Compounding wealth long-term
Rockwood Strategic Plc
Report and Accounts for the year ended 31 March 2023
31 March
2023
Overview
01 Chairman’s Statement
03 Investment Manager’s Report
08 About the Investment Manager
09 Strategic Report 2023
Governance
02 Board of Directors
13 Corporate Governance Report
18 Audit Committee Report
19 Directors’ Remuneration Report
20 Directors Remuneration Policy
21 Directors’ Report
24 Directors’ Responsibility Statement
25 Independent Auditor’s Report
Financial Statements
30 Statement of Comprehensive Income
31 Statement of Financial Position
32 Statement of Cash Flows
33 Statement of Changes in Equity
34 Notes to the Financial Statements
Other Information
47 Notice of Annual General Meeting
50 Corporate Information
Throughout this report we use the more
concise terms RKW or the Company.
Rockwood Strategic Plc is an
Investment Trust Company with a
Premium listing on the Main Market
of the London Stock Exchange. It
is invested in a focused portfolio of
smaller UK public companies. The
strategy identifies undervalued
shares, where the potential exists
to improve returns and where
the Company is benefitting, or
will benefit, from operational,
strategic or management changes.
These unlock, create or realise
shareholder value for investors.
Overview Governance
Financial
Statements
Other
Information
01Rockwood Strategic Plc
Dear Shareholder,
I am delighted to be reporting on a year of
significant progress at Rockwood Strategic
plc (“RKW”). Investment performance
has been excellent, and we successfully
moved to a Premium Listing on the Main
Market of the London Stock Exchange on
29 September 2022 (from AIM). As explained
last year, this process ensures tax efficiency
with Value Added Tax no longer being
applied to investment management fees
and performance fees, and from next year,
Corporation Tax will no longer be chargeable
on realised investment gains. This process
incurred one-off costs of approximately
£470,000. However on-going expenses
(including Administration and Custody fees)
have been materially lowered and the tax
efficiency is compelling.
Net Asset Value (“NAV”) Total Return
performance in the twelve months to 31 March
2023 was +21.4% which compares to declines
in the FTSE Small Cap (ex-ITs) of -15.7%.
The Total Shareholder Return in this period
was +28.2%
1
. Management fees are charged
at a fixed fee of £120,000 per annum while
assets are below £60m and we are pleased
that the excellent absolute performance of
the portfolio during a period of falling UK
smaller company prices has enabled us to
pay a performance fee to the Manager. This is
calculated as 10% of returns generated over
a hurdle of 6% per annum (subject to a high
watermark) and is achieving its purpose by
incentivising the manager to deliver excellent
outcomes for shareholders. RKW was the
best performing UK small companies fund
according to Association of Investment
Companies data for the year ended
31 March 2023.
Our Investment Manager has clearly been
busy, the Board is aware of a range of
initiatives that occurred both during the
year and are in progress to engage actively
with our investments to help them create,
unlock or realise value for all shareholders.
Furthermore, a number of new investments
have been established which the manager
believes have sown the seeds of future growth
in our NAV. The Board shares the view of the
manager that the UK small companies market
continues to provide a significant opportunity,
due to the inefficient pricing of poorly
researched or understood companies trading
at historically low valuations. The Investment
Manager is using its decades of investing
experience and specialist insight to identify a
small number of the very best opportunities.
The differentiated, stock-specific driven
approach of the strategy has shown that
positive returns are possible despite negative
macroeconomic and market conditions
or wider geo-political developments. Our
portfolio’s underlying companies have been
steadily growing shareholder value and having
that value better recognised by the wider
stock market. Performance in any short
period under review will be primarily due to
the individual performances of a handful of
our holdings and in this regard the success
of the investment in Crestchic Plc should
be highlighted, an excellent case-study for
our differentiated investment approach,
discussed in the Investment Manager’s report.
We welcomed Paul Dudley to the Board
during the year. His background in corporate
finance, accounting and the financing of listed
companies is already proving valuable. Post
year end, we achieved another milestone with
the share price rising above £20. With the aim
of increasing marketability and liquidity the
Board is recommending a 10 for 1 stock split.
Growing the NAV remains a clear priority for
the Company. This will open up a wider set
of investment opportunities in the targeted
part of the UK small cap market where the
manager can purchase significant investee
company ownership stakes. We have put
in place a block-listing facility to enable
share issuance above NAV. Subsequent to
year end, I am delighted to report that the
discount to NAV has been eliminated entirely
and we have begun to issue new shares.
This is a significant achievement, given the
market backdrop and alongside sustained
performance and on-going marketing
initiatives we hope to continue to attract new
investors to the strategy.
The Board believes that, until the Company
has gained greater scale, it will retain the
maximum capital allowable to maximise the
compounding of NAV growth. As such there
will be no dividend proposed this year. Our
AGM will be held on 12 September for those
that would like to meet the Board and Manager
in person.
Noel Lamb
Chairman RKW
21 June 2023
Noel Lamb
Chairman
Rockwood Strategic Plc
Chairman’s
Statement
1 These are considered to be Alternative performance Measures (APMs). See APMs on page 46.
02 Rockwood Strategic Plc
Board of Directors
Noel Lamb
Age: 67
Independent, Non-Executive Chairman
(appointed 20 January 2022)
Noel graduated from Exeter College, Oxford
and is a barrister-at-law. Commissioned into
the 5th Royal Inniskilling Dragoon Guards, he
served as ADC to the Commandant of the Royal
Military Academy Sandhurst and Adjutant of the
North Irish Horse. He joined Lazard Brothers
& Co Limited in 1987 and from 1990 to 1997 he
was the managing director of Lazard Japan
Asset Management where he was the fund
manager for their Japanese equities. In 1997, he
moved to the Russell Investment Group where
he established the investment management
capability of Russell in London. In 2002, he was
promoted to Chief Investment Officer in North
America where he managed assets of $150bn
until his departure in 2008. Noel is also currently
the Chairman of Atlantis Japan Growth Trust
and a director of Guinness Asset Management
Funds.
Kenneth Lever
Age: 69
Senior Non-Executive Director
Chairman of the Audit Committee
Ken is Chair of the audit committee at
Rockwood Strategic, Chairman of WANdisco plc,
NED of Vertu Motors plc and Deputy Chairman
of Rainier Developments Limited. Ken was
previously Chief Executive of Xchanging plc
and during his career has held listed company
executive board positions with Tomkins plc,
Albright and Wilson plc, Alfred McAlpine plc and
private equity owned Numonyx BV.
In his early career Ken qualified as a Chartered
Accountant and became a partner in Arthur
Andersen. Until 2014 Ken was a member of
the UK Accounting Standards Board. He is
Chairman of the Advisory Board of the Alliance
Manchester Business School. Ken graduated
from the University of Manchester with a degree
in Management Sciences.
Paul Dudley
Age: 51
Non-Executive Director
Paul Dudley is a Fellow of the Institute of
Chartered Accountants of England and Wales
and is a Member of the UK’s Chartered Institute
of Securities and Investment. Paul founded Aer
Ventures in 2011, where he is Managing Partner,
a corporate advisory business that is Authorised
and Regulated by the UK’s Financial Conduct
Authority. Previously he worked at stockbroking
firm WH Ireland where he was approved as a
Qualified Executive acting as the Corporate
Finance adviser on AIM corporate transactions.
Paul graduated from Durham University and
began his career at PricewaterhouseCoopers.
He is currently a director of a number of public
and private companies including Celsius
Resources Ltd, Watercycle Technologies Ltd
and Pyne Gould Corporation Ltd.
Overview Governance
Financial
Statements
Other
Information
03Rockwood Strategic Plc
Investment Manager’s
Report
Highlights
Æ NAV Total Return performance in the
twelve months to 31 March 2023 of 21.4%
to 1,959.56p per share which compares
to declines in the FTSE Small Cap (ex-ITs)
of 15.7%. The positive Total Shareholder
Return of the Company in this period was
28.2%
2
Æ NAV Total Return performance in the three
years to 31 March 2023 of 116.9% which
compares to the FTSE Small Cap (ex-ITs) of
49.6%. The Company’s Total Shareholder
Return in this period was 139.4%
3
Æ Successful migration from AIM to a
Premium Listing on the Main Market of the
London Stock Exchange (”LSE”)
Market backdrop
The period was very challenging for UK
smaller company investors. The FTSE Small
Cap (ex-ITs) fell 3 of out of four quarters with
a modest rally in Q4 of 2022, mainly because
sentiment had got so negative that a slight
improvement in mood regarding the direction
of US interest rates prompted a rally. Against
this backdrop, investor money flow data and
surveys indicated continued reductions to UK
equities. It is difficult to pinpoint the rationale
to this seemingly entrenched pessimism;
partly structural such as the desire to allocate
to “Global” equities rather than UK; partly
aversion due to concerns about the post-Brexit
economy; possibly partly due to the lack of
flag-waving UK fund managers with attractive
performance to highlight. It may just be the
political shambles that characterised most
of the period, firstly with the departure of
Boris Johnson, second through the disastrous
and record-breaking short tenure of his
replacement, Liz Truss. There is little doubt
though that with UK Debt to GDP ratios the
highest since World War II, the tax burden
at generational highs and a general lack of
support for public service cost-cutting, the
UK’s political leaders have wafer thin room to
manoeuvre fiscal policy. The lower valuation
of UK equities relative to global equities and
compared with historical levels, seems to have
been spotted given the increasing number
of takeover approaches for UK companies by
Private Equity Funds who have record amounts
of capital to deploy.
UK unemployment hit its lowest level of 3.4%
since 1974 and retail inflation reading 14%, the
highest since 1980. Inflation is, in our view, the
most important current determinant in both
the outlook for markets and also the source
of broader corporate, investor and central
bank behaviour. During the year interest rates
rose markedly around the world in an attempt
to tame inflation, the UK official Bank Rate
up from 0.75% to 4.25%. Jerome Powell,
Chairman of the Federal Reserve, earlier in
the year, made it clear “pain” was inevitable,
he was still raising interest rates to new highs
as Rockwood’s Financial year came to a close.
This is an era-defining regime change and
should benefit ‘value’ investments over long-
duration ‘growth’ investments and unleveraged
asset classes over ones relying on debt to juice
returns. Both of these characteristics should
benefit Rockwood Strategic’s approach.
The impact of higher interest rates
characterised other key developments:
noticeably the emergence of banking stress in
our final quarter leading to the distressed sales
of Silicon Valley Bank, Credit Suisse and First
Republic Bank to better capitalised rivals. A
credit squeeze commenced and is, alongside
the cost of living squeeze on consumers,
feeding into measly economic growth,
Richard Staveley
Lead Fund Manager
Nicholas Mills
Assistant Fund Manager
Christopher Mills
Advisory Group Member
CIO Harwood Capital LLP
2 These are considered to be APMs. See APMs on page 46.
3 These are considered to be APMs. See APMs on page 46.
04 Rockwood Strategic Plc
teetering on recession in major economies,
other than China where extreme lock-down
conditions post Covid-19 were lifted. This is
easing supply-chain blockages, and noticeably
causing a normalisation of freight rates. Gold
and, begrudgingly, Crypto coins performed
subsequently well given this backdrop. Housing
and property markets began to weaken. The
Ukrainian conflict sadly rumbles on with little
evidence to suggest a resolution is in sight.
However, the sourcing of gas and oil away from
Russia has been impressive in Europe and
almost everyone will be pleased energy prices
have been moderating. The effectiveness of an
inverted yield curve providing an early warning
signal of impending recession is being tested.
Outlook
We have provided a ‘market-backdrop’ section
above, but as we have previously stated, over
the medium-term, market factors will not
be the primary determinant of Rockwood’s
returns, it will be stock-specific risk and
return. Our results this year demonstrate that
Rockwood Shareholders can have a smile on
their faces when almost everyone else hasn’t.
Some of the factors mentioned above such
as the seemingly on-going outflows from UK
equities to other asset classes or geographies
are in fact positive for our strategy. We are
not faced with outflows, we can choose to buy
when others are forced to sell.
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. Many
holdings have depressed levels of profitability
relative to history with clear plans for Recovery
independent of macro-economic conditions.
Overall, the portfolio holdings are well-financed
too with strong balance sheets in almost all
cases or the ability to de-leverage quickly in the
remainder. We finished the year with £10.5m of
cash, 21.2% of NAV. We see ‘core’ inflation being
quite sticky, sense the market is too hopeful
on the speedy reversal of interest rates and
thus prone to further volatility which is likely
to accompany weakening of general economic
conditions further. We remain confident the
‘value’ factor will perform well and provide
support for our portfolio and investment style.
Our pipeline of new investments remains busy
with due diligence finished on some where we
wait patiently for an optimised entry point and
is on-going on others where we feel no rush to
execute until we have sufficient clarity on the
‘margin of safety’.
We expect the pickup in trade buyer acquisition
activity and public-to-private transactions to
accelerate 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. This dynamic should
deliver material, absolute NAV growth for the
current portfolio holdings as it did during the
year.
As signalled a year ago we were able to
increase the number of holdings and we expect
this to continue during the current year. We
ended with 8 ‘Core’ holdings and 10 ‘Springboard
Opportunities’ with the top ten holdings
accounting for 64.1% of NAV at year end.
Investment Philosophy
Æ ‘Value’ investor mindset and free cash flow
focused
Æ Seek proven businesses, identifiable
assets
Æ Establish mean reversion potential
(profitability, balance sheet and valuation
re-rating)
Æ Identify catalysts for change
Æ Develop exit thesis to mitigate illiquidity
risks (3–5-year time horizon)
Æ Engage with all stakeholders to de-risk and
add value
We believe that investment returns are
generated by purchasing a share for less
than the intrinsic worth of the company, (a
‘value’ philosophy), which is enhanced by
identifying companies which 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 through constructive engagement
with the Board, management and other
stakeholders.
Top 5 Investment Portfolio Holdings
RM Plc 11.1% Net Assets
9.2% of their Issued Share Capital
Cost: £2.85m, Value as at 31 March 2023,
£5.53m, IRR to period end 450%
The company is an established and leading
supplier to the education market. It has three
divisions: firstly an educational supplies
business which reaches 90% of UK Primary
schools selling everything from basic supplies
to bespoke teaching aids, often encouraged
by the curriculum. The second is a leading
assessment business which marks exams
from the International Baccalaureate to
A-levels both in the UK and abroad. The final
division provides outsourced technology
services to groups of schools. During the year
financial stress arose due to a poorly executed
implementation of a new group software
system which lead to operational problems
and a need to ease banking covenants. This
has led to the CEO being replaced alongside an
Interim CFO. Fortunately, the business has a
long history of cash generation and also some
surplus assets which were able to be sold at
short notice easing stress. We believe that
the shares have a ‘sum-of-the-parts” valuation
materially above the current share price and
expect the company and the new CEO to focus
on the creation and realisation of shareholder
value through a well-managed divisional
disposal process once the business has been
stabilised.
Centaur Media Plc 8.5% Net Assets
6% of their Issued Share Capital
Cost: £3.44m, Value as at 31 March 2023,
£4.25m, IRR to period end date 10%
The company has two divisions providing
business information, consultancy, training,
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 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. During the period
Richard Staveley (member of the Investment
Team) joined the Board as a Non-Executive
Director and in January 2023 and March 2023
the company announced two material special
dividends for investors. The investment team
continue to identify a material discount in
the share price to intrinsic value despite a
transformed level of profitability, quality of
earnings, and stronger balance sheet (than
previous years).
Investment Manager’s Report (continued)
Overview Governance
Financial
Statements
Other
Information
05Rockwood Strategic Plc
M&C Saatchi 8.0% Net Assets,
1.7% of their Issued Share Capital
Cost: £1.72m, Value as at 31 March 2023,
£3.99m, IRR to period end date 38%
The company is one or the world’s best known
global advertising and communications
advice agencies with clients stretching from
governments to supra-national organisations
(e.g. the World Health Organisation) to the
world’s leading brands (e.g. McDonalds) and
social media sites (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
markedly and improve margins to over 17%
(currently 13%). During COVID the business
had no material client losses indicating the
strength of their relationships. Opportunistic
takeover approaches by former Board Director
Vin Murria and Next Fifteen Plc were rejected
by shareholders during the period. We believe
the company has considerable further recovery
potential and is grossly undervalued. Many of
its services are counter-cyclical and its highest
margin activities are growing the fastest.
Flowtech Fluidpower 7.3% Net Assets
5.8% of their Issued Share capital
Cost: £2.56m, Value as at 31 March 2023,
£3.63m, IRR to period end date 14%
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 then there has
been Board evolution, importantly the
appointment of the highly regarded Roger
McDowell as Chairman (Roger was previously
a Non-Executive Director at Augean plc).
During the period Jamie Brooke, a member
of the Rockwood Strategic Plc Investment
Advisory Group (“IAG”), joined the Board also
as a Non-Executive Director and shortly after
year-end a new CEO was appointed, Mike
England, formerly COO of FTSE 100 RS Group
Plc. The company has been addressing the lack
of integration amongst its various acquisitions,
driving scale and synergies and has been
investing in its on-line capabilities. The
business is still 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 thus
improve returns, profitability and in-turn a
valuation re-rating.
Pressure Technologies 6.9% Net Assets
20.5% of Issued Share capital
Cost: £4.26m, Value as at 31 March 2023,
£3.41m, IRR to period end -8%
The company has two divisions; the industry
leading Chesterfield Special Cylinders which
manufactures and services a range of high-
end industries and customers including
the Ministry of Defence, and the Precision
Machined Components division (“PMC”), 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 both late 2020
and 2022 further equity issuance was needed
to support the company’s ambitions. Similar to
Crestchic we see strategic logic in focusing the
company into one division (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 are opportunities in the emergent
Hydrogen economy. During the period, we
corner-stoned the fund raise, Richard Staveley
was announced as becoming a NED, a new
Chief Financial Officer was appointed, and
the company announced advisors had been
engaged to explore a sale of PMC.
Portfolio Activity
This was the most active period of investing
since the strategy was conceived with 13 new
investments made during the year.
The main feature was Crestchic Plc (formerly
Northbridge Industrial Services) which started
the period at 15.8% of NAV. We are delighted
that our engagement efforts supported
the company and ultimately rewarded all
shareholders with a material increase in
shareholder value which was realised into cash.
Crestchic was a proven business, asset-rich
with an excellent international client base. Our
engagement since late 2019 included getting
the company to report and focus on Return
on Capital Employed metrics, the evolution of
management with the appointment of Peter
Harris as Executive Chairman, the appointment
of two NEDS, one a direct representative
of Harwood Capital, the development of an
appropriate incentivisation scheme, the
sale of the company’s loss-making second
division, the re-investment into the business
and improved Investor Relations narrative and
approach. Rockwood owned a material stake
in the company and “ran our winner” with the %
of NAV reaching c. 31% prior to the company
being successfully taken over by Aggreko
(Private Equity backed). The realisation
generated an IRR of 30.4%, a Money Multiple of
4.8x and a gain of £12.4m.
There were only three other, much smaller,
exits during the year:
Lakes Distillery Convertible Loan Note –
realised IRR 21.6%
The Lakes Distillery has been building its
English whisky and spirits brand carefully
and successfully over recent years, despite a
number of external challenges. The business
model requires a lot of capital, whilst growing,
to support the working-capital in laid down
casks. We were delighted to see some well-
deserved awards for their whisky but were
happy to realise our maturing Convertible Loan
note into cash during the period allowing new
investors to take the company through to its
next phase of growth.
Seraphine – realised IRR -6%
Our target holding period for investments is
three to five years. This relates to the usual
time we have observed it historically takes for
a turnaround in a company’s profitability and
valuation rating when accompanied by the
usual Board, management, operational and
strategic changes to catalyse the recovery.
Over excited ‘Growth’ investors backed a
series of over-valued IPOs in the run-up to the
regime change caused by the normalisation
of interest rates. Seraphine, a mainly on-line,
successful, international retailer of maternity
apparel had listed at c. £150 million market
capitalisation and had collapsed to c.£20m. We
initiated a ‘Springboard’ 2% weighting, however
subsequent key online platform changes
to advertising rates affected all retailer’s
customer acquisition costs hitting profitability,
alongside the accelerating cost of living
pressures and poor consumer confidence. We
accepted a Private Equity takeover approach
for the company, at approximately the value
we paid for our holding (our ‘margin of safety’
protected us), as the risks to our medium-term
thesis had materially increased post purchase.
Bonhill Loan – realised IRR 65.4%
Bonhill, the financial services B2B media
publishing and events business, has also
been a volatile investment since initiation
in a rescue fund raise in the first couple of
months of lockdown in 2020. There is no doubt
the collapse in physical events was highly
disruptive for the relationship between their
brands and customers, however operationally
management was found wanting and changes
were necessary. The inability of the US
business to generate cashflow, some marginal
brands creating organisational cost and
06 Rockwood Strategic Plc
complexity, inadequate technology systems
and limited integration led to one conclusion:
the business was sub-scale for a listing and
had no mandate for further acquisitions.
Having taken a NED Board position, we helped
refinance again during the year increasing
our holding to 19.5%, and the Board then
initiated a formal sales process of the business
with UK and Asian assets and the small titles
sold during the period. During this process
further financing was required and Rockwood
Strategic provided a “bridging” loan to Bonhill
to help them through to completion of asset
sales. Although modest in terms of a cash
return (relative to NAV) it delivered an excellent
IRR. Post year end the US assets were sold and
the company initiated a full return of realised
capital to shareholders. A good illustration of
the flexibility of our mandate.
As a result of the above exits the strategy did
not have any non-listed or private instruments
in the portfolio at the end of the year.
New Holdings
The Investment Team have an exciting
short list of potential investments and have
been actively deploying capital during these
depressed market conditions to seed returns
for shareholders over the medium term, most
notably to date being RM Plc. None of the
other new positions exceeded 5% of NAV at
the year end and are not deemed ‘core’ but
‘Springboards/Opportunities’ at this date.
Below we highlight a few through a brief
summary of the opportunity. A small number of
holdings are still in the process of being built to
target weightings and thus we look forward to
updating shareholders on these in the Interim
Report. The Board notes that for new holdings,
we display NAV, IRR and Market Capitalisation
as set out for the below. None of which are
designated as ‘core’ investments to date.
Finsbury Food Group 4.0% NAV, IRR to date
39%, Market capitalisation £124m
A significant UK manufacturer of cakes and
Bread products with particularly high market
share in branded ‘celebration’ cakes such as
Birthday cakes branded Disney, Minions, Mary
Berry etc. Sales are over £350million and the
long-standing proven management team have
delivered a successful recovery of the business
since 2010 alongside allocating capital well
including some smart bolt-on acquisitions.
With strong customer relationships and stable
c.5% margins over a long period we anticipate
a phase of improving profitability as the fruits
of new systems investment, automation in the
factories and other efficiency measures take
effect, a lot of which has been obscured by
the exceptional input cost food price inflation
in recent months. We see the combination
of these factors as creating a step-change in
operational effectiveness and thus profitability,
when delivered. The company has large debt
facilities available and the scope and ambition
for material, even transformative, M&A activity
in this large sector, however they are somewhat
constrained by a seemingly inappropriately
low stock market multiple. We believe Private
Equity could achieve a lot with this team,
balance sheet and business, particularly if
higher levels of leverage were taken on.
Galliford Try 4.1% NAV, IRR to date 8%, Market
capitalisation £185m
Construction Services are generally hated by
institutional investors as many bear the scars
of former investments in companies such
as Carillion. However, we have recognised
a change in risk management in the larger
players in the sector and have identified that
Galliford Try’s chosen markets, primarily being
regulated industries or public sector clients
as being much lower risk. With huge sales of
over £1.4billlion, the wave of infrastructure
requirements across schools, hospitals, roads,
energy, water and rail mean the current order
book is over £3.5billion. This is diverse with the
average job value £25m, indeed 90% of work is
now on ‘framework’ contracts with much lower
risk contract terms than yester-year. However,
shareholders also benefit from the ownership
of approximately £46m of Public & Private
Partnership (“PPP”) Investments which produce
a very stable and inflation linked income stream
and a massive cash balance which on average
has been around £154m giving considerable
scope for M&A, dividends and buybacks. The
new management team have been re-building
profitability (now 2.3% operating margin) which
we expect to continue alongside an emerging
market re-appraisal of the defensiveness
of the construction infrastructure sector’s
growth drivers when compared to many other
Companies in this sector.
City Pub Company 4.8% NAV, IRR to date 11%,
Market capitalisation £86m
Having survived the travails of Covid-19, the
company entered a new suite of external
pressures including the cost-of-living squeeze
on consumers and cost inflation (energy, food,
wages). What is clear is that management
are first rate operationally, indeed they are
also proven to investors as Founder Clive
Watson built up another pub group and sold it
successfully to Greene King previously. Here
he has helped carefully curate an estate of 52
units in the South of England in high ‘quality’
locations, dominated by Freehold ownership.
Headwinds are all starting to abate, whilst
critical mass is emerging meaning improved
overhead recovery and much improved profits
for shareholders. Of course central costs
wouldn’t be needed at all to larger trade buyers
of the group, some of whom we suspect are
eyeing the £160m Director’s valuation of the
estate, a material premium to the stock market
valuation. We expect accretive strategic
developments and further operational
improvements after some recent senior
leadership evolution.
Trifast 4.1% NAV, very high IRR to date not
relevant to due short holding period, Market
capitalisation £106m
The company is an international manufacturer
(30%) and distributor (70%) of fasteners
(nuts ‘n’ bolts) and has been established for
a number of decades. With 34 locations, of
which 7 are high volume manufacturing sites,
15bn parts are sold per year, 1200+ employees.
Sales exceed £245m with a long history of
profitability and cash generation. The company
has material net assets and is well invested
in plant and machinery. However, returns
have fallen and ROCE is poor. The operating
margin is depressed vs its long history and a
management and Board evolution is underway
alongside a restructuring program to deliver
savings. This follows a new ERP system roll-out
finally completing (after a £17.5m investment).
75% of sales are customer-specific branded
products, 18-year average tenure of top ten
customers, the largest <7.5% sales. Net Debt
has become elevated not least due to a bulging
inventory position of over £100m. We can
identify a significant multi-year turnaround and
recovery opportunity with scope to materially
increase cash generation (reduce leverage),
improve returns and profits leading to a
normalisation of the valuation rating.
The investments discussed above aggregate to
58.8% of the portfolio’s NAV, cash is 21.1% with
the remainder of the portfolio spread across
a mix of holdings. Some, as mentioned above,
were only initiated just before yearend and we
are still building our investment, others are
in a known realisation phase such as Bonhill
or Smoove, currently subject to a takeover
approach. Other notable positions would be
Argentex (Cost £1.08m, Value £1.58m, IRR to
date 100%) and Van Elle (Cost £2.1m, Value
£2.6m, IRR to date 9%) both of which are
steadily recovering profitability and remain on
very low valuations.
Investment Manager’s Report (continued)
Overview Governance
Financial
Statements
Other
Information
07Rockwood Strategic Plc
Conclusion
Christopher Mills and I have made material
personal investments in the shares of
Rockwood Strategic and the investment
management contract rewards success in
alignment with Total Shareholder Returns
for the Company’s shareholders. 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.
This year was a pleasing one where the
portfolio and strategy delivered, despite
difficult market conditions and losses across
almost all other sector participants. We
continue to identify value and businesses
which we think will be attractive to off-market
participants if the UK stock market remains
out of favour. Often ‘self-help’ is driving higher
levels of profitability, reducing financial
leverage and resulting, for the “patient”, a
higher ultimate valuation. We have a robust
portfolio cash position, but will carefully wait
for the ‘fat pitch’, as Mr Buffett would call it,
to deploy our cash. We would call it a ‘slow,
over-pitched ball outside off-stump’ where
the chances of clearing the boundary are
excellent. To stretch the analogy further, we
see Rockwood’s approach to investment as
very much the ‘Test’ game and not the ’short
form’ version; long-term, requiring patience,
consistency, adaptability, mental fortitude and
sustained periods of both attack and defence.
We thank our shareholders for their consistent
and long-term support.
Richard Staveley
08 Rockwood Strategic Plc
About the Investment Manager
Harwood Capital LLP (“HC LLP”) was incorporated in 2003 and is the investment manager for Rockwood Strategic Plc. HC LLP is a wholly owned
subsidiary of Harwood Capital Management Limited (“HCM”) and is authorised and regulated by the Financial Conduct Authority (“FCA”), authorisation
number 224915 and is led by Christopher Mills. The funds managed and advised by HCM follow an active, value approach towards the businesses in
which they invest. The HCM Group manages North Atlantic Smaller Companies Investment Trust Plc (“NASCIT”), Oryx International Growth Fund Ltd
(“Oryx”), Harwood Private Equity Funds, and Harwood Private Debt. Mr Mills is a member of the Rockwood Strategic Plc Investment Advisory Group.
Investment Advisory Group
Harwood Capital LLP has formed an Investment Advisory Group (IAG) to support the Investment Team for Rockwood Strategic Plc. The members
are experienced financial professionals with relevant experience, their details are disclosed on the www.rockwoodstrategic.co.uk website. The IAG
members are provided with details of pipeline ‘core’ investments for the strategy prior to the completion of the research process. Their insights,
relevant contacts and investment views are incorporated into the Investment Team’s subsequent due diligence. On completion of due diligence,
research is shared with the IAG members and their perspectives actively considered prior to any investment decision by the Investment Team.
Richard Staveley
Lead Fund Manager
Richard has over twenty years’ experience of
equity investment and fund management.
Having qualified as a chartered accountant
at PricewaterhouseCoopers, Richard joined
Bradshaw Asset Management, as assistant
fund manager in 1999. He subsequently joined
Société Générale Asset Management where
he became Head of UK Small Companies and
a CFA charterholder. In 2006, he co-founded
River and Mercantile Asset Management where
he launched both the UK Small Company Fund,
the UK Income Fund and was Head of Research.
In 2013, he joined Majedie Asset Management
to co-manage and subsequently solely manage
the UK small company investments. In 2019 he
joined Gresham House Plc as fund manager
for Gresham House Strategic Plc, the Strategic
Public Equity LP and eventually the Gresham
House UK Small Companies Fund. He currently
sits on the boards of Pressure Technologies Plc,
Bonhill Plc and Centaur Plc.
Nicholas Mills
Assistant Fund Manager
Nicholas joined Harwood Capital LLP in
2019 after spending 5 years at Gabelli Asset
Management in New York. He acted primarily as
a Research Analyst covering the multi-industrial
space and also gained experience in Merger
Arbitrage strategies and marketing Closed
End Funds. He has a Bachelor of Science
Degree from Boston College’s Carroll School of
Management. He currently sits on the boards of
Niox Plc and Hargreaves Services Plc and served
on Crestchic Plc until its takeover.
Christopher Mills
Advisory Group Member
CIO Harwood Capital LLP
Christopher has over 45 years investment
experience and has been the Chief Executive
Officer and principal shareholder of Harwood
Capital Management since 2011. He founded
JO Hambro Capital Management with Jamie
Hambro in 1993 acting as Chief Investment
Officer and Harwood Wealth with Alan Durant in
2013 until their respective sales in 2011 and 2020.
He is CEO of North Atlantic Smaller Companies
Investment Trust (“NASCIT”) which he has
managed since 1982 and Executive Director of
Oryx International Growth Fund which he has
managed since 1995. NASCIT has delivered a
total NAV per share of nearly 200x under Mr.
Mills’ management. He has sat on the board of
over 100 companies during his career including
most recently Augean, MJ Gleeson, SureServe,
Frenkel Topping, Assetco, Ten Entertainment,
Bigblu Broadband, Trellus Health, SourceBio
International and is currently Chairman of EKF
Diagnostics and Renalytix AI.
Overview Governance
Financial
Statements
Other
Information
09Rockwood Strategic Plc
Strategic Report 2023
The Directors present their Strategic Report
for the period ended 31 March 2023. Details of
the Directors who held office during the period
and as at the date of this report are given on
page 2 of the Annual Report and Accounts.
This Strategic Report has been prepared in
accordance with the requirements of Section 414
of the Companies Act 2006 and best practice.
Its purpose is to inform the shareholders of
the Company and help them to assess how the
Directors have performed their duty to promote
the success of the Company, in accordance
with Section 172 of the Companies Act 2006.
The Strategic Report contains certain forward-
looking statements. These statements are
made by the Directors in good faith based on
the information available to them up to the
date of this report and such statements should
be treated with caution due to the inherent
uncertainties, including both economic and
business risk factors, underlying any such
forward-looking information.
The Company’s business review, developments
during the year and a detailed discussion of the
individual asset performance together with future
outlook are covered in the Chairman’s Statement
and the Investment Manager’s Report.
Business Model
Status of the Company
The Company is registered in England and
Wales as a public limited company and is an
investment company within the terms of section
833 of the Companies Act 2006. The principal
activity of the Company is to carry on business
as an investment trust. The Company has been
approved by HM Revenue & Customs as an
authorised investment trust under sections 1158
and 1159 of the Corporation Tax Act 2010, subject
to there being no subsequent serious breaches
of regulations, from 1 April 2023. In the opinion
of the Directors, the Company is directing its
affairs so as to enable it to continue to qualify
for such approval. The Company’s shares have a
listing on the premium segment of the Official
List of the Financial Conduct Authority (“FCA”)
and trade on the London Stock Exchange’s
(“LSE”) Main Market for listed securities. The
Company is a member of the Association of
Investment Companies (“AIC”), a trade body
which promotes investment companies and
also develops best practice for its members.
Strategy for the year ended 31 March 2023
and Strategic Review
During the year ended 31 March 2023, the
Company continued to follow its investment
objective and policy. During the year, the Board
made all strategic decisions for the Company.
Harwood Capital LLP undertook all strategic
and administrative activities on behalf of the
Board, which retained overall responsibility.
Purpose
The purpose of the Company is to achieve
predominantly capital growth in our
shareholders’ wealth over time. It aims to
achieve this by using its closed-ended structure
to invest in a concentrated number of smaller
quoted companies, which the Investment
Manager believes are undervalued and could be
generating higher returns for their shareholders.
The long-term nature of the Company’s capital
enables the Investment Manager to undertake
constructive corporate engagement with
the underlying portfolio companies and their
stakeholders, on financial and operating
performance, strategy and governance.
The Board
The Board of the Company comprises Noel
Lamb (Chairman), Ken Lever and Paul Dudley,
all of whom are independent non-executive
Directors and male. All Directors will stand for
re-election at the forthcoming Annual General
Meeting. Further information on the Directors
can be found on page 2.
Board Focus and Responsibilities
With the day to day management of the
Company outsourced to service providers the
Board’s primary focus at each Board meeting
is reviewing the investment performance and
associated matters, such as, inter alia, future
outlook and strategy, gearing, asset allocation,
investor relations, marketing, and industry
issues. In line with its primary focus, the Board
retains responsibility for all the key elements
of the Company’s strategy and business model,
including:
Æ Investment Objective and Policy,
incorporating the investment guidelines
and limits, and changes to these;
Æ review of performance against the
Company’s key performance indicators
(“KPIs”);
Æ whether the Manager should be authorised
to gear the portfolio up to a pre-
determined limit (currently no leverage is
used or planned to be used);
Æ review of the performance and continuing
appointment of service providers; and
Æ maintenance of an effective system of
oversight, risk management and corporate
governance.
Key Performance Indicators
At each Board meeting, the Directors consider
the performance measures to assess the
Company’s success in meeting its objectives.
The Board believes the Company’s key
performance indicators are:
Æ Net Asset Value Total Return: the sum
of NAV per Ordinary Share growth and
cumulative dividends paid. This measure
incorporates investment performance
and Company expenses. The investment
objective is to make investments capable
of delivering 15% Internal Rates of Return
(IRR) over the medium term. This was
21.4% in the current and 27.5% in the
prior year.
10 Rockwood Strategic Plc
Æ Rockwood Strategic Plc Total Shareholder
Return: RKW cumulative share price return
for the year and cumulative dividends paid.
Implicit in this measure is any movement
in the share price discount or premium
to NAV which is also measured. This was
28.2% in the current year and 22.2% in the
prior year.
Æ Ongoing charges: ensuring the costs
of running the strategy are appropriate
and proportionate. Other costs (note
4) were £1.182m for the year (including
non-recurring costs of £0.47m for ITC
conversion costs) 2022: £2.302m.
The Directors draw attention to the Investment
Manager’s Report (page 3 of the annual report).
Business review
The Directors are of the view the investment
strategy has performed very well, exceeding its
performance objectives during the year.
Principal Risks and Uncertainties
The Board, on behalf of the shareholders,
manages a range of risks that might impact the
financial position of the Company, the principal
risks are as follows:
Æ Investment value - The risk that the value
of the Company’s investments might fall.
See note 13 to the financial statements for
further details on this, specifically note
13a “Market Risk”. Our mitigation, as set
out in the Investment Manager’s Report,
is to manage a diverse portfolio and for
the manager to operate with controls and
diligence around new investments.
The Board reviews and discusses the
Company’s performance against its
investment objective and policy, and
assesses performance in comparison
to industry peers and the broader
comparative market. The Board also
keeps the performance of the Investment
Manager under continual review, along
with a review of significant investment
decisions and the overall rationale for
holding the current portfolio
Æ Investment Manager – the Company
is reliant on the Investment Manager
to implement the investment strategy
successfully and the risk that this
might not continue is managed by the
Board through regular and detailed
engagement with, and oversight of, the
manager together with the manager’s own
comprehensive investment and operating
processes.
Additional risks – as mentioned under the
Corporate Governance section, the Board
maintains a register, and in addition to
comments above, risks managed there
include, among others: the management of key
operational and financial controls; risk of key
personnel being unavailable; and maintaining
regulatory permissions.
Liquidity is not considered a risk as this is a
closed-end fund and does not have redemption
provisons, as seen in the open-ended fund
sector.
The principle risks to shareholders are
the performance of the portfolio and the
competence of the manager in pursing the
strategy.
Custodian
RBC Investor Services Trust – UK Branch (“RBC”)
was appointed as the Company’s Custodian
pursuant to an agreement dated 8 June 2022.
RBC is in charge of, inter alia, safekeeping and
custody of the Company’s assets, investments
and cash, processing transactions and foreign
exchange services, as required.
Stakeholder Engagement and Statement
under Section 172
The Board recognises that the Company
should be run for the benefit of shareholders,
but that the long term success of a business is
dependent on maintaining relationships with
stakeholders and considering the external
impact of the Company’s activities.
Section 172 statement
Overview
The Directors’ overarching duty is to act in
good faith and in a way that is the most likely to
promote the success of the Company as set out
in Section 172 of the Companies Act 2006. In
doing so, Directors must take into consideration
the interests of the various stakeholders of the
Company, the impact the Company has on the
community and the environment, take a long-
term view on consequences of the decisions
they make as well as aim to maintaining a
reputation for high standards of business
conduct and fair treatment between the
members of the Company.
Fulfilling this duty naturally supports the
Company in achieving its investment objective
and helps to ensure that all decisions are
made in a responsible and sustainable way.
In accordance with the requirements of
the Companies (Miscellaneous Reporting)
Regulations 2018, the Company explains how
the Directors have discharged their duty under
Section 172 below.
The Directors have continued access to the
advice and services of the Company Secretary,
and when deemed necessary, the Directors
can seek independent professional advice.
The schedule of Matters Reserved for the
Board, as well as the Terms of Reference of any
committees are reviewed on an annual basis
and further describe Directors’ responsibilities
and obligations and include any statutory and
regulatory duties. The Audit Committee has
the responsibility for the ongoing review of
the Company’s risk management systems and
internal controls and, to the extent that they are
applicable, risks related to the matters set out
in Section 172 are included in the Company’s risk
register and are subject to periodic review.
Further details on Section 172 reporting can be
found in the S172 Statement, in the Corporate
Governance Report on pages 15 to 17.
Stakeholders
A company’s stakeholders are normally
considered to comprise its shareholders,
its employees, its customers, its suppliers
as well as the wider community in which the
company operates and impacts. The Company
is different in that as an investment trust it has
no employees and, significantly, its customers
are synonymous with its shareholders. In
terms of suppliers, the Company receives
professional services from a number of different
providers, principal among them being the
Investment Manager. The Board believes that
the wider community in which the Company
operates encompasses its portfolio of investee
companies and the communities in which
theyoperate.
Shareholders
Continued shareholder support and
engagement are critical to existence of the
business and the delivery of the long term
strategy of the Company.
The Board is committed to maintaining open
channels of communication and to engage with
shareholders in a manner which they find most
meaningful, in order to gain an understanding of
the views of shareholders. These include:
Strategic Report (continued)
Overview Governance
Financial
Statements
Other
Information
11Rockwood Strategic Plc
Æ Annual General Meeting (“AGM”) – The
Company welcomes and encourages
attendance, voting and participation from
shareholders at the AGM, during which
the Directors and the Investment Manager
are available to discuss issues affecting
the Company and answer any questions.
The Company values any feedback
and questions it may receive from
shareholders ahead of and during the AGM.
Æ Publications – The Annual and Interim
Reports of the Company are made
available on its website. These reports
provide shareholders with a clear
understanding of the Company’s portfolio
and financial position. This information
is supplemented by a quarterly factsheet
and regular presentations which are
available on the website. Feedback and/or
questions the Company receives from the
shareholders help the Company evolve its
reporting, aiming to render the reports and
updates transparent and informative.
Æ Shareholder meetings – The Investment
Manager and the Company’s Broker are in
regular contact with major shareholders.
The Chairman and the other Directors are
available to meet with shareholders to
understand their views on governance and
the Company’s performance where they
wish to do so. The results from all meetings
between the Investment Manager, the
Broker and shareholders, and the views of
the shareholders are reported to the Board
on a regular basis.
Æ Shareholder concerns – In the event
shareholders wish to raise issues or
concerns with the Directors, they are
welcome to do so at any time by writing
to the Chairman. Other members of the
Board are also available to shareholders
if they have concerns that have not been
addressed through the normal channels.
Shareholders wishing to communicate
directly with the Board should contact
the Company Secretary at the registered
office address on page 50.
Æ Investor relations updates – At every Board
meeting, the Directors receive updates
from the Company’s Broker on the share
trading activity, share price performance
and any shareholders’ feedback, as well as
updates from the Investment Manager. To
gain a deeper understanding of the views
of its shareholders and potential investors,
the Investment Manager also meet
regularly with shareholders. Any pertinent
feedback is taken into account when
Directors discuss the share capital and
any possible new share issuance under the
Block Listing application. The willingness
of the shareholders, including the partners
and staff of the Investment Manager, to
maintain their holdings over the long term
period is another way for the Board to
gauge how the Company is meeting its
objectives and suggests a presence of a
healthy corporate culture.
The Investment Manager
The Investment Manager’s performance is
critical for the Company to successfully deliver
its investment strategy and meet its objective to
provide shareholders with attractive total return
over a long-term period.
The management of the Company’s portfolio
is delegated to the Investment Manager,
which manages the assets in accordance
with the Company’s objectives and policies.
At each Board meeting, representatives from
the Investment Manager are in attendance
to present reports to the Directors covering
the Company’s current and future activities,
portfolio of assets and its investment
performance over the preceding period.
Maintaining a close and constructive working
relationship with the Investment Manager is
crucial as the Board and Harwood Capital both
aim to continue to achieve long-term returns
in line with its investment objective. Important
components in the collaboration with the
Investment Manager, representative of the
Company’s culture, are:
Æ Operating in a fully supportive, co-
operative and open environment and
maintaining ongoing communication with
the Board between formal meetings;
Æ Encouraging open discussion with the
Investment Manager, allowing time and
space for original and innovative thinking;
Æ Recognising that the interests of
shareholders and the Investment Manager
are for the most part well aligned, adopting
a tone of constructive challenge;
Æ Drawing on Board members’ individual
experience and knowledge to support the
Investment Manager in its monitoring of
and engagement with portfolio companies;
Æ Willingness to make the Board members’
experience available to support the
Investment Manager in the sound long-
term development of its business and
resources, recognising that the long-term
health of the Investment Manager is in the
interests of shareholders in the Company.
In addition to the management fee, the
Investment Manager also receives a
performance fee if certain circumstances are
met. In respect of the year ended 31 March
2023, a performance fee of £624,846 has
been accrued. The Board is happy with the
outperformance which is being rewarded in line
with the Investment Management Agreement.
Other service providers
In order to function as an investment trust with
a Main Market listing on the LSE, the Company
relies on a diverse range of reputable advisors
for support in meeting all relevant obligations.
The Company’s main functions are delegated to
a number of service providers, each engaged
under separate contracts. The Board, together
with the Company Secretary, and Investment
Manager maintains regular contact with its
key external providers and receives regular
reporting from them, both through the Board
and committee meetings, as well as outside
of the regular meeting cycle. Their advice and
views are routinely taken into account. This
regular interaction provides an environment
where issues and business developments needs
can be dealt with efficiently and collegiately.
The Audit Committee reviews and evaluates
the financial reporting control environments
in place at each service provider. The Board
formally assesses performance, fees and
continuing appointment annually to ensure that
the key service providers continue to function
at an acceptable level and are appropriately
remunerated to deliver the expected level
ofservice.
Employees, human rights, social and
community issues
The Board recognises the requirement under
Companies Act 2006 to detail information
about human rights, employees and community
issues, including information about any
policies it has in relation to these matters and
the effectiveness of these policies. These
requirements do not apply to the Company
as it has no employees, all the Directors are
non-executive and it has outsourced all its
functions to third party service providers. The
Company has therefore not reported further
in respect of these provisions, however, it
does expect its service providers and portfolio
companies to respect these requirements.
12 Rockwood Strategic Plc
Integrity and business ethics
The Company is committed to carrying out
business in an honest and fair manner with
a zero-tolerance approach to bribery, tax
evasion and corruption. As such, policies and
procedures are in place to prevent the above.
The Board’s expectations are that its principal
service providers have similar governance
policies in place. The Company Secretary, on
behalf of the Board, will seek assurances from
service providers on a regular basis.
Environmental, social and governance issues
The Company has no employees, property or
activities other than investments, so its direct
environmental impact is minimal. In carrying
out its activities and in its relationships with
service providers, the Company aims to conduct
itself responsibly, ethically and fairly. The
Board is comprised entirely of non-executive
Directors and the day-to-day management of
the Company’s business is delegated to the
Investment Manager. The Investment Manager
aims to be a responsible investor and considers
environmental, ethical and social issues with
regards to their investments.
The Directors believe that proxy voting is an
important part of the corporate governance
process. It is the policy of the Company to
vote at all shareholder meetings of investee
companies, and the Board has delegated voting
activities to the Investment Manager. Whilst
there is no specific policy, Investment Manager
follows relevant regulatory requirements with
an aim to make voting decisions which will best
support growth in shareholder value and will
commonly take into account best practices
regarding corporate governance, Board
composition, remuneration and Environment,
Social and Governance (“ESG”) issues.
Modern Slavery Act 2015
The Company does not provide goods or
services in the normal course of business, and
as a financial investment vehicle does not have
customers. The Directors do not therefore
consider that the Company is required to make
a statement under the Modern Slavery Act 2015
in relation to slavery or human trafficking. The
Company’s suppliers are typically professional
advisers and the Company’s supply chains are
considered to be low risk in this regard. In light
of the nature of the Company’s business there
are no relevant human rights issues and the
Company does not have a human rights policy.
Long Term Viability Statement
In accordance with the UK Corporate
Governance Code, the Directors have carefully
assessed the Company’s position and prospects
as well as the principal risks and have formed
a reasonable expectation that the Company
will be able to continue in operation and meet
its liabilities as they fall due over the next three
financial years. The Board has chosen a three-
year horizon in view of the long-term nature and
outlook adopted by the Investment Manager
when making investment decisions. To make
this assessment and in reaching this conclusion,
the Board has considered the Company’s
financial position and its ability to liquidate its
portfolio and meet its liabilities as they fall due:
Æ the portfolio is comprised of investments
listed and traded on stock exchanges.
These are actively traded and, whilst
perhaps less liquid than larger quoted
companies, the portfolio is well diversified;
Æ the portfolio is run with a net cash position
and as a result there is ample liquidity on a
day-to-day basis for the Company to meet
its obligations;
Æ the expenses of the Company are
predictable and modest in comparison
with the assets and there are no capital
commitments foreseen which would alter
that position; and
Æ the Company has no employees, only its
non-executive Directors. Consequently,
it does not have redundancy or other
employment related liabilities or
responsibilities.
As well as considering the potential impact
of the Company’s principal risks and various
downside scenarios, such as a withdrawal
of shareholder interest in the niche asset
class of UK smaller companies, the Board has
also considered the following assumptions
in considering the Company’s longer-term
viability:
Æ there will continue to be demand for
investment trusts;
Æ the Board and the Investment Manager will
continue to adopt a long-term view when
making investments;
Æ the Company invests principally in the
securities of UK listed companies to which
investors will wish to continue to have
exposure;
Æ regulation will not increase to a level
that makes running the Company
uneconomical; and
Æ the performance of the Company will
continue to be satisfactory.
Noel Lamb
Chairman
21 June 2023
Strategic Report (continued)
Overview Governance
Financial
Statements
Other
Information
13Rockwood Strategic Plc
Corporate Governance
Report
AIC Code Statement of Compliance
The Company maintained its compliance with
the AIC Code of Corporate Governance issued
in February 2019 (the AIC Code), except as set
out below:
Æ The Directors do not consider it
appropriate to establish a nomination,
remuneration or a management and
engagement committee. The functions
that carried out by these committees
are dealt with by the full Board, which is
comprised of non-executive Directors.
Æ As the Company has no employees and its
functions are undertaken by third parties,
the Audit Committee does not consider it
necessary for the Company to establish its
own internal audit function. From time to
time, the Audit Committee will review the
requirement of an internal audit function
and material controls, and if established,
will carry out effectiveness reviews as
required under AIC Provision 34.
Æ The Board will review on an annual basis
the Company’s application of the AIC Code
of Corporate Governance and whether it
remains applicable for a company of this
size.
The AIC Code is made up of 17 principles and 35
provisions over five sections covering:
1. Board Leadership and Purpose;
2. Division of Responsibilities;
3. Composition, Succession and Evaluation;
4. Audit, Risk and Internal Control; and
5. Remuneration
Details of how the Company has complied
with the principles and provisions of the AIC
Code are set out its Corporate Governance
Statement which can be found on the
Company’s website.
The AIC Code is available on the AIC website
(www.theaic.co.uk). It includes an explanation
of how the AIC Code adapts the Principles and
Provisions set out in the UK Code to make them
relevant for investment companies.
The Board of Directors
The Board is responsible for the effective
oversight and long-term sustainable success
of the Company, generating value for
shareholders and controlling of all aspects of
the Company’s affairs, notwithstanding any
delegation of responsibilities to third parties.
The Board oversees the role of the investment
manager who are seeking to grow net asset
value over the long-term by executing on the
agreed investment policy.
The Board consists of three independent non-
executive directors, all whom are independent
of the investment manager. No one individual
dominates the board’s decision making. The
Board have an Investment Manager Agreement
in place and this agreement is reviewed
annually.
The Board considers the required time
commitment annually and during the year
under review all Directors continued to devote
sufficient amount of time to the business of
RKW. The Directors possess a wide range of
skills, knowledge and experience relevant
to the leadership of the Company, including
financial, legal, and regulatory and industry
experience as well as the ability to provide
constructive challenge to the views and
assumptions of the Investment Manager and
hold third party service providers to account.
All members of the Board own shares in the
Company. Further detail on each of their
shareholding can be found on page 19. After
consideration of the above factors, and taking
into account guidance from the AIC, which
encourages directors owning shares, the
Board is of the view that all the Non-executive
Directors continue to be independent in
character and judgement and free from
relationships or circumstances that could
affect their judgement within the meaning
of the AIC Code. The Board considers that all
Directors continue to be committed to their
roles and have sufficient time available to meet
their Board responsibilities.
The names and responsibilities of the
Directors, together with their biographies and
details of their significant commitments, are
set out on page 2.
Board and Committee meetings
The Board holds quarterly Board meetings (with
additional meetings arranged as necessary)
where it considers investment performance,
investor relations, share price performance and
other relevant matters. Regular discussions are
held with the manager and its advisers about
the discount to NAV at which the shares trade
and how this might be reduced.
The company secretary and investment
manager regularly provide the Board with
relevant statutory, regulatory and corporate
governance updates relating to the sector
in which the Company operates. At each
Board meeting, representatives from the
investment manager attend to present verbal
and written reports covering the Company’s
portfolio and investment performance over
the period. Communication between the
Board and the investment manager and other
service providers is maintained between
formalmeetings.
The Board reviews annually the performance,
services and the terms of its engagement
with all the Company’s third-party providers
to ensure they continue to be competitive and
effective. Strategy sessions are held annually,
and the Board may meet from time to time
without the investment manager present, when
considering the manager’s performance, fees
and contractual arrangements.
14 Rockwood Strategic Plc
The Board has delegated certain
responsibilities to its audit committee so that it
can operate efficiently and give an appropriate
level of attention and consideration to relevant
matters. Given the size of the Board, the
Directors do not consider it appropriate to
establish a nomination, remuneration or a
management and engagement committee. The
functions that would normally be carried out
by these committees are dealt with by the full
board.
The Board and its audit committee are
supported by the company secretary who
ensures that appropriate policies and
procedures are in place in order for the Board
to function effectively and efficiently. A
formal agenda is produced for each meeting
and papers are distributed several days
before meetings take place allowing all Board
members to contribute even if they are unable
to attend.
The Directors have access to the advice
and services of the company secretary
and individual directors are able to take
independent legal and financial advice at the
Company’s expense when necessary to support
the performance of their duties as Directors.
During the year, the Chairman met regularly
with the Non-Executive Directors without the
manager present.
The table below sets out the attendance record
of individual Directors at the scheduled board
and committee meetings held during the year-
ended 31 March 2023:
Current
Directors
Scheduled
Board
Meetings
Scheduled
Audit
Committee
Meetings
Number
attended
Number
attended
Noel Lamb*
(appointed
20/01/2022) 10/10 n/a
Kenneth Lever 10/10 2/2
Paul Dudley 6/6 1/1
Directors that
resigned during
year-ended
March 2023
Scheduled
Board
Meetings
Scheduled
Audit
Committee
Meetings
Number
attended
Number
attended
Graham Bird
(resigned
01/09/2022) 3/4 1/1
* not a member of the Audit Committee
Conflicts of interest
The Company has effective procedures in place
to monitor and deal with conflicts of interest.
A register has been set up to record all actual
and potential conflict situations which have
been declared. All declared conflicts have been
approved by the Board. The Board is aware of
the other commitments and interests of its
Directors, and changes to these commitments
and interests are reported to and, where
appropriate, agreed with the rest of the Board.
Directors’ appointment and re-election
All Non-Executive Directors are appointed on
the basis of letters of appointments which
provide for a maximum of three months’ notice
of termination by the director or the Company.
The letters of appointment are available for
inspection at each AGM.
The Board’s policy on tenure is that the
maximum period that any director shall serve
as a director of the Company shall be limited
and no director shall be eligible to serve beyond
the 9th Annual General Meeting following his or
her appointment. In the event that a director
is appointed at an Annual General Meeting, for
these purposes, that Annual General Meeting
will not count towards the number.
The appointment of any new director is made
on the basis of assessing the candidate’s merits
and measuring his or her skills and experience
against the criteria identified by the board.
Whilst the Board has not put in place a policy
on diversity, the Board fully endorses the AIC
Code principle to promote diversity of gender,
social and ethnic backgrounds on the Board
and would always consider this when making
any new director appointments.
The Board recognises the importance of
succession planning to refresh the Board and
the AIC provisions relating to this. Whilst the
Board has no succession plans in place at
this time, it is envisaged that should a Board
member be unable to fulfil their duties for a
period of time, one of the other directors with
the most appropriate experience would step in
to perform the role on an interim basis until a
longer-term solution is identified.
The Company considers annual re-election of
the Directors to be good corporate governance
and has therefore chosen to follow this
practice. The Directors have considered the
performance of each Director serving on the
Board, including the Chairman, and believe
that each of the Directors continues to make a
valuable contribution to Board discussions and
decisions and supports their re-election at the
2023 AGM.
During the year there was one appointment to
the Board, Paul Dudley.
Paul Dudley was appointed as an Independent
Non-Executive Director following a lengthy
search process. A number of candidates were
considered and the individuals included on the
short list of candidates were met separately
the Chairman, Noel Lamb, and Ken Lever.
Board evaluation
The Board has formalised a process to conduct
a regular evaluation of its performance and
that of individual Directors and its audit
committee on an annual basis. This process
is led by the Chairman (supported by the
company secretary) and is conducted internally
using a questionnaire designed to assess
the strengths and weaknesses of the Board
and its committees, the composition of the
board, how effectively Board members work
together. Each Director is required to complete
a questionnaire covering the assessment of
the composition, functioning and operation
of the Board as a whole and a similar review of
the effectiveness of the audit committee and
investment manager is also carried out. Given
the recent changes to the composition of the
Board, it is envisaged that a succession plan
be reviewed towards the end of the year, along
with the Board evaluation.
The Board does not consider it necessary at
present to employ the services or to incur the
additional expense of an external third party to
conduct the evaluation process but will keep
this under review.
Corporate Governance Report (continued)
Overview Governance
Financial
Statements
Other
Information
15Rockwood Strategic Plc
Internal controls and risk management
systems
The Board has established an ongoing process
for identifying, evaluating and managing the
significant risks faced by the Company.
The Board maintains a risk register to identify
any new risks and makes the necessary
adjustments required to existing risks and the
controls and mitigation measures in place in
respect of these risks.
The Company’s Ordinary Shares are quoted on
the Main Market of the London Stock Exchange
under reference RKW.
Systems have been in place for the year under
review and up to the date of approval of the
annual report and accounts.
UK Stewardship
The Board and the Investment Manager
support the UK Stewardship Code, issued
by the FRC, which sets out the principles of
effective stewardship by institutional investors.
The Investment Manager has have extensive
experience and a strong commitment to
effective stewardship.
Section 172 Statement
Section 172 of the Companies Act 2006 (the
‘Act’) requires Directors to act in good faith and
in a way that is the most likely to promote the
success of the Company. In doing so, Directors
must take into consideration the interests
of the Company’s various stakeholders, the
impact on the wider community and the
environment when making decisions.
The Company has no employees and delegates
its day-to-day management and administration
to third parties. The Board considers its
key stakeholders to be its shareholders,
its investment manager and its third-party
service providers while also taking into
account the Company’s responsibilities to
regulators and the wider community. Given
the out-sourced nature of the Company’s
operations, the Company has very little direct
impact on the community or the environment.
However, the Directors recognise that the
investment manager can influence an investee
company’s approach to Environmental,
Social and Governance (ESG) matters.
The investment manager is committed
to operating responsibly. The investment
manager also recognises that the integration
of ESG considerations into its investment
assessments is important and that when these
factors are addressed well they can have a
positive impact on the financial performance of
the fund investments.
The investment manager assesses ESG
factors during due diligence and incorporates
conclusions into its engagement, strategic
and operational plan, investment thesis and
investment risk assessment. They continue to
monitor factors post-investment and engage
when appropriate. The investment manager
expects companies to be minimising their
environmental footprint, without damaging
the outlook for cash earnings and will engage
where necessary to address lack of active
attention in this area. The investment manager
believes successful companies incorporate
the interests of multiple stakeholders into
their business operations and their strategy
for maximising shareholder value. The
governance factor is most important to our
manager and investment strategy, enabling
effective approaches to environmental and
social factors. The manager actively engages
with companies as an integrated part of their
philosophy and process. This is often including
through board representation, which helps
ensure corporate governance is structured
appropriately, ‘groupthink’ is avoided and
the Board is working effectively to deliver
shareholder value.
16 Rockwood Strategic Plc
Stakeholder
group
Importance of
engagement Key methods of engagement Topics of engagement Outcome and actions
Shareholders Shareholders
remain central to the
Company’s ability
to access capital to
support its strategic
objectives and goals
and in ensuring the
long-term success of
the business
The Board is
committed to
ensuring that there
is open and effective
communication
with the Company’s
shareholders
on a range of
matters including:
governance,
strategy and
performance against
the Company’s
investment objective
and policy to ensure
that the Directors
understand the views
of shareholders on
such matters
The Company communicates
with its shareholders in a
number of ways including:
Æ Through its annual and
half-yearly reports
Æ Regulatory
announcements
Æ Website - the website
provides all existing and
potential shareholders
with information about the
Company, its investment
policy and performance to
allow shareholders to fully
understand the risk/reward
balance of holding shares
in the Company
Æ Informal meetings: the
Chairman meets with
the Company’s major
shareholders annually
if they wish to do so
to discuss matters of
governance, strategy and
performance against the
Company’s investment
objective and policy
Æ Annual General
Meeting: this provides
a further opportunity
to communicate with
shareholders who
attend and for the Board
to respond to their
questions at the meeting.
All shareholders are
encouraged to attend and
vote at the Company’s AGM,
to be held on 12 September
2023 at 11:00am.
Board composition changed
to reflect the new investment
policy.
Following further material
evolution of the shareholder
register further discussions
were held with shareholders.
Corporate Governance Report (continued)
Overview Governance
Financial
Statements
Other
Information
17Rockwood Strategic Plc
Stakeholder
group
Importance of
engagement Key methods of engagement Topics of engagement Outcome and actions
Investment
Manager
The Board has
contractually
delegated the
management of
the portfolio to the
investment manager
(Harwood Capital).
The performance
of Harwood Capital
is crucial to the
Company executing
its investment
strategy successfully
and providing
attractive returns
to shareholders.
Therefore,
maintaining a close
and constructive
working relationship
with Harwood Capital
remains important
to the Board and the
long-term success of
the Company.
The Board regularly engages
with the investment manager
and meets with the investment
manager on a quarterly basis
and other times throughout the
year enabling the Directors to
discuss the performance of the
investee companies (amongst
other matters) and probe
further should there be matters
of concern or requirement for
clarification on certain matters.
The performance of the
investment manager is
monitored and reviewed by
the Board as a whole in the
absence of a management and
engagement Committee. In
addition, an annual appraisal
of the investment manager’s
performance is undertaken as
part of the board evaluation
process. It is the opinion of
the Board that the continuing
appointment of the investment
manager is in the interests of
shareholders as a whole.
Full review of all aspects of
the investment manager
agreement and suitability of
manager as part of the strategic
review.
Harwood Capital provided a
quarterly report to the Board
which provides an update on
the investment portfolio and
future pipeline opporutnities.
Harwood Capital was appointed
as asset manager following the
conclusion of the strategic review.
The Board will review key
investment and provided
feedback.
Service
providers and
suppliers
As an externally
managed investment
Company, RKW
relies on a diverse
range of advisors to
support the Company
in meeting all its
relevant obligations
including: the
company secretary,
administrator,
auditors, registrar,
depositary and
corporate advisor.
The Board maintains regular
contact with its key external
providers and receives
regular reporting from them,
both through the board and
committee meetings, as well as
outside of the regular meeting
cycle.
The Board assesses the
performance, fees and
continuing appointment of its
service providers and suppliers
annually to ensure that the key
service providers continue
to function at an acceptable
level and are appropriately
remunerated to deliver the
expected level of service.
The investment manager on
behalf of the Board conducted
a full review of suppliers post
year-end which resulted in various
supplier changes, and cost
reductions.
Regulators RKW can only
operate with the
approval of its
regulators who have
a legitimate interest
in how the Company
operates in the
market and treats its
shareholders.
The Company continues
to monitor and ensure its
compliance with the relevant
regulatory, legal and statutory
obligations along with
corporate governance best
practice.
The Board reviewed its
compliance with the AIC Code
of Governance published in
February 2019 to assess the
extent of its compliance and
identify any gaps. Regular
updates are received from
the company secretary on
governance matters to inform
the Board of any changes in
market practice or any legal
or statutory obligations which
could affect the Company.
No specific action required
SGH Company Secretaries Limited
Company Secretary
21 June 2023
18 Rockwood Strategic Plc
Audit Committee
Report
The Audit Committee is chaired by Ken
Lever, the Senior Independent Director. The
other member is Paul Dudley. Ken Lever is a
Chartered Accountant and is also the Audit
Committee Chair of Vertu Motors plc. The
Chair is considered to have recent and relevant
financial experience and the Audit Committee,
as a whole, has competence in the investment
company sector. The Chair of Rockwood
Strategic plc and the investment manager are
not members of the committee but are invited
to attend meetings of the committee from time
to time. Representatives of the Company’s
auditor attend the committee meetings
at which the draft half year and full year
accounts are reviewed. The auditor is given
the opportunity to speak to the committee
members without the presence of the manager
and speaks directly with the Chair of the Audit
Committee as required.
The Audit Committee operates within a scope
and remit defined by specific terms of reference
determined by the Board. The committee
meets twice a year to review and discuss the
Company’s half-year and full year accounts.
The principal areas of focus of the committee
are:
Æ Monitor the integrity of the financial
statements of the Company and any formal
announcements relating to the Company’s
financial performance;
Æ Review the significant issues/judgements
relating to the financial statements, and
how these issues were addressed;
Æ Ensure that the Company has followed
appropriate accounting standards
and made appropriate estimates and
judgements, taking into account the views
of the external auditor;
Æ Review and make recommendations to
the Board relating to the content of the
Financial Statements and accompanying
narrative included within the Annual Report;
Æ Review and assess the independence,
objectivity and effectiveness of
the external audit process and the
approach taken to the appointment or
reappointment of the independent auditor;
Æ Approve the remuneration of the
independent auditors; and
Æ Monitor and review the effectiveness of
the Company’s internal financial controls,
internal control and risk management
systems.
Principal activities during the year
Æ Considered the independent auditor’s
annual scope and report on the full year
accounts and the key areas of focus;
Æ Reviewed the full year and half-year results,
including the underlying accounting
issues, judgements and estimates and the
processes underpinning the preparation of
those documents;
Æ Considered the report prepared by the
third party service provider with respect to
the review of internal controls, accounting
systems and processes used to prepare
the financial information,
Æ Reviewed the information presented in the
half-year and full year reports to assess
whether, taken as a whole, the reports
are fair, balanced and understandable
and the information presented enable the
shareholders to assess the Company’s
performance and strategy;
Æ Reviewed and recommended the
reappointment of BDO LLP as the external
auditor for the Company and agreed the
remuneration of the Auditor; and,
Æ Reviewed the need to establish or
otherwise an internal audit function.
Independent Auditor
BDO LLP has been the independent auditor
for the Company since 2013. The auditor is
required to rotate the audit partner every five
years and the current audit partner is Peter
Smith, who has been in place for three years.
It is therefore anticipated that Peter Smith will
serve as audit partner for two more years until
completion of the audit process in 2025. No
tender for the audit of the Company has been
undertaken. The Committee will review the
continuing appointment of the Auditor on an
annual basis and give regular consideration
to the Auditor’s fees and independence, along
with matters raised during each audit.
The breakdown of fees between audit and
non-audit services paid to BDO LLP during
the financial year is set out in note 4 of the
Financial Statements.
Ken Lever
Chair, Audit Committee
21 June 2023
Overview Governance
Financial
Statements
Other
Information
19Rockwood Strategic Plc
Director’s Remuneration
Report
The report on Directors’ remuneration for the
year-ended 31 March 2023 is set out in the
table below. As mentioned previously, the full
Board undertake the role of the Remuneration
Committee given the size of the Board.
The fees paid to the Board are reviewed
periodically and may also be reviewed when
new non-executive directors are recruited
to the board. The Directors’ fees were last
reviewed and increased in 2020. The Directors
Remuneration Policy can be found on page 20.
The Company was not subject to requirement
of having Remuneration Report voted on by
shareholders and therefore this will be the first
year of figures.
The fees payable per annum in respect of each
of the Directors who served during the financial
year were as follows:
31 March
2023
(£)
31 March
2022
(£)
Noel Lamb 40,000 8,300
Kenneth Lever 27,500 27,500
Paul Dudley (appointed
1 September 2022) 16,042 N/A
Graham Bird (resigned
1 September 2022) 11,458 22,300
Charles Berry
(Resigned
22 November 2021) N/A 25,900
David Potter (Resigned
11 June 2021) N/A 24,400
Helen Sinclair
(Resigned on
5 November 2021) N/A 41,300
Simon Pyper (Resigned
on 31 March 2022) N/A 11,400
Total annual fees
payable as at the Year
End 95,000 161,000
The total social security payments for the
year-ended 31 March 2023 were £6,629
(31 March 2022: £11,519).
The total aggregate annual fees cap payable
to Directors under the Company’s Articles of
Association (Articles) is £250,000. As per the
Company’s Articles, the Directors are entitled
to be paid all reasonable expenses properly
incurred in the performance of their duties as
Directors including their expenses travelling to
and from board and committee meetings.
As the Board is solely composed of
Independent Non-Executive Directors, the
consideration of their remuneration does not
involve any variable or performance-related
bonuses, or other benefits such as pensions.
The level of remuneration has been set in order
to attract individuals of a calibre appropriate
to the future development of the Company and
reflects the duties and responsibilities of the
Directors and the value and amount of time
committed to the Company’s affairs.
The Directors Remuneration Report should
include a performance table in accordance
with the Large and Medium- Sized Companies
and Group Regulations 2008; Schedule 8:(18:1).
We have not included this as the Company has
not had a full year of performance and we will
include in subsequent years.
Directors and their interests
The Directors serving during the year-ended
31 March 2023 had the following interests in the
share capital of the Company:
As at
21 June
2023
As at
31 March
2023
As at
31 March
2022
Noel Lamb 2,500 2,500 1,500
Kenneth Lever 3,555 3,555 3,555
Paul Dudley 521 521 N/A
Graham Bird N/A N/A 17,462
Relative importance of spend on
Directors’ fees
The below table is required to be included in
accordance with The Large and Medium Sized
Companies and Groups (Accounts and Reports)
Regulations 2008.
31 March
2023
(£)
31 March
2022
(£)
Total
Directors’
fees £95,000 £161,000
NAV £49,793,321 £41,007,400
The Directors’ fees as a percentage of NAV
for the year to 31 March 2023 were 0.232 per
cent and for the year to 31 March 2022 were
0.191 per cent.
20 Rockwood Strategic Plc
Directors Remuneration Policy
The Company follows the recommendation
of the AIC Code that non-executive Directors’
remuneration should reflect the time
commitment and responsibilities of the role.
The Board’s policy is that the remuneration
of non-executive Directors should reflect the
experience of the Board as a whole, and be
determined with reference to comparable
organisations and appointments. All Directors
are non-executive, appointed under the
terms of letters of appointment. There are no
service contracts in place. The Company has
no employees. The fees for the non-executive
Directors are determined within the limits
(not to exceed £250,000 per annum) set out in
the Company’s Articles of Association, or any
greater sum that may be determined by special
resolution of the Company. Directors are not
eligible for bonuses, share options, long-term
incentive schemes or other performance-
related benefits as the Board does not believe
that this is appropriate for non-executive
Directors. There are no pension arrangements
or retirement benefits in place for the Directors
of the Company. Under the Company’s Articles
of Association, if any Director is called upon
to perform or render any special duties or
services outside their ordinary duties as a
Director, they may be paid such reasonable
additional remuneration as the Board, or any
committee authorised by the Board, may from
time to time determine. The Directors are
entitled to be repaid all reasonable travelling,
hotel and other expenses properly incurred
by them in or about the performance of their
duties as Director, including any expenses
incurred in attending meetings of the Board
or any committee of the Board or general
meetings of the Company. Directors’ and
Officers’ liability insurance cover is maintained
by the Company on behalf of the Directors.
Fees are reviewed annually in accordance with
the above policy. The fee for any new Director
appointed to the Board will be determined on
the same basis. The Company is committed
to ongoing shareholder dialogue and any
views expressed by shareholders on the fees
being paid to Directors would be taken into
consideration by the Board when reviewing
the Directors’ remuneration policy and in the
annual review of Directors’ fees. Compensation
will not be made upon early termination of
appointment. The Directors’ Remuneration
Report was approved by the Board and signed
on its behalf by:
Component Role
Rate as at
31 March 2023 Purpose of Remuneration
Annual Fee Chairman £40,000 Commitment as Chairman
Annual Fee
Independent Non-
Executive Director £27,500
Commitment as
Non-executive Director
Additional Fee All Directors N/A
For extra or special services
performed in their role as a
Director
Expenses All Directors N/A
Reimbursement of expenses
incurred in the performance
of duties as a Director
Noel Lamb
Chairman
21 June 2023
Overview Governance
Financial
Statements
Other
Information
21Rockwood Strategic Plc
Director’s Report
The contents of the Strategic Report are
spread between the Chairman’s Statement and
Investment Manager’s Report. The Directors
present their Annual Report and the audited
financial statements for the year-ended
31 March 2023.
Activities
Rockwood Strategic plc (the Company) is
a Main Market listed investment company
invested in a focused portfolio of smaller UK
public companies. The strategy identifies
undervalued shares, where the potential exists
to improve returns and where the Company is
benefitting, or will benefit, from operational,
strategic or management changes. These
unlock, create or realise shareholder value
forinvestors.
The Company has no employees but has a
Board consisting of three non-executive
Directors.
Directors
The Directors in office at the date of this
Annual Report are shown on page 2.
Substantial shareholdings
As at the date of this report, the Company has been notified of the following substantial interests
representing 2.8% or more of its total voting rights:
Shareholder
% of total
voting rights
Harwood Capital 28.9%
Interactive Investor (Manchester) 6.69%
James Sharp & Co 6.22%
Hargreaves Lansdown Asset Mgt (Bristol) 6.02%
Unicorn Asset Management 5.38%
Investec Wealth & Investment 4.32%
River & Mercantile Asset Management 3.70%
Schroder Investment Mgt (London) 2.91%
Rockwood Realisation Plc Directors & Related Parties (UK) 2.90%
Evelyn Partners 2.81%
Dividends
The Directors have not recommended the
payment of a final dividend in respect of the
year-ended 31 March 2023.
Global Greenhouse Gas Emissions for the Year
ended 31 March 2023
The Company is an investment trust, with
neither employees nor premises, nor has it
any financial or operational control of the
assets which it owns. It has no greenhouse
gas emissions to report from its operations
nor does it have responsibility for any other
emissions producing sources under the
Companies Act 2006 (Strategic Report and
Directors’ Report) Regulations 2013, including
those within the Company’s underlying
investment portfolio. Consequently, the
Company consumed less than 40,000 kWh of
energy during the year in respect of which the
Directors’ Report is prepared and therefore
is exempt from the disclosures required
under the Streamlined Energy and Carbon
Reportingcriteria.
Political Donations
The Company has not made any political
donations in the past, nor does it intend to do
so in the future.
Qualifying Indemnity Provision
The Company has maintained Directors’ and
Officers’ Liability Insurance on behalf of the
Directors, through a policy arranged by the
manager, indemnifying the Directors in respect
of certain liabilities which may be incurred
by them in connection with the activities of
theCompany.
Acquisition of Own Shares
There was no acquisition of own shares during
the year.
Share capital
As at 31 March 2023, the Company’s issued
share capital was 2,541,046 Ordinary Shares
of 50 pence each, of which none were held
intreasury.
The Company cancelled 2,000,000 Deferred
Shares of £0.005 on 22 September 2022
Financial risk management
The principal risks and uncertainties regarding
the Company’s future financial performance
are set out in note 13 of the financial
statements. The Directors do not consider that
the Company faces any significant credit risk,
liquidity risk or cash flow risk.
Going Concern
The Directors consider the Company to be well
placed to operate for at least twelve months
(21June 2024) from the date of this report,
as the Company has sufficient cash liquidity
to pay its liabilities as and when they fall due
and also to invest in new opportunities as
they arise. The cash and publicly tradeable
investments when compared to the non-
discretionary cash outflows of the company
are more than sufficient to allow the company
to continue to meet these commitments, even
if investee companies cease to be able to pay
22 Rockwood Strategic Plc
dividends or loan stock interest. This has been
further discussed in Note 1 to the financial
statements.
Share price
The average share price of the Company’s
quoted Ordinary Shares in the year ended
31 March 2023 was £15.5. In the year, the share
price reached a maximum of £19.6 (1 decimal
place) and a minimum of £13.7 (1 decimal place).
The closing share price on 31 March 2023 was
£18.2 (1 decimal place).
Post Balance Sheet Events
The Company had no post balance sheet
events. Future Developments are covered in
the Investments Managers Report on page 7.
Audit information
Each of the Directors who held office at the
date of approval of the Report of the Directors
confirms that:
1. So far as the Director is aware, there is no
relevant audit information of which the
Company’s auditor is unaware; and
2. The Director has taken all the steps that
they should have taken as a Director in
order to make themselves aware of any
relevant audit information and to establish
that the Company’s auditor is aware of
that information.
Annual General Meeting
The Notice of Annual General Meeting to be
held at 11:00am on Tuesday 12 September
2023 is set out on pages 47 to 49. Details of the
business to be transacted are outlined below:
Resolution 1: Report and accounts
As required by company law, the annual report
and accounts will be laid before shareholders.
Resolutions 2 & 3: Remuneration Report
and Policy
The Directors are seeking the authorisation to
approve the Directors Remuneration Report
and Directors Remuneration Policy for the
financial year ended 31 March 2023 as set out
on pages 19 to 20. The Remuneration Report
gives details of Directors’ remuneration for the
year ended 31 March 2023.
Resolutions 4 -6: Re-election of Directors
Each of the Directors will stand for re-election
at the AGM.
Resolution 7: Auditor
The re-appointment of BDO LLP as auditor and
a resolution allowing the Directors to determine
their remuneration.
Resolution 8: Directors’ authority to allot shares
The Directors are seeking the usual authority
to allot shares. Resolution 8 in the Notice of
Annual General Meeting seeks authority to allot
Ordinary Shares up to an aggregate nominal
amount of £438,553.17 (being an amount equal
to 33% of the total issued share capital of the
Company as at the date of this report). The
Directors have no present intention to exercise
this authority.
Resolution 9: Sub-division of shares
The Board has considered whether a
recommendation of a sub-division of the
Company’s shares is in the best interest
of the Company’s shareholders. Following
consideration, in conjunction with the Manager,
it is believed that the sub-division could
potentially increase the marketability of the
Company’s shares, particularly from investors
seeking to trade smaller quanta of the
Company’s shares, and therefore potentially
increase the liquidity profile of the Company’s
shares accordingly. The Board therefore
believes that it is appropriate to recommend a
sub-division of each existing ordinary share of
50 pence each into ten new ordinary shares of
5 pence each.
The share sub-division would result in
shareholders holding 10 Ordinary Shares
for each existing Ordinary Share they held
immediately prior to the share sub-division.
The resolution is conditional upon the new
Ordinary Shares being admitted to the Official
List of the FCA and to trading on the London
Stock Exchange’s main market for listed
securities, although the date of the share
sub-division has not yet been settled, and will
be determined by the Directors in due course
should they wish to implement.
If the proposed share sub-division proceeds,
it is expected that the price of each new
Ordinary Share will become one tenth of the
price of the existing Ordinary share. This will
reflect the fact that shareholders will own ten
times as many ordinary shares. Shareholders
should however note that, subject to market
movements, the aggregate value of their
shareholdings should remain the same.
Additionally, the share sub-division will not
have any impact on the Company’s net assets
as no change in the total aggregate nominal
value of the Company’s issued share capital will
occur.
The new Ordinary Shares will carry the same
rights in all respects as the existing Ordinary
shares, including voting rights. Mandates and
other instructions for the payment of dividends
and communication preferences will continue
to apply to the new Ordinary Shares.
The new Ordinary Shares will be in registered
form and may be held in certificated or
uncertificated form. Following the share sub-
division becoming effective, share certificates
in respect of the existing Ordinary Shares will
cease to be valid and will be cancelled. New
certificates in respect of the new Ordinary
Shares will be issued to those shareholders
who hold their existing Ordinary Shares
in certificated form. When the Directors
determine that the share sub-division should
proceed, a full timetable of the process will be
issued to shareholders.
Resolutions 10 & 11: Authority to allot shares
outside of pre-emption rights
Subject to the passing of resolution 8,
resolutions 10 and 11 will allow the Company
to issue, in aggregate, up to 20 per cent. of
the number of Ordinary Shares in issue as at
31 March 2023, and to sell Ordinary Shares
held in treasury for cash as if section 561 of
the Companies Act 2006 did not apply. The
Directors recognise that this authority is
beyond the standard 10 per cent. sought by
investment companies, but believe that the
passing of both resolution 10 and resolution 11
is in the interests of Shareholders, given that
the authority is intended to be used to fund
future acquisitions of investments in line with
the Company’s investment policy, thereby
mitigating the potential dilution of investment
returns for existing Shareholders. Furthermore,
new Ordinary Shares issued under this
authority will only be issued at a minimum
price equal to the relevant prevailing net asset
value per share plus a premium to cover any
expenses of the relevant issue and therefore
should not be dilutive to the net asset value
(“NAV”) per existing share. The Directors have
no present intention to exercise this authority.
If resolution 10 is passed but resolution 11 is
not passed, Shareholders will only be granting
Directors the authority to allot up 10 per cent.
of the existing issued Ordinary Share capital of
the Company.
Director’s Report (continued)
Overview Governance
Financial
Statements
Other
Information
23Rockwood Strategic Plc
Resolution 12: Authority to make market
purchases of the Company’s own shares
Resolution 12, which is a special resolution, will
give the Company authority to make market
purchases of up to 398,419 Ordinary Shares,
representing 14.99% of the Company’s issued
ordinary share capital (excluding treasury
shares) as at the date of this report (the latest
practicable date before publication of this
document).
The resolution sets minimum and maximum
prices. The Directors will only use this authority
to undertake a further share buyback and
consider it useful to retain the authority
for the future in case circumstances alter.
The Directors shall ensure that all legal and
regulatory requirements associated with any
future purchases of the Company’s own shares
are fulfilled including, in the event that the
purchase would result in any shareholder being
obliged to make an offer under Rule 9.1 of the
Takeover Code and the requirement to seek a
waiver from the Takeover Panel.
The authorities contained in Resolutions 8,
10 and 11 will continue until the AGM of the
Company in 2024. It is intended that renewal of
these authorities will be sought at each AGM.
Recommendation
The board considers that the passing of the
resolutions to be proposed at the AGM is in the
interests of the Company and its shareholders
as a whole and they unanimously recommend
that shareholders vote in favour of those
resolutions.
Approved by the Board of Directors and signed
on its behalf
SGH Company Secretaries Limited
Company Secretary
21 June 2023
24 Rockwood Strategic Plc
Directors’ Responsibility
Statement
The Directors are responsible for preparing the
Directors’ Report and the financial statements
in accordance with applicable law and
regulations.
Company law requires the Directors to prepare
financial statements for each financial year.
Under that law the Directors have elected to
prepare the Company financial statements
in accordance with UK adopted International
Accounting Standards. Under company law
the Directors must not approve the financial
statements unless they are satisfied that they
give a true and fair view of the state of affairs
of the Company and of the profit or loss of the
Company for that period. The Directors are also
required to prepare financial statements in
accordance with the rules of the London Stock
Exchange for companies trading securities on
the Alternative Investment Market.
In preparing these financial statements, the
Directors are required to:
Æ Select suitable accounting policies and
then apply them consistently;
Æ Make judgements and accounting
estimates that are reasonable and prudent;
Æ State whether they have been prepared in
accordance with UK adopted International
Accounting Standards, subject to any
material departures disclosed and
explained in the financial statements; and
Æ Prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Company’s
transactions and disclose with reasonable
accuracy at any time the Financial Position
of the Company and enable them to ensure
that the financial statements comply with the
requirements of the Companies Act 2006.
They are also responsible for safeguarding
the assets of the Company and hence for
taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for preparing the
Annual Report in accordance with applicable
law and regulations. The Directors consider the
Annual Report and the financial statements,
taken as a whole, provide the information
necessary to assess the Company’s position,
performance and strategy and is fair, balanced
and understandable.
Website publication
The Directors are responsible for ensuring that
the Annual Report and Financial Statements
are made available on a website. Financial
statements are published on the Company’s
website in accordance with legislation in the
United Kingdom governing the preparation
and dissemination of financial statements,
which may vary from legislation in other
jurisdictions. The maintenance and integrity
of the Company’s website is the responsibility
of the Directors. The Directors’ responsibility
also extends to the ongoing integrity of the
Financial Statements contained herein.
Overview Governance
Financial
Statements
Other
Information
25Rockwood Strategic Plc
Independent Auditor’s
Report
Independent auditor’s report to the members of Gresham House Strategic plc
Opinion on the financial statements
In our opinion the financial statements:
Æ give a true and fair view of the state of the
Company’s affairs as at 31 March 2023 and
of its profit for the year then ended;
Æ have been properly prepared in accordance
with UK adopted international accounting
standards; and
Æ have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements of
Rockwood Strategic Plc (“the Company”) for
the year ended 31 March 2023 which comprise
the statement of comprehensive income,
statement of financial position, statement of
cash flows, statement of changes in equity and
notes to the financial statements, including a
summary of significant accounting policies.
The financial reporting framework that has
been applied in their preparation is applicable
law and UK adopted international accounting
standards.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described
in the Auditor’s responsibilities for the audit of
the financial statements section of our report.
We believe that the audit evidence we have
obtained is sufficient and appropriate to provide
a basis for our opinion. Our audit opinion is
consistent with the additional report to the audit
committee.
Independence
Following the recommendation of the audit
committee, we were appointed by the Board
of Directors 13 May 2013 to audit the financial
statements for the year ended 31 March 2013
and subsequent financial periods. The period
of total uninterrupted engagement including
retenders and reappointments is 11 years,
covering the years ended 31 March 2013 to
31 March 2023. We remain independent of
the Company in accordance with the ethical
requirements that are relevant to our audit of
the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed
public interest entities, and we have fulfilled
our other ethical responsibilities in accordance
with these requirements. The non-audit
services prohibited by that standard were not
provided to the Company.
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the Directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of
the Company’s ability to continue to adopt the
going concern basis of accounting included:
Æ Evaluating the appropriateness of the
Directors’ method of assessing the going
concern in light of market volatility and
the present uncertainties in economic
recovery created by the current economic
environment of high inflation and interest
rates, by reviewing the information used
by the Directors in completing their
assessment; and
Æ Assessing the liquidity of the investment
portfolio, which is available to meet the
future obligations and operating expenses
of the Company for a period of 12 months
from the date of approval of these financial
statements.
Based on the work we have performed, we
have not identified any material uncertainties
relating to events or conditions that,
individually or collectively, may cast significant
doubt on the Company’s ability to continue as
a going concern for a period of at least twelve
months from when the financial statements
are authorised for issue.
In relation to the Company’s reporting on how
it has applied the UK Corporate Governance
Code, we have nothing material to add or
draw attention to in relation to the Directors’
statement in the financial statements
about whether the Directors considered it
appropriate to adopt the going concern basis
of accounting.
Our responsibilities and the responsibilities of
the Directors with respect to going concern
are described in the relevant sections of this
report.
26 Rockwood Strategic Plc
Overview
Key audit matter Valuation and ownership of
investments
2023
Yes
2022
Yes
Materiality Financial statements as a whole
£495k (2022: £540k) based on 1% (2022: 1.25%) net assets
(2022: total assets).
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal control, and
assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls,
including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including
those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter
Valuation and
ownership of
Investments
(See accounting
policy on Note 1 and
note 8)
Investments are held in
quoted companies.
The Company’s performance
is largely based on the
returns on these investment
which is, in turn, driven
by the valuation. As such,
there is a potential risk
of overstatement of
investment valuations,
although this is mitigated to
an extent by the valuations
being produced by the
administrator and reviewed
and approved by the Board.
Due to the significance of
this balance we considered
it to be a key audit matter.
In respect of 100% of the investments, we performed the following procedures:
Æ Agreed all additions and disposals to supporting contract notes
Æ Confirmed that bid price has been used by agreeing to externally quoted prices;
Æ Re-performed the calculation of the value attributable to the company based on the
closing bid price
Æ In respect of the ownership of investments we obtained direct confirmation from the
custodian regarding all investments held at the balance sheet date.
Key observations:
Based on the procedures performed we did not identify any matters to suggest that the
valuation and ownership of investments was not appropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality
to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the
basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated
as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Independent Auditor’s Report (continued)
Overview Governance
Financial
Statements
Other
Information
27Rockwood Strategic Plc
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
2023 2022
Materiality £495k £540k
Materiality Basis for determining
materiality
1% value of net assets 1.25% value of total assets
Rationale for the benchmark applied As an investment company, the principal
operations of the audited entity which impact
the decision making of the stakeholders are
investments. Hence net assets has been chosen as
the benchmark to set materiality.
The Asset value of the Company is a key indicator
of the performance and as such the most
relevant benchmark for the users of the financial
statements.
Total assets has been used as a basis as there
were significant disposals during the period,
significantly changing the composition of the
investments and cash. The cash is available to
reinvest. The Asset value of the Company is a key
indicator of the performance and as such the most
relevant benchmark for the users of the financial
statements.
Performance materiality £372k £405k
Basis for determining performance
materiality
75% of materiality. 75% of materiality.
Rationale for the percentage applied for
performance materiality
We considered a number of factors including
the expected total value of known and likely
misstatements (based on past experience and
other factors) and management’s attitude towards
proposed adjustments.
We considered a number of factors including
the expected total value of known and likely
misstatements (based on past experience and
other factors) and management’s attitude towards
proposed adjustments.
Lower testing threshold
We also determined that for items impacting realised return, a misstatement of less than materiality for the financial statements as a whole, could
influence the economic decisions of users. As a result, we determined a lower testing threshold for these items based on 5% gross expenditure
(2022: 5% gross expenditure) of £95k (2022: £124k).
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £24k (2022: £27k).
We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the Report and Accounts
other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility
is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement relating to the parent
company’s compliance with the provisions of the UK Corporate Governance Code specified for our
review.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit.
28 Rockwood Strategic Plc
Going concern and
longer-term viability
Æ The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and
any material uncertainties identified set out on page 21; and
Æ The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and why
the period is appropriate set out on page 12.
Other Code provisions Æ Directors’ statement on fair, balanced and understandable set out on page 18;
Æ Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page10;
Æ The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 18; and
Æ The section describing the work of the audit committee set out on page 18.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006
and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
Æ the information given in the Strategic report and the Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
Æ the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report.
Directors’ remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with
the Companies Act 2006.
Corporate governance
statement
In our opinion, based on the work undertaken in the course of the audit the information about internal control and risk
management systems in relation to financial reporting processes and about share capital structures, given in compliance
with rules 7.2.5 and 7.2.6 in the Disclosure Guidance and Transparency Rules sourcebook made by the Financial Conduct
Authority (the FCA Rules), is consistent with the financial statements and has been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in this information.
In our opinion, based on the work undertaken in the course of the audit information about the Parent Company’s corporate
governance code and practices and about its administrative, management and supervisory bodies and their committees
complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
We have nothing to report arising from our responsibility to report if a corporate governance statement has not been
prepared by the Parent Company.
Matters on which we
are required to report
by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
Æ adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
Æ the Parent Company financial statements and the part of the Directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
Æ certain disclosures of Directors’ remuneration specified by law are not made; or
Æ we have not received all the information and explanations we require for our audit.
Independent Auditor’s Report (continued)
Overview Governance
Financial
Statements
Other
Information
29Rockwood Strategic Plc
Responsibilities of Directors
As explained more fully in the Directors’
responsibilities statement, the Directors are
responsible for the preparation of the financial
statements and for being satisfied that they
give a true and fair view, and for such internal
control as the Directors determine is necessary
to enable the preparation of financial
statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the
Directors are responsible for assessing the
Company’s ability to continue as a going
concern, disclosing, as applicable, matters
related to going concern and using the going
concern basis of accounting unless the
Directors either intend to liquidate the Group or
the Parent Company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement
when it exists. Misstatements can arise from
fraud or error and are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the basis
of these financial statements.
Extent to which the audit was capable of
detecting irregularities, including fraud
Irregularities, including fraud, are instances
of non-compliance with laws and regulations.
We design procedures in line with our
responsibilities, outlined above, to detect
material misstatements in respect of
irregularities, including fraud. The extent to
which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
We gained an understanding of the legal
and regulatory framework applicable to the
Company and the industry in which it operates,
and considered the risk of acts by the Company
which were contrary to applicable laws and
regulations, including fraud. These included
but were not limited to compliance with the
Companies Act 2006 and applicable accounting
standards.
We communicated relevant identified laws
and regulations and potential fraud risks
to all engagement team members and
remained alert to any indications of fraud or
non-compliance with laws and regulations
throughout the audit.
We focused on laws and regulations that could
give rise to a material misstatement in the
Company financial statements.
Our tests included, but were not limited to:
Æ agreement of the financial statement
disclosures to underlying supporting
documentation;
Æ enquiries of the Board and relevant Service
Organisations;
Æ review of minutes of board meetings
throughout the period; and
Æ obtaining an understanding of the control
environment in monitoring compliance
with laws and regulations.
Fraud
The engagement team discussed how and
where fraud might occur in the financial
statements.
Based on our risk assessment, we considered
the areas most susceptible to fraud to be
management override of controls. Our tests
included, but were not limited to:
Æ The procedures set out in the Key Audit
Matters section above;
Æ Recalculating investment management
fees in total;
Æ Analysing the whole population of
dividend receipts to identify any unusual
items that could indicate a capital
distribution, for example where a dividend
represents a particularly high yield;
Æ Obtaining independent confirmation of
bank balances; and
Æ Testing journals which met a defined
risk criteria by agreeing to supporting
documentation.
Our audit procedures were designed to respond
to risks of material misstatement in the
financial statements, recognising that the risk
of not detecting a material misstatement due
to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve
deliberate concealment by, for example,
forgery, misrepresentations or through
collusion. There are inherent limitations in the
audit procedures performed and the further
removed non-compliance with laws and
regulations is from the events and transactions
reflected in the financial statements, the less
likely we are to become aware of it
A further description of our
responsibilities is available on the
Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent
Company’s members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so
that we might state to the Parent Company’s
members those matters we are required
to state to them in an auditor’s report and
for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the Parent
Company and the Parent Company’s members
as a body, for our audit work, for this report, or
for the opinions we have formed.
Peter Smith, Senior Statutory Auditor
For and on behalf of BDO LLP, Statutory Auditor
London, UK
21 June 2023
BDO LLP is a limited liability partnership
registered in England and Wales (with
registered number OC305127).
30 Rockwood Strategic Plc
Statement of Comprehensive
Income
for the year ended 31 March 2023
Notes
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Gains on investments 8 8,991 20,007
Revenue
Bank interest income 109 1
Loan note interest income 274 563
Portfolio dividend income 925 99
Other income 40 –
1,348 663
Administrative expenses
Directors fees and other staff costs 3 (102) (173)
Performance fee 11 (625) (2,772)
Other costs 4 (1,182) (2,302)
Total administrative expenses (1,909) (5,247)
Profit before taxation 8,430 15,423
Taxation 5 (1) (1,580)
Profit for the financial year 8,429 13,843
Attributable to:
– Equity shareholders of the Company 8,429 13,843
Basic and Diluted earnings per ordinary share for profit from continuing operations and
for profit for the year (pence) 6 331.72p 428.76p
There are no components of other comprehensive income for the current year (2022: None), all income arose from continuing operations.
Overview Governance
Financial
Statements
Other
Information
31Rockwood Strategic Plc
Statement of
Financial Position
as at 31 March 2023
Notes
31 March
2023
£’000
31 March
2022
£’000
Non-current assets
Investments at fair value through profit or loss 8 39,255 31,609
Current assets
Cash and cash equivalents 11,631 10,507
Trade and other receivables 9 73 1,019
11,704 11,526
Total assets 50,959 43,135
Current liabilities
Trade and other payables 10 (541) (547)
Tax liability - (1,580)
Performance fee payable 11 (625) -
Total liabilities (1,166) (2,127)
Net current assets/(liabilities) 10,538 9,399
Net assets 49,793 41,008
Represented by:
Issued capital 12 1,281 1,281
Share premium 13,063 13,063
Revenue reserve 14 24,105 15,320
Capital redemption reserve 11,344 11,344
Total equity 49,793 41,008
The NAV per share on 31 March 2023 is 1,959.6 pence (2022: 1,613.8 pence).
These financial statements were approved and authorised for issue by the Board of Directors on 21 June 2023. Signed on behalf of the Board
ofDirectors.
Noel Lamb Kenneth Lever
Chairman Director
32 Rockwood Strategic Plc
Statement of
Cash Flows
for the year ended 31 March 2023
Notes
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Cash flow from operating activities
Cash flow from operations a (670) (7,306)
Portfolio dividend income received 862 99
Corporation tax paid (1,581) –
Net cash outflow from operating activities (1,389) (7,207)
Cash flows from investing activities
Purchase of investments 8* (20,015) (1,457)
Sale of investments 8* 22,528 43,122
Net cash inflow from investing activities 2,513 41,665
Cash flows from financing activities
Dividends paid 7 - (535)
Return of Capital B Share Scheme and Tender Offer - (25,021)
Net cash outflow from financing activities - (25,556)
Change in cash and cash equivalents 1,124 8,902
Opening cash and cash equivalents 10,507 1,605
Closing cash and cash equivalents 11,631 10,507
Note
a) Reconciliation of profit for the year to net cash outflow from operations
£’000 £’000
Profit for the year 2 8,429 13,843
Rolled up interest - (224)
Gains on investments 8 (8,991) (20,007)
Portfolio dividend income (925) (99)
Adjustment for accrued interest on redemption/conversion - (16)
Operating loss (1,487) (6,503)
Decrease/(increase) in trade and other receivables 153 (65)
Increase/(decrease) in trade and other payables 664 (738)
Net cash outflow from operations (670) (7,306)
* The purchase and sale of financial investments are the cash paid or received during the year and exclude unsettled investments as at 31 March
2023.
Overview Governance
Financial
Statements
Other
Information
33Rockwood Strategic Plc
Statement of Changes
in Equity
for the year ended 31 March 2023
B shares
£’000
D shares
£’000
Ordinary
Share
Capital
£’000
Share
Premium
£’000
Revenue
Reserve
£’000
Capital
Redemption
Reserve
£’000
Total
Equity
£’000
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
Profit and total comprehensive income for the year - - - - 8,429 - 8,429
Total profit and comprehensive income for the year - 10 1,271 13,063 23,749 11,344 49,437
Contributions by and distributions to owners
Return of unclaimed special dividends and capital
payments – – – – 356 – 356
Balance at 31 March 2023 - 10 1,271 13,063 24,105 11,344 49,793
34 Rockwood Strategic Plc
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 accounting policies applied are consistent with the prior year.
Basis of preparation
These financial statements for year ended 31 March 2023 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.
The functional and presentational currency of the Company is Pounds Sterling and has been determined on the basis of the currency of the
Company’s share capital and the currency in which dividends and expenses are paid. The Financial Statements are presented to the nearest thousand
(£’000).
Going concern
In assessing the Company as a going concern, the Directors have considered the market valuations of the portfolio investments, the current
economic outlook and forecasts for Company costs.
The Board convened a general meeting for Shareholders to vote on a proposal to change its investment strategy from the 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 UK small companies at a general meeting on 25 April 2022.
The Company is in a net asset position of £49.8 million (2022: £41.0 million) and 100% 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’s ability to continue as a going concern
and are satisfied that the Company has adequate resources to continue in operational existence for a period of at least 12 months from the date when
these financial statements were approved.
Financial instruments:
Trade debtors and creditors
Trade debtors and creditors are held at amortised cost and are accounted for at fair 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 with original
maturity of 3 months or less that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Overview Governance
Financial
Statements
Other
Information
35Rockwood Strategic Plc
1. Basis of preparation and significant accounting policies (continued)
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:
Æ Fair Value should be estimated at each Measurement Date (each time Fair Value based Net Asset Value (NAV) is reported to investors (LPs)).
Æ The Price of a Recent Investment (if deemed Fair Value) should be used to calibrate against the alternative valuation methodologies.
Æ Calibration is required by accounting standards.
Æ 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.
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 enacted or substantively enacted at the balance sheet date 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
or other comprehensive income in which case the deferred tax is also recognised in equity or other comprehensive income..
36 Rockwood Strategic Plc
1. Basis of preparation and significant accounting policies (continued)
Performance fee
Under the terms of the Investment Management Agreement (7 April 2022) with Harwood Capital LLP, the Company will pay the Investment Manager a
performance fee equal to 10 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
£100 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 £100 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
feeperiod.
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.
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:
Æ IFRS Practice Statement 2 – Disclosure of Accounting Policies;
Æ Amendment to IAS 12, Income taxes effective from 1 January 2023;
Æ Amendment to IAS 8, change in definition of accounting estimates, effective from 1 January 2023.
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.
Notes to the Financial Statements (continued)
Overview Governance
Financial
Statements
Other
Information
37Rockwood Strategic Plc
2. Statement of comprehensive income
The Company’s profit for the year was £8.429 million (2022: profit of £13.843 million).
The Company has recognised gains on investments through the statement of comprehensive income of £8.991 million (2022: income of
£20.007 million).
3. Information regarding Directors and employees
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Directors’ remuneration summary
Basic salaries 95 161
Social security costs 7 12
102 173
Year ended 31 March 2023 Year ended 31 March 2022
Emoluments
£’000
Social
Security
costs
£’000
Total
£’000
Emoluments
£’000
Social
Security
costs
£’000
Total
£’000
Analysis of Directors’ remuneration
C Berry (Resigned on 22 November 2021) - - - 25.9 – 25.9
D Potter (Resigned on 11 June 2021) - - - 24.4 – 24.4
H Sinclair (Resigned on 5 November 2021) - - - 41.3 – 41.3
K Lever 27.5 - 27.5 27.5 – 27.5
G Bird (Appointed 10 June 2021, resigned on
30 August 2022) 11.5 - 11.5 22.2 – 22.2
S Pyper (Resigned on 31 March 2022) - - - 11.4 – 11.4
N Lamb (Appointed on 20 January 2022) 40.0 - 40.0 8.3 – 8.3
P Dudley (Appointed on 1 September 2022) 16.0 - 16.0 – – –
Social security costs - 6.6 6.6 - 12.0 12.0
95.0 6.6 101.6 161.0 12.0 173.0
The Company has no employees.
Year ended
31 March
2023
No.
Year ended
31 March
2022
No.
Directors
Investment and related administration 3 3
3 3
As at 31 March 2023, the Board comprises 1 Chairman and 2 Non-executive Directors (2022: 1 Chairman and 2 Non-executive Directors).
38 Rockwood Strategic Plc
4. Other costs
Profit for the year has been derived after taking the following items into account:
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Auditors remuneration
Fees payable to the current auditor for the audit of the Company’s annual financial statements 37 40
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
Under provision of tax fee - 3
Recharge cost - 1
Analysis of other costs:
Professional fees* 420 1,539
Investment Trust Company conversion costs 470 –
Management fee 112 593
Other general overheads 76 103
1,182 2,302
* The company’s corporate activity during the year to March 2022 led to significant costs, with professional fees totalling £0.67m and legal fees totalling £0.37m.
5. Taxation
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
UK corporation tax
Corporation tax liability at 19% (2022: 19%) 1 1,580
1 1,580
Current tax 1 1,580
Tax on profit from ordinary activities 1 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% (2022: 19%).
The differences are explained below:
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Current tax reconciliation
Profit before taxation 8,430 15,423
Current tax charge at 19% (2022: 19%) 1,602 2,930
Effects of:
Non-taxable income (227) (553)
Non-deductible expenditure 103 21
Chargeable gains (1,341) (27)
Deferred tax not recognised (136) (791)
Tax on profit on ordinary activities 1 1,580
Notes to the Financial Statements (continued)
Overview Governance
Financial
Statements
Other
Information
39Rockwood Strategic Plc
5. Taxation (continued)
Deferred tax
There remains an unrecognised deferred tax asset in respect of tax losses and other temporary differences. The unrecognised deferred tax asset
is £34 million (2022: £34 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 £136 million
(2022: £136 million).
An estimated deferred tax liability on the unrealised gains in the portfolio at year end is nil and therefore no liability has been recognised.
The movement in the year is taken to the statement of comprehensive income.
6. Earnings per share
Basic earnings per share is calculated by dividing the profit/loss attributable to ordinary shareholders by the weighted average number of Ordinary
Shares during the year. Diluted earnings per share is calculated by dividing the profit/loss attributable to shareholders by the adjusted weighted
average number of Ordinary Shares in issue.
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Earnings
Profit for the year 8,429 13,843
Number of shares (‘000)
Weighted average number of ordinary shares in issue for basic EPS 2,541 3,229
Weighted average number of ordinary shares in issue for diluted EPS 2,541 3,229
Earnings per share
Basic EPS 331.72p 428.76p
Diluted EPS 331.72p 428.76p
As at 31 March 2023, the total number of shares in issue was 2,541,046 (2022: 2,541,046). No shares were bought back by the Company (2022: 939,838).
There are no share options outstanding at the end of the year.
7. Dividends
The Company paid no dividend to shareholders in the year ended 31 March 2023 (2022: £534,664). Unclaimed historic dividends amounting to
£355,855 were reclassified to revenue reserve during the year (2022: £63,834).
40 Rockwood Strategic Plc
8. Investments at fair value through profit or loss
Year ended 31 March 2023
Value at
1 April
2022
£’000
Additions
£’000
Disposal
proceeds
£’000
Gain on
disposals
£’000
Revaluation
£’000
Transfer
between
levels
£’000
Value at
31 March
2023
£’000
Investments in quoted companies
(Level1) 28,692 19,120 (17,548) 12,673 (3,682) - 39,255
Other unquoted investments
(Level3) 2,917 1,207 (4,124) - - - -
Total investments at fair value
through profit or loss 31,609 20,327 (21,672) 12,673 (3,682) - 39,255
Year ended 31 March 2022
Value at
1 April
2021
£’000
Additions
£’000
Disposal
proceeds
£’000
Gain on
disposals
£’000
Revaluation
£’000
Transfer
between
levels
£’000
Value at
31 March
2022
£’000
Investments in quoted companies
(Level1) 47,565 596 (41,173) 15,667 4,298 1,739 28,692
Other unquoted investments
(Level3) 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
For the year ended 31 March 2023, there were no transfers of the investments between the fair value hierarchy levels.
For the year ended 31 March 2022, there was a transfer from Level 3 to Level 1 of £389,886 Northbridge loan notes converted to equity shares and
National World amounting to £1,348,931 converted to equity shares as a result of its admission to AIM.
The revaluations and gains on disposal above are included in the statement of comprehensive income as gains on investments.
Year ended
31 March
2023
£’000
Year ended
31 March
2022
£’000
Opening valuation 31,609 53,888
Acquisitions 20,327 1,675
Unrealised and realised gains on investment 8,991 20,007
Disposals (21,672) (43,961)
Closing valuation 39,255 31,609
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).
Notes to the Financial Statements (continued)
Overview Governance
Financial
Statements
Other
Information
41Rockwood Strategic Plc
8. Investments at fair value through profit or loss (continued)
The fair values of the Company’s investments is summarised as follows:
31 March
2023
£’000
2022
£’000
Level 1 39,255 28,692
Level 2 - –
Level 3 - 2,917
39,255 31,609
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 2023 and 31 March 2022, 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 investment are as follows:
31 March 2023 31 March 2022
Investments included £’000 Investments included £’000
Fair value None - The Lakes Distillery Company 2,917
- 2,917
Valuation policy: Every three months, the investment manager within Harwood Capital LLP is asked to revalue the investments that he looks after
and submit his valuation recommendation to the Valuation and Pricing (“V&P“) Committee. The V&P Committee considers the recommendation made,
and approves or adjust the valuation as required.
Level 3 investments have been valued in accordance with the IPEV guidelines.
Investments in quoted companies (Level 1) have been valued according to the quoted bid price as at 31 March 2023.
At the year-end, the Company held 20.50% of the aggregate nominal value of voting equity of Pressure Technologies, in ordinary share capital.
Pressure Technologies is incorporated in the UK and at its year end 30th September 2022 had capital and reserves of £12.10 million and had made a
revenue loss of £4.04 million.
9. Trade and other receivables
31 March
2023
£’000
31 March
2022
£’000
Other debtors 63 1,001
Prepayments 10 18
73 1,019
42 Rockwood Strategic Plc
10. Trade and other payables
31 March
2023
£’000
31 March
2022
£’000
Due to Brokers 312 –
Unclaimed historic special dividends and capital payments - 356
Trade creditors 229 186
Social security - 5
541 547
There were no other creditors as at 31 March 2023 (2022: none).
The unclaimed special dividends and capital payments amounting to £420k between the periods of 2009 to 2014 were returned to the company in
2021, out of which £356k (2022: £64k) was reclassified to revenue reserves during the year as its reclaim period has lapsed.
11. Performance fees payable
31 March
2023
£’000
31 March
2022
£’000
Performance fees payable 625 –
625 –
12. Issued capital
31 March
2023
£’000
31 March
2022
£’000
Called up, allotted and fully paid:
2,541,046 (2022: 2,541,046) Ordinary Shares of 50 pence (2022: 50 pence) 1,271 1,271
2,000,000 (2022: 2,000,000) D shares of 0.50 pence (2022: 0.50 pence) 10 10
1,281 1,281
As at 31 March 2023, the total number of shares in issue were 2,541,046 (2022: 2,541,046).
The average share price of Rockwood Strategic Plc quoted Ordinary Shares in the year-ended was 1,547.47 pence. In the year, the share price reached
a maximum of 1,955.00 pence and a minimum of 1,370.00 pence. The closing share price on 31 March 2023 was 1,820.00 pence.
The Company’s shares are listed on the premium segment of the Main Market on the London Stock Exchange 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 2023, £39.3 million of the Company’s net assets were invested in quoted investments, £nil in unquoted
investments and £11.7 million in liquid balances (31 March 2022: £28.7 million in quoted investments, £2.9 million in unquoted investments and
£11.5 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.
Notes to the Financial Statements (continued)
Overview Governance
Financial
Statements
Other
Information
43Rockwood Strategic Plc
13. Financial instruments and financial risk management (continued)
All financial assets with the exception of investments, which are held at fair value through profit or loss, are categorised as financial assets at
amortised cost and all financial liabilities are categorised as amortised cost, amortised cost is a reasonable approximation of its fair value.
a) Market risk
i) Price risk
Market price risk arises from uncertainty about the future valuations of financial instruments held in accordance with the Company’s investment
objectives. These future valuations are determined by many factors but include the operational and financial performance of the underlying investee
companies, as well as market perceptions of the future of the economy and its impact upon the economic environment in which these companies
operate. This risk represents the potential loss that the Company might suffer through holding its investment portfolio in the face of market
movements, which was a maximum of £39.3 million (2022: £31.6 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 2023, the Company held interests in
18 companies (2022: 9 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% (2022: 25%) movement in overall
shareprices.
As at 31 March 2023 +25% -25%
Security Valuation basis Fair value
Impact
£’000
Impact
per share
(in pence)
Impact
£’000
Impact
per share
(in pence)
Quoted investments Latest share price 39,255 9,814 386.21 (9,814) (386.21)
As at 31 March 2022 +25% -25%
Security Valuation basis Fair value
Impact
£’000
Impact
per share
(in pence)
Impact
£’000
Impact
per share
(in pence)
Quoted investments Latest share price 28,692 7,173 282.29 (7,173) (282.29)
The impact of a change of 25% (2022: 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 at 31 March 2022, there were none at 31 March 2023.
as there is no exposure to market price risk in the valuation methodology applied for these investments. Interest rates are less volatile than market
prices; therefore, the company has deemed it inappropriate to consider a 25% upward or downward move in interest rates. Interest rates are
determined by monetary policy and have been kept historically low due to quantitative easing and therefore we do not believe that interest rates will
be as volatile as share prices.
ii) Currency risk
The Company does not hold any significant assets or liabilities denominated in a currency other than sterling, the functional currency. The
transactions in foreign currency for the Company are highly minimal. Therefore, currency risk sensitivity analysis was not performed as the results
would not be significantly affected by movements in the value of foreign exchange rates.
iii) Cash flow interest rate risk
As the Company has no borrowings, it only has limited interest rate risk. The impact is on income and operating cash flow and arises from changes in
market interest rates. Some of the Company’s cash resources are placed in an interest paying current account to take advantage of preferential rates
and are subject to interest rate risk to that extent.
44 Rockwood Strategic Plc
13. Financial instruments and financial risk management (continued)
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
2023
£’000
31 March
2022
£’000
Loan stock investments – 2,917
Cash and cash equivalents* 11,631 10,507
Trade and other receivables 73 1,019
11,704 14,443
* £7.02m held in “on notice” term deposit accounts accruing interest at 4.18% (as at 31 March 2023) paid daily.
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 2023 and 2022 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 2023 is
£49.8 million (31 March 2022: £41.0 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 £24.105 million (2022: £15.32 million) which is fully distributable and can be utilised for any
futuredividends.
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 and its Investment Manager and significant
shareholder Harwood Capital LLP (Harwood).
The total payable to Harwood is as follows:
31 March 2023 31 March 2022
Performance fee £0.63 million £2.77 million
Management fee £0.11 million £0.59 million
Total £0.74 million £3.36 million
Notes to the Financial Statements (continued)
Overview Governance
Financial
Statements
Other
Information
45Rockwood Strategic Plc
15. Related party transactions (continued)
As at 31 March 2023, the following shareholders of the Company that are related to Harwood had the following interests in the issued shares of the
Company as follows:
31 March 2023 31 March 2022
Harwood Holdco Limited 734,000 Ordinary Shares 734,000 Ordinary Shares
R Staveley 25,689 Ordinary Shares 25,689 Ordinary Shares
The Directors’ remuneration and their interest in the Company are disclosed in the Director’s remuneration review in the annual report.
There are no other material related party transactions of which we are aware in the year ended 31 March 2023.
Investment Management Fees:
A monthly management fee of £10,000 (inclusive of VAT, if any) until the company’s NAV equals £60 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 £100 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.
16. Subsequent events note
The Company has converted to an Investment Trust Company on 1st April 2023 within the meaning of Sections 1158/1159 of the Corporation Tax Act 2010.
Share Issues:
The Company issued for cash 116,852 ordinary shares of 50 pence each in May/June 2023 from its block listing facility.
Æ 23 May 2023 - 50,000 at a price of 2,064.1 pence per share.
Æ 25 May 2023 - 15,000 at a price of 2,065.00 pence per share.
Æ 31 May 2023 - 15,000 at a price of 2,059.60 pence per share.
Æ 6 June 2023 - 10,000 at a price of 2,061.00 pence per share.
Æ 8 June 2023 - 21,852 at a price of 2,028.67 pence per share.
Æ 9 June 2023 - 5,000 at a price of 2,046.00 pence per share.
46 Rockwood Strategic Plc
Alternative Performance Measures
(APMS)
Alternative performance Measures (APMs)
APMs are often used to describe the performance of investment companies although they are not specifically defined under FRS 102. The Directors
assess the Company’s performance against a range of criteria which are viewed as relevant to both the Company and its market sector.
APM calculations for the Company are shown below.
Total Return
A measure of performance that includes both income and capital returns. This takes into account capital gains and reinvestment of dividends paid
out by the Company into its Ordinary Shares on the ex-dividend date. This is calculated for both the Share Price and the Net Asset Value.
Premium/(Discount)
The amount, expressed as a percentage, by which the share price is more/(less) than the Net Asset Value per Ordinary Share.
Ongoing Expenses
A measure, expressed as a percentage of the average daily net asset values during the year, of the regular, recurring annual costs of running an
investment company. This includes the Investment Management fee and excludes any variable performance fees. In the last two years there have
been exceptional expenses, which will not be ongoing, associated in 2022 with the Strategic Review and its related Extraordinary Meetings and in
2023 associated with moving from the AIM to the Main Market of the London Stock Exchange.
Overview Governance
Financial
Statements
Other
Information
47Rockwood Strategic Plc
Notice of Annual
General Meeting
NOTICE IS GIVEN that the Annual General
Meeting of the Company will be held at the
offices of Shakespeare Martineau LLP,
60 Gracechurch Street, London EC3V 0HR at
11:30 am on Tuesday 12 September 2023 to
consider the following resolutions, of which
resolutions 1 to 9 will be proposed as ordinary
resolutions and resolutions 10 to 12 will be
proposed as special resolutions:
Ordinary Resolutions
1. To receive the Annual Report
and Accounts for the year-ended
31 March 2023.
2. To receive and adopt the Directors’
Remuneration Report
3. To receive and approve the Directors’
Remuneration Policy
4. To re-appoint Paul Dudley as a Director of
the Company.
5. To re-elect Noel Lamb as a Director of the
Company.
6. To re-elect Ken Lever as a Director of the
Company.
7. To reappoint BDO LLP as auditors to
the Company to hold office until the
conclusion of the next general meeting
at which accounts are laid before the
members and to authorise the Directors to
determine their fees.
8. THAT the Directors of the Company be
generally and unconditionally authorised
in accordance with section 551 of the
Companies Act 2006 (the Act) to exercise
all the powers of the Company to allot
shares in the Company or to grant rights to
subscribe for, or convert any security into,
shares in the Company (Rights) up to an
aggregate nominal amount of £438,553.17
during the period commencing on the
date of the passing of this resolution and
expiring at the conclusion of the next
Annual General Meeting of the Company,
and provided further that the Company
shall be entitled before such expiry to
make an offer or agreement which would
or might require shares to be allotted or
Rights to be granted after such expiry
and the Directors shall be entitled to allot
shares and grant Rights under such offer
or agreement as if this authority had not
expired.
9. THAT, in accordance with section 618 of
the Companies Act 2006 (Act) and the
Company’s Articles of Association, the
Ordinary Shares of 50 pence each in the
capital of the Company be subdivided into
Ordinary Shares of 5 pence each, such
Ordinary Shares having the rights and
being subject to the restrictions attached
to them pursuant to the Company’s
Articles of Association for the time
being, provided that such sub-division
shall be conditional upon, and shall take
effect on, admission to the Official List
of the FCA and to trading on the London
Stock Exchange’s main market for listed
securities of the new ordinary shares
arising from such sub-division on such
other time and date as the Directors may,
in their absolute discretion, determine.
Special Resolutions
10. THAT, subject to and conditional upon
the passing of resolution 8 above, the
Directors of the Company be empowered
under section 570 of the Companies Act
2006 (the Act) to allot equity securities
(within the meaning of section 560 of
the Act) for cash and/or to sell or transfer
shares held by the Company in treasury
(as the directors shall deem appropriate)
under the authority conferred on them
under section 551 of the Act by resolution
8 above as if section 561(1) of the Act did
not apply to any such allotment provided
that this power shall be limited to:
(a) the allotment of equity securities in
connection with any rights issue or other
pro-rata offer in favour of the holders of
Ordinary Shares in the Company where the
equity securities respectively attributable
to the interests of all such holders of
shares are proportionate (as nearly as
may be) to the respective numbers of
shares held by them, provided that the
Directors of the Company may make such
arrangements in respect of overseas
holders of shares and/or to deal with
fractional entitlements as they consider
necessary or convenient; and
(b) the allotment (otherwise than under sub-
paragraph (a) above) of equity securities
and/or the sale or transfer of shares
held by the Company in treasury (as the
Directors shall deem appropriate) up to an
aggregate nominal amount of £132,894.90
(representing approximately 10.0% of the
ordinary share capital of the Company
at the latest practicable date before
publication of this Notice).
and this authority shall expire on the conclusion
of the Company’s Annual General Meeting in
2024 provided that the Company may before
such expiry make offers or agreements which
would or might require equity securities to be
allotted after such expiry and the Directors of
the Company may allot equity securities under
such offers or agreements as if the power
conferred by this resolution had not expired
and provided further that this authority shall be
in substitution for, and to the exclusion of, any
existing authority conferred on the Directors.
48 Rockwood Strategic Plc
11. THAT, subject to and conditional upon
the passing of resolution 8 above, and
in addition to the authority granted in
resolution 9, the Directors of the Company
be empowered under section 570 of the
Companies Act 2006 (the Act) to allot
equity securities (within the meaning
of section 560 of the Act) for cash and/
or to sell or transfer shares held by the
Company in treasury (as the directors shall
deem appropriate) under the authority
conferred on them under section 551 of
the Act by resolution 8 above as if section
561(1) of the Act did not apply to any such
allotment provided that this power shall be
limited to:
(a) the allotment of equity securities in
connection with any rights issue or other
pro-rata offer in favour of the holders of
Ordinary Shares in the Company where the
equity securities respectively attributable
to the interests of all such holders of
shares are proportionate (as nearly as
may be) to the respective numbers of
shares held by them, provided that the
Directors of the Company may make such
arrangements in respect of overseas
holders of shares and/or to deal with
fractional entitlements as they consider
necessary or convenient; and
(b) the allotment (otherwise than under sub-
paragraph (a) above) of equity securities
and/or the sale or transfer of shares
held by the Company in treasury (as the
Directors shall deem appropriate) up to an
aggregate nominal amount of £132,894.90
(representing approximately 10.0% of the
ordinary share capital of the Company
at the latest practicable date before
publication of this Notice).
and this authority shall expire on the earlier
of 30 September 2024 or the conclusion of
the Company’s Annual General Meeting in
2024 provided that the Company may before
such expiry make offers or agreements which
would or might require equity securities to be
allotted after such expiry and the Directors of
the Company may allot equity securities under
such offers or agreements as if the power
conferred by this resolution had not expired
and provided further that this authority shall be
in substitution for, and to the exclusion of, any
existing authority conferred on the Directors.
12. THAT, the Company be generally and
unconditionally authorised to make
market purchases (as defined in the
Companies Act 2006) of Ordinary Shares
in the capital of the Company (Ordinary
Shares) on such terms and in such manner
as the Directors may from time to time
determine, provided that:
(a) the maximum number of Ordinary Shares
authorised to be purchased shall be
398,419 (or, subject to the implementation
of the subdivision of Ordinary Shares
approved in resolution 9 above, 3,984,190);
(b) the minimum price which may be paid for
an Ordinary Share is the nominal value
of an Ordinary Share at the time of the
purchase;
(c) the maximum price which may be paid for
an Ordinary Share is an amount equal to
105% of the average of the middle market
quotations for an Ordinary Share (as
derived from the Daily Official List) for the
five business days immediately preceding
the date on which the Ordinary Share is
contracted to be purchased;
(d) the minimum and maximum prices
per Ordinary Share referred to in sub-
paragraphs (b) and (c) of this resolution are
in each case exclusive of any expenses
payable by the Company;
(e) the authority conferred by this resolution
shall expire at the end of the Annual
General Meeting in 2024 (or if earlier at the
close of business on 30 September 2024)
unless such authority is varied, revoked
or renewed prior to such time by the
Company in general meeting; and
(f) the Company may make a contract to
purchase Ordinary Shares under the
authority hereby conferred prior to the
expiry of such authority which will or may
be completed wholly or partly after the
expiration of such authority.
By order of the Board
SGH Company Secretaries Limited
Company Secretary
21 June 2023
Registered Office: 6th Floor,
60 Gracechurch Street, London EC3V 0HR
Notice of Annual General Meeting (continued)
Overview Governance
Financial
Statements
Other
Information
49Rockwood Strategic Plc
Notice of Meeting Notes:
The following notes explain your general rights as a
shareholder and your right to attend and vote at this
Meeting or to appoint someone else to vote on your
behalf.
1. To be entitled to attend and vote at the Meeting
(and for the purpose of the determination by the
Company of the number of votes they may cast),
shareholders must be registered in the Register
of Members of the Company at close of trading
on Friday 8 September 2023. Changes to the
Register of Members after the relevant deadline
shall be disregarded in determining the rights of
any person to attend and vote at the Meeting.
2. Shareholders, or their proxies, intending to
attend the Meeting in person are requested,
if possible, to arrive at the Meeting venue at
least 20 minutes prior to the commencement
of the Meeting at 11:10am (UK time) on Tuesday
12 September 2023 so that their shareholding
may be checked against the Company’s Register
of Members and attendances recorded.
3. Shareholders are entitled to appoint another
person as a proxy to exercise all or part of
their rights to attend and to speak and vote on
their behalf at the Meeting. A shareholder may
appoint more than one proxy in relation to the
Meeting provided that each proxy is appointed
to exercise the rights attached to a different
Ordinary Share or Ordinary Shares held by that
shareholder. A proxy need not be a shareholder
of the Company.
4. In the case of joint holders, where more than
one of the joint holders’ purports to appoint a
proxy, only the appointment submitted by the
most senior holder will be accepted. Seniority
is determined by the order in which the names
of the joint holders appear in the Company’s
Register of Members in respect of the joint
holding (the first named being the most senior).
5. A vote withheld is not a vote in law, which
means that the vote will not be counted in the
calculation of votes for or against the resolution.
If no voting indication is given, your proxy
will vote or abstain from voting at his or her
discretion. Your proxy will vote (or abstain from
voting) as he or she thinks fit in relation to any
other matter which is put before the Meeting.
6. You can vote either:
Æ by logging on to www.signalshares.
com and following the instructions; you
can also vote by downloading the new
shareholder app, LinkVote+, on Apple App
Store or Google Play and following the
instructions.
Æ You may request a hard copy form of proxy
directly from the registrars, Link Group
(previously called Capita), on Tel: 0371 664
0300. Calls are charged at the standard
geographic rate and will vary by provider.
Calls outside the United Kingdom will be
charged at the applicable international
rate. Lines are open between 09:00 –
17:30, Monday to Friday excluding public
holidays in England and Wales.
Æ in the case of CREST members, by utilising
the CREST electronic proxy appointment
service in accordance with the procedures
set out below.
Æ if you are an institutional investor, you
may also be able to appoint a proxy
electronically via the Proxymity platform,
a process which has been agreed by the
Company and approved by the Registrar.
For further information regarding
Proxymity, please go to www.proxymity.
io. Your proxy must be lodged by 11:30am
on Friday 8 September 2023 in order to
be considered valid or, if the meeting is
adjourned, by the time which is 48 hours
before the time of the adjourned meeting.
Before you can appoint a proxy via this
process you will need to have agreed
to Proxymity’s associated terms and
conditions. It is important that you read
these carefully as you will be bound by
them and they will govern the electronic
appointment of your proxy. An electronic
proxy appointment via the Proxymity
platform may be revoked completely by
sending an authenticated message via the
platform instructing the removal of your
proxy vote;
In order for a proxy appointment to be valid
a form of proxy must be completed. In each
case the form of proxy must be received
by Link Group, PXS, 10th Floor, Central
Square, 29 Wellington Street, Leeds LS1 4DL by
11:30am on Friday 8 September 2023.
7. If you return more than one proxy appointment,
either by paper or electronic communication,
the appointment received last by the Registrar
before the latest time for the receipt of proxies
will take precedence. You are advised to read
the terms and conditions of use carefully.
Electronic communication facilities are open to
all shareholders and those who use them will not
be disadvantaged.
8. The return of a completed form of proxy,
electronic filing or any CREST Proxy Instruction
(as described in note 11 below) will not prevent
a shareholder from attending the Meeting and
voting in person if he/she wishes to do so.
As mentioned above, the Company advises
shareholders to vote electronically, or to appoint
the Chair as their proxy as physical attendance
in person may now be permitted.
9. CREST members who wish to appoint a proxy
or proxies through the CREST electronic proxy
appointment service may do so for the Meeting
(and any adjournment of the Meeting) by using
the procedures described in the CREST Manual
(available from www.euroclear.com). CREST
Personal Members or other CREST sponsored
members, and those CREST members who
have appointed a service provider(s), should
refer to their CREST sponsor or voting service
provider(s), who will be able to take the
appropriate action on their behalf.
10. In order for a proxy appointment or instruction
made by means of CREST to be valid, the
appropriate CREST message (a ‘CREST Proxy
Instruction’) must be properly authenticated in
accordance with Euroclear UK & International
Limited’s specifications and must contain the
information required for such instructions, as
described in the CREST Manual. The message
must be transmitted so as to be received by the
issuer’s agent (ID RA10) by 11:30am on Friday
8 September 2023. For this purpose, the time
of receipt will be taken to mean the time (as
determined by the timestamp applied to the
message by the CREST application host) from
which the issuer’s agent is able to retrieve the
message by enquiry to CREST in the manner
prescribed by CREST. After this time, any
change of instructions to proxies appointed
through CREST should be communicated to the
appointee through other means.
11. CREST members and, where applicable, their
CREST sponsors or voting service providers
should note that Euroclear UK & International
Limited does not make available special
procedures in CREST for any particular
message. Normal system timings and
limitations will, therefore, apply in relation to
the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned
to take (or, if the CREST member is a CREST
personal member, or sponsored member, or
has appointed a voting service provider(s),
to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as
shall be necessary to ensure that a message
is transmitted by means of the CREST system
by any particular time. In this connection,
CREST members and, where applicable, their
CREST sponsors or voting system providers are
referred, in particular, to those sections of the
CREST Manual concerning practical limitations
of the CREST system and timings. The Company
may treat as invalid a CREST Proxy Instruction
in the circumstances set out in Regulation 35(5)
(a) of the Uncertificated Securities Regulations
2001.
12. Any corporation which is a shareholder can
appoint one or more corporate representatives
who may exercise on its behalf all of its powers
as a shareholder provided that no more than one
corporate representative exercises powers in
relation to the same shares.
13. As at 21 June 2023 (being the latest practicable
business day prior to the publication of this
Notice), the Company’s ordinary issued share
capital consists of 2,657,898 Ordinary Shares,
carrying one vote each. Therefore, the total
voting rights in the Company as at 21 June 2023
are 2,657,898.
14. Any shareholder attending the Meeting has
the right to ask questions. The Company must
cause to be answered any such question
relating to the business being dealt with at
the Meeting but no such answer need be given
if: (a) to do so would interfere unduly with the
preparation for the Meeting or involve the
disclosure of confidential information; (b) the
answer has already been given on a website in
the form of an answer to a question; or (c) it is
undesirable in the interests of the Company or
the good order of the Meeting that the question
be answered.
15. The following documents are available for
inspection during normal business hours at
the registered office of the Company on any
business day from the date of this Notice
until the time of the Meeting and may also be
inspected at the Meeting venue, as specified
in this Notice, from 10:30am on the day of the
Meeting until the conclusion of the Meeting:
copies of the Directors’ letters of appointment
or service contracts.
16. You may not use any electronic address (within
the meaning of Section 333(4) of the Companies
Act 2006) provided in either this Notice or any
related documents (including the form of proxy)
to communicate with the Company for any
purposes other than those expressly stated.
A copy of this Notice, and other information required
by Section 311A of the Companies Act 2006, can be
found on the Company’s website.
50 Rockwood Strategic Plc
Corporate
Information
Directors
N Lamb (Chairman)
P Dudley
K Lever
Company Secretary
SGH Company Secretaries Limited
6th Floor
60 Gracechurch Street
London
EC3V 0HR
Registered Office
6th Floor
60 Gracechurch Street
London
EC3V 0HR
Investment Manager
Harwood Capital LLP
6 Stratton St
London
W1J 8LD
Bankers
Royal Bank of Canada
100 Bishopsgate
London
EC2N 4AA
Solicitors
Shoosmiths LLP
1 Bow Churchyard
London
EC4M 9DQ
Auditor
BDO LLP
55 Baker St
London
W1U 7EU
Registrars
Link Group
Central Square
29 Wellington St
Leeds
LS1 4DL
Nominated Advisor and Brokers
Singer Capital Markets
1 Bartholomew Lane
London
EC2N 2AX
Please contact a member of the Rockwood
Strategic team if you wish to discuss your
investment or provide feedback on this
document. Rockwood Strategic is committed
to meeting the needs and expectations
of all stakeholders and welcomes any
suggestions to improve its service delivery.
https://www.rockwoodstrategic.co.uk/
