | | | Statement of Financial Position, Statement of | | services prohibited by that standard were not | Based on the work we have performed, we | | | Cash Flows, Statement of Changes in Equity | | provided to the Company. | have not identified any material uncertainties | | | and notes to the financial statements, including | | | relating to events or conditions that, | | | a summary of material accounting policies. | | Conclusions relating to going concern | individually or collectively, may cast significant | | | The financial reporting framework that has | | In auditing the financial statements, we have | doubt on the Company’s ability to continue as | | | been applied in their preparation is applicable | | concluded that the Directors’ use of the going | a going concern for a period of at least twelve | | | law and UK adopted international accounting | | concern basis of accounting in the preparation | months from when the financial statements | | | standards. | | of the financial statements is appropriate. | are authorised for issue. | | Our evaluation of the Directors’ assessment of Basis for opinion the Company’s ability to continue to adopt the In relation to the Company’s reporting on how We conducted our audit in accordance with going concern basis of accounting included: it has applied the UK Corporate Governance International Standards on Auditing (UK) (ISAs Code, we have nothing material to add or (UK)) and applicable law. Our responsibilities  Evaluating the appropriateness of the draw attention to in relation to the Directors’ under those standards are further described Directors’ method of assessing the going statement in the financial statements in the Auditor’s responsibilities for the audit of concern in light of economic and market about whether the Directors considered it the financial statements section of our report. conditions by reviewing the information appropriate to adopt the going concern basis We believe that the audit evidence we have used by the Directors in completing their of accounting. obtained is sufficient and appropriate to provide assessment; a basis for our opinion. Our audit opinion is Our responsibilities and the responsibilities of  Assessing the appropriateness of the consistent with the additional report to the audit the Directors with respect to going concern Directors’ assumptions and judgements committee. are described in the relevant sections of this made by comparing the prior year report. forecasted costs to the actual costs incurred to check that the projected costs are reasonable; ## 29Rockwood Strategic Plc ## Independent Auditor’s Report (continued) Overview Key audit matter Valuation and ownership of 2024 2023 investments Yes Yes Materiality Financial Statements as a whole £640k (2023: £495k) 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. 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. Key audit matter How our audit addressed the key audit matter Valuation and The investment portfolio at the year-end We responded to this matter by testing the valuation and ownership of ownership of comprised of quoted equity investments (£59m the whole portfolio of quoted investments (98% of the total portfolio by Investments – 98% of the total portfolio by value) and a small value). We performed the following procedures: number of unquoted investments (including a | (See accounting | loan note and a warrant) (£907k – 2% of the total |  Confirmed the year-end bid price was used by agreeing to externally | | | --- | --- | --- | --- | | policy on Notes 1, 8 | portfolio by value) held at fair value through | | quoted prices; | | and 13) | profit or loss. | | |  Assessed if there were contra indicators, such as liquidity considerations, to suggest bid price is not the most appropriate The valuation of the unquoted investments indication of fair value by considering the realisation period for includes an element of subjectivity. individual holdings; We considered the valuation and ownership of  Recalculated the valuation by multiplying the number of shares held investments to be a significant audit area as per the statement obtained from the custodian by the valuation per investments represent the most significant share; and balance in the financial statements and  Obtained direct confirmation of the number of shares held per equity underpins the principal activity of the entity. investment from the custodian regarding all investments held at the balance sheet date. There is a risk that the bid price used as a proxy for fair value of investments held at the reporting For the loan note held at the year-end we: date is inappropriate. Given the nature of the portfolio is such that it comprises majority of  Obtained the loan agreement and verified the inputs used in listed level 1 investments, we do not consider the calculating the value of the loan note; use of bid price to be subject to significant estimation uncertainty.  We verified the loan note was issued at arm’s length;  We considered movement in market interest rates and any other There is also a risk of error in the recording of changes in the credit risk or other risks associated with the investment holdings such that those recording counterparty based on the Company’s performance; and do not appropriate reflect the property of the Company.  Re-calculated the valuation and compared it to the Investment Manager’s valuation also including a sensitivity analysis. For these reasons and the materiality to the financial statements as a whole, they are Key observations: considered to be a key area of our overall audit Based on our procedures performed we did not identify any matters to strategy and allocation of our resources and suggest the valuation or ownership of investments was not appropriate. hence a Key Audit Matter. ## 30 Rockwood Strategic Plc Financial Other Overview Governance Statements Information 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. Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: 2024 2023 Materiality £640k £495k Materiality Basis for determining 1.0% value of net assets 1.0% value of net assets materiality Rationale for the benchmark applied As an investment trust, the net asset value is As an investment company, the principal the key measure of performance for users of the operations of the audited entity which impact financial statements. the decision making of the stakeholders are investments. Hence net assets has been chosen as the benchmark to set materiality. The Asset value of the Company is a key indicator of the performance and as such the most relevant benchmark for the users of the Financial Statements. Performance materiality £480k £372k Basis for determining performance 75.0% of materiality. 75.0% of materiality. materiality Rationale for the percentage applied for The level of performance materiality applied was We considered a number of factors including performance materiality set after having considered a number of factors the expected total value of known and likely including the expected total value of known and misstatements (based on past experience and likely misstatements and the level of transactions other factors) and management’s attitude towards in the year. proposed adjustments. Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £32k (2023: £24k). 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 Report and Accounts 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. ## 31Rockwood Strategic Plc ## Independent Auditor’s Report (continued) 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 Going concern and  The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and longer-term viability any material uncertainties identified set out on page 26; 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 page 14. Other Code provisions  Directors’ statement on fair, balanced and understandable set out on page 28;  Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 12;  The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 21; and  The section describing the work of the audit committee set out on page 22. 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. Strategic report and In our opinion, based on the work undertaken in the course of the audit: Directors’ report  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.. Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. Matters on which we We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to are required to report report to you if, in our opinion: by exception  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.. ## 32 Rockwood Strategic Plc Financial Other Overview Governance Statements Information Responsibilities of Directors Non-compliance with laws and regulations Our risk assessment procedures included: As explained more fully in the Directors’ Based on: Responsibility Statement, the Directors are  Enquiry with the Investment Manager, responsible for the preparation of the financial  Our understanding of the Company and the the Administrator and those charged statements and for being satisfied that they industry in which it operates; with governance regarding any known or give a true and fair view, and for such internal suspected instances of fraud;  Discussion with the Investment Manager, control as the Directors determine is necessary the Administrator and those charged with  Obtaining an understanding of the to enable the preparation of financial governance and; Company’s policies and procedures statements that are free from material relating to: misstatement, whether due to fraud or error.  Obtaining and understanding of the Company’s policies and procedures  Detecting and responding to the In preparing the financial statements, the regarding compliance with laws and risks of fraud; and Directors are responsible for assessing the regulations.  Internal controls established to Company’s ability to continue as a going mitigate risks related to fraud. | concern, disclosing, as applicable, matters | we considered the significant laws and | | | | --- | --- | --- | --- | | related to going concern and using the | regulations to be Companies Act 2006, the |  Review of minutes of meeting of those | | | going concern basis of accounting unless | FCA listing and DTR rules, the principles | | charged with governance for any known or | | the Directors either intend to liquidate the | of the AIC Code of Corporate Governance, | | suspected instances of fraud; and | | Company or to cease operations, or have no | industry practice represented by the AIC SORP, | | |  Discussion amongst the engagement realistic alternative but to do so. the applicable accounting framework, and team as to how and where fraud might qualification as an Investment Trust under occur in the financial statements. Auditor’s responsibilities for the audit of the UK tax legislation as any non-compliance of financial statements this would lead to the Company losing various Based on our risk assessment, we considered Our objectives are to obtain reasonable deductions and exemptions from corporation the areas most susceptible to be valuation assurance about whether the financial tax. of unquoted investments and management statements as a whole are free from material override of controls. misstatement, whether due to fraud or error, Our procedures in respect of the above and to issue an auditor’s report that includes included: Our procedures in respect of the above our opinion. Reasonable assurance is a high included: level of assurance but is not a guarantee that  Agreement of the financial statement an audit conducted in accordance with ISAs disclosures to underlying supporting  In addressing the risk of valuation of (UK) will always detect a material misstatement documentation; unquoted investments, the procedures set when it exists. Misstatements can arise from  Enquiries of management and those out in the key audit matter section in our fraud or error and are considered material if, charged with governance relating to the report were performed; individually or in the aggregate, they could existence of any non-compliance with laws reasonably be expected to influence the  In addressing the risk of management and regulations; economic decisions of users taken on the basis override of control, we: of these financial statements.  Reviewing minutes of meeting of those  Tested journals posted in the charged with governance throughout the preparation of the financial Extent to which the audit was capable of period for instances of non-compliance statements detecting irregularities, including fraud with laws and regulations; and Irregularities, including fraud, are instances  Incorporated unpredictability into  Reviewing the calculation in relation to of non-compliance with laws and regulations. our testing by selecting a sample of Investment Trust compliance to check We design procedures in line with our immaterial expenses that would not that the Company was meeting its responsibilities, outlined above, to detect otherwise have been selected for requirements to retain their Investment material misstatements in respect of testing Trust Status. This included a review of irregularities, including fraud. The extent to other qualitative factors and ensuring  Reviewed the significant judgements which our procedures are capable of detecting compliance with these. made in the unquoted investment irregularities, including fraud is detailed below: valuations and considering whether Fraud the valuation methodology is the We assessed the susceptibility of the financial most appropriate; statement to material misstatement including  Considered any indicators of bias in fraud. our audit as a whole; and  Performed a review of unadjusted audit differences, if any, for indications of bias or deliberate misstatement. ## 33Rockwood Strategic Plc ## Independent Auditor’s Report (continued) 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. 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. Peter Smith, Senior Statutory Auditor For and on behalf of BDO LLP, Statutory Auditor London, UK 18 June 2024 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). ## 34 Rockwood Strategic Plc Financial Other Overview Governance Statements Information ## Statement of ##  for the year ended 31 March 2024 | | | | Year ended | | | Year ended | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 31 March 2024 | | | | 31 March | | | | Revenue | | | Capital | Total | | | 2023 | | Notes | | £’000 | | £’000 | £’000 | | | £’000 | Income 2 1,114 – 1,114 1,348 Net gains on investments at fair value – 2,715 2,715 8,991 Total income 1,114 2,715 3,829 10,339 Administrative expenses Investment Manager fee 3 (191) – (191) (112) Performance fee 3 – – – (625) Other expenses 4 (581) (161) (742) (1,172) Return before finance costs and taxation 342 2,554 2,896 8,430 Finance costs (1) – (1) – Return before taxation 341 2,554 2,895 8,430 Taxation 5 – – – (1) Return for the year 341 2,554 2,895 8,429 Basic and Diluted earnings per ordinary share for profit from continuing operations and for profit for the year (pence)* 1.25p 9.34p 10.59p 33.17p * In accordance with IAS 33 ‘Earnings per Share’, the comparative return per ordinary share figures have been restated using the new number of shares in issue following the ten for one share split. For weighted average purposes, the share split has been treated as happening on the first day of the accounting period. See note 12 for further details. The total column of the statement is the Statement of Comprehensive Income of the Company prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the United Kingdom. The supplementary revenue and capital columns are presented for information purposes as recommended by the Statement of Recommended Practice (“SORP”) issued by the Association of Investment Companies (“AIC”). All items in the above Statement derive from continuing operations. No operations were acquired or discontinued during the period. The notes on pages 39 to 50 form part of these Financial Statements. ## 35Rockwood Strategic Plc ## Statement of ## Financial Position as at 31 March 2024 | | 31 March | | 31 March | | | --- | --- | --- | --- | --- | | | | 2024 | | 2023 | | Notes | | £’000 | | £’000 | Non-current assets Investments at fair value through profit or loss 8 60,322 39,255 Current assets Cash and cash equivalents 4,761 11,631 Trade and other receivables 9 281 73 5,042 11,704 Total assets 65,364 50,959 Current liabilities Trade and other payables 10 (1,103) (541) Performance fee payable – (625) Total liabilities (1,103) (1,166) Net current assets 3,939 10,538 Net assets 64,261 49,793 Represented by: Share capital 12 1,560 1,281 Share premium 24,347 13,063 Revenue reserve 18,565 24,105 Capital reserve 8,435 – Capital redemption reserve 11,354 11,344 Total equity 64,261 49,793 The NAV per share on 31 March 2024 is 206.04p pence (2023: 195.96 pence restated for the sub-division of each ordinary share into 10 new ordinary shares, approved at the AGM held on 12 September 2023 and completed on 11 October 2023). These Financial Statements were approved and authorised for issue by the Board of Directors on 18 June 2024. Signed on behalf of the Board  Noel Lamb Kenneth Lever Chairman Director The notes on pages 39 to 50 form part of these Financial Statements. ## 36 Rockwood Strategic Plc Financial Other Overview Governance Statements Information ## Statement of ## Cash Flows for the year ended 31 March 2024 | | Year ended | | | Year ended | | | | --- | --- | --- | --- | --- | --- | --- | | | | 31 March | | | 31 March | | | | | | 2024 | | | 2023 | | Notes | | | £’000 | | | £’000 | Cash flow from operating activities Return for the year 2,895 8,429 Net gains on investments at fair value (2,715) (8,991) (Increase)/decrease in trade receivables (52) 90 (Decrease)/increase in trade and other payables (652) 664 Corporation tax paid – (1,581) Net cash outflow from operating activities (524) (1,389) Cash flows from investing activities Purchases of investments (30,336) (20,015) Sales of investments 12,573 22,528 Net cash (outflow)/inflow from investing activities (17,763) 2,513 Cash flows from financing activities Gross proceeds of share issue* 11,527 – Share issue costs (110) – Net cash inflow from financing activities 11,417 – (Decrease)/increase in cash and cash equivalents (6,870) 1,124 Reconciliation of net cash flow movements in funds Cash and cash equivalents at the beginning of the year 11,631 10,507 (Decrease)/increase in cash and cash equivalents (6,870) 1,124 Cash and cash equivalents at end of year 4,761 11,631 * excludes share issues not received at 31 March 2024 totaling £156,000. ## 37Rockwood Strategic Plc ## Statement of Changes ## in Equity for the year ended 31 March 2024 | | | Ordinary | | | | | | | | Capital | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Share | | Share | Revenue | | Capital | Redemption | | Total | | D shares | | | Capital | Premium | | Reserve* | | Reserve | | Reserve | Equity | | | £’000 | | £’000 | | £’000 | | £’000 | £’000 | | £’000 | £’000 | Balance at 31 March 2022 10 1,271 13,063 15,320 – 11,344 41,008 Profit and total comprehensive income for the year – – – 8,429 – – 8,429 Total profit and comprehensive income for the year 10 1,271 13,063 23,749 – 11,344 49,437 Contributions by and distributions to owners Return of unclaimed special dividends and capital payments – – – 356 – – 356 Balance at 31 March 2023 10 1,271 13,063 24,105 – 11,344 49,793 Unrealised appreciation transferred at 1 April 2023 – – – (5,881) 5,881 – – Cancellation of D shares (10) – – – – 10 – Gross proceeds of share issue – 289 11,284 – – – 11,573 Profit and total comprehensive income for the year – – – 341 2,554 – 2,895 Balance at 31 March 2024 – 1,560 24,347 18,565 8,435 11,354 64,261 * The revenue reserve can be distributed in the form of dividends. The notes on pages 39 to 50 form part of these Financial Statements. ## 38 Rockwood Strategic Plc Overview Governance Financial^{}[] Statements Other^{}[] Information # Notes to the Financial Statements Rockwood Strategic Plc (the Company) is a public company incorporated in the UK and registered in England and Wales (registration number: 03813450). The Company carries on the business as an investment trust company within the meaning of Sections 1158/1159 of the Corporation Tax Act 2010. ## 1. Basis of preparation and material accounting policies ### Basis of preparation Following the Company's approval as an investment trust company on 1 April 2023, the annual Financial Statements of the Company for the year to 31 March 2024 have been prepared in accordance with UK adopted international accounting standards. They will also be prepared in accordance with applicable requirements of England and Wales company law and reflect the following summarised policies which will be adopted and applied consistently. The Financial Statements have also been prepared in accordance with the SORP for investment trust companies issued in July 2022, except to any extent where it conflicts with IFRS. In order better to reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. The functional and presentational currency of the Company is Pounds Sterling and has been determined on the basis of the currency of the Company's share capital and the currency in which dividends and expenses are paid. The Financial Statements are presented to the nearest thousand (£'000). ### Going concern In assessing the Company as a going concern, the Directors have considered the market valuations of the portfolio investments, the current economic outlook and forecasts for Company costs. The Company is in a net asset position of £64.3 million (March 2023: £49.8 million) and 98.5% of the Company's portfolio of investments consist listed equities which, should the need arise, can be liquidated to settle liabilities. The rest of the Company's portfolio consisted of 1.2% in a loan and 0.3% in other unquoted investments. There are no other contractual obligations other than those already in existence and which are predictable. At the year end, Pressure Technologies had an outstanding loan of £0.75 million with the Company. The loan is valued at par which is approximate to it fair value and there is no reason to doubt its recoverability as pressure technologies had £13.6 million net assets on its balance sheet as per the annual report dated 30 September 2023 and had first charge over the assets of pressure technologies. The Company's forecasts and projections, taking into account the current economic environment and other factors, including reasonably possible changes in performance, show that the Company is able to operate within its available working capital and continue to settle all liabilities as they fall due for the foreseeable future. The Company has consistent, predictable ongoing costs and major cash outflows, such as for the payment of dividends, are at the full discretion of the Board. Therefore, the Directors taking into the consideration the above assessment are satisfied that the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for a period of at least 12 months from the date when these Financial Statements were approved. ### Segmental reporting The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. Rockwood Strategic Plc 39 1. Basis of preparation and material accounting policies (continued) Material Accounting Judgements, Estimates and Assumptions The preparation of Financial Statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reported period. It also requires Management to exercise their judgement in the process of applying the accounting policies. The main area of estimation is in the inputs used in determination of the valuation of the unquoted investments in Note 8. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. Management believes that the underlying assumptions are appropriate and that the Company’s Financial Statements are fairly presented. Investments at fair value through profit or loss All investments held by the Company are designated as “fair value through profit or loss”. As the Company’s business is investing in financial assets with a view to profiting from their return in the form of interest, dividends or increase in fair value. Listed equities, unquoted equities and fixed income securities are classified as fair value through profit or loss on initial recognition. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy. Investments are initially recognised at cost, being the fair value of the consideration. Fixed income securities are designated at fair value which is approximation of its par value. After initial recognition, investments are measured at fair value, with movements in fair value of investments and impairment of investments recognised in the Statement of Comprehensive Income and allocated to the capital column. For quoted equity shares fair value is generally determined by reference to quoted market bid prices or closing prices for SETS (London Stock Exchange’s electronic trading service) stocks. IFRS 13 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following classifications:  Level 1 – valued using quoted prices in active markets for identical investments.  Level 2 – valued using other significant observable inputs (including quoted prices for similar investments, interest rates, prepayments, credit risk, etc). There are no level 2 financial assets (31 March 2023: £nil).  Level 3 – valued using significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments). There are £907,000 level 3 financial assets (31 March 2023: £nil). Unquoted investments are valued in accordance with the International Private Equity and Venture Capital Valuation (“IPEV”) Guidelines. Their valuation incorporates all factors that market participants would consider in setting a price. The primary valuation techniques employed to value the unquoted investments are earnings multiples, recent transactions and the net asset basis. Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits held at call with banks and other short-term highly liquid investments with original maturity of 3 months or less that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Foreign currency Transactions in currencies other than Sterling are recorded at the rate of exchange prevailing on the date of the transaction. Items that are denominated in foreign currencies are retranslated at the rates prevailing on Statement of Financial Positions. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or the revenue reserve depending on whether the gain or loss is capital or revenue in nature. Revenue Dividend income from investments is recognised when the Company’s right to receive payment has been established, normally the ex-dividend date. Where the Company has elected to receive its dividends in the form of additional shares rather than cash, the amount of cash dividend foregone is recognised as income. Any excess in the value of shares received over the amount of cash dividend foregone is recognised as a capital gain in the Statement of Comprehensive Income. Interest income is recognised in line with coupon terms on a time-apportioned basis. Special dividends are credited to capital or revenue according to their circumstances. Expenses All expenses are accounted for on an accruals basis and are allocated wholly to revenue with the exception of Performance Fees which are allocated wholly to capital, as the fee is payable by reference to the capital performance of the Company, and transaction costs which are also allocated tocapital. ## 40 Rockwood Strategic Plc Overview Governance Financial^{}[] Statements Other^{}[] Information # Notes to the Financial Statements (continued) ## 1. Basis of preparation and material accounting policies (continued) ### Taxation The charge for taxation is based on the net revenue for the year and takes into account taxation deferred or accelerated because of temporary differences between the treatment of certain items for accounting and taxation purposes. The Company has an effective tax rate of 0.0%. The estimated effective tax rate is 0.0% as investment gains are exempt from tax owing to the Company's status as an investment trust and there is expected to be an excess of management expenses over taxable income and thus there is no charge for corporation tax. Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amount for financial reporting purposes at the reporting date. Deferred tax assets are only recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of timing differences can be deducted. In line with recommendations of the SORP, the allocation method used to calculate the tax relief expenses charged to capital is the 'marginal' basis. Under this basis, if taxable income is capable of being offset entirely by expenses charged through the revenue account, then no tax relief is transferred to the capital account. ### Equity dividends payable Equity dividends payable are recognised when the shareholders' right to receive payment is established. For interim dividends this is when they are paid and for final dividends this is when they are approved by shareholders. ### Share capital and reserves The share capital represents the nominal value of the Company's ordinary shares. As at 31 March 2024 there were 31,189,090 (31 March 2023 – 25,410,460, restated due to 1 for 10 share issue) Ordinary shares of 5p each in issue. During the year a share sub-division of its existing ordinary shares on a ten for one basis took effect on the 11 October 2023. The share premium account represents the accumulated premium paid for shares issued above their nominal value less issue expenses. This reserve cannot be distributed. 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. Realised gains can be distributed, unrealised gains cannot be distributed. The revenue reserve represents retained profits from the income derived from holding investment assets less the costs associated with running the Company. This reserve can be distributed, if positive. ### Adoption of New and Revised Standards New standards, interpretations and amendments adopted from 1 March 2023 There are no new standards impacting the Company that have had a significant effect on the annual financial statements for the year ended 31 March 2024. ### Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements) In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2. The amendments aim to make accounting policy disclosures more informative by replacing the requirement to disclose 'significant accounting policies' with 'material accounting policy information'. The amendments also provide guidance under what circumstance, the accounting policy information is likely to be considered material and therefore requiring disclosure. ### Definition to accounting estimates (Amendments to IAS 8) The amendment is to help entities to distinguish between accounting policies and accounting estimates. The amendments are effective for annual periods beginning on or after 1 January 2023. ### Deferred tax assets and liabilities (Amendments to IAS 12) Amendment to provide a temporary exception to the requirements regarding deferred tax assets and liabilities. The amendments are effective for annual periods beginning on or after 1 January 2023. These amendments have no effect on the measurement or presentation of any items in the financial statements of the Company nor do they affect the disclosure of accounting policies of the Company. ### Standards issued but not yet effective There are no standards or amendments not yet effective which are relevant or have a material impact on the Company. Rockwood Strategic Plc 41 2. Income | Year ended | | | Year ended | | | | --- | --- | --- | --- | --- | --- | | | 31 March | | | 31 March | | | | | 2024 | | | 2023 | | | | Total | | | Total | | | | £’000 | | | £’000 | Income from listed investments Dividends 811 925 Loan note interest income 40 274 Loan arrangement fee 22 40 873 1,239 Other income Bank interest 241 109 Total income 1,114 1,348 3. Investment management and performance fee | Year ended | | | Year ended | | | | --- | --- | --- | --- | --- | --- | | | 31 March | | | 31 March | | | | | 2024 | | | 2023 | | | | £’000 | | | £’000 | Investment Manager fee 191 112 Performance fees – 625 191 737 Under the terms of the Investment Management Agreement (7 April 2022) with Harwood Capital LLP, the Company will pay the Investment Manager a performance fee equal to 10.0%. of outperformance over the higher of a 6.0% per annum total return hurdle and the high watermark. The 6.0%. per annum compounds weekly and the performance fee is calculated annually. Provided that the Company’s average NAV is at or below £100 million, performance fees in any performance fee period are capped at 3.0%. of the Company’s average NAV for the relevant performance fee period. In such instance, performance fees in excess of the 3.0%. cap will not be paid and will instead be deferred into the next performance fee period. If the average NAV exceeds £100 million, the performance fee shall be further limited such that the combined investment management and performance fees shall not exceed 3.0%. of the Company’s average NAV. In such instance, performance fees in excess of the cap will not be deferred and will not become payable at any future date. The performance fee is calculated annually for each performance fee period, which is aligned with the Company’s accounting year. It is accounted for on an accrual basis and is recognised in the Statement of Comprehensive Income once a performance fee is triggered during the performance feeperiod. The Hurdle was not surpassed in the year and therefore there was no performance fee. 4. Other expenses | | Year ended | | | | Year ended | | | --- | --- | --- | --- | --- | --- | --- | | | 31 March 2024 | | | 31 March 2023 | | | | Income | | Capital | Total | | | Total | | £’000 | | £’000 | £’000 | | | £’000 | Auditors remuneration 47 – 47 37 Director’s fees 102 – 102 95 Professional fees 336 – 336 420 Investment Trust Company conversion costs – – – 470 Other general overheads 96 – 96 83 Transaction costs – 133 133 67 Share split costs – 28 28 - 581 161 742 1,172 ## 42 Rockwood Strategic Plc Financial Other Overview Governance Statements Information ## Notes to the Financial Statements (continued) 5. Taxation | Year ended | | | Year ended | | | | --- | --- | --- | --- | --- | --- | | | 31 March | | | 31 March | | | | | 2024 | | | 2023 | UK corporation tax Corporation tax liability at 25.0% (2023: 19.0%) – 1 – 1 Current tax – 1 Tax on profit from ordinary activities – 1 Factors affecting the tax charge for the current period The tax assessed for the year is different than that resulting from applying the standard rate of corporation tax in the UK: 25.0% (2023: 19.0%). The differences are explained below: | | Year ended | | | | Year ended | | | --- | --- | --- | --- | --- | --- | --- | | | 31 March 2024 | | | 31 March 2023 | | | | Income | | Capital | Total | | | Total | | £’000 | | £’000 | £’000 | | | £’000 | Current tax reconciliation Return before taxation 341 2,554 2,895 8,430 Tax at UK corporation tax rate of 25.0% (2023: 19.0%) 85 639 724 1,602 Tax effects of: Non-taxable dividends (202) – (202) (227) Non-deductible expenditure 3 – 3 103 Chargeable gains not subject to tax – (639) (639) (1,341) Movement in deferred tax not recognised 114 – 114 (136) Total tax charge for the year – – – 1 Deferred tax At 31 March 2024, the Company had losses of £143,306,000 (31 March 2023: £143,142,000) that are potentially available to offset future taxable revenue. A deferred tax asset of £35,827,000 (31 March 2023: £35,786,000), based on the enacted UK corporation tax rate of 25.0% that applied from 1 April 2023, has not been recognised because the Company is not expected to generate sufficient taxable income in future periods that the carried forward tax losses can be utilised against. 6. Earnings per share Basic earnings per share is calculated by dividing the profit/loss attributable to ordinary shareholders by the weighted average number of Ordinary Shares during the year. Diluted earnings per share is calculated by dividing the profit/loss attributable to shareholders by the adjusted weighted average number of Ordinary Shares in issue. Year ended 31 March 2024 Year ended 31 March 2023 | | | | | Basic and | | | | | | Basic and | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Weighted | | | diluted | | | Weighted | | | diluted | | | | | average | earnings | | | | | average | earnings | | | Net Return | | Ordinary | | per share | | Net Return | | Ordinary | | per share | | | | £'000 | | Shares | | pence | | £'000 | | Shares | | pence | Revenue 341 27,356,247 1.25 8,429 25,410,460* 33.17 Capital 2,554 27,356,247 9.33 - 25,410,460* - Total 2,895 10.58 8,429 33.17 As at 31 March 2024, the total number of shares in issue was 31,189,090 (2023: 25,410,460, restated due to 1 for 10 share issue). No shares were bought back by the Company (2023: None). There are no share options outstanding at the end of the year. * Restated to reflect the subsequent 10 for 1 share split. ## 43Rockwood Strategic Plc 7. Dividends The Company is recommending a dividend of 0.6p to shareholders in respect of the year ended 31 March 2024 (2023: none). No unclaimed historic dividends were reclassified to revenue reserve during the year (2023: £355,855 ). 8. Investments at fair value through profit or loss Year ended 31 March 2024 | Investments | | | | Other | | --- | --- | --- | --- | --- | | | in quoted | | unquoted | | | companies | | investments | | | | | (Level 1) | | (Level 3) Total | | Opening Cost at beginning of year 33,374 – 33,374 Opening unrealised appreciation at the beginning of the year 5,881 – 5,881 Opening fair value at the beginning of the year 39,255 – 39,255 Movements in the year: Transfer between levels* (41) 41 – Purchases at cost 30,175 750 30,925 Sales proceeds (12,573) – (12,573) Realised gain on disposal 3,262 – 3,262 Change in unrealised (depreciation)/appreciation at the end of the year (635) 88 (547) Closing Fair value at the end of the year 59,443 879 60,322 Closing cost at the end of the year 54,197 791 54,988 Closing unrealised appreciation at the end of the year 5,246 88 5,334 Closing fair value at the end of the year 59,443 879 60,322 Year ended 31 March 2023 | Investments | | | | Other | | --- | --- | --- | --- | --- | | | in quoted | | unquoted | | | companies | | investments | | | | | (Level 1) | | (Level 3) Total | | Opening Cost at beginning of year 19,129 2,917 22,046 Opening unrealised appreciation at the beginning of the year 9,563 – 9,563 Opening fair value at the beginning of the year 28,692 2,917 31,609 Movements in the year: Purchases at cost 19,120 1,207 20,327 Sales proceeds (17,548) (4,124) (21,672) Realised gain on disposal 12,673 – 12,673 Change in unrealised depreciation at the end of the year (3,682) – (3,682) Closing Fair value at the end of the year 39,255 – 39,255 Closing cost at the end of the year 33,374 – 33,374 Closing unrealised appreciation at the end of the year 5,881 – 5,881 Closing fair value at the end of the year 39,255 – 39,255 * For the year ended 31 March 2024, there was a transfer from Level 1 to Level 3 of £69,175 Bonhill group due to voluntary liquidation. ## 44 Rockwood Strategic Plc Overview Governance Financial Statements Other Information # Notes to the Financial Statements (continued) # 8. Investments at fair value through profit or loss (continued) The following table analyses investments carried at fair value at the end of the year, by the level in the fair value hierarchy into which the fair value measurement is categorised. The different levels are defined as follows: - (i) level one measurements are at quoted prices (unadjusted) in active markets for identical assets or liabilities; - (ii) level two measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and - (iii) level three measurements are valuations not based on solely observable market data (that is, the measurement requires significant unobservable inputs). The fair values of the Company's investments is summarised as follows: | | 31 March | | | --- | --- | --- | | | 2024 £'000 | 2023 £'000 | | Level 1 | 59,415 | 39,255 | | Level 2 | - | - | | Level 3 | 907 | - | | | **60,322** | **39,255** | # Fair values of financial assets and financial liabilities Financial assets and liabilities are carried in the Statement of Financial Position at either their fair value (investments), or the Statement of Financial Position amount is a reasonable approximation of the fair value (dividends receivable, accrued income, accruals, and cash at bank). As at 31 March 2024 and 31 March 2023, all investments, except for the investments in the table below, fall into the category 'Level 1' under IFRS 7 fair value hierarchy. A summary of the level 3 investments are as follows: | | 31 March 2024 | | 31 March 2023 | | | --- | --- | --- | --- | --- | | | Investments included | £'000 | Investments included | £'000 | | Fair value | Bonhill group | 69 | - | - | | | Pressure Technologies | | | | | | - Loan Notes | 750 | - | - | | | - Warrants | 88 | - | - | | | | **907** | **-** | **-** | Valuation policy: Every three months, the Investment Manager within Harwood Capital LLP is asked to revalue the investments that he looks after and submit his valuation recommendation to the Valuation and Pricing ("V&P") Committee. The V&P Committee considers the recommendation made, and approves or adjust the valuation as required. Level 3 investments have been valued in accordance with the IPEV guidelines. The valuation incorporates all relevant factors that market participants would consider in setting a price. Methods applied include cost of investment, price of recent investments, net assets and earnings multiples. Although the Manager believes that the estimates of fair values are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair values. Subsequent adjustments in price are determined by the Manager's Valuation and Pricing Committee. Investments in quoted companies (Level 1) have been valued according to the quoted bid price as at 31 March 2024. At the year-end, the Company held 20.0% of the aggregate nominal value of voting equity of Pressure Technologies, in ordinary share capital. Pressure Technologies is incorporated in the UK and at its year end 30 September 2024 had capital and reserves of £13.6 million and had made a revenue loss of £1.1 million. Rockwood Strategic Plc 45 9. Trade and other receivables | 31 March | | 31 March | | | --- | --- | --- | --- | | | 2024 | | 2023 | | | £’000 | | £’000 | Proceeds due from share issues 156 – Other debtors 112 63 Prepayments 13 10 281 73 10. Trade and other payables | 31 March | | 31 March | | | --- | --- | --- | --- | | | 2024 | | 2023 | | | £’000 | | £’000 | Due to Brokers 901 312 Trade Creditors 202 229 1,103 541 There were no other creditors as at 31 March 2024 (2023: none). 11. Performance fees payable | 31 March | | 31 March | | | --- | --- | --- | --- | | | 2024 | | 2023 | | | £’000 | | £’000 | Performance fees payable – 625 12. Issued capital Allotted, called-up and fully paid: For the year ended 31 March 2024 £’000 2,541,046 ordinary shares of 50p each listed at 31 March 2023 1,271 146,863 ordinary shares of 50p each issued before the share split 73 24,191,181 ordinary shares issued through the share split – 4,310,000 ordinary shares of 5p each issued after the year 216 31,189,090 ordinary shares of 5p each listed at 31 March 2024 1,560 2,000,000 D shares of 0.5p each listed at 31 March 2023 10 2,000,000 D shares of 0.5p cancelled during the year (10) D shares of 0.5p each listed at 31 March 2024 – ## 46 Rockwood Strategic Plc Overview Governance Financial^{}[] Statements Other^{}[] Information ## Notes to the Financial Statements (continued) ### 12. Issued capital (continued) #### Allotted, called-up and fully paid: | For the year ended 31 March 2023 | £'000 | | --- | --- | | 2,541,046 ordinary shares of 50p each listed at 31 March 2022 | 1,271 | | Nil ordinary shares of 50p each issued during the year | 73 | | **2,541,046 ordinary shares of 50p each listed at 31 March 2023** | **1,559** | | 2,000,000 D shares of 0.5p each listed at 31 March 2022 | 10 | | NIL D shares of 0.5p issued during the year | – | | **D shares of 0.5p each listed at 31 March 2023** | **10** | At the AGM of the Company held on 12 September 2023, shareholders approved a resolution for a ten for one share split such that each shareholder would receive 10 shares with a nominal value of 5 pence each for every one share held. Expenses associated with the share split amount to £28,000. The Company's shares are listed on the premium segment of the Main Market on the London Stock Exchange under reference RKW. In order for the Company's conversion to an Investment Trust to be successful, all of its ordinary share capital needed to be listed as trading on a UK regulated market. The Deferred Shares which were issued as D Shares in October 2009 to incentivise the Investment Manager at the time were not admitted to trading on AIM and were economically valueless. The entire 2,000,000 Deferred Shares were bought back by the Company for 1 penny in aggregate and thereafter cancelled. ### 13. Financial instruments and financial risk management The Company invests in quoted and unquoted companies in accordance with the investment policy. In addition to investments in smaller listed companies in the UK, the Company maintains liquidity balances in the form of cash held for follow-on financing and debtors and creditors that arise directly from its operations. As at 31 March 2024, £59.4 million of the Company's net assets were invested in quoted investments, £0.9 in unquoted investments and £4.7 million in liquid balances (31 March 2023: £39.3 million in quoted investments, £nil in unquoted investments and £11.7 million in liquidity). In pursuing its investment policy, the Company is exposed to risks that could result in a reduction in the value of net assets and consequently funds available for distribution by way of dividend or for re-investment. The main risks arising from the Company's financial instruments are due to fluctuations in market prices (market price risk), credit and liquidity risk and cash flow interest rate risk; credit risk and liquidity risk are also discussed below. The Board regularly reviews and agrees policies for managing each of these risks and they are summarised below. These have been in place throughout the current and preceding years. All financial assets with the exception of investments, which are held at fair value through profit or loss, are categorised as financial assets at amortised cost and all financial liabilities are categorised as amortised cost, amortised cost is a reasonable approximation of its fair value. #### a) Market risk ##### i) Price risk Market price risk arises from uncertainty about the future valuations of financial instruments held in accordance with the Company's investment objectives. These future valuations are determined by many factors but include the operational and financial performance of the underlying investee companies, as well as market perceptions of the future of the economy and its impact upon the economic environment in which these companies operate. This risk represents the potential loss that the Company might suffer through holding its investment portfolio in the face of market movements, which was a maximum of £59.6 million (2023: £39.3 million). The investments in fixed interest stocks of unquoted companies that the Company holds are not traded and as such the prices are more uncertain than those of more widely traded securities. The Board's strategy in managing the market price risk is determined by the requirement to meet the Company's investment objective. Risk is mitigated to a limited extent by the fact that the Company holds investments in several companies. At 31 March 2024, the Company held interests in 20 companies (2023: 18 companies). The Directors monitor compliance with the investment policy, review and agree policies for managing this risk and monitor the overall level of risk on the investment portfolio on a regular basis. Rockwood Strategic Plc 47 13. Financial instruments and financial risk management (continued) Market price risk sensitivity The Board considers that the value of investments in quoted equity instruments is ultimately sensitive to changes in quoted share prices. The value of investments in Pressure Technologies, where the valuation methodology is to estimate the value of the conversion option of the instrument, is similarly linked to quoted share prices. The table below shows the impact on the return and net assets if there were to be a 25.0% (2023: 25.0%)  As at 31 March 2024 +25% -25% | | | Impact | | Impact | | --- | --- | --- | --- | --- | | | Impact | per share | Impact | per share | | Security Valuation basis Fair value | £’000 | (in pence) | £’000 | (in pence) | Quoted investments Latest share price 59,443 14,861 47.65 (14,861) (47.65) As at 31 March 2023 +25% -25% | | | Impact | | Impact | | --- | --- | --- | --- | --- | | | Impact | per share | Impact | per share | | Security Valuation basis Fair value | £’000 | (in pence) | £’000 | (in pence) | Quoted investments Latest share price 39,255 9,814 38.62* (9,814) (38.62)* * Restated for the sub-division of each ordinary share into 10 new ordinary shares. The impact of a change of 25.0% (2023: 25.0%) has been selected as this is considered reasonable given the current level of volatility, observed both on a historical basis, and market expectations for future movement. A sensitivity has not been performed for the other unquoted investments held by the Company at 31 March 2024 as they were not deemed to be material. There were none at 31 March 2023. as there is no exposure to market price risk in the valuation methodology applied for these investments. Interest rates are less volatile than market prices; therefore, the Company has deemed it inappropriate to consider a 25.0% upward or downward move in interest rates. Interest rates are determined by monetary policy and have been kept historically low due to quantitative easing and therefore we do not believe that interest rates will be as volatile as share prices. ii) Currency risk The Company does not hold any significant assets or liabilities denominated in a currency other than sterling, the functional currency. The transactions in foreign currency for the Company are highly minimal. Therefore, currency risk sensitivity analysis was not performed as the results would not be significantly affected by movements in the value of foreign exchange rates. iii) Cash flow interest rate risk As the Company has no borrowings, it only has limited interest rate risk. The impact is on income and operating cash flow and arises from changes in market interest rates. Some of the Company’s cash resources are placed in an interest paying current account to take advantage of preferential rates and are subject to interest rate risk to that extent. b) Credit risk Credit risk is the risk that a counterparty will fail to discharge an obligation or commitment that it has entered into with the Company. The Company’s maximum exposure to credit risk is: | 31 March | | 31 March | | | --- | --- | --- | --- | | | 2024 | | 2023 | | | £’000 | | £’000 | Loan stock investments 750 – Cash and cash equivalents 4,761 11,631 Trade and other receivables 281 73 5,972 11,704 Credit risk relating to loan stock investments in unquoted companies is considered to be part of market risk. ## 48 Rockwood Strategic Plc Overview Governance Financial^{}[] Statements Other^{}[] Information ## Notes to the Financial Statements (continued) ### 13. Financial instruments and financial risk management (continued) The Company's cash balances at 31 March 2024 and 2023 were held in institutions currently rated A or better by Fitch. Given these ratings, the Company does not expect any counterparty to fail to meet its obligations and therefore, no allowance for impairment is made for bank deposits. #### c) Liquidity risk The Directors consider that there is no significant liquidity risk faced by the Company. The Company maintains sufficient liquidity in cash and liquid investments to pay accounts payable and accrued expenses. All liabilities are current and repayable upon demand. ### 14. Capital disclosures The Company's objective has been to maximise shareholder value from all assets, which in recent years has been to realise its portfolio at the most advantageous time and reinvest the proceeds to grow shareholder value per share over the long-term. The capital subscribed to the Company has been managed in accordance with the Company's objectives. The available capital at 31 March 2024 is £64.3 million (31 March 2023: £49.8 million) as shown in the Statement of Financial Position, which includes the Company's share capital and reserves. The total amount of revenue reserve for the year is £18,566 million (2023: £24,105 million) which is fully distributable and can be utilised for any future dividends. The Company has no borrowings and there are no externally imposed capital requirements other than the minimum statutory share capital requirements for public limited companies. ### 15. Related party transactions and transactions with the Investment Manager The related parties of Rockwood Strategic Plc are its Directors, persons connected with its Directors and its Investment Manager and significant shareholder Harwood Capital LLP (Harwood). The total payable to Harwood is as follows: | | 31 March 2024 | 31 March 2023 | | --- | --- | --- | | Performance fee | Nil | £0.63 million | | Management fee | £0.05 million | £0.11 million | | **Total** | **£0.05 million** | **£0.74 million** | As at 31 March 2024, the following shareholders of the Company that are related to Harwood had the following interests in the issued shares of the Company as follows: | | 31 March 2024 | 31 March 2023 | | --- | --- | --- | | Harwood Holdco Limited | 8,340,000 Ordinary Shares | 7,340,000 Ordinary Shares* | | R Staveley | 321,380 Ordinary Shares | 256,890 Ordinary Shares* | \* Restated to reflect the 10 for 1 share split completed in October 2023 The Directors' remuneration and their interest in the Company are disclosed in the Director's remuneration review in the annual report. There are no other material related party transactions of which we are aware in the year ended 31 March 2024. #### Investment Management Fees: A monthly management fee of £10,000 (inclusive of VAT, if any) until the Company's NAV equalled £60 million or higher (NAV threshold). The NAV Threshold was met on 16 February 2024, since then, Harwood has been entitled to a management fee of 1/12th of an amount equal to 1.0% of the Net Asset Value before deduction of that month's Investment Management Fee and before deduction of any accrued Performance Fees. Rockwood Strategic Plc 49 15. Related party transactions and transactions with the Investment Manager (continued) Performance Fees: Harwood will also be entitled to a performance fee equal to 10.0% of outperformance over the higher of a 6.0% per annum total return hurdle and the high watermark. The 6.0% per annum compounding weekly and the performance fee will be calculated annually. Provided that the Company’s average NAV is at or below £100 million, performance fees in any performance fee period will be capped at 3.0% of the Company’s average NAV for the relevant performance fee period. In such instance, performance fees in excess of the 3.0% cap will not be paid and will instead be deferred into the next performance fee period. 16. Subsequent events note Share Issues: The Company issued for cash 1,005,608 ordinary shares of 5 pence each in April and May 2024 from its block listing facility at an average price of 232.64pence per share. ## 50 Rockwood Strategic Plc Overview Governance Financial^{}[] Statements Other^{}[] Information # Glossary/Alternative Performance Measures (APMS) ## AIC The Association of Investment Companies. ### Alternative performance Measures (APMs) APMs are often used to describe the performance of investment companies although they are not specifically defined under FRS 102. The Directors assess the Company's performance against a range of criteria which are viewed as relevant to both the Company and its market sector. APM calculations for the Company are shown below. ### Cash Alternatives/Equivalent Also known as cash equivalents. A class of investments considered relatively low-risk because of their high liquidity, meaning they can be quickly converted into cash. ## CTA Corporation Tax Act 2010. ### Discount The amount by which the market price per share of an investment trust is lower than the net asset value per share. The discount is normally expressed as a percentage of the net asset value per share. ### Dividend The portion of company net profits paid out to shareholders. ## FCA Financial Conduct Authority. ## LSE London Stock Exchange. ### Market Capitalisation The total value of a company's equity, calculated by the number of shares multiplied by their market price. ## NAV NAV stands for net asset value and represents shareholders' funds. Shareholders' funds are the total value of a company's assets at current market value less its liabilities. ### Ongoing charges ratio A measure, expressed as a percentage of the average daily net asset values during the year, of the regular, recurring annual costs of running an investment company. This includes the Investment Management fee and excludes any variable performance fees. In the last two years there have been exceptional expenses, which will not be ongoing, associated in 2023 with the Strategic Review and its related Extraordinary Meetings and in 2024 associated with moving from the AIM to the Main Market of the London Stock Exchange. Ongoing charges is calculated on an annualised basis. This figure excludes any portfolio transaction costs and may vary from period to period. The calculation below is in line with AIC guidelines. | | Year ended 31 March 2024 | | --- | --- | | Investment management fee | 191,000 | | Administrative expenses | 581,000 | | Less: one off legal and professional fees | (5,000) | | **Total** | **(a) 767,000** | | Average cum income net asset value throughout the period | (b) 48,546,578 | | Ongoing expenses (c=a/b) | (c) 1.58% | ### Premium The amount by which the market price per share of an investment trust exceeds the net asset value per share. The premium is normally expressed as a percentage of the net asset value per share. ### Total Return 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 into its Ordinary Shares on the ex-dividend date. This is calculated for both the Share Price and the Net Asset Value. | | Year ended 31 March 2024 | | --- | --- | | **NAV Total Return** | | | NAV 31 March 2024 | (a) 206.04 | | NAV 31 March 2023 | (b) 195.96* | | Increase in NAV (c=a-b) | (c) 10.08 | | Total Return (d=c/b) | (d) 5.1% | | **Total Shareholder Return** | | | NAV price 31 March 2024 | (a) 210.00 | | NAV price 31 March 2023 | (b) 182.00* | | Increase in share price (c=a-b) | (c) 28.00 | | Total Return (d=c/b) | (d) 15.4% | \* Restated for a 10 for 1 share split Rockwood Strategic Plc 51 ## Notice of Annual ## General Meeting | NOTICE IS GIVEN that the Annual General | | 8. THAT the Directors of the Company be | | (a) the allotment of equity securities in | | | --- | --- | --- | --- | --- | --- | | Meeting (“AGM”) of the Company will be held | | | generally and unconditionally authorised | | connection with any rights issue or other | | at the offices of Shakespeare Martineau LLP, | | | in accordance with section 551 of the | | pro-rata offer in favour of the holders of | | 60 Gracechurch Street, London EC3V 0HR | | | Companies Act 2006 (the Act) to exercise | | Ordinary Shares in the Company where the | | at 10.00am on Wednesday, 31 July 2024 to | | | all the powers of the Company to allot | | equity securities respectively attributable | | consider the following resolutions, of which | | | shares in the Company or to grant rights to | | to the interests of all such holders of | | resolutions 1 to 8 will be proposed as ordinary | | | subscribe for, or convert any security into, | | shares are proportionate (as nearly as | | resolutions and resolutions 9 to 12 will be | | | shares in the Company (Rights) up to an | | may be) to the respective numbers of | | proposed as special resolutions: | | | aggregate nominal amount of £536,581.43 | | shares held by them, provided that the | | | | | during the period commencing on the | | Directors of the Company may make such | | Ordinary Resolutions | | | date of the passing of this resolution and | | arrangements in respect of overseas | | 1. To receive the Annual Report and | | | expiring at the conclusion of the next | | holders of shares and/or to deal with | | | Accounts for the year-ended 31 March | | AGM of the Company or 15 months from | | fractional entitlements as they consider | | | 2024. | | the passing of this resolution, whichever | | necessary or convenient; and | is earlier, and provided further that the | 2. To receive and adopt the Directors’ | | | Company shall be entitled before such | (b) the allotment (otherwise than under | | | --- | --- | --- | --- | --- | --- | | | Remuneration Report. | | expiry to make an offer or agreement | | sub-paragraph (a) above) of equity | | | | | which would or might require shares to be | | securities and/or the sale or transfer of | | 3. THAT the final dividend for the year | | | allotted or Rights to be granted after such | | shares held by the Company in treasury | | | ended 31 March 2024 of 0.6 pence per | | expiry and the Directors shall be entitled | | (as the Directors shall deem appropriate) | | | ordinary share be and is hereby declared | | to allot shares and grant Rights under such | | up to an aggregate nominal amount of | | | payable on 2 September 2024 to Ordinary | | offer or agreement as if this authority had | | £160,974.43 (representing approximately | | | Shareholders whose names appeared on | | not expired. | | 10.0% of the ordinary share capital of the | | | the Register of Members at the close of | | | | Company at the latest practicable date | | | business on 9 August 2024. | Special Resolutions | | | before publication of this Notice). | 9. THAT, subject to and conditional upon | 4. To re-appoint Paul Dudley as a Director of | | the passing of resolution 8 above, the | and this authority shall expire at the conclusion | | --- | --- | --- | --- | | | the Company. | Directors of the Company be empowered | of the next AGM of the Company or 15 months | | | | under section 570 of the Companies Act | from the passing of this resolution, whichever | | 5. To re-elect Noel Lamb as a Director of the | | 2006 (the Act) to allot equity securities | is earlier, that the Company may before such | | | Company. | (within the meaning of section 560 of | expiry make offers or agreements which | | | | the Act) for cash and/or to sell or transfer | would or might require equity securities to be | | 6. To re-elect Ken Lever as a Director of the | | shares held by the Company in treasury | allotted after such expiry and the Directors of | | | Company. | (as the Directors shall deem appropriate) | the Company may allot equity securities under | | | | under the authority conferred on them | such offers or agreements as if the power | | 7. To reappoint BDO LLP as auditors to | | under section 551 of the Act by resolution | conferred by this resolution had not expired | | | the Company to hold office until the | 8 above as if section 561(1) of the Act did | and provided further that this authority shall be | | | conclusion of the next general meeting | not apply to any such allotment provided | in substitution for, and to the exclusion of, any | | | at which accounts are laid before the | that this power shall be limited to: | existing authority conferred on the Directors. | members and to authorise the Directors to determine their fees. ## 52 Rockwood Strategic Plc Financial Other Overview Governance Statements Information ## Notice of Annual General Meeting (continued) | 10. THAT, subject to and conditional upon | | 11. THAT, the Company be generally and | | 12. That a general meeting other than an | | | --- | --- | --- | --- | --- | --- | | | the passing of resolution 8 above, and | | unconditionally authorised to make | | Annual General Meeting may be called on | | | in addition to the authority granted in | | market purchases (as defined in the | | not less than 14 clear days’ notice during | | | resolution 9, the Directors of the Company | | Companies Act 2006) of Ordinary Shares | | the period from the date of the passing | | | be empowered under section 570 of the | | in the capital of the Company (Ordinary | | of this resolution until the conclusion of | | | Companies Act 2006 (the Act) to allot | | Shares) on such terms and in such manner | | the next Annual General Meeting of the | | | equity securities (within the meaning | | as the Directors may from time to time | | Company. | | | of section 560 of the Act) for cash and/ | | determine, provided that: | | | | | or to sell or transfer shares held by the | | | By order of the Board | | | | Company in treasury (as the Directors shall | (a) the maximum number of Ordinary Shares | | | | | | deem appropriate) under the authority | | authorised to be purchased shall be | SGH Company Secretaries Limited | | | | conferred on them under section 551 of | | 4,829,233; | Company Secretary | | the Act by resolution 9 above as if section 18 June 2024 561(1) of the Act did not apply to any such (b) the minimum price which may be paid for allotment provided that this power shall be an Ordinary Share is the nominal value Registered Office: 6th Floor, limited to: of an Ordinary Share at the time of the 60 Gracechurch Street, London EC3V 0HR purchase; (a) the allotment of equity securities in | connection with any rights issue or other | (c) the maximum price which may be paid | | | --- | --- | --- | | pro-rata offer in favour of the holders of | | for an Ordinary Share is an amount equal | | Ordinary Shares in the Company where the | | to 105.0% of the average of the middle | | equity securities respectively attributable | | market quotations for an Ordinary Share | | to the interests of all such holders of | | (as derived from the Daily Official List) | | shares are proportionate (as nearly as | | for the five business days immediately | | may be) to the respective numbers of | | preceding the date on which the Ordinary | | shares held by them, provided that the | | Share is contracted to be purchased; | Directors of the Company may make such arrangements in respect of overseas (d) the minimum and maximum prices holders of shares and/or to deal with per Ordinary Share referred to in sub- fractional entitlements as they consider paragraphs (b) and (c) of this resolution are necessary or convenient; and in each case exclusive of any expenses payable by the Company. (b) the allotment (otherwise than under sub- | paragraph (a) above) of equity securities | (e) the authority conferred by this resolution | | | --- | --- | --- | | and/or the sale or transfer of shares | | shall expire at the end of the AGM in | | held by the Company in treasury (as the | | 2025 or 15 months from the passing of | | Directors shall deem appropriate) up to an | | this resolution, whichever is earlier, if | | aggregate nominal amount of £160,974.43 | | unless such authority is varied, revoked | | (representing approximately 10.0% of the | | or renewed prior to such time by the | | ordinary share capital of the Company | | Company in general meeting; and | at the latest practicable date before publication of this Notice). (f) the Company may make a contract to purchase Ordinary Shares under the | and this authority shall expire at the conclusion | authority hereby conferred prior to the | | --- | --- | | of the next AGM of the Company or 15 months | expiry of such authority which will or may | | from the passing of this resolution, whichever | be completed wholly or partly after the | | is earlier, provided that the Company may | expiration of such authority. | before such expiry make offers or agreements which would or might require equity securities to be allotted after such expiry and the Directors of the Company may allot equity securities under such offers or agreements as if the power conferred by this resolution had not expired and provided further that this authority shall be in substitution for, and to the exclusion of, any existing authority conferred on the Directors. ## 53Rockwood Strategic Plc | Notice of Meeting Notes: | go to www.proxymity.io. Your proxy must | 11. CREST members and, where applicable, their | | | --- | --- | --- | --- | | The following notes explain your general rights as a | be lodged by 10.00am on Monday, 29 July | | CREST sponsors or voting service providers | | shareholder and your right to attend and vote at this | 2024 in order to be considered valid | | should note that Euroclear UK & International | | Meeting or to appoint someone else to vote on your | or, if the meeting is adjourned, by the | | Limited does not make available special | | behalf. | time which is 48 hours before the time | | procedures in CREST for any particular | | | of the adjourned meeting. Before you | | message. Normal system timings and | 1. To be entitled to attend and vote at the Meeting can appoint a proxy via this process you limitations will, therefore, apply in relation to (and for the purpose of the determination by will need to have agreed to Proxymity’s the input of CREST Proxy Instructions. It is the the Company of the number of votes they may associated terms and conditions. It is responsibility of the CREST member concerned cast), shareholders must be registered in the important that you read these carefully to take (or, if the CREST member is a CREST Register of Members of the Company at close of as you will be bound by them and they will personal member, or sponsored member, or trading on Monday, 29 July 2024. Changes to the govern the electronic appointment of your has appointed a voting service provider(s), Register of Members after the relevant deadline proxy. An electronic proxy appointment to procure that his CREST sponsor or voting shall be disregarded in determining the rights of via the Proxymity platform may be revoked service provider(s) take(s)) such action as any person to attend and vote at the Meeting. | | | completely by sending an authenticated | shall be necessary to ensure that a message | | --- | --- | --- | --- | | 2. Shareholders, or their proxies, intending to | | message via the platform instructing the | is transmitted by means of the CREST system | | | attend the Meeting in person are requested, if | removal of your proxy vote; | by any particular time. In this connection, | | | possible, to arrive at the Meeting venue at least | | CREST members and, where applicable, their | In order for a proxy appointment to be 20 minutes prior to the commencement of the CREST sponsors or voting system providers are valid a form of proxy must be completed. Meeting at 9.40am (UK time) on Wednesday, referred, in particular, to those sections of the In each case the form of proxy must be 31 July 2024 so that their shareholding may be CREST Manual concerning practical limitations received by Link Group, PXS, Central Square, checked against the Company’s Register of of the CREST system and timings. The Company 29 Wellington Street, Leeds LS1 4DL by Members and attendances recorded. may treat as invalid a CREST Proxy Instruction 10.00am on Monday, 29 July 2024. 3. Shareholders are entitled to appoint another in the circumstances set out in Regulation 35(5) 7. f you return more than one proxy appointment, person as a proxy to exercise all or part of (a) of the Uncertificated Securities Regulations either by paper or electronic communication, their rights to attend and to speak and vote on 2001. the appointment received last by the Registrar their behalf at the Meeting. A shareholder may 12. Any corporation which is a shareholder can before the latest time for the receipt of proxies appoint more than one proxy in relation to the appoint one or more corporate representatives will take precedence. You are advised to read Meeting provided that each proxy is appointed who may exercise on its behalf all of its powers the terms and conditions of use carefully. to exercise the rights attached to a different as a shareholder provided that no more than one Electronic communication facilities are open to Ordinary Share or Ordinary Shares held by that corporate representative exercises powers in all shareholders and those who use them will not shareholder. A proxy need not be a shareholder relation to the same shares. be disadvantaged. of the Company. 13. As at 18 June 2024 (being the latest practicable 8. The return of a completed form of proxy, 4. In the case of joint holders, where more than business day prior to the publication of this electronic filing or any CREST Proxy Instruction one of the joint holders’ purports to appoint a Notice), the Company’s ordinary issued share (as described in note 11 below) will not prevent proxy, only the appointment submitted by the capital consists of 32,194,886 Ordinary Shares, a shareholder from attending the Meeting and most senior holder will be accepted. Seniority carrying one vote each. Therefore, the total voting in person if he/she wishes to do so. is determined by the order in which the names voting rights in the Company as at 18 June 2024 As mentioned above, the Company advises of the joint holders appear in the Company’s are 32,194,886. shareholders to vote electronically, or to appoint Register of Members in respect of the joint the Chair as their proxy as physical attendance 14. Any shareholder attending the Meeting has holding (the first named being the most senior). in person may now be permitted. the right to ask questions. The Company must 5. A vote withheld is not a vote in law, which cause to be answered any such question 9. CREST members who wish to appoint a proxy means that the vote will not be counted in the relating to the business being dealt with at or proxies through the CREST electronic proxy calculation of votes for or against the resolution. the Meeting but no such answer need be given appointment service may do so for the Meeting If no voting indication is given, your proxy if: (a) to do so would interfere unduly with the (and any adjournment of the Meeting) by using will vote or abstain from voting at his or her preparation for the Meeting or involve the the procedures described in the CREST Manual discretion. Your proxy will vote (or abstain from disclosure of confidential information; (b) the (available from www.euroclear.com)). CREST voting) as he or she thinks fit in relation to any answer has already been given on a website in Personal Members or other CREST sponsored other matter which is put before the Meeting. the form of an answer to a question; or (c) it is members, and those CREST members who 6. You can vote either: undesirable in the interests of the Company or have appointed a service provider(s), should the good order of the Meeting that the question  by logging on to www.signalshares.com and refer to their CREST sponsor or voting service be answered. | following the instructions; you can also | provider(s), who will be able to take the | | | | --- | --- | --- | --- | | vote by downloading the new shareholder | appropriate action on their behalf. | 15. The following documents are available for | | | app, LinkVote+, on Apple App Store or | | | inspection during normal business hours at | 10. In order for a proxy appointment or instruction Google Play and following the instructions. the registered office of the Company on any made by means of CREST to be valid, the business day from the date of this Notice  You may request a hard copy form of proxy appropriate CREST message (a ‘CREST Proxy until the time of the Meeting and may also be directly from the registrars, Link Group, Instruction’) must be properly authenticated in inspected at the Meeting venue, as specified on Tel: 0371 664 0300. Calls are charged accordance with Euroclear UK & International in this Notice, from 10am am on the day of the at the standard geographic rate and will Limited’s specifications and must contain the Meeting until the conclusion of the Meeting: vary by provider. Calls outside the United information required for such instructions, as copies of the Directors’ letters of appointment Kingdom will be charged at the applicable described in the CREST Manual. The message or service contracts. | international rate. Lines are open between | must be transmitted so as to be received by | | | | --- | --- | --- | --- | | 09:00 – 17:30, Monday to Friday excluding | the issuer’s agent (ID RA10) by 10.00am on | 16. You may not use any electronic address (within | | | public holidays in England and Wales. | Monday 29 July 2024. For this purpose, the | | the meaning of Section 333(4) of the Companies | | | time of receipt will be taken to mean the time | | Act 2006) provided in either this Notice or any |  in the case of CREST members, by utilising (as determined by the timestamp applied to the related documents (including the form of proxy) the CREST electronic proxy appointment message by the CREST application host) from to communicate with the Company for any service in accordance with the procedures which the issuer’s agent is able to retrieve the purposes other than those expressly stated. set out below. message by enquiry to CREST in the manner A copy of this Notice, and other information required  if you are an institutional investor, you may prescribed by CREST. After this time, any by Section 311A of the Companies Act 2006, can be also be able to appoint a proxy electronically change of instructions to proxies appointed found on the Company’s website. via the Proxymity platform, a process through CREST should be communicated to the which has been agreed by the Company appointee through other means. and approved by the Registrar. For further information regarding Proxymity, please ## 54 Rockwood Strategic Plc Financial Other Overview Governance Statements Information ## Corporate ## Information | Directors | Bankers | Registrars | | --- | --- | --- | | N Lamb (Chairman) | Caceis Bank | Link Group | | P Dudley | UK Branch | Central Square | | K Lever | Broadwalk House | 29 Wellington St | | | 5 Appold Street | Leeds | | Company Secretary | London | LS1 4DL | | SGH Company Secretaries Limited | EC2A 2DA | | | 6th Floor | | Nominated Advisor and Brokers | | 60 Gracechurch Street | Solicitors | Singer Capital Markets | | London | Shoosmiths LLP | 1 Bartholomew Lane | | EC3V 0HR | 1 Bow Churchyard | London | | | London | EC2N 2AX | | Registered Office | EC4M 9DQ | | 6th Floor | 60 Gracechurch Street | Auditor | | | --- | --- | --- | | London | BDO LLP | Please contact a member of the Rockwood | | EC3V 0HR | 55 Baker St | Strategic team if you wish to discuss your | investment or provide feedback on this London document. Rockwood Strategic is committed Investment Manager W1U 7EU to meeting the needs and expectations Harwood Capital LLP of all stakeholders and welcomes any 6 Stratton St suggestions to improve its service delivery. London https://www.rockwoodstrategic.co.uk/ W1J 8LD ## 55Rockwood Strategic Plc ## Note sNotes ## 56 Rockwood Strategic Plc