TIDMRKW
RNS Number : 8750P
Rockwood Strategic PLC
23 June 2022
Rockwood Strategic plc
("RKW" or "the Company")
Full year results for the year ended 31 March 2022
27.5% NAV growth
Rockwood Strategic plc (AIM: RKW) is pleased to announce its
audited results for the year ended 31 March 2022.
Financial highlights
-- NAV Total Return performance in the twelve months to 31 March
2022 of 27.5% to 1613.8p/share which compares to the FTSE Small Cap
(ex-ITs) of 3.2%. The Total Shareholder Return in this period was
22.2%.
-- NAV Total Return performance in the three years to 31 March
2022 of 57.7% to 1613.8p/share which compares to the FTSE Small Cap
(ex-ITs) of 29.7%. The Total Shareholder Return in this period was
50.9%
-- Investment gains realised in Augean, RPS, National World,
Universe Group and Ted Baker. Significant unrealised gains within
remaining portfolio.
-- Material engagement across the investments supporting the
unlocking and realisation of shareholder value through operational
and strategic changes.
-- RKW ended the year with net assets of GBP41 million, invested
in 9 companies together with GBP10.5 million in cash.
-- GBP25 million returned to shareholders during the period by
way of B share scheme and tender offer. No final dividend declared
as a result. Future policy to pay out at least 85% of portfolio
income net of expenses, retaining capital for re-investment.
Corporate development
-- Harwood Capital appointed as Investment Manager, Richard
Staveley as Lead Fund Manager.
-- Revised Investment Policy approved by shareholders post
year-end to actively invest in a focused portfolio of UK Small
Companies, with substantial cash to deploy carefully into new
opportunities.
-- Noel Lamb appointed as Chairman.
-- Graham Bird will not be seeking re-election at the AGM, a
replacement independent Non-executive Director will be announced in
due course.
-- 'Investment Advisory Group' (IAG) formed to support the
investment process, its highly regarded members having over 150
years of cumulative investment experience.
-- Material reductions made to the Company's running costs going
forward, following elevated costs due to corporate actions during
the year.
-- Singer Capital Markets appointed Nomad and Sole Broker.
Noel Lamb, Chairman of Rockwood Strategic plc, commented:
"The portfolio has delivered excellent NAV growth despite a year
of significant corporate change and elevated costs. This
specialist, active strategy now has an aligned, focused Investment
Manager which we believe will continue to deliver for shareholders.
We are exploring a move from the AIM to the main market of the
London Stock Exchange to help further enhance future shareholder
returns."
Richard Staveley, Fund Manager, Harwood Capital LLP said:
"We are tremendously excited about the future for Rockwood
Strategic. The portfolio holdings have significant upside, with
profits predominantly driven by self-help. We have substantial cash
to carefully deploy into an inefficient part of the UK stock
market. The investment opportunity for shareholders is clear: UK
equities are on a discount to Global equities, Micro-cap companies
are on a discount to the market, the portfolio is on a discount to
Micro-cap and Rockwood shares are on a discount to the
portfolio.
We have aligned ourselves with shareholders in this
differentiated, specialist strategy, current market conditions are
rich with opportunity for the experienced, dedicated, value
investor and we look forward to delivering our goal of compounding
shareholders wealth over the long term."
The full version of the RKW 2022 Annual Report and Notice of AGM
has been published and will shortly be available on the Company's
website shortly at www.rockwoodstrategic.co.uk.
For further information, please contact:
Rockwood Strategic plc
Chairman Noel Lamb 020 7264 4444
Harwood Capital LLP Christopher
Investment Manager Hart 020 7640 3200
Singer Capital Markets Advisory James Maxwell
LLP Alex Bond
Nominated Adviser and Broker James Fischer 020 7496 3000
CHAIRMAN'S STATEMENT
Of the many significant dates since we last reported, one stands
out amongst the others. On 25(th) April 2022, 96% of voting
shareholders supported the board's proposed resolution to adopt a
new active investment policy. This ensures the future of the
Company and capitalises on the proven track record. Taking over as
chairman towards the end of January, the Company was in the middle
of a brief phase when shareholders had supported a resolution
proposed by our then largest shareholder and previous manager to
realise its investments and return the proceeds. GBP25 million was
returned to shareholders during this time. GBP10.4m or 300p per
share was returned by means of a B-share scheme and a further
GBP14.6m was returned through a tender offer at 1551.17 pence per
share. The NAV per share (net of these distributions) rose from
1,512.8p to 1613.8p in the reporting period.
Developments during the year sometimes took place at incredible
speed. The composition of the shareholder register has changed
markedly, the board composition has evolved, the investment manager
has changed and the short period during which the Company was in
orderly windup has now ceased. The Company's intention is to grow
net assets materially over the coming years through a combination
of investment performance and new fund raising. The strategy
followed will be similar to that which has successfully driven
significant shareholder value in recent years. It is a strategy
that is clearly differentiated and suited to the long-term capital
that the Company retains. The board is particularly pleased with
the appointment of Harwood Capital as investment manager to deliver
this strategy.
Christopher Mills was lead fund manager during the realisation
phase in the latter part of the year. He is moving into Rockwood's
Investment Advisory Group (IAG) and Richard Staveley, previously
lead fund manager for the strategy, having joined Harwood, has been
re-appointed to this role. With over 150 years of cumulative
investment experience, shareholders will clearly benefit from the
insights the IAG will bring to Richard and the investment team.
The Company's corporate activity during the year led to
significant costs, with professional fees totalling GBP0.67m and
legal fees totalling GBP0.37m. In addition, the termination of the
investment management agreement with Gresham House led to an
acceleration of performance fees which meant manager fees reached
GBP3.36m. This was despite the new manager, Harwood Capital,
charging zero fees for its services from October 2021 to year-end.
Costs associated with the various corporate actions of last year
totalled GBP1.10m, or 2.09% of starting NAV. There was a material
cost to the Company of administering the B-share scheme, Tender and
Strategic Review, not least because of the very significant (over
4,200) number of shareholders, many of whom have fewer than 10
shares. The Company is therefore exploring ways to consolidate the
register for the future. Shareholders are again encouraged to cash
any dividend cheques they retain. The Company will seek to reduce
the statute of limitations to 6 from 12 years so that unclaimed
capital can be re-invested and grow future shareholder value.
Following a thorough review of service providers, the Company
(supported by the actions of Harwood Capital) has significantly
reduced its future corporate running costs. Management fees are
much reduced and will be charged at a fixed fee of GBP120,000 while
assets are below GBP60m from 25(th) April 2022, mitigating a key
concern for many investors about the size of the Company. Growing
the NAV is a clear priority for the Company. This will open up a
wider set of investments in the target part of the UK small cap
market where the manager can purchase significant investee company
stakes.
With effect from April 2021, U.K. tax law changed with the
regard to the use of historic tax losses in reducing taxable
profits, lowering the extent these can be utilised in any one year.
The company previously benefitted from a significant Corporation
Tax shield in the form of over GBP125m of brought forward tax
losses. Following the changes, the maximum tax shield that can be
used in any one financial year is limited to GBP5m. As a result,
there is a Corporation Tax charge for the current year of
approximately GBP1.58m. In addition, unlike an Investment Trust,
the Company remains liable to be charged for Value Added Tax, which
is charged to the Company on all fees and expenses including the
investment management and performance fees. Consequently the
Company paid a further GBP0.46m in VAT on the management fees and
performance fee which it is unable to reclaim. The board wishes to
improve our tax efficiency as fast as possible, hence there will be
a recommendation to shareholders to support a move to the main
market on the London Stock Exchange from AIM and convert to an
Investment Trust. The Company, in this new form, would no longer
incur VAT on fees, including management and performance fees, and
Corporation Tax under the current HMRC rules. The cash payback from
converting is expected to be swift. This move should also widen our
audience of potential investors.
From an investment perspective this Annual Report covers a year
in which only one further investment was made on behalf of
shareholders by the previous manager, Gresham House. The new
manager, Harwood Capital, was not mandated to re-deploy capital
until the new investment policy was approved by shareholders on
25(th) April 2022. This one additional investment has, since
year-end, been sold back to the previous investment manager at
cost. The investment portfolio, as the investment manager's report
explains in more detail, is in fine fettle. Unlike most situations
when an investment manager changes, your company's investments are
known extremely well to the new manager. There will be no need for
any material portfolio restructuring or the costs associated with
it. During the year, significant realised gains were made from the
sale of Augean Plc, RPS Group Plc, National World Plc, Universe
Group Plc and Ted Baker Plc. Offsetting these were losses realised
from the complete disposals of Fulcrum Utility Services Plc and
SpaceandPeople Plc, a company which entered the portfolio in 2015
in a stock-swap from the previous manager.
The investment backdrop for the portfolio has been volatile,
with the COVID-19 Omicron variant induced lockdowns, the inflection
in the interest rate cycle, rising inflation, soaring energy
prices, and the awful developments in Ukraine. Against this
backdrop, I might highlight why the Company's investment strategy
is so attractive. In spite of sustained negative macroeconomic and
geo-political news 'headlines', our portfolio's underlying
companies have been steadily growing shareholder value and having
that value better recognised by the wider stock market. This is a
truly 'active' and focused strategy and performance over the
medium-term will be primarily due to stock-specific factors and
outcomes, not macro-economic ones. Performance in any short period
under review will be due to the individual performances of a
handful of our holdings.
There are many to thank for their help in navigating the Company
through the last year. You know who you are, even if not named
here. In particular, I should mention David Potter, Helen Sinclair
and Charles Berry for their many years of service to the Company
and thank Ken Lever for his on-going support through this
challenging period of stakeholder management.
I would also like to thank Graham Bird for all his work as a
director over the past year. Graham has had an excellent grasp of
the portfolio and been impartial, but will not seek re-election due
to a very full workload of other commitments
The board believes that, until the Company has gained greater
scale, it will not reinstate the dividend policy and instead use
the capital to compound NAV growth. Our shareholders do have a
range of views on this matter. We will continue to listen to them
as well as prospective shareholders and act accordingly.
Rockwood Strategic faces an exciting future. The Company now has
a more appropriately sized cost base, it will ensure tax efficiency
shortly, it has an outstanding and experienced manager to drive
shareholder value, and a differentiated investment strategy which
we expect to deliver attractive returns over the years ahead.
Yours sincerely
Noel Lamb
Chairman
INVESTMENT MANAGER'S REPORT
Highlights
- NAV Total Return performance in the twelve months to 31 March
2022 of 27.5% to 1613.8p/share which compares to the FTSE Small Cap
(ex-ITs) of 3.2% The Total Shareholder Return in this period was
22.2%.
- NAV Total Return performance in the three years to 31 March
2022 of 57.7% to 1613.8p/share which compares to the FTSE Small Cap
(ex-ITs) of 29.7%. The Total Shareholder Return in this period was
50.9%
- Harwood Capital LLP appointed Investment Manager
- GBP25m returned to shareholders by way of B share scheme and tender offer
- New Investment Policy adopted by shareholders post year-end
- Significant realised and unrealised gains across the portfolio
- Costs elevated due to corporate actions
Investments Managers Report
Shareholders were updated at the Interim stage by the previous
Investment Manager. This report encompasses the full year. As
highlighted in the Chairman's statement, Harwood Capital was
appointed in October 2021; however, between the date of appointment
and the end of the financial year in March, the Company was
following a realisation strategy and, as such, investment activity
was restricted to realisations until the vote to adopt a new
Investment Policy after year end was approved.
Market backdrop
We do not believe a detailed historic review of markets during
the period is particularly helpful to shareholders in this
stock-picking strategy. Suffice to say that the second half of the
year was characterised by the Omicron variant of the COVID -- 19
virus, the invasion by Russia of Ukraine, high inflation (not
'transitory' as anticipated by many) leading to an inflection point
in the direction of interest -- rates by Central Banks.
Second-order effects have been supply-chain shortages, rising
energy and commodity prices, falling bond prices, and a
strengthening Dollar. Within equity markets high valuation stocks,
particularly in the technology and early-stage healthcare sectors,
have been very weak.
The monetary policy change is most relevant to this strategy.
For over a decade equity market participants have become overly
used to extremely accommodative monetary policy, which has resulted
in valuation multiple expansion of long -- duration equities, most
commonly 'Growth' shares. The 'boost' to this investment style has
clearly now peaked. Going -- forward, the 'value' factor, a key
component of our investment philosophy, should increasingly
benefit, particularly the cashflow generating companies we
target.
Outlook
We are confident in the upside potential of the portfolio with a
range of good trading updates during recent months. We have
exciting strategic investment theses for all the holdings and
expect our 'engaged' style will lead to the un -- locking of
material shareholder value. To this end we have been intimately
involved with the appointment of new Board members to 5 of our 9
companies in recent months.
We anticipate a pickup in trade buyer acquisition activity and
public-to-private transactions in the coming years for our targeted
part of the UK stock market. If the stock market doesn't fairly
value or provide growth capital to UK listed small companies then
other solutions will emerge.
Due to the 'realisation' phase, the portfolio ended the period
less diversified than targeted. The strategy will continue to have
between 5-10 "core" holdings (9 at year end) which constitute the
majority of net asset value, however it will become less
concentrated in future periods. The rest of the portfolio will be
formed from 15-25 investments with smaller weightings. This part of
the portfolio will thus grow over the next year. These holdings
will meet the investment criteria yet are when the opportunity to
establish a 'core' size investment has not arisen yet, or are more
liquid corporate recovery/'special' situations where the targeted
return objectives can be expected but where a large stake is not
deemed necessary to influence or generate strategic, operational or
management change. We expect the market conditions during the rest
of 2022 to be particularly advantageous for making investments as
on-going turbulence and market weakness provides opportunities for
our medium-term investment time horizon.
Top 5 Investment Portfolio Holdings
Crestchic (previously called Northbridge Industrial Holdings)
15.8% Net Assets
Cost: GBP3.23m, Value as at 31(st) March 2022, GBP6.44m
The company manufactures, sells and hires load-banks (specialist
electrical equipment for power testing) internationally. The
investment was initiated in 2016 and struggled with weak oil &
gas related end markets and a poorly timed acquisition of the
Tasman business. In 2020, following shareholder engagement, there
was Board and management change which has led to a greater focus on
Return on Capital, the sale of the underperforming Tasman division
and a renewed energy into the growth strategy where the company is
very well-placed given trends around electrification. Convertible
bonds, some of which owned by the strategy, were redeemed or
converted, cash generation improved and the maxed-out manufacturing
facility is now being expanded. Nicholas Mills, member of the
Investment Team has joined the Board as Non-Executive Director. We
expect demand to remain robust, and EBITDA to continue to grow with
material scope for a valuation re-rating.
Flowtech Fluidpower 11.7% Net Assets
Cost: GBP2.56m, Value as at 31(st) March 2022, GBP4.75m
The company primarily distributes Fluidpower components to a
diverse range of customers with a strong bias to parts used for
repair or maintenance reasons. The investment was initiated in 2020
since when there has been Board evolution including the appointment
of the highly regarded Roger McDowell as Chairman (Roger was
previously a NED at Augean). The company has been addressing the
lack of integration amongst its various acquisitions, driving scale
and synergies and has been accelerating its on-line capabilities.
The business is producing sub-par operating margins and has a
stock-turn well below that targeted by management and achieved by
peers. We expect this to improve and drive returns and
profitability.
Centaur Media 9.8% Net Assets
Cost: GBP3.44m, Value as at 31(st) March 2022, GBP4.004m
The company has two divisions providing business information,
consultancy, premium media and events content in the Marketing and
Legal sectors. The legal business is focused on the market leading
publication The Lawyer whilst the marketing activities span a
number of high quality brands such as Econsultancy, Influencer
Intelligence, Marketing Week and Festival of Marketing. The
business has also developed a very fast growing e-learning solution
called MiniMBA. The holding was made in 2017 at 50p, however in
late 2019-20 the investment was quadrupled in size at an average
price of 31p.The company has gone through extensive restructuring
in the last few years and disposed of a number of other divisions,
converting activities from print to digital and increasing
subscription content. Management have therefore been improving
profitability markedly, with 23% Ebitda margins targeted for 2023.
The business has significant cash balances. Following the period
end Richard Staveley, member of the Investment Team, joined the
Board as a Non-Executive Director
Pressure Technologies 9.8% Net Assets
Cost: GBP3.22m, Value as at 31(st) March 2022, GBP3.99m
The company has two divisions; the industry leading Chesterfield
Special Cylinders which manufactures and services a range of
end-industries and customers including the Ministry of Defence and
the Precision Machined Components division, which manufactures high
specification parts primarily for the oil & gas industry. The
investment was initiated in early 2019, however cash generation has
not been as expected and in late 2020 further discounted equity
issuance was needed to support the company's ambitions. Similar to
Northbridge (above) we see strategic sense in focusing the company
onto Chesterfield. The PMC division should benefit from an improved
oil & gas pricing environment resulting in higher activity
levels. Whilst Chesterfield has significant orders in defence and
elsewhere, there is genuine excitement in the company about the
opportunities in the emergent Hydrogen economy. The business has
the quality and specialist credentials and the end-market for
Hydrogen storage, using their cylinders, could be huge, potentially
becoming a key strategic supplier to the industry. This potential
is not reflected in the share valuation.
M&C Saatchi 8.0% Net Assets
Cost: GBP1.72m, Value as at 31(st) March 2022, GBP3.24m
The company is one or the world's best known global advertising
agencies with clients stretching from governments to supra-national
organisations (e.g. the World Health Organisation) to the world's
leading brands (e.g. MacDonalds) and newest successes (e.g.
TikTok). In more recent times the company has been in turmoil with
the original Founders leaving, accounting errors and a poorly
structured incentive scheme. The investment was initiated in late
2020 as management and Board changes started to take effect. The
balance sheet has net cash and a new strategy to grow the business
and improve margins has been unveiled. During COVID the business
had no material client losses indicating the strength of their
relationships. More recently there has been a seemingly
opportunistic takeover approach by Board Director Vin Murria. We
believe the company has considerable further recovery potential and
is grossly undervalued.
Portfolio Activity
In the first half of the year, the former manager made only one
new investment, namely the Hannover Co-Invest S.C.A. SICAV-RAIF Sub
Fund 1. This was a Private Equity Fund, which charges its own set
of fees to its investors and was focused on one investment in a
Scandinavian technology business. Following the period end, this
investment was sold back to the former manager at cost. In the
first half the most important transaction was due to the agreed
takeover bid for Augean, the largest portfolio investment,
resulting in a 101.2% IRR (9x money multiple, a gain of GBP22m) a
significant realised gain for shareholders, proceeds funding the
majority of the subsequent capital return. We highlight that
Harwood managed strategies were the largest shareholders in Augean
and that Christopher Mills was a Board Director. A 130.7% IRR was
also generated from the sale of Ted Baker (1.9x money
multiple).
During the realisation phase a number of investments were sold
as detailed below.
RPS Group - realised IRR 148.9% (Gain GBP4.2m)
This investment was Initiated in September 2020, when we
supported a capital raise to strengthen the balance sheet, having
identified a recovery was building under a new management and
Board. This global specialist environmental consultancy and
planning business has improved its acquisition discipline, and is
building margins to match peers. It's growth is accelerating due to
the tailwinds of urbanisation and sustainability.
Universe Group - realised IRR 24.6% (Gain GBP3.0m)
Shares were first purchased at 11.5p in 2017. However, in a
perfect example of the inefficiency of small cap markets, we were
able to purchase significantly more shares in early 2021 at 3.25p,
further reducing our average cost of investment materially. Later
that year a successful cash takeover was launched for this niche
software and services business at 12p, delivering an attractive
IRR.
National World - realised IRR 201.1% (Gain GBP2.2m)
Purchased in January 2021, we backed the highly experienced
management team to purchase the old Johnston Press regional press
titles, such as the Yorkshire Post and The Scotsman from a
distressed situation and therefore at a very low valuation. It came
with no pension fund liabilities and a clean balance sheet. The
desire for local news remains and the journey to digital delivery
on-going. We expect the management to continue to build scale and
drive the transformation of the assets.
SpaceandPeople - realised IRR -20.5% (Loss GBP1.2m)
The shares in this business were originally swapped into the
strategy in 2015 at 66p in exchange for the issuance of shares in
Gresham House Strategic to the former manager. Sales have declined
since then and the business, which relies on promotional activity
within shopping centres, has struggled to generate profits and
positive cashflow and was hard hit by COVID-19, leading to
increasing leverage. Sub-scale with elevated risk and slim chance
of a corporate solution we exited at 7.25p.
Fulcrum Utility Services - realised IRR -34.7% (Loss
GBP0.7m)
Fulcrum has been a disappointing investment as operational
execution has not recovered cash generation as quickly as expected.
The former manager purchased additional shares in the first half
the year, however in November the company announced a material
GBP19.5 million fund raise and given the Investment Policy at the
time and time horizon for additional investment, the holding was
exited.
Strategy Update
Following the post year end approval by shareholders of the new
investment policy, we remind shareholders of the investment
opportunity Rockwood Strategic is targeting, the investment
philosophy we use and the process for putting it into action.
Investment Opportunity
- Structurally inefficient part of UK market creating opportunities in all markets conditions
- Significant universe of shares from which to select investments from
- 'Value' & 'Recovery' investor mindset differentiated from many investors
- Active engagement with investee companies drives shareholder value
- Material due diligence de-risks our decision making and creates informational advantage
- Relationships and networks unlock opportunities, find 'hidden' value, catalyses change
We believe there is a structural investment opportunity for
enhanced returns in small cap equities. This has been proven across
geographies, over history and is clearly evident in the UK as
demonstrated in the research of Dimson & Marsh and the
long-term performance of both the Numis Small Companies Index
(Bottom 10% of the UK stock-market, re-calculated annually, back to
1955) and the Numis 1000 Index (Smallest 1000 companies).
The causes of this long-term outperformance are believed to be
due to the premium received for faster than average growth
("Elephants don't gallop"), an illiquidity premium and a risk
premium for aspects such as immaturity and reduced funding
options.
We expect an additional return through the selection of better
than average small cap stocks through the application of a 'value'
philosophy and the avoidance of excessive risk through the
application of company research and due diligence.
Stock market dynamics have enhanced the opportunity within this
universe of nearly 1000 companies. A reduction in company research
coverage in recent years (due to a combination of collapsed
commission fees and MIFID2 regulations) has occurred and
institutional interest has reduced, due to higher market
concentration within a small number of large institutions, whose
huge scale prohibits them from considering a large part of the
universe due to liquidity requirements. As a result, we believe
there is a structural opportunity to find outstanding investment
opportunities in an inefficient market place, with over-looked and
misunderstood companies, whilst still benefiting from the
established 'small cap effect'. (Fama & French '93)
In the near term the opportunity is further enhanced due to the
out of favour status relative to history of the UK stock market
relative to global (mainly the US) stock markets. The UK discount
started widening following the calling of the Brexit Referendum in
2016 and has since increased with investor flows chasing the
momentum of US technology mega-caps. Relative performance has,
notably, recently finally started to invert. Timing is
auspicious.
Investment Philosophy
- 'Value' investor mindset and free cash flow focused
- Seek proven businesses, identifiable assets
- Establish mean reversion potential (profitability, balance sheet and valuation re-rating)
- Identify catalysts for change
- Develop exit thesis to mitigate illiquidity risks (3-5-year time horizon)
- Engage with all stake-holders to de-risk and add value
The philosophy of an investor is what they believe drives share
prices and outperformance over the long-term. We believe that
investment returns are generated by purchasing a share for less
than the intrinsic worth of the company, (a 'value' philosophy),
enhanced by identifying companies that can increase their
fundamental intrinsic worth over time, thus avoiding 'value traps'.
We seek to optimise the IRR by identifying 'catalysts' which will
un-lock the share's discount to the business's worth or accelerate
value creation. For 'core' investments we ourselves may be the
'catalyst' through the provision of capital, insight and
personnel.
We are medium-long term investors with a typical time horizon of
3-5 years, as this period allows for intrinsic worth to be
recognised more widely and fundamental improvements or changes to
have a positive effect. We stick to what we believe we understand,
avoid unproven business models and are adverse to high
indebtedness. We believe that a company's intrinsic worth is driven
by its future cashflows discounted back to today, however we do not
make long-term forecasts and seek businesses with identifiable
near-term cash flow generation to justify our assumptions on
upside. Our financial analysis is focused on cash flow generation
and returns on capital.
The fast-changing nature of the world economy and technology
means any confidence in growth forecasts many years hence for
individual companies are fraught with risk. We therefore focus the
majority of capital into 'recovery', turnaround' or
'transformation' opportunities, where the past can be a true guide
to the potential future. There are businesses that have historic
evidence of cash generation yet have fallen on difficult times and
have depressed profitability typically as a result of strategic
mis-steps (poor M&A), bad management (execution) or a lack of
adaption to changing end-markets or circumstances (inertia). These
special situations of depressed returns are usually accompanied by
a significant de-rating and low valuation. Many of them have
underlying, or the prospect of, above-average growth rates, however
it is the normalisation of returns that drives improved intrinsic
value.
Often with new management and an evolving Board, key issues can
be identified, a strategic plan agreed and, if executed well, can
lead to a mean-reversion and recovery of returns. This in turn
leads to a re-rating, the combination of which drives an
outperformance of markets. We seek therefore to exploit 'fear' and
'negativity' at a company level where we believe a 'turnaround' is
possible and structural change has not permanently damaged
prospects.
We believe in the highest standards of sensible corporate
governance, noting that small company circumstances don't always
fit with generic rules for all companies. We actively target large
stakes in companies to ensure a 'voice' and 'influence', and
through the strength of our arguments seek stakeholder support. Our
philosophy is therefore heavily 'engaged' which requires much
higher than average contact with executive management, boards and
advisors. The purpose of this 'engagement' is to build a deep
understanding of the company's dynamics, a positive relationship
with those appointed to run and oversee the company and ensure
their focus is on the maximisation of shareholder value.
Investment Process
- Ideas sourced from network and quantitative screening
- Investment Team due diligence results in 'Springboard' investment (c.2-4%) or expanded DD
- Expanded due diligence circulated to and enhanced by IAG
- 'Core' investments (initial 5-15% NAV), typically a block trade or company re-financing
- Active management involves Stakeholder engagement, Results/Industry and thesis monitoring
- Exit liquidity through corporate activity or secondary market demand
The process by which the above philosophy is put into effect is
unashamedly simple. It is focused on establishing a proper
understand of a potential investment's business fundamentals, a
clear view of intrinsic worth and the catalysts for change and
value realisation. There are four stages:
1. Idea identification is driven both organically and
systematically. We generate ideas through our interest in markets,
innate curiosity about companies and incentive to find outstanding
investment opportunities. We have large, established, arguably
unrivalled, networks across the UK small cap universe. This is
bolstered by the networks of the IAG. In addition, we
quantitatively screen the small cap universe for companies with
depressed valuations and profitability relative to history. These
ideas inevitably lead to an initial company meeting (we often have
met them historically), preliminary analysis and the development of
a simple potential investment thesis.
2. Due diligence is then commenced on those companies where the
initial thesis and meeting confirm an opportunity may exist. The
amount is significantly greater for potential 'core' investments.
Huge amounts of information are now available to investors. The key
is having the skill to know what is important, the ability to
analyse and enhance our understanding of risks and specific drivers
of a company's intrinsic value and the time and dedication to do
the work required. A focused portfolio significantly increases the
time we have relative to other competitors, where typical small cap
portfolios have 60 to >100 holdings. During the process for
potential 'core' investments, the Investment Advisory Group (IAG)
is contacted for their insight, network opportunities and initial
concerns. This is then incorporated into the diligence process.
Prior to entering into a 'core' position a thorough investment
memorandum is circulated to the IAG and Board. We would seek
executive management buy-in (if no change is needed) to the
strategic and operational changes required to drive value and where
appropriate will seek Board representation. For non-'core'
investments a simpler investment memorandum is documented.
3. Execution: The manager has full responsibility for investment
decisions which will have been discussed within the Investment Team
and, for 'core', the IAG members. For 'core' investments a 'block'
stake or company financing event is usually needed which will
involve liaison with company advisers. All orders are managed by
Harwood's highly experienced in-house dealer. Regularly, the
opportunity for a 'core' position is not immediately available and
thus a 'springboard' position will be taken if the upside is clear
and patience is required to scale up. "Search the parks in the
world's cities, there are no statues to committees." Barton
Biggs
4. Post investment, holdings are monitored through on-going
financial results analysis, meetings with management and board
members, input from industry, sector and company analysts or
experts. For 'core' investments, a summary 'annual review' will be
circulated to the IAG and board, including an updated target
valuation/price. For all investments 'exit' theses are established
at the outset. For 'core' investments this will often require high
levels of board engagement, communication with other shareholders
of our views, and a pro-active approach, leading to a sale of the
business and a 'control' premium. Secondary market sales are also
possible as other investors re-consider a rehabilitated company,
usually with business and share price momentum.
The foundations for Rockwood Strategic's long-term success:
- A 'value' investing approach with an 'ownership' mentality and
a desire to buy at a significant discount to intrinsic worth,
establishing a 'margin of safety' (Security Analysis by Benjamin
Graham)
- 'Long term Capital' matching the best timeframe for investment success
- Patience in a market usually characterised by impatience
- 'Skin in the game' (Nassim Nicholas Taleb) evidenced by the
manager's fee structure and equity ownership
- Low overheads and a simple organisation structure, keeping
costs low and decision-making nimble
- Tax efficiency
- Clear communications, externally and internally
- The premium captured for illiquidity in the inefficient
publicly listed UK small companies' arena
- Financial strength through the cycle, providing opportunities when others are distressed
- Experience and complementary capabilities of the team
We have invested our own money in the shares of Rockwood
Strategic and have a management contract which rewards success. We
see a real opportunity to compound wealth for all shareholders over
the long-term and a vibrant, inefficient stock market full of
opportunities to deliver our target returns.
Statement of Comprehensive Income for the year ended 31 March
2022
Year ended Year ended
31-Mar-22 31-Mar-21
Notes GBP'000 GBP'000
----------------------------------------- ------ ----------- -----------------
Gains on investments 8 20,007 19,837
------------------------------------------ ------ ----------- -----------------
Revenue
Bank interest income 1 2
Loan note interest income 563 753
Portfolio dividend income 99 -
Other income - 1
------------------------------------------ ------ ----------- -----------------
663 756
Administrative expenses
Directors fees and other staff costs 3 (173) (148)
Performance fee 11 (2,772) (2,294)
Other costs 4 (2,302) (1,539)
------------------------------------------ ------ ----------- -----------------
Total administrative expenses (5,247) (3,981)
------------------------------------------ ------ ----------- -----------------
Profit before taxation 15,423 16,612
Taxation 5 (1,580) -
Profit for the financial year 13,843 16,612
------------------------------------------ ------ ----------- -----------------
Attributable to:
- Equity shareholders of the Company 13,843 16,612
Basic and Diluted earnings per ordinary
share for profit 6 428.76p 477.24p
from continuing operations and for
profit for the year (pence)
------------------------------------------ ------ ----------- -----------------
There are no components of other comprehensive income for the
current year (2021: None), all income arose from continuing
operations.
Statement of Financial Position as at 31 March 2022
31-Mar-22 31-Mar-21
Notes GBP'000 GBP'000
Non-current assets
Investments at fair value through
profit or loss 8 31,609 53,888
-------------------------------------- -------- ------------- -----------
31,609 53,888
Current assets
Cash and cash equivalents 10,507 1,605
Trade and other receivables 9 1,019 99
-------------------------------------- -------- ------------- -----------
11,526 1,704
-------------------------------------- -------- ------------- -----------
Total assets 43,135 55,592
-------------------------------------- -------- ------------- -----------
Current liabilities
Trade and other payables 10 (547) (641)
Tax liability (1,580) -
Performance fee payable 11 - (2,294)
-------------------------------------- -------- ------------- -----------
Total liabilities (2,127) (2,935)
Net current assets/(liabilities) 9,399 (1,231)
-------------------------------------- -------- ------------- -----------
Net assets 41,008 52,657
-------------------------------------- -------- ------------- -----------
Equity
Issued capital 12 1,281 1,751
Share premium 13,063 13,063
Revenue reserve 14 15,320 26,969
Capital redemption reserve 11,344 10,874
-------------------------------------- -------- ------------- -----------
Total equity 41,008 52,657
-------------------------------------- -------- ---- ------- -----------
The NAV per share on 31 March 2022 is 1,613.8 pence (2021:
1,512.8 pence)
These financial statements were approved and authorised for
issue by the Board of Directors on 22 June 2022. Signed on behalf
of the Board of Directors.
Noel Lamb Kenneth Lever
Chairman Director
Statement of Cash Flows for the year ended 31 March 2022
Year ended Year ended
31-Mar-22 31-Mar-21
Notes GBP'000 GBP'000
----------------------------------------------------------------------- ------- ----------- -----------
Cash flow from operating activities
Cash flow from operations a (7,306) (783)
Portfolio dividend income 99 -
----------------------------------------------------------------------- ------- ----------- -----------
Net cash outflow from operating activities (7,207) (783)
Cash flows from investing activities
Purchase of investments 8-- (1,457) (14,943)
Sale of investments 8-- 43,122 11,334
----------------------------------------------------------------------- ------- ----------- -----------
Net cash inflow/(outflow) from investing activities 41,665 (3,609)
Cash flows from financing activities
Dividends paid 7 (535) (867)
Return of Capital B Share Scheme and Tender Offer (25,021) -
----------------------------------------------------------------------- ------- ----------- -----------
Net cash outflow from financing activities (25,556) (867)
Change in cash and cash equivalents 8,902 (5,259)
Opening cash and cash equivalents 1,605 6,864
----------------------------------------------------------------------- ------- ----------- -----------
Closing cash and cash equivalents 10,507 1,605
----------------------------------------------------------------------- ------- ----------- -----------
Note
a) Reconciliation of profit for the year to net cash outflow from operations
GBP'000 GBP'000
----------------------------------------------------------------------- ------- ----------- -----------
Profit for the year 2 13,843 16,612
Rolled up interest (224) (345)
Gains on investments 8 (20,007) (19,837)
Portfolio dividend income (99) -
Adjustment for accrued interest on redemption/conversion (16) -
----------------------------------------------------------------------- ------- ----------- -----------
Operating loss (6,503) (3,570)
Decrease in trade and other receivables (65) (33)
(Decrease)/Increase in trade and other payables (738) 2,820
----------------------------------------------------------------------- ------- ----------- -----------
Net cash outflow from operations (7,306) (783)
----------------------------------------------------------------------- ------- ----------- -----------
--The purchase and sale of financial investments are the cash
paid or received during the year and exclude unsettled investments
as at 31 March 2022.
Statement of Changes in Equity for the year ended 31 March
2022
B shares D shares Ordinary Share Revenue Capital Total
Share Premium Reserve Redemption Equity
Capital Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------- --------- --------- --------- --------- ----------- ---------
Balance at 31 March
2020 - 10 1,741 13,063 11,224 10,874 36,912
-------------------------------- --------- --------- --------- --------- --------- ----------- ---------
Profit and total comprehensive
income for the year - - - - 16,612 - 16,612
-------------------------------- --------- --------- --------- --------- --------- ----------- ---------
Total profit and
comprehensive
income for the year - 10 1,741 13,063 27,836 10,874 53,524
-------------------------------- --------- --------- --------- --------- --------- ----------- ---------
Contributions by
and distributions
to
owners
Share buy back - - - - - - -
Dividends paid - - - - (867) - (867)
-------------------------------- --------- --------- --------- --------- --------- ----------- ---------
Balance at 31 March
2021 - 10 1,741 13,063 26,969 10,874 52,657
-------------------------------- --------- --------- --------- --------- --------- ----------- ---------
Profit and total comprehensive
income for the year - - - - 13,843 - 13,843
-------------------------------- --------- --------- --------- --------- --------- ----------- ---------
Total profit and
comprehensive
income for the year - 10 1,741 13,063 40,812 10,874 66,500
Contributions by
and distributions
to owners
Share buy back - - (470) - 470 -
Dividends paid - - - - (535) - (535)
Return of unclaimed
special dividends
and capital payments - - - - 64 - 64
Tender Offer - - - - (14,578) - (14,578)
Issue of B Shares 10,443 - - (10,443) - - -
Redemption of B Shares (10,443) - - 10,443 (10,443) - (10,443)
Balance at 31 March
2022 - 10 1,271 13,063 15,320 11,344 41,008
-------------------------------- --------- --------- --------- --------- --------- ----------- ---------
Notes to the Financial Statements
1 Basis of preparation and significant accounting policies
Rockwood Strategic Plc (the Company) is a company incorporated
in the UK and registered in England and Wales (registration number:
03813450). The Company was formerly named Gresham House Strategic
Plc but took the opportunity to change the Articles of Association
at a General Meeting held on 15 December 2021 to permit the
Directors to change the company's name by a resolution of the
Board. Accordingly, the name was changed to Rockwood Realisation
Plc on 23 December 2021. The company subsequently changed its name
to Rockwood Strategic Plc on 4 May 2022 (Note 16). The accounting
policies applied are consistent with the prior year.
Basis of preparation
These financial statements for year ended 31 March 2022 have
been prepared in accordance with UK adopted International
Accounting Standards.
The financial statements are prepared on a historical cost basis
except for the revaluation of certain financial instruments stated
at fair value. Standards and interpretations applied for the first
time have had no material impact on these financial statements.
The Company's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Directors' Report and Investment Manager's
Report. The key risks facing the business and management's policy
and practices to manage these are further discussed in note 13.
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.
A formal decision was taken for a Managed Wind-Down of the
Company and associated adoption of the New Investment Policy on
15
December 2021. Subsequently, Gresham House plc (Gresham), the
parent company of its former investment manager sold its entire
c.23.7% interest (being 602,866 ordinary shares) in the Company to
a number of institutional investors, including the current
investment manager, Harwood Capital LLP (Harwood). Harwood now owns
28.9% of the Company's issued share capital.
Harwood indicated to the Board that it believes that the
investing policy does not operate in the best interests of the
Company's shareholders and should be reviewed. The Board therefore
engaged with Harwood, in its capacity as both the Company's
investment manager and largest shareholder, to consider whether a
change of investing policy is warranted.
The Board convened a general meeting for Shareholders to vote on
a proposal to change its investment strategy from its current
realisation strategy to instead enable the Company to continue as a
going concern and to make new investments (the Proposal).
Shareholders voted in favour of the resolution to re-start
active investing in U.K. small companies at a general meeting on 25
April 2022.
The Company is in a net asset position of GBP41.0 million (2021:
GBP52.7 million) and approximately 91% of the Company's portfolio
of Investments consist listed equities which, should the need
arise, can be liquidated to settle liabilities. There are no other
contractual obligations other than those already in existence and
which are predictable.
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 will be able to settle
their liabilities as they fall due and therefore is a going concern
and the financial statements are prepared on this basis.
Notes to the Financial Statements (continued)
1 Basis of preparation and significant accounting policies
(continued)
Financial instruments:
Trade debtors and creditors
Trade debtors and creditors are held at amortised cost and are
accounted for at transaction value when an asset or liability is
incurred as these are short term in nature.
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
that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.
Investments at fair value through profit or loss
Investments are included at valuation on the following
basis:
(a) Quoted investments are recognised on trading date and valued
at the closing bid price at the year end.
(b) Unquoted Investments are valued according to the to the
Directors' best estimate of the Company's share of that
investment's value. This value is calculated in accordance with the
International Private Equity and Venture Capital Valuation
Guidelines (the IPEV of December 2018 and the special valuation
guidance issued in March 2020) and industry norms which include
calculations based on appropriate earnings or sales multiples.
The core principles of the IPEV guidelines are:
-- Fair Value should be estimated at each Measurement Date (each
time Fair Value based Net Asset Value (NAV) is reported to
investors (LPs)).
-- The Price of a Recent Investment (if deemed Fair Value)
should be used to calibrate against the alternative valuation
methodologies.
-- Calibration is required by accounting standards.
-- Market Participant perspectives should be used to estimate
Fair Value at each Measurement Date.
After considering individual facts and circumstances and
applying these Guidelines, it is possible that Fair Value at a
subsequent Measurement Date is the same as Fair Value as at a prior
Measurement Date. This means that Fair Value may be equal to the
Price of a Recent Investment; however, the Price of a Recent
Investment is not automatically deemed to be Fair Value.
For measurement purposes, investments, including equity, loan
and similar instruments, are designated at fair value through
profit and loss, and are valued in compliance with IFRS 9
'Financial Instruments', IFRS 13 'Fair Value Measurement' and the
IPEV Guidelines as recommended by the British Venture Capital
Association.
The Directors consider that a substantial measure of the
performance of the Company is assessed through the capital gains
and losses arising from the investment activity of the Company.
Gains and losses on the realisation of investments are
recognised in the statement of comprehensive income for the year
and taken to retained earnings. The difference between the market
value of financial investments and book value to the Company is
shown as a gain or loss for the year and taken to the statement of
comprehensive income.
Revenue
Dividends receivable on unquoted equity shares are brought into
account when the Company's right to receive payment is established
and there is no reasonable doubt that payment will be received.
Dividends receivable on quoted equity shares are brought into
account when the right to receive payment is established and the
amount of the dividend can be measured reliably.
Interest receivable is included on an effective interest rate
basis.
Notes to the Financial Statements (continued)
1 Basis of preparation and significant accounting policies
(continued)
Taxation
The tax expense included in the statement of comprehensive
income comprises of current and deferred tax. Current tax is the
expected tax payable based on the taxable profit for the year,
using tax rates that have been enacted or substantially enacted by
the reporting date. Deferred tax is recognised on differences
between the carrying amounts of assets and liabilities in the
accounts and the corresponding tax bases used in the computation of
taxable profit and are accounted for using the statement of
financial position liability method.
Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial
recognition of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit. The
carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset is realised.
Deferred tax is charged or credited in the statement of
comprehensive income, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also
recognised in equity.
Performance fee
The Board terminated the Investment Management Agreement with
Gresham House Management Ltd (GHAM) on 11 October 2021.
Under the terms of the restated Investment Management Agreement
(7 April 2022), the Company will pay the Investment Manager a
performance fee equal to 10 per cent. of outperformance over the
higher of a 6 per cent. per annum total return hurdle and the high
watermark. The 6 per cent. per annum compounds weekly and the
performance fee is calculated annually. Provided that the Company's
average NAV is at or below GBP100 million, performance fees in any
performance fee period are capped at 3 per cent. of the Company's
average NAV for the relevant performance fee period. In such
instance, performance fees in excess of the 3 per cent. cap will
not be paid and will instead be deferred into the next performance
fee period. If the average NAV exceeds GBP100 million, the
performance fee shall be further limited such that the combined
investment management and performance fees shall not exceed 3 per
cent. 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.
Harwood Capital LLP (Harwood) was appointed as the new
Alternative Investment Fund Manager on 10 October 2021. Based on
the new agreement with Harwood, a performance fee is not payable by
the Company for the period from 10 October 2021 to 31 March
2022.
Foreign exchange
Transactions denominated in foreign currencies are translated
into the functional currency at the rate ruling at the dates of the
transactions. Monetary assets and liabilities denominated in
foreign currencies at the reporting date are retranslated at the
rates ruling at that date. These translation differences are
recognised in the statement of comprehensive income.
Critical accounting judgements and key sources of estimation
uncertainty
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.
The majority of the portfolio is valued on bid price which
factors in the anticipated impact of climate and ESG related issues
on the portfolio companies, therefore these are incorporated into
the valuations.
Management believes that the underlying assumptions are
appropriate and that the Company's financial statements are fairly
presented.
Notes to the Financial Statements (continued)
1 Basis of preparation and significant accounting policies
(continued)
Segmental analysis
There is only one operating segment of the business - investment
activities. The performance measure of investment activities
considered by the Board is profitability and is disclosed on the
face of the statement of comprehensive income.
New Standards issued but not yet effective
Standards and amendments will be effective for annual reporting
periods beginning on or after 1 January 2023 and which have not
been early-adopted by the Company include:
-- IAS 1 and IFRS Practice Statement 2 -Disclosure of Accounting Policies
-- IAS 8 -Definition of Accounting Estimates
-- IAS 12 - Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction
These standards and amendments are not expected to have a
significant impact on the financial statements in the period of
initial application and therefore detailed disclosures have not
been provided.
2 Statement of comprehensive income
The Company's profit for the year was GBP13.843 million (2021:
profit of GBP16.612 million).
The Company has recognised gains on investments through the
statement of comprehensive income of GBP20.007 million (2021:
income of GBP19.837 million).
3 Information regarding Directors and employees
Year ended Year ended
31 March 31 March
2022 2021
GBP'000 GBP'000
------------------------------------------------------------------------ ------------------ -------------
Directors' remuneration summary
Basic salaries 161 138
Social security costs 12 10
173 148
------------------------------------------------------------------------ ------------------ -------------
Year ended 31 March Year ended 31 March
2022 2021
------------------------------------ -----------------------------------------
Social Social
Security Security
Emoluments costs Total Emoluments costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------ ----------- --------- --------------- ----------- -----------
Analysis of Directors'
remuneration
C Berry (Resigned on
22 November 2021) 25.9 - 25.9 27.5 - 27.5
D Potter (Resigned on
11 June 2021) 24.4 - 24.4 55.0 - 55.0
H Sinclair (Resigned
on 5 November 2021) 41.3 - 41.3 27.5 - 27.5
K Lever 27.5 - 27.5 27.5 - 27.5
G Bird (Appointed 10
June 2021) 22.2 - 22.2 - - -
S Pyper (Resigned on
31 March 2022) 11.4 - 11.4 - - -
N Lamb (Appointed on
20 January 2022) 8.3 - 8.3 - - -
Social security costs - 12 12 - 10 10
161.0 12 173.0 137.5 10 147.5
------------------------ ------------ ----------- --------- --------------- ----------- -----------
The Company has no employees.
Notes to the Financial Statements (continued)
3 Information regarding Directors and employees (continued)
Year ended Year ended
31 March 31 March
2022 2021
No. No.
--------------------------------------- ---------------------- --------------------
Directors
Investment and related administration 3 4
3 4
--------------------------------------- ---------------------- --------------------
As at 31 March 2022, the Board comprises 1 Chairman and 2
Non-executive Directors (2021: 1 Chairman and 3 Non-executive
Directors).
4 Other costs
Profit for the year has been derived after taking the following
items into account:
Year ended Year ended
31 March 31 March
2022 2021
GBP'000 GBP'000
------------------------------------------------------------------------- ----------- -----------
Auditors remuneration
Fees payable to the current auditor for the
audit of the Company's annual financial
statements 40 34
Fees payable to the Company's current auditor
and its associates for other services:
Fees for agreed upon procedures in relation to financial information 10 -
Fees for agreed upon procedures for performance fee 5 -
Fees paid for review of interim report 3 -
Other services relating to taxation 5 10
Under provision of tax fee 3 -
Recharge cost 1 -
Analysis of other costs:
Professional fees * 1,539 534
Management fee 593 832
Other general expenses 103 129
2,302 1,539
------------------------------------------------------------------------- ----------- -----------
* The company's corporate activity during the year led to
significant costs, with professional fees totalling GBP0.67m and
legal fees totalling GBP0.37m.
Notes to the Financial Statements (continued)
5 Taxation
Year ended Year ended
31 March 31 March
2022 2021
GBP'000 GBP'000
--------------------------------------------- ----------- -----------
UK corporation tax
Corporation tax liability at 19% (2021: 19%) (1,580) -
--------------------------------------------- ----------- -----------
(1,580) -
Current tax (1,580) -
Deferred tax - -
Tax on profit from ordinary activities (1,580) -
--------------------------------------------- ----------- -----------
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: 19%
(2021: 19%).
The differences are explained below:
Year ended Year ended
31 March 31 March
2022 2021
GBP'000 GBP'000
--------------------------------------- ----------- -----------
Current tax reconciliation
Profit before taxation 15,423 16,612
--------------------------------------- ----------- -----------
Current tax charge at 19% (2021: 19%) 2,930 3,156
Effects of:
Non-taxable income (553) (3,396)
Non-deductible expenditure 21 -
Chargeable gains (27) -
Deferred tax not recognised (791) 240
Tax on profit on ordinary activities (1,580) -
--------------------------------------- ----------- -----------
Deferred tax
There remains an unrecognised deferred tax asset in respect of
tax losses and other temporary differences. The unrecognised
deferred tax asset is GBP34 million (2021: GBP29 million) for the
Company. The increase in the balance for unrecognised deferred tax
is due to the rate of corporation tax being raised to 25% with
effect from 1 April 2023. The assessed loss on which no deferred
tax has been recognised amounts to GBP136 million (2021: GBP152
million).
An estimated deferred tax liability on the unrealised gains in
the portfolio at year end is de-minimus (approximately GBP29k) and
has therefore not been recognised as a liability due to the
likelihood that brought forward losses in the future will offset
this amount.
Year ended Year ended
31 March 31 March
2022 2021
GBP'000 GBP'000
--------------------------- ----------- ----------------
Company deferred tax asset
Balance at 1 April - -
Movement in the year - -
Balance at 31 March - -
--------------------------- ----------- ----------------
The movement in the year is taken to the statement of
comprehensive income.
Notes to the Financial Statements (continued)
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 Year ended
31 March 31 March
2022 2021
GBP'000 GBP'000
----------------------------------------------- ----------------------- -----------------------
Earnings
Profit for the year 13,843 16,612
----------------------------------------------- ----------------------- -----------------------
Number of shares ('000)
Weighted average number of ordinary shares in
issue for basic EPS 3,229 3,481
----------------------------------------------- ----------------------- -----------------------
Weighted average number of ordinary shares in
issue for diluted EPS 3,229 3,481
----------------------------------------------- ----------------------- -----------------------
Earnings per share
Basic EPS 428.76p 477.24p
----------------------------------------------- ----------------------- -----------------------
Diluted EPS 428.76p 477.24p
----------------------------------------------- ----------------------- -----------------------
As at 31 March 2022, the total number of shares in issue was
2,541,046 (2021: 3,480,884). During the year, the Company cancelled
nil Treasury shares (2021: nil). A Tender Offer was made during the
year and 939,838 shares were bought back by the Company (2021:
nil). There are no share options outstanding at the end of the
year.
7 Dividends
The Company paid GBP534,664 in dividends to shareholders in the
year ended 31 March 2022 (2021: GBP866,740). Unclaimed historic
dividends amounting to GBP63,834 was reclassified to revenue
reserve during the year (2021: nil).
8 Investments at fair value through profit or loss
Year ended 31 March 2022
---------------------------------------------------------------
Transfer
Value between Value
at levels at
1 April Disposal Gain 31 March
2021 Additions proceeds on disposals Revaluation 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- ---------- ---------- -------------- ------------ --------- ----------
Investments in
quoted companies
(Level 1) 47,565 596 (41,173) 15,667 4,298 1,739 28,692
Other unquoted
investments (Level
3) 6,323 1,079 (2,788) - 42 (1,739) 2,917
---------------------- --------- ---------- ---------- -------------- ------------ --------- ----------
Total investments
at fair value
through profit
or loss 53,888 1,675 (43,961) 15,667 4,340 - 31,609
---------------------- --------- ---------- ---------- -------------- ------------ --------- ----------
Year ended 31 March 2021
---------------------------------------------------------------
Value at Transfer Value at
1 April Disposal Gain between 31 March
2020 Additions proceeds on disposals Revaluation levels 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- ---------- ---------- -------------- ------------ --------- ----------
Investments in
quoted companies
(Level 1) 23,558 13,680 (8,246) 1,165 17,408 - 47,565
Other unquoted
investments (Level
3) 6,402 1,545 (2,888) 796 468 - 6,323
---------------------- --------- ---------- ---------- -------------- ------------ --------- ----------
Total investments
at fair value
through profit
or loss 29,960 15,225 (11,134) 1,961 17,876 - 53,888
---------------------- --------- ---------- ---------- -------------- ------------ --------- ----------
Notes to the Financial Statements (continued)
8 Investments at fair value through profit or loss
(continued)
For the year ended 31 March 2021, there was a transfer from
Level 3 to Level 1 of GBP389,886 Northbridge loan notes converted
to equity shares and National World amounting to GBP1,348,931
converted to equity shares as a result of its admission to AIM .
For the year ended 31 March 2021, there were no transfers of the
investments between the fair value hierarchy levels.
The revaluations and gains on disposal above are included in the
statement of comprehensive income as gains on investments.
Value
at Value at
31 March 31 March
2022 2021
GBP'000 GBP'000
--------------------------------------------- --------- ---------
Opening valuation 53,888 29,960
Acquisitions 1,675 15,225
Unrealised and realised gains on investment 20,007 19,837
Disposals (43,961) (11,134)
Closing valuation 31,609 53,888
--------------------------------------------- --------- ---------
The following table analyses investment 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
----------------------------
2022 2021
GBP'000 GBP'000
--------- -------- ------------------
Level 1 28,692 47,565
Level 2 - -
Level 3 2,917 6,323
31,609 53,888
--------- -------- ------------------
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 2022 and 31 March 2021, 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 2022 31 March 2021
Material investments Material investments
included GBP'000s included GBP'000s
---------------------- ---------- -------------------------- --------------
The Lakes Distillery The Lakes Distillery
Fair value Company 2,917 Company 2,693
---------------------- ---------- -------------------------- --------------
Northbridge Industrial
Services plc convertible
bonds 2,430
---------------------------------------------- ---------- -------------------------- --------------
National World PLC 1,200
---------------------------------------------- ---------- -------------------------- --------------
Contracted sales
proceeds in post
balance sheet period None - None -
---------------------- ---------- -------------------------- --------------
2,917 6,323
---------------------------------------------- ---------- -------------------------- --------------
Notes to the Financial Statements (continued)
8 Investments at fair value through profit or loss
(continued)
Fair values of financial assets and financial liabilities
(continued)
Valuation policy: Every six 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
Investment Committee and the finance team. The Investment Committee
considers the recommendation made, and assuming the finance team
confirm that the investment valuation calculations are correct,
submits its valuation recommendations to the Board of the Company
to consider. The final valuation decision taken by the Board is
made after taking into account the recommendation of the
Manager.
Level 3 investments have been valued in accordance with the IPEV
guidelines, and represent the following:
-- The Lakes Distillery Company plc Convertible Bond was
purchased on 20 June 2019. It is valued at fair value which
approximates to the bond issue amount plus rolled up "payment in
kind" notes and capitalised interest.
-- Hanover Co- Invest S.C.A. SICAV-RAIF Sub Fund 1 was purchased
on 2 September 2021. It is valued based on the NAV of the Limited
Partnership which is a proxy for fair value as its underlying
investments are held at fair value. The Company agreed to dispose
of the investment in Hanover Co-Invest S.C.A. SICAV-RAIF Sub-Fund 1
on 17 March 2022 to Gresham House Plc or its nominees.
-- Northbridge Convertible Bond was purchased on 10 April 2018,
and a further investment was made on 3 July 2018. 20% of
Northbridge Industrial Services plc loan notes were converted into
equity shares and 80% were redeemed on 14 June 2021. The strike
price of each option was 90 pence for every GBP1 nominal value
converted into 433,207 ordinary shares. The accrued interest
(GBP32,045) and redemption premium (GBP389,886) on the loan
notes up to this period were paid at the time of redemption
therefore
no further interest is accrued. As a result of this, there was a
transfer from Level 3 to Level 1 of GBP389,886 Northbridge loan
notes
converted to equity shares.
-- National World plc Bond was purchased on 11 February 2021. It
was fully converted into 12,263,013 equity shares on 7 May 2021.
The conversion premium and accrued interest up to the date of
conversion were given in the form of equity shares and included in
the above. As a result of this, there was a transfer from Level 3
to Level 1 of GBP1,348,931 National World plc loan notes converted
to equity shares.
Investments in quoted companies (Level 1) have been valued
according to the quoted bid price as at 31 March 2022.
9 Trade and other receivables
31 March 31 March
2022 2021
GBP'000 GBP'000
--------------- ---------------------- --------------------
Other debtors 1,001 66
Prepayments 18 33
1,019 99
--------------- ---------------------- --------------------
10 Trade and other payables
31 March 31 March
2022 2021
GBP'000 GBP'000
-------------------------------------- --------- ---------
Other creditors - 5
Unclaimed historic special dividends
and capital payments 356 420
Trade creditors 64 112
Accrued expenses 122 98
Social security 5 6
547 641
-------------------------------------- --------- ---------
There were no other creditors as at 31 March 2022. (2021: Other
creditors of GBP5k were related to the acquisition of further
equities in Van Elle Holdings Plc which was settled in April
2021).
Notes to the Financial Statements (continued)
10 Trade and other payables (continued)
The unclaimed special dividends and capital payments amounting
to GBP420k between the periods of 2009 to 2014 were returned to the
company in 2021, out of which GBP64k was reclassified to revenue
reserves during the year as its reclaim period has lapsed. The
remaining will be used for the benefit of the company until claimed
by the relevant person or forfeited (2021: GBP420k).
11 Performance fees payable
31 March 31 March
2022 2021
GBP'000 GBP'000
-------------------------- ----------- ----------
Performance fees payable - 2,294
- 2,294
-------------------------------------- ----------
As a result of the Board terminating the investment management
contract with GHAM, a performance fee of GBP2,772k became payable
on 11 October 2021 (2021: GBP2,294k). This was subsequently paid in
November 2021 (2021: August 2021).
12 Issued capital
31 March 31 March
2022 2021
GBP'000 GBP'000
-------------------------------------------------------------------------- ---------- ----------
Called up, allotted and fully paid:
2,541,046 (2021: 3,480,884) Ordinary Shares of 50 pence (2021: 50 pence) 1,271 1,741
2,000,000 (2021: 2,000,000) D shares of 0.50 pence (2021: 0.50 pence) 10 10
1,281 1,751
-------------------------------------------------------------------------- ---------- ----------
As at 31 March 2022, the total number of shares in issue were
2,541,046 (2021: 3,480,884).
During the year, the Company established a B Shares Scheme as
defined in the circular to Shareholders dated 29 November 2021 to
return GBP10,443k to Shareholders via an issue and redemption of B
Shares.
Also during the year, 939,838 Shares were bought back at the
Tender Price of 1,551.17 pence with a total cost of GBP14,578k.
The average share price of Rockwood Strategic Plc quoted
Ordinary Shares in the year-ended 31 March 2022 was 1,491.90 pence.
In the year, the share price reached a maximum of 1,710.70 pence
and a minimum of 1334.71 pence. The closing share price on 31 March
2022 was 1,420.0 pence.
The Company's shares are listed on London's AIM market under
reference RKW.
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 2022, GBP28.7 million of the Company's net assets
were invested in quoted investments, GBP2.9 million in unquoted
investments and GBP11.5 million in liquid balances (31 March 2021:
GBP47.6 million in quoted investments, GBP6.3 million in unquoted
investments and GBP1.7 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.
Notes to the Financial Statements (continued)
13 Financial instruments and financial risk management
(continued)
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 GBP31.6 million (2021:
GBP53.9 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
2022, the Company held interests in 9 companies (2021: 16
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.
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 CLN, 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% (2021: 25%) movement in overall share prices.
As at 31 March
2022 +25% -25%
----------------------- -----------------------
Impact Impact
Valuation Fair Impact per share Impact per share
Security basis value GBP'000 (in pence) GBP'000 (in pence)
-------------------- -------------- ------- --------- ------------ --------- ------------
Latest share
Quoted investments price 28,692 7,173 282.29 (7,173) (282.29)
-------------------- -------------- ------- --------- ------------ --------- ------------
As at 31 March
2021 +25% -25%
Impact Impact
Valuation Fair Impact per share Impact per share
Security basis value GBP'000 (in pence) GBP'000 (in pence)
------------- ------------ -------------------- -----------
Latest
Quoted share
investments price 47,565 11,891 341.62 (11,891) (341.62)
------------- ------------ -------------------- ----------------------- ----------- --------------------- ------------------------------
Unquoted investments
Bond issue
- amount +
Northbridge conversion
CLN right 2,430 328 9.42 (309) (8.87)
------------- ------------ -------------------- ----------------------- ----------- --------------------- ------------------------------
The impact of a change of 25% (2021: 25%) 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, 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% 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.
Notes to the Financial Statements (continued)
13 Financial instruments and financial risk management
(continued)
a) Market risk (continued)
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
2022 2021
GBP'000s GBP'000s
----------------------------- --------- ---------
Loan stock investments 2,917 6,323
Cash and cash equivalents 10,507 1,605
Trade and other receivables 1,019 99
14,443 8,027
----------------------------- --------- ---------
Credit risk relating to loan stock investments in unquoted
companies is considered to be part of market risk.
The Company's cash balances at 31 March 2022 and 2021 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 2022 is GBP41.0 million (31 March 2021: GBP52.7 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 GBP15,320
million (2021: GBP26,969 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
The related parties of Rockwood Strategic Plc are its Directors,
persons connected with its Directors, its previous Investment
Manager, Gresham House Asset Management (GHAM), former significant
shareholder, Gresham House Plc (Gresham), and its new Investment
Manager and significant shareholder Harwood Capital LLP (Harwood).
Gresham sold its entire c23.7% interest in March 2022 to a number
of institutional investors, including Harwood, making Harwood a
significant shareholder.
During the year to 31 March 2022, Rockwood Strategic Plc was
charged management fees of GBP593k (2021: GBP832k) and performance
fee of GBP2,772k (2021: GBP2,294k) by Gresham House Asset
Management.
Notes to the Financial Statements (continued)
15 Related party transactions (continued)
The total payable to GHAM is as follows:
Particulars As at 31 March 2022 As at 31 March 2021
Performance fee (includes VAT) nil GBP2.29 million
-------------------- --------------------
Management fee nil GBP0.08 million
-------------------- --------------------
Other miscellaneous nil GBP0.01 million
-------------------- --------------------
Total nil GBP2.38 million
-------------------- --------------------
The company has terminated the Investment Management Agreement
with Gresham House Asset Management Ltd (GHAM) on 11 October 2021.
As a result of termination of this agreement by the Board, no
performance fee is payable (31 March 2021: GBP2,294k).
Harwood Capital LLP, as investment manager, waived its
entitlement to both management and performance fees, amounting to
GBP127k (ex. VAT) for the period from their appointment as
Investment Management from 11th October 2021 to 15th December 2021
when a wind down resolution passed enacting an amended deed. No
fees were payable to the Investment Manager from this date until
the investment policy resolution was passed post year end enacting
an amended deed.
As at 31 March 2022, the following shareholders of the Company
that are related to Harwood and GHAM had the following interests in
the issued shares of the Company as follows:
As at 31 March 2022 As at 31 March 2021
A L Dalwood 21,947 Ordinary Shares 31,183 Ordinary Shares
------------------------ ------------------------
G Bird 17,462 Ordinary Shares 22,651 Ordinary Shares
------------------------ ------------------------
Gresham House Holdings Ltd nil 812,913 Ordinary Shares
------------------------ ------------------------
Harwood Holdco Limited 734,000 Ordinary Shares nil
------------------------ ------------------------
R Staveley 25,689 Ordinary Shares 7,689 Ordinary Shares
------------------------ ------------------------
The Company signed a co-investment agreement with SPE Fund LP, a
sister fund to the Company launched by Gresham House Asset
Management Ltd (GHAM) on 15 August 2016. Under the agreement, the
Company undertook to co-invest GBP7.5 million with the SPE Fund LP.
This agreement ended after the Investment Agreement with GHAM was
terminated by the Board during the year.
The Company agreed to dispose of an investment in Hanover
Co-Invest S.C.A. SICAV-RAIF Sub-Fund 1 that was made in mid-2021,
to Gresham or its nominees during the year. This investment was
acquired by the Company for GBP855,586 and Gresham agreed to
acquire it for the same.
On 1 October 2020, as disclosed in Note 8 of last year's Annual
Report, the investment in Hanover Equity Partners II LP was
disposed for GBP214,566 (the current book value at the time of the
transfer, therefore at no gain, no loss). This was to the Gresham
House Strategic Equity Fund LP, a related party to the former
Investment Manager, Gresham House Asset Management Ltd.
The Directors' remuneration and their interest in the Company
are disclosed in the Director's remuneration review in the annual
report.
Graham Bird, through a Company he is a Director, received
payments during the period of GBP277,951 due to historic carry fee
arrangements, accrued when previously fund manager to GHS Plc from
Gresham House Plc, which were directly linked to the performance
fees paid by the Company to Gresham House Asset Management under
the IMA. These arrangements were between Gresham House Plc and
Graham Bird and not the Company.
During the year, the Company disposed of its entire holding of
7,044,018 shares in Fulcrum Utility Services Ltd at 12 pence per
share through a placing to Harwood Capital LLP.
There are no other related party transactions of which we are
aware in the year ended 31 March 2022.
Notes to the Financial Statements (continued)
16 Subsequent events note
Proposal for change of investment strategy, adoption of new
investment policy and Notice of General Meeting
The Board convened a General Meeting on 25 April 2022 for
Shareholders to vote on a proposal by way of an ordinary resolution
(the resolution) to change its investment strategy from its
realisation strategy to instead enable the Company to continue as a
going concern and to make new investments (the Proposal).
The Proposal was approved by Shareholders and the new investment
strategy will be overseen by the Company's current investment
manager, Harwood Capital LLP.
With effect from the passing of the Resolution, Harwood will
receive the following:
Investment Management Fees:
A monthly management fee of GBP10,000 (inclusive of VAT, if any)
until the company's NAV equals GBP60 million or higher (NAV
threshold).
Once the NAV Threshold has been met, Harwood will be entitled to
a management fee of 1/12th of an amount equal to 1 per cent. of the
Net Asset Value before deduction of that month's Investment
Management Fee and before deduction of any accrued Performance
Fees.
Performance Fees:
Harwood will also be entitled to a performance fee equal to 10
per cent. of outperformance over the higher of a 6 per cent. per
annum total return hurdle and the high watermark. The 6 per cent.
per annum compounding weekly and the performance fee will be
calculated annually.
Provided that the Company's average NAV is at or below GBP100
million, performance fees in any performance fee period will be
capped at 3 per cent. of the Company's average NAV for the relevant
performance fee period. In such instance, performance fees in
excess of the 3 per cent. cap will not be paid and will instead be
deferred into the next performance fee period.
Change of Name
Following the change of investment policy, the Company proceeded
to change its name to Rockwood Strategic plc on 4 May 2022.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR BKBBPOBKDFAB
(END) Dow Jones Newswires
June 23, 2022 02:00 ET (06:00 GMT)
Rockwood Strategic (LSE:RKW)
Historical Stock Chart
From Feb 2024 to Mar 2024
Rockwood Strategic (LSE:RKW)
Historical Stock Chart
From Mar 2023 to Mar 2024