NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 ANNUAL REPORT
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
1 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Table of Contents
Page
COMPANY OVERVIEW
Features
2
Capital Structure
3
Business Model
4
2024 PERFORMANCE REVIEW
Financial Highlights
8
Chairman’s Statement
10
Investment Manager’s Report
12
Portfolio Information
16
Ordinary Share Class
16
Extended Life Share Class
18
New Global Share Class
20
Strategic report
22
GOVERNANCE
Directors
28
Directors’ Report
29
Corporate Governance Report
34
Audit Committee Report
42
Management Engagement Committee Report
46
Inside Information Committee Report
48
Remuneration Committee Report
49
Directors’ Remuneration Report
50
Directors’ Responsibilities Statement
53
Independent Auditor’s Report
54
FINANCIAL STATEMENTS
Consolidated Statement of Assets and Liabilities
59
Consolidated Statement of Operations
60
Consolidated Statement of Changes in Net Assets
61
Consolidated Statement of Cash Flows
62
Consolidated Condensed Schedule of Investments
63
Notes to the Consolidated Financial Statements
71
ADDITIONAL INFORMATION
Contact Details
89
2 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
1
In addition the Company has two Class A Shares in issue. Further information
is provided in the Capital Structure section of this report on page 3
COMPANY OVERVIEW | Features
NB Distressed Debt Investment Fund Limited (the
“Company”)
The Company is a closed-ended investment company
incorporated and registered in Guernsey on 20 April 2010
with registration number 51774. The Company is governed
under the provisions of the Companies (Guernsey) Law,
2008 (as amended) (the “Law”), and the Registered
Collective Investment Scheme Rules and Guidance 2021
issued by the Guernsey Financial Services Commission
(“GFSC”). It is a non-cellular company limited by shares and
has been declared by the GFSC to be a registered closed-
ended collective investment scheme. The Company trades
on the Specialist Fund Segment (“SFS”) of the London Stock
Exchange (“LSE”).
The Company is a member of the Association of Investment
Companies (the “AIC”) and is classified within the Debt –
Loans & Bonds Category.
Investment Objective
The Company’s primary objective is to provide investors with
attractive risk-adjusted returns through long-biased,
opportunistic exposure to stressed, distressed and special
situation credit-related investments while seeking to limit
downside risk by, amongst other things, focusing on senior
and senior secured debt with both collateral and structural
protection.
Alternative Investment Fund Manager (“AIFM”) and
Manager
Investment management services are provided to the
Company by Neuberger Berman Investment Advisers LLC
(the “AIFM”) and Neuberger Berman Europe Limited (the
“Manager”), collectively the “Investment Manager”. The
AIFM is responsible for risk management and discretionary
management of the Company’s Portfolio and the Manager
provides, amongst other things, certain administrative
services to the Company.
Share Capital
As at 31 December 2024 the Company’s share capital
comprised the following
1
:
Ordinary Share Class (“NBDD”)
15,382,770 Ordinary Shares, none of which were held in
treasury.
Extended Life Share Class (“NBDX”)
38,731,819 Extended Life Shares, none of which were held
in treasury.
New Global Share Class (“NBDG”)
25,123,440 New Global Shares, none of which were held
in treasury.
For the purposes of efficient portfolio management, the
Company has established a number of wholly-owned
subsidiaries domiciled in Luxembourg. All references to the
Company in this document refer to the Company together
with its wholly-owned subsidiaries.
Non-Mainstream Pooled Investments
The Company currently conducts its affairs so that the
shares issued by the Company can be recommended by
Independent Financial Advisers to ordinary retail investors
in accordance with the Financial Conduct Authority’s
(“FCA”) rules in relation to non-mainstream pooled
investment (“NMPI”) products and intends to continue to do
so for the foreseeable future.
The Company’s shares are excluded from the FCA’s
restrictions which apply to NMPI products.
Company Numbers
Ordinary Shares
LSE ISIN code: GG00BDFZ6F78
Bloomberg code: NBDD: LN
Extended Life Shares
LSE ISIN code: GG00BPNZ1C58
Bloomberg code: NBDX:LN
New Global Shares
LSE ISIN code: GG00BTLMK410
Bloomberg code: NBDG:LN
Legal Entity Identifier
YRFO7WKOU3V511VFX790
Website
www.nbddif.com
3 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Capital Structure
The Company’s share capital consists of three different share classes, all of which are in the harvest period: the Ordinary Share Class;
the Extended Life Share Class; and the New Global Share Class. These share classes each have different capital return profiles and,
in one instance a different geographical remit. In addition, the Company has two Class A Shares in issue.
While the Company’s share
classes are all now in harvest, returning capital to shareholders, the Company’s corporate umbrella itself has an indefinite life to allow
for flexibility for the Company to add new share classes if demand, market opportunities and shareholder approval supported such a
move, although the Company has no current plans to create new share classes. Each share class is considered in turn below.
Ordinary Share Class
NBDD was established at the Company's launch on 10 June 2010 with a remit to invest in the global distressed debt market with a
focus on North America. The investment period of NBDD expired on 10 June 2013.
Voting rights: Yes
Denomination: US Dollars
Hedging: Portfolio hedged to US Dollars
Authorised share capital: Unlimited
Par value: Nil
Extended Life Share Class
A vote was held at a class meeting of NBDD shareholders on 8 April 2013 where the majority of shareholders voted in favour of a
proposed extension.
Following this meeting and with the NBDD shareholders’ approval of the extension, on 9 April 2013 a new Class, NBDX, was created
and the NBDX Shares were issued to 72% of initial NBDD investors who elected to convert their NBDD Shares to NBDX Shares. NBDX
had a remit to invest in the global distressed debt market with a focus on North America. The investment period of NBDX expired on 31
March 2015.
Voting rights: Yes
Denomination: US Dollars
Hedging: Portfolio hedged to US Dollars
Authorised share capital: Unlimited
Par value: Nil
New Global Share Class
NBDG was created on 4 March 2014 and had a remit to invest in the global distressed market with a focus on Europe and North
America. The investment period of NBDG expired on 31 March 2017.
Voting rights: Yes
Denomination: Pound Sterling
Hedging: Unhedged portfolio
Authorised share capital: Unlimited
Par value: Nil
Class A Shares
The Class A Shares are held by a trustee pursuant to a purpose trust established under Guernsey law. Under the terms of the Trust
Deed the Trustee holds the Class A Shares for the purpose of exercising the right to receive notice of general meetings of the Company
but the Trustee shall only have the right to attend and vote at general meetings of the Company when there are no other Shares of the
Company in issue.
Voting rights: No
Denomination: US Dollars
Authorised share capital: 10,000 Class A Shares
Par value: US Dollar $1
4 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Business Model
Principal Activities and Structure
The principal activity of the Company is to carry out business as an investment company. The Directors do not envisage any changes
in this activity for the foreseeable future.
The chart below sets out the ownership, organisational and investment structure of the Company.
INVESTMENT STRUCTURE OF THE COMPANY
1
Further information on the Company’s capital structure can be found on page 3.
2
Further information on the Company’s investment management arrangements can be found on page 27.
Investment Objective
The Company’s primary objective is to provide investors with attractive risk-adjusted returns through long-biased, opportunistic exposure
to stressed, distressed and special situation credit-related investments while seeking to limit downside risk by, amongst other things,
focusing on senior and senior secured debt with both collateral and structural protection.
Investment Policy
The investment period of each share class has expired. During the investment period, the Investment Manager sought, in accordance
with the Investment Policy, to identify mis-priced or otherwise overlooked securities or assets that had the potential to produce attractive
absolute returns while seeking to limit downside risk through collateral and structured protection where possible.
The Ordinary Shares, Extended Life Shares and New Global Shares (collectively the “Portfolios”) are biased toward stressed and
distressed debt securities secured by hard asset collateral in accordance with the Investment Policy. When investing on behalf of the
Company, the Investment Manager focused on companies with significant tangible assets which were judged likely to maintain long-
term value through a restructuring. The Investment Manager avoided "asset-light" companies, as their values tend to depreciate in
distressed scenarios, and also aimed to concentrate on companies with stressed balance sheets whose low implied enterprise value
multiples, often calculated using currently depressed cash flows, offered a discount to comparable market valuations.
COMPANY OVERVIEW | Business Model
Company
(Guernsey domiciled Alternative
Investment Fund)
TRUSTEE
1
Class A
Shares
1
NBDG SHAREHOLDERS
1
NBDX SHAREHOLDERS
1
NBDD SHAREHOLDERS
1
ALTERNATIVE INVESTMENT FUND
MANAGER
2
(Neuberger Berman Investment
Advisers LLC)
MANAGER
2
(Neuberger Berman Europe
Limited)
Company Portfolio
attributable to Ordinary
Shares
Company Portfolio attributable
to Extended Life Shares
Company Portfolio
attributable to New Global
Shares
5 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
COMPANY OVERVIEW | Business Model
Business Model (continued)
What is Distressed Debt?
Distressed debt generally refers to the financial obligations of a company that is either already in default, under bankruptcy protection,
or in distress and heading toward default. Distressed debt often trades at a significant discount to its par value and may present investors
with compelling opportunities to profit if there is a recovery in the business. Typically, when a company experiences financial distress
or files for bankruptcy protection, the original debt holders often sell their debt securities or claims to a new set of investors at a discount.
These investors often try to influence the process by which the issuer restructures its obligations or implements a plan to turn around
its operations. These investors may also inject new capital into a distressed company in the form of debt or equity in order to prevent
the company from going into liquidation or to aid the company in carrying out a restructuring plan. Investors in distressed debt typically
must not only assess the issuer’s ability to improve its operations but also whether the restructuring process is likely to result in a
meaningful recovery to the investors’ class of claims.
Distressed debt can be performing or non-performing. Performing debt is defined as debt that maintains its contractual obligations
relating to interest and/or principal payments and can be debt that has yet to default or even debt that is under bankruptcy protection.
Non-performing debt is defined as debt that does not continue to meet its financial obligations.
There are several different strategies related to investing in distressed debt. These strategies differ mainly in the types of securities that
investors purchase, the life of a fund and its investment period, and a fund’s expected returns. Four strategic categories include: (i)
senior/senior secured debt strategies; (ii) control/private equity strategies; (iii) junior debt strategies; and (iv) capital structure arbitrage
strategies. During the investment periods of the Portfolios, the Investment Manager focused on implementing a senior/senior secured
debt strategy in which it invested primarily in secured debt with strong collateral value and structural protection. The Investment Manager
has also invested in control positions and non-control positions with the objective of acquiring a blocking position on behalf of the
Portfolios.
Investing in secured debt at the top of the capital structure is, in the opinion of the Investment Manager, towards the more conservative
end of the distressed debt strategy risk spectrum due to the support from the value of the underlying collateral. Additionally, secured
debt holders often have the ability to foreclose on the assets securing their claim and to drive the restructuring process. The typical
holding period for investments in this type of strategy is at least six months and can be more than three years.
6 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
COMPANY OVERVIEW | Business Model
Business Model (continued)
Typical Life Cycle of a Distressed Debt Investment
Further information on the Company’s investment process can be found in the Company’s most recent prospectuses which are
available on the Company’s website at www.nbddif.com
under the “Investor Information” tab.
1
Negotiations can take place within bankruptcy or creditors can negotiate with the company to agree on a pre-packaged bankruptcy whereby the plan of reorganisation is
negotiated before the company files for bankruptcy protection (this has become more common).
IDENTIFY DISTRESSED OPPORTUNITY AND INITIATE INVESTMENT
• Identify Senior Secured debt secured by hard assets which maintain value during restructuring process
• Understand creditor group makeup and motivations of different constituencies
RESTRUCTURE COMPANY
• Enter negotiations with various creditor classes
• Assess value allocation to various creditor classes
• Consider pre-packaged bankruptcies versus “Chapter 11” court-based formal bankruptcy process
1
COMPANY EMERGES FROM BANKRUPTCY
• Fund capital expenditures necessary for future profitability
• Optimise capital structure for return to profitability
• Implement business model for return to profitability
EXIT INVESTMENTS
• Company returns to profitability and creates value for equity
• Sale of the company to a strategic buyer
• Effect a dividend recapitalisation
• Liquidate the company to recover the original investment
7 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
COMPANY OVERVIEW | Business Model
Business Model (continued)
Distributions to Shareholders
Income
In order to benefit from an exemption to the United Kingdom (“UK”) offshore fund rules, all income from the Company’s Portfolio (after
deduction of reasonable expenses) must be paid to investors. To meet this requirement the Company will pay out by way of dividend,
in respect of each share class, all net income received on investments of the Company attributable to such share class, as appropriate.
It is not anticipated that income from the Portfolios will be material and therefore any income distributions by way of dividend will be on
an ad-hoc basis. However, the Company monitors the need to distribute such income annually (less allowable expenses under the
NMPI rules) in order to continue to be excluded from the FCA’s restrictions which apply to non-mainstream investment products. The
exact amount of such income distribution by way of dividend in respect of any class of shares will be variable depending on the amounts
of income received by the Company attributable to such share class and will only be paid in accordance with applicable law at the
relevant time, including the Companies (Guernsey) Law, 2008 (as amended) (the “Law”) and, in particular, will be subject to the
Company passing the solvency test contained in the Law at the relevant time. The amount of income distributions by way of dividend
paid in respect of one class of shares may be different from that of another class.
Capital
Following the expiry of the Portfolios’ investment periods, the capital proceeds attributable to the corresponding share class as
determined by the Directors and in accordance with the articles of incorporation (the “Articles”), will, at such times and in such amounts
as the Directors shall in their absolute discretion determine, be distributed to shareholders of that class pro rata to their respective
holdings of the relevant shares.
Any capital return will only be made by the Company in accordance with the Articles of the Company and applicable law at the relevant
time, including the Law (and, in particular, will be subject to the Company passing the solvency test contained in the Law at the relevant
time).
Towards the end of the Portfolios’ respective harvest periods, a residual amount will be retained in accordance with regulatory
requirements until such time as the relevant share class may be liquidated or its assets otherwise disposed of at the discretion of the
Board.
Gearing
The Company will not employ leverage or gearing for investment purposes. The Company may, from time to time, use borrowings for
share buybacks and short-term liquidity purposes, including bridging purposes, prior to the sale of investments. Save for such bridging
borrowings the Directors will restrict borrowing, with respect to each share class, to an amount not exceeding 10 percent of the NAV of
the share class at the time of drawdown.
The Company does not currently have any borrowings. Derivatives may be used for the purposes of efficient portfolio management and
to hedge risk within the Portfolios. In addition, from time to time the Company may also invest in such derivatives for investment
purposes.
8 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Financial Highlights
Key Figures
AS AT 31 DECEMBER 2024
ORDINARY
SHARE CLASS
EXTENDED LIFE
SHARE CLASS
NEW GLOBAL
SHARE CLASS
1
AGGREGATED
Net Asset Value (“NAV”) ($ millions)
11.6
35.9
16.0
63.5
NAV per Share ($)
0.7557
0.9271
0.6354
-
Share Price ($)
0.6200
0.7000
0.4008
-
NAV per Share (£)
-
-
0.5073
-
Share Price (£)
-
-
0.3200
-
Premium /(Discount) to NAV per Share
(17.96%)
(24.50%)
(36.93%)
-
Portfolio of Distressed Investments ($ millions)
6.3
15.2
15.2
36.7
Cash and Cash Equivalents ($ millions)
4.9
20.3
0.2
25.4
Total Expense Ratio (“TER”)
2
1.43%
1.45%
2.34%
-
Ongoing Charges
3
1.37%
1.38%
2.28%
-
AS AT 31 DECEMBER 2023
ORDINARY
SHARE CLASS
EXTENDED LIFE
SHARE CLASS
NEW GLOBAL
SHARE CLASS
1
AGGREGATED
Net Asset Value (“NAV”) ($ millions)
12.4
45.6
22.1
80.1
NAV per Share ($)
0.8071
1.0312
0.7954
-
Share Price ($)
0.6900
0.5300
0.3952
-
NAV per Share (£)
-
-
0.6239
-
Share Price (£)
-
-
0.31
-
Premium /(Discount) to NAV per Share
(14.51%)
(48.60%)
(50.32%)
-
Portfolio of Distressed Investments ($ millions)
7.4
32.0
21.5
60.9
Cash and Cash Equivalents ($ millions)
4.3
11.9
0.3
16.5
Total Expense Ratio (“TER”)
2
1.28%
1.38%
2.21%
-
Ongoing Charges
3
1.22%
1.31%
2.17%
-
1
Stated in US Dollars, the £ price as at 31 December 2024 and 31 December 2023 converted to US Dollars using respective year end exchange rates.
2
The TERs represent the operating expenses, as required by US Generally Accepted Accounting Principles (“US GAAP”), expressed as a percentage of average net assets.
3
In the year to 31 December 2024, the Company’s Ongoing Charges were 1.62%. This figure is based on an expense figure for the year to 31 December 2024 of $1,263,616.
This figure, which has been prepared in accordance with AIC guidance represents the Company’s operating expenses, excluding finance costs payable, expressed as a
percentage of average net assets. Effective 18 March 2021, the Investment Manager had waived its entitlement to all fees from the Company. The Ongoing Charges by
share class are disclosed above.
9 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Financial Highlights
Financial Highlights (continued)
Summary of Value in Excess of Original Capital Invested
AS AT 31 DECEMBER 2024
ORDINARY
SHARE CLASS ($)
EXTENDED LIFE
SHARE CLASS ($)
NEW GLOBAL
SHARE CLASS (£)
Original Capital Invested
(124,500,202)
(359,359,794)
(110,785,785)
Total Capital Distributions
129,627,394
299,562,041
52,938,252
Total Income Distributions
1
3,166,835
21,349,930
5,682,362
Distributions as % of Original Capital
107%
89%
53%
Total Buybacks
-
12,112,379
10,924,963
NAV
11,624,114
35,907,610
12,746,359
Total of NAV Plus Capital and Income Returned (“Value”)
144,418,343
368,931,960
82,291,936
Value in Excess of Original Capital Invested
19,918,141
9,572,166
(28,493,849)
Value as % of Original Capital Invested
116%
103%
74%
AS AT 31 DECEMBER 2023
ORDINARY
SHARE CLASS ($)
EXTENDED LIFE
SHARE CLASS ($)
NEW GLOBAL
SHARE CLASS (£)
Original Capital Invested
(124,500,202)
(359,359,794)
(110,785,785)
Total Capital Distributions
129,627,394
294,070,076
51,444,766
Total Income Distributions
1
3,166,835
20,695,255
5,070,285
Distributions as % of Original Capital
107%
88%
51%
Total Buybacks
-
12,112,379
10,924,963
NAV
12,415,231
45,614,485
17,358,035
Total of NAV Plus Capital and Income Returned (“Value”)
145,209,460
372,492,195
84,798,049
Value in Excess of Original Capital Invested
20,709,258
13,132,401
(25,987,736)
Value as % of Original Capital Invested
117%
104%
77%
1
By way of dividend
10 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Chairman’s Statement
Chairman’s Statement
I am pleased to be able to report that, after a difficult period, progress has been made in realising assets
as demonstrated by the returns of capital that have been made. Two assets were exited since the year end
but, because of the requirement to holdback, a distribution could only be made to the holders of Global
class shares.
I am optimistic that further progress can be made in the coming months and it is our expectation to make
substantial realisation of asses of all classes prior to allow for the liquidation of classes thus allowing us to
release the cash that has to be held back. This is likely to be a combination of a final redemption prior to
liquidation followed by distributions made by the appointed Liquidator. We will continue to report exits and
cash receipts by way of market announcements.
Company Performance
As at 31 December 2024, the Company had returned a total of $132.8m or 107% of NBDD investors’ original capital of $124.5m,
$333.0m or 93% of NBDX investors’ original capital of $359.4m and £69.5m or 63% of NBDG investors’ original capital of £110.8m.
Currently we are in what we hope to be the final stages of harvesting a number of investments and we will keep investors informed as
they occur. It is our intention to fully harvest NBDD during the coming months, subject to market conditions. The Board continues to
monitor all costs to ensure that they are appropriate as we are conscious that shareholders may be concerned about the impact of costs
on a reducing portfolio during the harvest period. We would therefore remind shareholders that with effect from 18 March 2021 our
investment manager agreed to waive all future fees.
Annual General Meeting (“AGM”) Results
While all of the resolutions tabled at our Annual General Meeting held on 26 June 2024 were passed I would note the significant number
of votes against buybacks. As previously mentioned the Board does not expect to carry out any buybacks preferring to make all returns
of capital via share redemptions. However, your Board thought it prudent to keep this option open lest an unexpected situation arose
where a buyback would be extremely advantageous to the remaining shareholders. Following the vote, a similar resolution will not be
placed before the next AGM. My own re-election also received some opposition which is easily understood given my unanticipated
extended tenure. I am grateful that my Board colleagues remain supportive of my continuing in office and that this view was supported
by over 80% of the votes cast. I look forward to continuing to work with all my colleagues to secure the earliest possible winding up of
our Company.
Board Composition, Independence and Diversity
Due to the expected wind up of the fund it is not considered appropriate or practical to refresh the board at present and we believe the
results of the relevant AGM resolutions endorse this approach.
Distributions
During 2024, we made further progress on the realisation of assets. Following the receipt of proceeds from a return of capital of an Oil
& Gas investment the Board resolved on 7 November 2024 to make capital distributions of $0.1242 and £0.0537 per share in respect
of the NBDX and NBDG classes respectively. These distributions were made by a compulsory pro rata redemption of shares held as at
26 November 2024 with payment being made on 10 December 2024.
The Board was also pleased to announce an income distribution by way of dividend which was paid on 9 December 2024.
We will continue to put our income distribution policy to a shareholder vote at each annual general meeting. I would like to remind
shareholders that such distributions occur on an ad-hoc basis and are not expected to be either material or equal for each share class.
11 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Chairman’s Statement
Chairman’s Statement (continued)
Outlook
Since I commenced drafting this statement we have seen political developments that have caused great uncertainty in global markets
and it is difficult to foresee how these will pan out and the degree to which they will, yet again, delay the return of capital. However, our
goal continues to be to commence the winding up of your Company in the coming months in order to release funds to shareholders,
even if this means that they will have a residual asset that is a receivable rather than a listed security.
It had long been our expectation that the Ordinary class of shares would be the first to commence the final wind-up process followed
by the Extended share class and then the New Global share class but we will retain the option to consolidate this approach into a single
event if we believe that to be in the best interest of shareholders.
As is normally the case with investment companies, as opposed to those with commercial undertakings, this does not currently have
any material impact on the Company’s ability to continue as a going concern or to remain viable. However, the whole process must be
managed in a way that ensures compliance with UK regulations. This means that the final 10% of the total return (NAV plus cumulative
distributions) in respect of any class of participating shares in the Company will be returned to shareholders with a final compulsory
redemption of all of the outstanding shares of that class. The Global class will continue to distribute until its net assets are reduced to
approximately £8m. The cash associated with these share classes may, in some instances, need to remain in underlying corporate
vehicles while tax and other matters relating to those vehicles are concluded. We will keep investors appraised of developments in
respect of the remaining assets.
On behalf of the Board, I would like to thank our longstanding shareholders for your support of our Company. We look forward to
updating you further on investment realisations throughout this year.
John Hallam
Chairman
29 April 2025
12 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Investment Manager’s Report
Investment Manager’s Report
Ordinary Share Class
Summary
The NAV per share decreased by 6.37% for the year ended 31 December, 2024 primarily due to a lower value in a containers &
packaging investment that reported weaker earnings and a reduction in the surface transport asset.
Portfolio Update
NBDD ended the year with a NAV per share of $0.7557 compared to $0.8071 at end of 2023. At 31 December 2024, 50% of NBDD’s
NAV was invested in distressed assets, and $4m in US Government securities which represented a further 50% of NAV,
with a minimal
amount cash net of payables (see table below). Cash balances will continue to increase as assets are realised, subject to variations in
collateral cash, but as noted previously cannot be distributed until the final liquidation of the share class. The portfolio consisted of 3
issuers across five sectors. The largest sector concentrations were in surface transportation, containers & packaging and commercial
mortgage and lodging and casinos.
CASH ANALYSIS
Balance Sheet – Cash
$4.9m
Collateral cash
($3.1m)
Other payables ($0.1m)
Total available cash
$1.7m
Significant Price Movement during 2024 (more than 1% of NBDD NAV or approximately $120,000)
INDUSTRY INSTRUMENT
TOTAL RETURN
(US DOLLARS MILLIONS)
COMMENT
Containers & packaging
Private Equity
(0.7)
Earnings miss
Surface Transport
Total Return Swap
(0.4)
Delayed exit
Exits
During the year, we had two exits. The total number of exits since inception in NBDD is 53, with a total return of $29.3m.
Distributions
To date, $132.8m or 107% of original capital has been distributed to investors in the form of capital distributions via redemptions and
income dividends. Total value to investors including NAV and all distributions paid is $144.4m (116% of original capital). For regulatory
reasons, the final 10% of the total return (NAV plus cumulative distributions) in respect of any class of participating shares in NBDDIF
will be returned to shareholders with a final compulsory redemption of all of the outstanding shares of that class. The next distribution
for NBDD will be the final distribution to shareholders and will wind down the share class. Our current expectation is to wind down the
share class during the coming months. We will continue to update investors as we gain clarity on the realisations.
13 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Investment Manager’s Report
Investment Manager’s Report (continued)
Extended Life Share Class
Summary
The NAV per share decreased by 10.1% for the year ended 31 December, 2024. The reduction to NAV was the result of weaker
earnings in a container and packaging investment, a delayed exit in a surface transport asset, an exit that occurred at a lower than
expect value in a surface transport asset, offset partially by an exit in an oil and gas investment above NAV.
Portfolio Update
NBDX ended the year with a NAV per share of $0.9271 compared to $1.0312 at end of 2023. At 31 December 2024, 61% of NBDX’s
NAV was invested in distressed assets, and $2m in US Government securities which represented a further 39% of NAV with a minimal
amount of cash net of payables (see table below). Cash balances will continue to increase as assets are realised, subject to variations
in collateral cash, but as noted previously not all cash can be distributed until the final liquidation of the share class. The NAV per share
increase during the year was principally driven by an increase in value of a packaging investment and two surface transport investments,
offset by a decrease in value of an automobile components investment. The NBDX portfolio consists of 6 issuers across 5 sectors. The
largest sector concentrations were in surface transportation, commercial mortgage, containers & packaging, lodging & casinos.
CASH ANALYSIS
Balance Sheet – Cash
$18.9m
Collateral cash
($6.6m)
Other payables
($0.2m)
Total available cash
$12.1m
Significant Price Movements during 2024 (more than 1% of NBDX NAV or $360,000)
INDUSTRY INSTRUMENT
TOTAL RETURN
(USD MILLIONS)
COMMENT
Oil & Gas Private Equity
0.6
Sale above NAV
Commercial Mortgage
Bank Debt Investments
(0.4)
Indications of interest below NAV, adjusted mark
Surface Transport
Total Return Swap
(2.2)
Delayed exit
Surface Transport
Bank Debt Investments
(1.2)
Exit in 1Q’25, adjusted mark
Containers & Packaging
Private Equity
(1.8)
Earnings miss
Exits
In 2024 we had two exits. This brought the total number of exits since inception in NBDX to 73 with total return of $37.8m.
Distributions
During 2024 NBDX made distributions of $6.1m. The total distributions to date (dividends, redemptions and buy-backs) amount to
$333m or 93% of original capital. Total value to investors including NAV and all distributions paid is $368.9m or 103% of original capital.
For regulatory reasons, the final 10% of total return in respect of any class of participating shares in NBDDIF will be returned to
shareholders with the final compulsory redemption of all of the outstanding shares of that class. Our current expectation is to wind down
the share class during the coming year. We will continue to update investors as we gain clarity on the realisations.
14 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Investment Manager’s Report
Investment Manager’s Report (continued)
New Global Share Class
Summary
The NAV per share decreased by 18.68% for the year ended 31 December 2024 primarily due to reduced value in our commercial
mortgage and surface transportation assets ahead of expected exits in 1Q'25 at lower values.
Portfolio Update
NBDG ended the year with a NAV per share of £0.5073 compared to £0.6239 at the end of 2023. At 31 December 2024, 99% of NBDG’s
NAV was invested in distressed assets with 1% of cash net of payables (see table below). NAV per share decreased during the year
primarily due to currency fluctuation and to a reduction in value of a surface transport investment and a commercial mortgage
investment, offset by an increase in value of a surface transport investment. The portfolio consisted of 4 issuers across 5 sectors. The
largest sector concentrations were in lodging & casinos, commercial mortgage, surface transportation and oil & gas.
CASH ANALYSIS
Balance Sheet – Cash
$0.2m
Other payables
($0.1m)
Total available cash
$0.1m
Significant Price Movements during 2024 (more than 1% of NBDG NAV or £130,000)
INDUSTRY INSTRUMENT
TOTAL RETURN
(GBP MILLIONS)
COMMENT
Oil & Gas
Private Equity
0.2
Sale above NAV
Commercial Mortgage
Bank Debt Investments
(0.3)
Indications of interest below
NAV, adjusted mark
Surface Transport
Bank Debt Investments
(0.9)
Exit in 1Q’25, adjusted mark
Exits
During 2024 there was one exit. The total number of exits since inception is 33 with a total return of £ (10.4m). Detailed descriptions of
the exit are at the end of this report.
Distributions
During 2024, there were distributions of £2.2m. The total distributions to date (dividends, redemptions, and buy-backs) have been
£69.5m or 62.8% of original capital. Total value to investors including NAV and all distributions paid is £82.3m or 74% of original capital.
For regulatory reasons, the final 10% of total return in respect of any class of participating shares in NBDDIF will be returned to
shareholders with the final compulsory redemption of all the outstanding shares of that class. Our current expectation is to wind down
the share class during the coming year. We will continue to update investors as we gain clarity on the realisations.
15 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Investment Manager’s Report
Investment Manager’s Report (continued)
Summary of Exits across all Share Classes
Exits experienced from inception to date were as follows:
NBDD 53 exits with a total return of $29.3m, IRR
1
of 8% and ROR of 16%
NBDX 73 exits with a total return of $37.8m, IRR
1
of 2% and ROR of 7%
NBDG 33 exits with a total return of £ (10.4) m, IRR
1
of (8)% and ROR of (8)%
The annualised internal rate of return (“IRR”) is computed based on the actual dates of the cash flows of the security (purchases, sales,
interest and principal pay downs), calculated in the base currency of each portfolio. The Rate of Return (“ROR”) represents the change
in value of the security (capital appreciation, depreciation, and income) as a percentage of the purchase amount. The purchase amount
can include multiple purchases. Total Return represents the inception to date gain/loss on an investment.
Exit A3 (Exit 33 for NBDG, Exit 52 for NBDD Exit 72 for NBDX)
EXIT A3
EXIT
CASH INVESTED
(MILLIONS)
CASH RECEIVED
(MILLIONS)
TOTAL RETURN
(MILLIONS)
IRR
ROR
MONTHS
HELD
NBDX
72
$36.8
$15.1
($21.7)
(44.4) %
(59.0) %
131
NBDD
52
$7.1
$2.4
($4.7)
(55.2) %
(66.3) %
131
NBDG
33
£12.2
£3.9
(£8.2)
(46.2) %
(67.6) %
120
Exit A4 (Exit 73 for NBDX and Exit 53 for NBDD)
EXIT A4
EXIT
CASH INVESTED
(MILLIONS)
CASH RECEIVED
(MILLIONS)
TOTAL RETURN
(MILLIONS)
IRR
ROR
MONTHS
HELD
NBDX
73
$20.0
$2.5
($17.5)
20.3%
86.5 %
131
NBDD
53
$1.6
$0.2
($1.4)
19.8%
874 %
131
Neuberger Berman Investment Advisers LLC Neuberger Berman Europe Limited
29 April 2025 29 April 2025
16 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Portfolio Information
Portfolio Information
Ordinary Share Class
Top 3
1
Holdings as at 31 December 2024
HOLDING
SECTOR
PURCHASED
INSTRUMENT
STATUS
COUNTRY
% OF NAV
PRIMARY ASSET
1
Surface Transport
Trade Claim
Defaulted
Brazil
26%
Municipal Claim
2 Containers & Packaging Post-Reorg Equity Post-Reorg Luxembourg 16% Manufacturing Plant and Equipment
3 Containers & Packaging Post-Reorg Equity Post-Reorg Luxembourg 2% Manufacturing Plant and Equipment
Total
44%
Sector Breakdown
3
1
Ordinary Share Class holds three investments by issuer.
2
As at 31 December 2024 collateral pledged is included in the Surface Transport Market Value.
3
Categorisations determined by Neuberger Berman; percentages determined by Neuberger Berman and U.S Bank Global Fund Services (Guernsey) Limited / U.S. Bank Global
Fund Services (Ireland) Limited as Administrator / Sub-Administrator to the Company. Surface Transport – Trade Claims have not been included in the Sector breakdown chart.
17 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Portfolio Information
Portfolio Information (continued)
Ordinary Share Class (continued)
Country Breakdown
4,5
31 December 2024 31 December 2023
4
Categorisations determined by Neuberger Berman and percentages determined by the Administrator, as a percentage of the net asset values as at 31 December 2024 and 31
December 2023.
5
As at 31 December 2024 collateral pledged is included in the Brazil Market Value.
18 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Portfolio Information
Portfolio Information (continued)
Extended Life Share Class
Top 6
1
Holdings as at 31 December 2024
HOLDING
SECTOR
PURCHASED
INSTRUMENT
STATUS
COUNTRY
% OF
NAV
PRIMARY ASSET
1
Surface Transport
Trade Claim
Defaulted
Brazil
22%
Municipal Claim
2 Containers & Packaging Post-Reorg Equity Post-Reorg Luxembourg 13% Manufacturing Plant and Equipment
3 Commercial Mortgage Secured Loan Defaulted Netherlands 12% Commercial Real Estate
4
Surface Transport
Secured Loan
Defaulted
Spain
7%
Concession
5 Oil & Gas Post-Reorg Equity Post-Reorg US 2% Ethanol Plant
6 Containers & Packaging Post-Reorg Equity Post-Reorg Luxembourg 2% Manufacturing Plant and Equipment
Total
58%
Sector Breakdown
3
1
Extended Share Class holds six investments by issuer.
2
As at 31 December 2024 collateral pledged is included in the Surface Transport Market Value.
3
Categorisations determined by Neuberger Berman; percentages determined by Neuberger Berman and U.S Bank Global Fund Services (Guernsey) Limited / U.S. Bank
Global Fund Services (Ireland) as Administrator / Sub-Administrator to the Company. Surface Transport – Trade Claims have not been included in the Sector breakdown
chart.
19 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Portfolio Information
Portfolio Information (continued)
Extended Life Share Class (continued)
Country Breakdown
4, 5
31 December 2024 31 December 2023
4
Categorisations determined by Neuberger Berman and percentages determined by the Administrator, as a percentage of the net asset values as at 31 December 2024 and 31
December 2023.
5
As at 31 December 2024 collateral pledged is included in the Brazil Market Value.
20 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Portfolio Information
Portfolio Information (continued)
New Global Share Class
Top 4
1
Holdings as at 31 December 2024
HOLDING
SECTOR
PURCHASED
INSTRUMENT
STATUS
COUNTRY
% OF NAV
PRIMARY ASSET
1 Lodging & Casino
Secured Loan /
Private Equity
Current Spain 46% Hotel/Casino
2
Commercial Mortgage
Secured Loan
Defaulted
Netherlands
35%
Commercial Real Estate
3 Surface Transportation Secured Loan Defaulted Spain 17% Legal Claim
4
Oil & Gas
Private Equity
Post-Reorg
US
2%
Ethanol Plant
Total
100%
Sector Breakdown
2
1
Global Share Class holds four investments by issuer
2
Categorisations determined by Neuberger Berman; percentages determined by Neuberger Berman and U.S Bank Global Fund Services (Guernsey) Limited / U.S. Bank
Global Fund Services (Ireland) Limited as Administrator / Sub-Administrator to the Company.
21 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
2024 PERFORMANCE REVIEW | Portfolio Information
Portfolio Information (continued)
New Global Share Class (continued)
Country Breakdown
3
31 December 2024 31 December 2023
3
Categorisations determined by Neuberger Berman and percentages determined by the Administrator, as a percentage of the net asset values as at 31 December 2024 and
31 December 2023.
22 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Strategic Report
Since 31 March 2017, the Portfolios have all been in their respective harvest period. As such this strategic report is presented in the context
of the current positioning of the Portfolios in their lifecycle. The Company’s corporate umbrella itself has an indefinite life to allow for flexibility
for the Company to add new share classes if demand, market opportunities and shareholder approval supported such a move, although the
Company has no current plans to create new share classes and the focus is on placing the Company into liquidation.
Principal and Emerging Risks and Risk Management
The Board is responsible for the Company’s system of internal financial and operating controls and for reviewing its effectiveness. The Board
uses the Company’s risk matrix as its core element in establishing the Company’s system of internal financial and reporting controls. The
Board has carried out a robust assessment of the Company’s emerging and principal risks and uncertainties including those that would threaten
its business model, future performance, solvency or liquidity. The principal risks, which have been identified, and the steps taken by the Board
to mitigate these areas are as follows:
RISK
MITIGATION
Investment Activity and Performance
An unsuccessful investment strategy may result in
underperformance against the Company’s objectives. This
might be due to the skills of the Investment Manager falling short
in its selection of sectors or issues in which to invest and its
management of the restructurings/reorganisations which can
ensure their success.
The Board has managed these risks by ensuring a diversification
of investments, although the level of diversification will diminish as
the respective Portfolios liquidate their positions during their
harvest periods. Please see “Principal Risks Specific to Harvest
Periods” below. The Investment Manager operates in accordance
with the investment limits and restrictions policy set out in the
Company’s Investment Policy and Objectives and as further
determined by the Board. The Directors review the limits and
restrictions on a regular basis and the Administrator monitors
adherence to the limits and restrictions every month and will notify
any breaches to the Board. The Investment Manager provides the
Board with management information including performance data
and reports, and the Corporate Broker provides shareholder
analyses. The Directors monitor the implementation and results of
the investment process with the Investment Manager at each
Board meeting and monitor risk factors in respect of the Portfolios.
Investment strategy is reviewed at each meeting.
Principal Risks Associated with Harvest Periods
There can be a significant period between the date the
Company makes an investment and the date that any gain or
loss on such investment is realised. Further, towards the end of
the Portfolios’ respective harvest periods, a residual amount is
required to be retained for each share class in accordance with
regulatory requirements until such time that all assets can be
liquidated and returned to shareholders.
As capital is returned through compulsory partial redemptions
and buybacks, the number of assets and shares in a Portfolio
will diminish which in turn may lead to an increased TER and
reduced liquidity in a Portfolio’s shares.
The Board has ensured that the Investment Manager has operated
in accordance with the investment limits and restrictions policy set
out in the Company’s Investment Policy and Objectives, although
it acknowledges that the diversification of Portfolio investments will
diminish as the Portfolios liquidate their positions and return capital
to shareholders. The Board also receives regular updates on the
status of the Portfolios’ investments and anticipated realisation
dates.
The Board monitors the Company’s expenses on a regular basis
and ensures that contracts with the Investment Manager and other
service providers are at competitive rates. The Board also notes
that the Company’s key expenses, the management fee, was
waived with effect from 18 March 2021.
The Company retains the services of its broker, Jefferies
International Limited to, amongst other things, enhance liquidity in
the underlying shares.
23 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Strategic Report (continued)
Principal and Emerging Risks and Risk Management (continued)
RISK
MITIGATION
Level of Premium or Discount
A discount or premium to NAV can occur for a variety of
reasons, including market conditions and the extent to which
investors undervalue the management activities of the
Investment Manager or discount its valuation methodology and
judgement.
While the Directors may seek to mitigate any discount or premium
to NAV per share through discount management mechanisms,
such as buybacks or share issuance, there can be no guarantee
that they will do so or that such mechanisms will be successful and
the Directors accept no responsibility for any failure of any such
strategy to effect a reduction in any discount or premium. Buy
backs have been ceased with the focus moving to returning capital
to shareholders via compulsory redemptions.
Market Price Risk
Market price risk is the potential for changes in the value of an
investment or Portfolio. The market value of investments may
vary because of a number of factors including, but not limited to,
the financial condition of the underlying borrowers, the industry
in which a borrower operates, general economic or political
co
nditions, interest rates, the condition of the debt trading
markets and certain other financial markets, developments or
trends in any particular industry and changes in prevailing
interest rates.
Further details on market price risk are provided in Note 4 on
page 82.
The Board has, over the Investment Periods of the various share
classes, ensured that the Investment Manager has operated in
accordance with the Company’s investment guidelines. The
Directors monitor the status of the Portfolio investments with the
Investment Manager at each quarterly Board meeting and monitor
risk factors in respect of the Portfolios.
Fair Valuation of Illiquid Assets
With respect to investments that do not have a readily
ascertainable market quotation in an active market, the
Investment Manager will value such investments at fair value
and such valuations will be inherently uncertain. Because of the
inherent uncertainty and subjectivity in
determining the fair
value of investments that do not have a readily ascertainable
market quotation in an active market, the fair value of the
Company’s investments as determined in good faith by the
Investment Manager may differ significantly from the values that
would have been used had a ready market existed for such
investments. The reliability of the NAV calculations published by
the Company will be impacted accordingly.
With respect to investments held in the Company’s Portfolios that
do not have a readily available market quotation, such as unquoted
investments or investments which are listed but deemed to be
illiquid, the Investment Manager values such investments at fair
value on each NAV calculation
date in accordance with its
customary valuation methods, policies and procedures. Further
information on the Company’s valuation process can be found in
Note 2(g) under “Investment t
ransactions, investment
income/expenses and valuation”, and Note 2(f), “Fair Value of
Financial Instruments”, of the Audited Consolidated Financial
Statements (the “Financial Statements”).
The Board monitors, reviews and challenges the Company’s fair
valued assets on a regular basis to ensure compliance with the
agreed methodology.
The Board reviews the Investment
Manager’s internal review process.
Accounting, Legal and Regulatory
The Company must comply with the provisions of the Law, and
since its shares trade on the SFS, the Company is required to
comply with the FCA’s Disclosure Guidance and Transparency
Rules (“DTRs”). A breach of the legislation could result in the
Company and/or the Directors being fined or subject to criminal
proceedings and the suspension of the Company’s shares to
trading on the SFS.
The Board relies on the Company Secretary and the Company’s
advisers to ensure adherence to the Guernsey legislation and the
DTRs. The Investment Manager, Company Secretary and the
Administrator, are contracted to provide investment, company
secretarial, a
dministration and accounting services through
qualified professionals.
Operational
Disruption to, or the failure of, either the Investment Manager’s
or the Administrator’s accounting, dealings or payment systems,
or the records of the custodian could lead to a loss of assets
and prevent the accurate reporting or monitoring of the
Company’s financial position.
Details of how the Board monitors the services provided by the
Investment Manager and the Administrator, and the key elements
designed to provide effective internal controls are explained further
in the internal controls section of the Corporate Governance Report
which is set out on pages 34 to 41.
24 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Strategic Report (continued)
Emerging Risks
The Board undertakes a quarterly assessment of all risks on a forward-looking basis, and in discussion with the Investment Manager identifies
emerging risks in addition to assessing expected changes to existing risks as discussed above. The Board assesses the likelihood and impact
of emerging risks. The Board will discuss and agree appropriate mitigation or management of emerging risks as relevant to those emerging
risks. Examples of emerging risks that have been identified over the course of the past three years included the continuing effects of climate
related risks, the issuance of new regulations and changing geopolitical risks. Emerging risks are managed through discussion of the likelihood
and impact at each quarterly Board meeting. Should an emerging risk be determined to have any potential impact on the Company, appropriate
mitigating measures and controls are agreed.
In 2019, the Board identified activism relating to climate change as an emerging risk and since then has closely monitored regulatory and other
developments in this area. The UN’s latest Intergovernmental Panel on Climate Change (IPCC) report will be considered by the Board when
undertaking Company related business.
Going Concern
The Company’s principal activities are set out on page 4. The financial position of the Company is set out on page 59. In addition, note 4 to
the Financial Statements includes the Company’s objectives, policies and processes for managing its capital, its financial risk management
and its exposures to credit risk and liquidity risk.
The Directors have undertaken a rigorous review of the Company’s ability to continue as a going concern including reviewing the on-going
cash flows and the level of cash balances, the likely liquidity of investments and any income deriving from those investments as of the reporting
date as well as taking into consideration the impact of emerging risks and have determined that the Company has adequate financial resources
to meet its liabilities as they fall due. The Directors therefore have a reasonable expectation that the Company has adequate resources to
continue in operational existence for the twelve months from the date these accounts are signed and the foreseeable future notwithstanding
the focus on moving towards liquidation. Thus, they continue to adopt the going concern basis of accounting in preparing the Financial
Statements and confirm that they have been prepared in accordance with Guidance on the Going Concern Basis of Accounting and Reporting
on Solvency and Liquidity Risks, published by the FRC.
The going concern statement required by the AIC Corporate Governance Code (the “AIC Code”) last updated in August 2024 is set out in the
“Directors’ Responsibilities Statement” on page 53.
Viability Statement
In accordance with provision 8.2 paragraph 36 of the AIC Code, the Directors have assessed the future prospects of the Company. In making
their assessment the Directors have considered the Company’s status as an investment entity, its investment objectives, the principal and
emerging risks it faces, its current position and the time period over which its assets are likely to be realised.
In their assessment of the viability of the Company over the forthcoming twelve months, being the expected time to realisation of the final
assets of the share classes of the Company, the Directors have carried out a robust assessment of the emerging risks, principal risks and
uncertainties the Company faces, as detailed on pages 82 and 83. These risks include the timing of asset realisations during the Portfolios’
harvest periods, the Company’s income and expenditure projections, and the expected cash flows arising in particular from capital distributions
to shareholders. The Directors noted that such distributions may be restricted if the interest and dividend income generated in the Portfolios is
not sufficient to meet operational expenses.
As part of their review, the Directors carried out a series of stress tests under different scenarios which assumed a significant fall in income
and asset levels and a corresponding increase in expenses and were satisfied with the results of this analysis. The Directors have performed
a quantitative and qualitative analysis that included the Company’s income and expenditure projections and the fact that the Company’s
investments can be expected to be sold, within a reasonable timeframe, to meet future funding requirements if necessary. As part of this
assessment, the Directors reviewed a series of stress test scenarios carried out by the Investment Manager, which included an assumption of
a significant 70% fall in income and no reduction in expenses, and were satisfied that the Company would continue to be viable financially.
25 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Strategic Report (continued)
Viability Statement (continued)
The Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its
liabilities as they fall due over the remaining life of each of its three share classes, which the Directors consider to be the twelve month period
from the signing date of these financial statements. However, the Directors noted that the prospects for the Company, which has an indefinite
life, are subject to change should the Company add new share classes to its structure before the existing Portfolios’ assets are fully realised
although this is highly unlikely.
Key Performance Indicators
In order to measure the success of the Company in meeting its objectives and to evaluate the performance of the Investment Manager, the
Directors take into account the following performance indicators:
• Returns and NAV – At each meeting the Board reviews the NAV, income and share price of each share class. To assist in this review the
Board considers formal reports from both the Investment Manager and brokers which assess the performance of the asset class and look
at trading activity. The Investment Manager also provides an in-depth analysis of the holdings within the Portfolios.
• Discount/premium to NAV - At each Board meeting, the Board monitors the level of the Company’s discount or premium to NAV per share
class and reviews the average discount/premium for other debt-orientated investment companies. The Company publishes a NAV per
share on a daily basis through the official newswire of the London Stock Exchange.
• Ongoing Charges - In the year to 31 December 2024, the Company’s Ongoing Charges were 1.62%. This figure is based on an annual
expense figure for the year of $1,263,616. This figure, which has been prepared in accordance with AIC guidance represents the
Company’s operating expenses, excluding finance costs payable, expressed as a percentage of average net assets. The Ongoing Charges
by share class are disclosed on page 8.
• Total Expense Ratio (“TER”) - In the year to 31 December 2024, the Company’s TER was 1.69%. This figure is based on an annual
expense figure for the year of $1,314,130. This figure which has been prepared in accordance with the U.S. Generally Accepted Accounting
Principles (“US GAAP”) methodology, represents the annual percentage reduction in shareholder returns as a result of recurring
operational expenses. The TERs by share class are disclosed on page 8.
Alternative Performance Measures (“APMs”)
Alternative Performance Measures (“APMs”) included in the Annual Financial Report and Financial Statements which require further
clarification have been considered by the Board. An APM is defined as a financial measure of historical or future financial performance, financial
position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework. APMs may not have
a standard meaning prescribed by US GAAP and therefore may not be comparable to similar measures presented by other entities. APMs
included in the Annual Report and Financial Statements are deemed to be as follows:
ALTERNATIVE
PERFORMANCE
MEASURES
PURPOSE AND/OR DESCRIPTION
CALCULATION
Internal Rate of Return (“IRR”)
The IRR is calculated by first calculating the
net present value (NPV), being (Today's
value of the expected future cash flows) -
(Today's value of invested cash). The IRR
is a determination of what discount rate
would cause the net present value (NPV) of
an investment to be $0.
Rate of Return (“ROR”)
The RoR is the net gain or loss on an
investment over a specified time period,
expressed as a percentage
of the
investment's initial cost.
It is calculated by taking the difference between the
current (or expected) value and original value, divided by
original value and multiplied by 100.
Opening NAV per share (A)
Closing NAV per share (B)
Rate of Return = (B-A)/A
26 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Strategic Report (continued)
Alternative Performance Measures (“APMs”) (continued)
Total Expense Ratio
(“TER”)
The TER is Management fees and all other
operating expenses expressed as a
percentage of average net assets during the
year.
Annualised charges (A)
Average undiluted net asset value in the period (B)
Total Expense Ratio (%) = (A)/(B)
On-going charges
On-going Charges are calculated to the AIC
Methodology, which is a measure, expressed
as a percentage of NAV, of the regular,
recurring costs of the Company. ”On-going
charges are those expenses of a type which
are likely to recur in the foreseeable future,
whether charged to capital or revenue, and
which relate to the operation of Company,
excluding the costs of acquisition/disposal of
investments, financing ch
arges and
gains/losses arising on investments. Ongoing
charges are based on costs incurred in the
year as being the best estimate of future
costs”.
Ongoing charges (%) = (A)/(B)
Annualised ongoing charges (A)
Average undiluted net asset value in the period (B)
Net Asset Value per share
(“NAV”)
The NAV per share represents the net assets
attributable to equity shareholders divided by
the number of shares in issue, excluding any
shares held in treasury.
The NAV per Ordinary Share is published
daily. This APM relates to past performance
and is used to assess performance.
Total Return
Total return is expressed as a percentage of
the amount invested and represents the
amount of value our investors earn from a
security over a specific period.
Original Investment cost (A)
Current Investments value (B)
Total Return = (B-A)/A
Ratio of Total Value to
original capital
Ratio of Total Value to original capital is a
total of NAV plus capital returned to investors
expressed as a percentage of the original
amount invested since inception.
Total Capital Distributions (A)
Total Income Distributions (B)
Total Buybacks (C)
Current NAV (D)
Total of NAV Plus Capital Returned, where (E) =
A+B+C+D
Original Capital Invested (F)
Ratio of Total Value to original capital (%) = E/F
(Discount) or Premium to
NAV
The share price of an Investment Company is
derived from buyers and sellers trading their
shares on the stock market. This price is not
identical to the NAV. If the share price is lower
than the NAV per share, the shares are trading
at a discount. This could indicate that there are
more sellers than buyers. Shares trading at a
price above the NAV per share, are said to be
at a premium. This
is expressed as a
percentage.
NAV per share (NBDD) (A)
Share price per share (NBDD) (B)
NBDD (Discount) or Premium = (B-A)/A
NAV per share (NBDX) (A)
Share price per share (NBDX) (B)
NBDX (Discount) or Premium = (B-A)/A
NAV per share (NBDG) (A)
Share price per share (NBDG) (B)
NBDG (Discount) or Premium = (B-A)/A
27 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Strategic Report (continued)
Management Arrangements
Investment Management Agreement
On 17 July 2014, the Company, the Manager and the AIFM made certain classificatory amendments to their contractual arrangements for the
purposes of compliance with the European Commission’s Directive on Alternative Investment Fund Managers (the “AIFM Directive”). The Sub-
Investment Management Agreement was terminated on 17 July 2014 and
Neuberger Berman Investment Advisers LLC, which was the Sub-
Investment Manager, was appointed as the AIFM per the amended and restated Investment Management Agreement (“IMA”) dated 17 July
2014. The IMA was further amended and restated on 31 December 2017. Under this agreement, the AIFM is responsible for risk management
and day-to-day discretionary management of the Company’s Portfolios (including un-invested cash). The risk management and discretionary
portfolio management functions are performed independently of each other within the AIFM structure. The AIFM is not required to, and
generally will not, submit individual investment decisions for approval by the Board. The Manager, Neuberger Berman Europe Limited, was
appointed under the same IMA to provide, amongst other things, certain administrative services to the Company. Please refer to Note 6 on
page 85 for details of fee entitlement.
The IMA can be terminated either by the Company on one hand or the Investment Manager on the other, but in certain circumstances, the
Company would be required to pay compensation to the Investment Manager of six months’ management charges. No compensation is
payable if notice of termination of more than six months is given. Effective 1 October 2020 the Investment Manager waived its fee on cash in
relation to the NBDD share class. Effective 18 March 2021, the Investment Manager waived its entitlement to all fees from the Company.
Administration and Custody Agreement
Effective 1 March 2015, the Company entered into an Administration and Sub-Administration Agreement with U.S. Bank Global Fund Services
(Guernsey) Limited (“USBG”) and U.S. Bank Global Fund Services (Ireland) Limited (“USBI”) a wholly-owned subsidiary of USBG. Under the
terms of the agreement, Sub-Administration services are delegated to USBI (the “Sub-Administrator”). US Bank National Association (the
“Custodian”) was appointed custodian to the Company effective 1 March 2015. See Note 6 on page 85 and 86 for details of fee entitlement.
On 1 June 2018 the Company entered into an Amendment to the Administration and Sub-Administration agreement to reflect the requirements
of the General Data Protection Regulation (EU) 2016/679 ("GDPR") and the Data Protection (Bailiwick of Guernsey) Law, 2017, as amended
from time to time.
Company Secretarial and Registrar Arrangements
Effective 20 June 2017, company secretarial services are provided by Suntera (Guernsey) Limited (formerly named Carey Commercial
Limited). Registrar services are provided by MUFG Corporate Markets (UK) Limited (formerly named Link Market Services (Guernsey)
Limited).
See Note 6 on page 85 and 86 for details of fee entitlement.
Related Party Transactions
The relationships with the Investment Manager and Directors are the only related party transactions currently in place. Other than fees payable
in the ordinary course of business there have been no material transactions with these related parties which have affected the financial position
or performance of the Company in the financial year.
For information on performance fees and Directors’ fees please refer to Note 6 on page 86.
For and on behalf of the Board,
John Hallam Christopher Legge
Chairman Director
29 April 2025 29 April 2025
28 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Directors
John Hallam (Chairman)
John Hallam is a fellow of the Institute of Chartered Accountants in England and Wales and qualified as an accountant
in 1971. Previously, Mr Hallam was a partner at PricewaterhouseCoopers and retired in 1999 after 27 years with the
firm in Guernsey and in other countries. He is a director of a number of financial services companies. Mr Hallam served
for many years as a member and latterly chairman of the GFSC, from which he retired in 2006.
Michael J. Holmberg
Michael J. Holmberg, Managing Director of Neuberger Berman, joined the NB Group in 2009. Mr Holmberg is the head
of distressed portfolio management. Prior to joining NB Group, Mr Holmberg founded Newberry Capital Management
LLC in 2006 and before that he founded and managed Ritchie Capital Management's Special Credit Opportunities
Group. He was also a managing director at Strategic Value Partners and Moore Strategic Value Partners. He began
investing in distressed and credit-oriented strategies as a portfolio manager at Continental Bank/Bank of America,
where he established the bank's global proprietary capital account. Mr Holmberg received a BA in economics from
Kenyon College and an MBA from the University of Chicago.
Christopher Legge (Chairman of the Audit Committee)
Chris Legge is a Guernsey resident and worked for Ernst & Young in Guernsey from 1983 to 2003. Having joined the
firm as an audit manager in 1983, he was appointed a partner in 1986 and managing partner in 1998. From 1990 to
1998, he was head of Audit and Accountancy and was responsible for the audits of a number of banking, insurance,
investment fund, property fund and other financial services clients. He also had responsibility for the firm’s training,
quality control and compliance functions. He was appointed managing partner for the Channel Islands region in 2000
and merged the business with Ernst & Young LLP in the United Kingdom. He retired from Ernst & Young in 2003. Chris
currently holds a number of non-executive directorships in the financial services sector. He is an FCA and holds a BA
(Hons) in Economics from the University of Manchester.
Stephen Vakil (Chairman of the Management Engagement Committee and Chairman of the Remuneration Committee and
Senior Independent Director)
After graduating with a BSc in economics from Bath University in 1983, Stephen Vakil joined L Messel & Co and moved
to Chase Manhattan in 1987 to focus on private client portfolio management. In 1989, he left to join Foster & Braithwaite
where he established the research function and subsequently became a director. Following Foster & Braithwaite’s
merger with Quilter Goodison to form Quilter & Co in 1996, Mr Vakil was given responsibility for the London investment
teams, the research department and marketing function. He was made a managing director in 2001. Having played a
key role in a number of corporate transactions, Mr Vakil left Quilter Cheviot in 2013. He is an Associate of the Society
of Investment Professionals.
29 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Directors’ Report
The Directors present their report and Financial Statements of the Company and their report for the year ended 31 December 2024.
Share Capital
The number of shares in issue at 31 December 2024 was as follows:
Class A Shares 2
Ordinary Shares 15,382,770
Extended Life Shares 38,731,819
New Global Shares 25,123,440
Share Buybacks
At the Annual General Meeting (“AGM”) of the Company held on 26 June 2024, the Directors were granted the general authority to purchase
in the market up to 14.99% of the Ordinary Shares, 14.99% of the Extended Life Shares and 14.99% of the New Global Shares in issue (as at
26 June 2024). The latest authority will expire at the AGM to be held on 30 June 2025. Pursuant to this authority, and subject to the Law and
the discretion of the Directors, the Company may purchase shares of any of its classes in the market on an ongoing basis with a view to
addressing any imbalance between the supply of and demand for such shares, thereby increasing the NAV per share of the shares and
assisting in controlling the share price discount to NAV per share.
There were no buybacks of the Company’s Shares in 2024 as on 16 November 2020 the Company announced in its quarterly Factsheet that
the share buyback programme had been discontinued. The buyback programme was intended to narrow the discount, if any, during the
investment period. At this point of the harvest period, the priority, based on investor feedback, is the return of capital. The Directors intend to
seek annual renewal of this authority from Shareholders to retain flexibility.
Distributions
The Company will, from time to time, pay out income distributions by way of dividend in respect of each share class in accordance with the
Company’s dividend policy as set out below. In addition, any capital proceeds attributable to a share class (as determined by the Directors in
accordance with the Articles), will, at such times and in such amounts as the Directors shall in their absolute discretion determine, be distributed
to shareholders of that class pro rata to their respective holdings of the relevant shares. Further information on the Company’s income and
capital distribution policies can be found on page 7.
Dividend Policy
As set out in the Company’s Prospectus, the Company will pay out in respect of each class of shares an income distribution by way of dividend,
comprising all net income received on investments of the Company attributable to such class of shares. It is not anticipated that income from
the portfolio will be material and therefore any dividends may be on an ad-hoc basis. It is a requirement of an exception to the United Kingdom
offshore fund rules that all income from the Company’s Portfolio (after deduction of reasonable expenses) is to be paid to investors. This policy
should ensure that this requirement will be met. The exact amount of such dividend in respect of any class of Shares will be variable depending
on the amounts of income received by the Company attributable to such class of Shares and will only be made available in accordance with
applicable law at the relevant time, including the Law (and, in particular, will be subject to the Company passing the solvency test contained
in the Law at the relevant time). Furthermore, the amount of dividends paid in respect of one class of shares may be different from that of
another class. This policy will be put to a shareholder vote by way of separate resolution at each AGM.
30 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Directors’ Report (continued)
Distributions made during the year
The following distributions were made:
Income distribution by way of dividend
ORDINARY SHARE CLASS
EXTENDED LIFE SHARE CLASS
NEW GLOBAL SHARE CLASS
DATE
DISTRIBUTION
AMOUNT
NUMBER
OF SHARES
PER SHARE
AMOUNT
DISTRIBUTION
AMOUNT
NUMBER
OF SHARES
PER SHARE
AMOUNT
DISTRIBUTION
AMOUNT
NUMBER OF
SHARES
PER SHARE
AMOUNT
21 November 2024
-
-
-
$654,675
44,234,786
$0.0148
£612,077
27,821,694
£0.022
Capital distributions by way of a compulsory partial redemption
ORDINARY SHARE CLASS
EXTENDED LIFE SHARE CLASS
NEW GLOBAL SHARE CLASS
DATE
DISTRIBUTION
AMOUNT
NUMBER
OF SHARES
PER SHARE
AMOUNT
DISTRIBUTION
AMOUNT
NUMBER
OF SHARES
PER SHARE
AMOUNT
DISTRIBUTION
AMOUNT
NUMBER OF
SHARES
PER SHARE
AMOUNT
26 November 2024
-
-
-
$5,491,965
5,502,971
$0.9980
£1,493,485
2,698,258
£0.5535
Substantial Share Interests
Based upon information deemed to be reliable as provided by the Company’s registrar as at 31 March 2025, the following shareholders owned
5% or more of the issued shares of the Company.
SUBSTANTIAL SHAREHOLDERS
NO. OF ORDINARY
SHARES
NO. OF EXTENDED
LIFE SHARES
NO. OF NEW
GLOBAL SHARES
PERCENTAGE
OF SHARE
CLASS (%)
THE BANK OF NEW YORK (NOMINEES) LIMITED
UKREITS ACCT
13,115,065
1,135,200
85.26
2.93
STATE STREET NOMINEES LIMITED OM05 ACCT
6,363,446
6,810,312
16.43
29.93
NORTRUST NOMINEES LIMITED GSYA ACCT
8,230,598
2,716,629
21.25
11.94
STATE STREET NOMINEES LIMITED OM04 ACCT
2,304,260
3,109,194
5.95
13.67
THE BANK OF NEW YORK (NOMINEES) LIMITED
672938 ACCT
884,309
1,719,840
1,567,366
5.75
4.44
6.89
VIDACOS NOMINEES LIMITED 158765 ACCT
394,487
1,675,745
1,581,884
2.56
4.33
6.95
J P MORGAN SECURITIES LLC CLIENTSK ACCT
2,961,775
583,877
7.65
2.57
HSBC GLOBAL CUSTODY NOMINEE (UK)
LIMITED 487757 ACCT
3,474,614
110,330
8.97
0.48
ROCK (NOMINEES) LIMITED CSHGROSS ACCT
1,370,008
1,290,409
3.54
5.67
HSBC GLOBAL CUSTODY NOMINEE (UK)
LIMITED 898873 ACCT
1,969,781
8.66
LYNCHWOOD NOMINEES LIMITED 2006420 ACCT
6,196
2,907,465
14,927
0.04
7.51
0.07
Note: shareholdings may be greater than 5% in the share class but may not be 5% in aggregate of the Company’s issued share capital.
31 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Directors’ Report (continued)
Notifications of Shareholdings
In the year to 31 December 2024 the Company has been notified in accordance with Chapter 5 of the DTR (which covers the acquisition and
disposal of major shareholdings and voting rights), of the following voting rights as a shareholder of the Company. When more than one
notification has been received from any shareholder, only the latest notification is shown. For non-UK issuers, the thresholds prescribed under
DTR 5.1.2 for notification of holdings commence at 5%. Class A shares do not hold voting rights.
SHAREHOLDER
NUMBER OF SHARES
PERCENTAGE OF TOTAL
VOTING RIGHTS (%)
M&G Plc
15,593,253
19.67%
Alliance Witan Plc
13,007,692
14.88%
Since the year end 31 December 2024 to the date of this report, there have been two notifications received by the Company.
DATE
SHAREHOLDER
NUMBER OF SHARES
PERCENTAGE OF TOTAL
VOTING RIGHTS (%)
05 March 2025
1729 Capital Ltd - Res Privata N.V.
4,331,552
5.47
06 March 2025
Nortrust Nominees Limited
11,230,598
14.17
Directorship in Public Companies (as at 31 December 2024)
COMPANY NAMES
EXCHANGE(S)
Mr John Hallam
NB Distressed Debt Investment Fund Limited
SFS, London
Ruffer Illiquid Multi Strategies Fund 2015 Limited
The International Stock Exchange (“TISE”)
Mr Michael Holmberg
NB Distressed Debt Investment Fund Limited
SFS, London
Mr Christopher Legge
NB Distressed Debt Investment Fund Limited
SFS, London
Mr Stephen Vakil
NB Distressed Debt Investment Fund Limited
SFS, London
Portfolio REIT PLC
TISE
Anti-Bribery and Corruption Policy
The Board of the Company has a zero-tolerance approach to instances of bribery and corruption. Accordingly, it expressly prohibits any
Director or associated persons, when acting on behalf of the Company, from accepting, soliciting, paying, offering or promising to pay or
authorise any payment, public or private, in the United Kingdom or abroad to secure any improper benefit for them or for the Company. The
Investment Manager has also adopted a zero-tolerance approach to instances of bribery and corruption.
The Board insists on strict observance with these same standards by its service providers in their activities for the Company and continues
to refine its process in this regard. The Company’s policy is available on its website at www.nbddif.com/corporate_governance.html
32 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Directors’ Report (continued)
Climate Change
In 2019, the Board identified concerns relating to climate change as an emerging risk and since then has closely monitored regulatory and
other developments in this area. The Board is conscious of its own impact on the environment, despite being an investment company with no
employees, and has committed, on a going forward basis, to offset its carbon-emissions arising from the air travel by the members of the
Board undertaking Company related business. In addition, the Board makes extensive use of teleconferencing facilities thus limiting the amount
of travel, all board papers are produced and hosted digitally via a dedicated board web-portal and the Company makes relevant enquiries to
our key service providers during face-to-face meetings about their initiatives and attitudes to climate change.
Criminal Facilitation of Tax Evasion Policy
The Board of the Company has a zero-tolerance commitment to preventing persons associated with it from engaging in criminal facilitation of
tax evasion. The Board has satisfied itself in relation to its key service providers that they have reasonable provisions in place to prevent the
criminal facilitation of tax evasion by their own associated persons and will not work with service providers who do not demonstrate the same
zero tolerance commitment to preventing persons associated with it from engaging in criminal facilitation of tax evasion. The Company’s policy
is available on its website at www.nbddif.com/corporate_governance.html
.
Employee Engagement & Business Relationships
The Company conducts its core activities through third-party service providers and does not have any employees. The Board recognises the
benefits of fostering strong business relationships with its key service providers and seeks to ensure each is committed to the performance
of their respective duties to a high standard and, where practicable, that each provider is motivated to adding value within their sphere of
activity. Details on the Board’s approach to service provider engagement and performance review are contained in the Management
Engagement Committee Report.
Employees and Socially Responsible Investment
The Company has a management contract with the Investment Manager. It has no employees and all of its Directors are non-executive, with
day-to-day activities being carried out by third parties. There are therefore no disclosures to be made in respect of employees. The Company’s
main activities are carried out by Neuberger Berman, which is a signatory of the Principles of Responsible Investment and has an ongoing
commitment to strengthening and refining its environmental, social and governance approach. An overview of Neuberger Berman’s Principles
for Responsible Investment is detailed on its website at www.nb.com/pages/public/en-gb/principles-for-responsible-investment.aspx
.
Gender Metrics
The current Board members are male. More information on the Board’s consideration of diversity is given in the Corporate Governance Report
on page 34.
General Data Protection Regulation
The Company takes privacy and security of your information seriously and will only use such personal information as set out in the Company’s
privacy notice which can be found on the Company’s website at: https://www.nbddif.com/pdf/NB_Privacy_Notice_2021.pdf
.
Global Greenhouse Gas Emissions
The Company has no significant greenhouse gas emissions to report from its operations for the year to 31 December 2024, nor does it have
responsibility for any other emissions producing sources.
The Modern Slavery Act 2015 (“MSA”)
The MSA requires companies to prepare a slavery and human trafficking statement for each financial year of the organisation. As the Company
has no employees and does not supply goods or services, the MSA does not directly apply to it. The MSA requirements more appropriately
relate to the Investment Manager which is a signatory of the Principles of Responsible Investment (please see “Employees and Socially
Responsible Investment” above) which include social factors such as working conditions, including slavery and child labour.
The MSA of the
Investment Manager is available on its website at NB.com.
33 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Directors’ Report (continued)
Disclosure of Information to Auditors
The Directors who were members of the Board at the time of approving this report are listed on page 28. Each of those Directors confirms
that:
• to the best of his or her knowledge and belief, there is no information relevant to the preparation of their report of which the auditors are
unaware; and
• he or she has taken all steps a director might reasonably be expected to have taken to be aware of relevant audit information and to
establish that the Company’s auditors are aware of that information.
For and on behalf of the Board.
John Hallam Christopher Legge
Chairman Director
29 April 2025 29 April 2025
34 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Corporate Governance Report
Applicable Corporate Governance Codes
As the Company is listed on the SFS it is only required to follow the GFSC code of corporate governance (the “Code”), applicable to Guernsey
companies. However, the Board has chosen to follow the AIC Code published in February 2013 and last amended in August 2024 (the “AIC
Code”). The AIC Code addresses all the principles set out in the Code as well as setting out additional principles and recommendations on
issues that are of specific relevance to the Company.
On 1 January 2012, the GFSC’s “Finance Sector Code of Corporate Governance” came into effect and was last amended in July 2023. The
GFSC has stated in its Code that companies which report against the UK Corporate Governance Code (the “UK Code”) or the AIC Code are
deemed to meet their Code, and need take no further action.
The Board of the Company has considered the principles and recommendations of the AIC Code.
The Board considers that reporting against the principles and recommendations of the AIC Code will provide more relevant information to
shareholders. Copies of the AIC Code can be found at www.theaic.co.uk.
Corporate Governance Statement
Throughout the year ended 31 December 2024 the Company has complied with the recommendations of the AIC Code, except where
explanations have been provided.
The Directors believe that this Annual Report and Audited Financial Statements, presents a fair, balanced and understandable assessment of
the Company’s position and prospects, and provides the information necessary for shareholders to assess the Company’s performance,
business model and strategy.
The Company complies with the corporate governance statement requirements pursuant to the FCA’s DTRs by virtue of the information
included in the Corporate Governance section of the Annual Report together with information contained in the Strategic Report and the
Directors’ Report.
Our Governance Framework
Chairman: John Hallam
Responsibilities:
The leadership, operation and governance of the Board, ensuring effectiveness, and setting the agenda for the Board.
More details are provided on pages 35 to 41.
Senior Independent Director: Stephen Vakil
Responsibilities:
The Senior Independent Director’s (“SID”) role is to work closely with the chairman, acting as a sounding board and providing support,
acting as an intermediary for other directors as and when necessary. The SID is available to shareholders and other non-executives to
address any concerns or issues they feel have not been adequately dealt with through the usual channels of communication (i.e. through
the chairman, other directors or Investment Management executives). The SID is also responsible, along with the non-executive Directors,
for review of the chairman’s performance and carrying out succession planning for the chairman’s role as deemed appropriate. The SID is
available to attend meetings with all shareholders to obtain a balanced understanding of their issues and concerns. A memo is available on
the Company’s website https://www.nbddif.com/pdf/Memorandum_on_the_Duties_of_the_26_August_2020.pdf
.
35 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Corporate Governance Report (continued)
The Board members of NB Distressed Debt Investment Fund Limited
John Hallam (Chairman) – independent non-executive Director
Christopher Legge and Stephen Vakil – independent non-executive Directors
Michael Holmberg – non-executive Director
Responsibilities:
Overall conduct of the Company's business and setting the Company's strategy.
More details are provided below.
AUDIT COMMITTEE
MANAGEMENT ENGAGEMENT COMMITTEE
Members:
Christopher Legge (Chairman)
Stephen Vakil
Members:
Stephen Vakil (Chairman)
John Hallam
Christopher Legge
Responsibilities:
The provision of effective governance over the appropriateness of
the Company’s financial reporting including the adequacy of related
disclosures, the performance of the external auditor, and the
management of the Company’s systems of internal controls and
business risks.
More details are provided on pages 42 to 45.
Responsibilities:
To review the performance of all service providers (including the
Investment Manager)
More details are provided on pages 46 to 47.
REMUNERATION COMMITTEE
INSIDE INFORMATION COMMITTEE
Members:
Stephen Vakil (Chairman)
John Hallam
Christopher Legge
Members:
John Hallam (Chairman)
Michael Holmberg
Christopher Legge
Stephen Vakil
Responsibilities:
To review the on-going appropriateness and relevance of the
remuneration policy.
More details are provided on page 49.
Responsibilities:
To identify inside information and monitor the disclosure and
control of inside information.
More details are provided on page 48.
36 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
GOVERNANCE | Corporate Governance Report
Corporate Governance Report (continued)
Board Independence and Composition
The biographical details of the Directors holding office at the date of this report are listed on page 28 and demonstrate a breadth of investment,
accounting and professional experience.
As of 31 December 2024 John Hallam had served on the Board for over thirteen years, the Board remains satisfied that John Hallam continues
to exercise independent judgement, and that retaining the depth of knowledge of the Company held by John is in the best interests of the
Company as a whole, given the current position of the Company. Mr Hallam was re-elected to the Board at the 2024 AGM with 81.63% of the
votes cast being in favour and expects to stand for re-election at the next AGM.
John Hallam, Christopher Legge and Stephen Vakil are considered independent from the Investment Manager. Michael Holmberg is deemed
not independent as he is employed by a Neuberger Berman group company.
The Board believes that Mr Holmberg brings a significant amount of experience and expertise to the Board; however, as a non-independent
Director, Mr Holmberg does not sit on the Audit Committee, Remuneration Committee or the Management Engagement Committee and is not
involved in any matters discussed by the Board concerning the evaluation of the performance of the Investment Manager.
The Directors review their independence annually.
The Company Secretary through its representative acts as Secretary to the Board and Committees and in doing so it:
• assists the Chairman in ensuring that all Directors have full and timely access to all relevant documentation;
• will organise induction of new Directors; and
• is responsible for ensuring that the correct Board procedures are followed and advises the Board on corporate governance matters.
Directors’ Appointment
No Director has a service contract with the Company. Directors have agreed letters of appointment with the Company, copies of which are
available for review by shareholders at the Registered Office and will be available at the 2025 AGM. The length of service of each Director is
shown in the Directors’ Remuneration Report on pages 51 to 52. Any Director may resign in writing to the Board at any time.
The Board has formal, rigorous and transparent procedures for the appointment of additional directors. Candidates are identified and selected
on merit against objective criteria and with due regard to the benefits of diversity on the Board, including gender. The Board undertakes a
broad search which includes obtaining lists of potential candidates from a variety of sources leading to agreed short-lists. Interviews are then
held with potential candidates. The skills, experience and time availability of each candidate is considered by the Board with due regard to the
skills and experience necessary to replace those lost by retirements or otherwise considered desirable to strengthen the Board. Short-listed
candidates are invited to meet the Chairman and the Investment Manager and feedback is provided to the Board prior to selection.
In accordance with the AIC Code all current Directors will offer themselves for re-election at each AGM of the Company; John Hallam, Michael
Holmberg, Christopher Legge and Stephen Vakil were re-elected as Directors at the AGM on 26 June 2024. The names and biographies of
the Directors holding office at the date of this report are listed on page 28.
37 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
GOVERNANCE | Corporate Governance Report
Corporate Governance Report (continued)
Tenure of Non-Executive Directors
The Board has adopted a policy on tenure that is considered appropriate for an investment company. Mr Hallam has served as a director of
the Company for over thirteen years. The Board does not believe that length of service, by itself, leads to a closer relationship with the
Investment Manager or necessarily affects a Director’s independence. The Board has sought to appoint Directors with past and current
experience of various areas relevant to the Company’s business. The Board agreed to adopt an amended tenure and succession policy in
February 2018 which is reflective of the Board’s belief that it is not in the best interests of shareholders to replenish the Board at the current
time when the long-term outlook of the umbrella of the Company is unknown, save for the appointment of directors to fill a key vacant position
with due regard to the skills and experience necessary to replace those lost by Directors’ retirements.
Directors are expected to devote such time as is necessary to enable them to discharge their duties. Other business relationships, including
those that conflict or may potentially conflict with the interests of the Company, are taken into account when appointing Board members and
are monitored on a regular basis.
Re-election of Directors
John Hallam, Michael Holmberg, Christopher Legge and Stephen Vakil have confirmed their intention to submit themselves for re-election at
the next AGM.
The Board recognises that the Portfolios are now in their harvest periods and, as such, it believes that it is in the best interests of shareholders
and the Company to maintain the current Board composition for the time being in order to benefit from the Directors’ technical knowledge and
experience of managing the Company’s affairs as the assets continue to wind down. The Board confirmed that the contributions made by the
Directors offering themselves for re-election at the next AGM continue to be effective and that the Company should support their re-election.
The dates of appointment of all Directors are provided in the Directors’ Remuneration Committee Report on page 52.
Board Diversity
The Board considers that its members have a balance of skills and experience which are relevant to the Company. The Board notes the Davies
Report, Hampton-Alexander Review and the Parker Review, and believes in the value and importance of diversity in the boardroom but it does
not consider it is appropriate or in the interests of the Company and its shareholders particularly given current circumstances to set prescriptive
targets for gender, ethnicity, nationality or any other criterion of representation on the Board. At 31 December 2024, the Board members were
male. The Board continues to focus on encouraging diversity of business skills and experience, recognising that directors with diverse skills
sets, capabilities and experience gained from different backgrounds enhances the Board but has no current plans to refresh the Board.
Board Responsibilities
The Board reviews all aspects of the Company’s affairs including the setting and monitoring of investment strategy and the review of investment
performance. With the Portfolios now in their harvest periods, the Investment Manager takes decisions as to the sale of individual investments,
in line with the investment policy and strategy set by the Board. The Investment Manager together with the Company Secretary and
Administrator also ensures that all Directors receive, in a timely manner, all relevant management, regulatory and financial information relating
to the Company and its portfolio of investments. Representatives of the Investment Manager attend each Board meeting, enabling the Directors
to question any matters of concern or seek clarification on certain issues. Matters specifically reserved for decision by the full Board have been
defined and a procedure adopted for Directors in the furtherance of their duties to take independent professional advice at the expense of the
Company. This is available on the Company’s website www.nbddif.com
.
38 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
GOVERNANCE | Corporate Governance Report
Corporate Governance Report (continued)
Conflict of Interests
Directors are required to disclose all actual and potential conflicts of interest to the Board as they arise and the Board may impose restrictions
or refuse to authorise conflicts if deemed appropriate. The Directors have undertaken to notify the Company Secretary as soon as they become
aware of any new potential conflicts of interest that would need to be approved by the Board. Only Directors who have no material interest in
the matter being considered will be able to participate in the Board approval process.
It has also been agreed that the Directors will advise the Chairman and the Company Secretary in advance of any proposed external
appointment.
None of the Directors had a material interest in any contract, which is significant to the Company’s business during the year ended 31 December
2024, except Michael Holmberg, being an employee of the Neuberger Berman Group of which the Investment Manager is part of.
The Directors’ Remuneration Report on pages 50 to 52 provides information on the remuneration and interests of the Directors.
Performance Evaluation
The performance of the Board, its Committees and the Directors, including the Chairman, was reviewed by the Board on 12 November 2024,
by means of an internal questionnaire. The Company Secretary collated the results of the questionnaires and the consolidated results were
reviewed and discussed by the Board and by the Remuneration Committee. The Chairman reviewed each individual Director’s contribution.
The 2024 evaluation concluded that:
• the performance of the Board, its committees, the Chairman and each of the Directors continues to be effective;
• Mr Hallam, Mr Legge and Mr Vakil are unanimously considered independent;
• all current Directors should be proposed for re-election at the next AGM; and
• the Board was considered to have an appropriate mix of skills and experience.
The Board intends to conduct another internal board evaluation in November 2025, and will continue to review its procedures, its effectiveness
and development in the year ahead.
The Directors noted that all three share classes were currently in harvest phase and agreed that, due to the position of the Company, it was
not beneficial or necessary to incur the costs of an externally facilitated external evaluation. The Directors agreed that in the unlikely event that
Company’s life were to be extended, further consideration would be given to an externally facilitated evaluation and therefore agreed to keep
this position under review.
The Remuneration Committee (excluding John Hallam) led by the Chairman of the Remuneration Committee reviewed the Chairman. It was
agreed that the Chairman was well-regarded by the other Board members and that he provided excellent depth of knowledge of the Company.
In addition, the Chairman has actively offered himself to meet with shareholders over the year.
Induction/Information and Professional Development
Directors are provided, on a regular basis, with key information on the Company’s policies, regulatory requirements and its internal controls.
Regulatory and legislative changes affecting Directors’ responsibilities are advised to the Board as they arise along with changes to best
practice by, amongst others, the Company Secretary and the Auditor. Advisers to the Company also prepare reports for the Board from time
to time on relevant topics and issues. In addition, Directors attend relevant seminars and events to allow them continually to refresh their skills
and knowledge and keep up with changes within the investment company industry. The Chairman reviewed the training and development
needs of each Director during the annual Board evaluation process. The Chairman confirmed that all directors actively kept up to date with
industry developments and issues.
Independent Advice
The Board recognises that there may be occasions when one or more of the Directors feels it is necessary to take independent legal advice
at the Company’s expense. A procedure is set out in the Directors’ letters of appointment to enable them to do so.
39 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
GOVERNANCE | Corporate Governance Report
Corporate Governance Report (continued)
Indemnities
To the extent permitted by the Law, the Company’s Articles provide an indemnity for the Directors against any liability except such (if any) as
they shall incur by or through their own breach of trust, breach of duty or negligence. Each Director has an Instrument of Indemnity with the
Company.
During the year, the Company has maintained insurance cover for its Directors and Officers under a Directors’ and Officers’ liability insurance
policy.
Relationship with the Investment Manager, Company Secretary, Administrator and Sub-Administrator
All of the Company’s management and administration functions are delegated to external parties including the management of the investment
Portfolios, the custodial services (including the safeguarding of assets), the registration services and the day-to-day company secretarial,
administration and accounting services. Each of these contracts was entered into after full and proper consideration by the Board of the quality
and cost of services offered, including the control systems in operation in so far as they relate to the affairs of the Company. The Management
Engagement Committee is responsible for the oversight of service providers.
The Board receives and considers reports regularly from the Investment Manager and ad hoc reports and information are supplied to the
Board as required. With the Portfolios now in their harvest periods, the Investment Manager takes decisions as to the sale of individual
investments. The Investment Manager, Company Secretary, Administrator and Sub-Administrator also ensure that all Directors receive, in a
timely manner, all relevant management, regulatory and financial information. Representatives of the Investment Manager, Administrator and
Sub-Administrator attend each Board meeting enabling the Directors to probe further into matters of concern.
The Directors have access to the advice and service of the corporate Company Secretary through its appointed representative who is
responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. The
Board, the Investment Manager, Company Secretary, the Administrator and Sub-Administrator operate in a supportive, co-operative and open
environment.
Shareholder Engagement
The Board believes that the maintenance of good relations with shareholders is important for the long-term prospects of the Company. It has,
since admission, sought engagement with investors. Where appropriate, the Chairman, and other Directors are available for discussion about
governance and strategy with major shareholders and the Chairman ensures communication of shareholders’ views to the Board. The Board
receives feedback on the views of shareholders from its Corporate Broker (“Broker”) and the Investment Manager, and shareholders are
welcome to contact the Directors at any time via the Company Secretary by email at: NB.Distressed@suntera.com.
The Directors believe that the AGM provides an appropriate forum for shareholders to communicate with the Board and encourages
participation. There is an opportunity for individual shareholders to question the Chairman of the Board, the Audit Committee, Management
Engagement Committee, Remuneration Committee and Inside Information Committee at the AGM. The Board also welcomes the opportunity
to meet with investors on a one-to-one basis, upon request.
The Board assesses the results of AGMs and will consider whether there is a significant number of votes not lodged in favour of a resolution.
Where the Board considers that a significant number of votes have not been lodged in favour of a resolution, an immediate announcement will
be made and further disclosures will be made in the next Annual Report. The Broker and the Investment Manager will seek feedback from
investors. In addition to this the Broker and the Investment Manager will provide the Board with feedback that has been received from investors
about the performance of the Company and the Investment Manager.
Key Stakeholder Groups
The Company identifies its key stakeholder groups as follows:
Shareholders
All Board decisions are made with the Company’s success in mind, which is ultimately for the long-term benefit of our shareholders.
40 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
GOVERNANCE | Corporate Governance Report
Corporate Governance Report (continued)
Key Stakeholder Groups (continued)
Service Providers
Our service providers’ relationships are vital to our overall success, so as a Board we carefully consider the selection of, and engagement and
continued relationship with our key service providers being the Investment Manager, Administrator, Custodian, Broker, Legal Advisers,
Registrar, Auditor and Company Secretary.
The Board recognises the benefits of fostering strong business relationships with its key service providers and seeks to ensure each is
committed to the performance of their respective duties to a high standard and, where practicable, that each provider is motivated to adding
value within their sphere of activity.
The Board has delegated various duties to external parties including the management of the investment portfolio, the custodial services
(including the safeguarding of assets), the registration services and the day-to-day company secretarial, administration and accounting
services. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of services offered,
including the control systems in operation in so far as they relate to the affairs of the Company.
The Board continues to have regular face-to-face meetings with all key service providers.
Stakeholders and Section 172
Whilst only directly applicable to UK domiciled companies, the intention of the AIC Code is that matters set out in section 172 of the UK
Companies Act, 2006 are reported. The following disclosures offer some insight into how the Board uses its meetings as a mechanism for
discharging its duties under Provision 5 of the AIC Code, including the breadth of matters it discussed and debated during the year and the
key stakeholder groups that were central to those discussions. The Board’s commitment to maintaining the high-standards of corporate
governance recommended in the AIC Code, combined with the directors’ duties enshrined in Company law, the constitutive documents, the
Disclosure Guidance and Transparency Rules, and Market Abuse Regulation, ensures that shareholders are provided with frequent and
comprehensive information concerning the Company and its activities via the Company’s website and Regulatory Information Service (“RIS”)
announcements on the LSE such as the quarterly factsheets.
Each Board meeting follows a carefully tailored agenda agreed in advance by the Board and Company Secretary. A typical meeting will
comprise reports on current financial and operational performance from the Administrator, market update from the Broker, portfolio
performance from the Investment Manager, with regulatory and governance updates from the Company Secretary and where required, a
detailed deep dive into an area of particular strategic importance or concern. Through oversight and control, we have in place suitable policies
to ensure the Company maintains high standards of business conduct, treats customers fairly, and employ high standards of corporate
governance.
Whilst the primary duty of the Directors is owed to the Company as a whole, the Board considers as part of its decision-making process the
interests of all stakeholders. Particular consideration being given to the continued alignment between the activities of the Company and those
that contribute to delivering the Board’s strategy, which include the Investment Manager, Administrator, and the Company Secretary.
The Annual Report, Key Information Documents and quarterly fact sheets are available to provide shareholders with a clear understanding of
the Company’s activities and its results. This information is supplemented by the daily calculation and publication via a Regulatory Information
Service of the net asset value of the Company’s Ordinary Shares, Extended Life Shares and New Global Shares. All documents issued by the
Company can be viewed on the Company’s website at www.nbddif.com
.
The Board respects and welcomes the views of all stakeholders. Any queries or areas of concern regarding the Company’s operations can be
raised with the Company Secretary.
2025 AGM
The 2025 AGM will be held in Guernsey on 30 June 2025. The notice for the AGM will set out the ordinary and special resolutions to be
proposed at the meeting. Separate resolutions are proposed for each substantive issue. Shareholders wishing to lodge questions in advance
of the meeting and specifically related to the resolutions proposed are invited to do so by writing to the Company Secretary at the address
given on page 89.
Voting on all resolutions at the AGM will be on a poll. The proxy votes cast, including details of votes withheld are disclosed to those in
attendance at the meeting and the results are published on the Company’s website and announced via a Regulatory Information Service.
41 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
GOVERNANCE | Corporate Governance Report
Corporate Governance Report (continued)
2025 AGM (continued)
Where a significant number of votes have been lodged against a proposed resolution (being greater than 20%), in accordance with the AIC
Code published in February 2019, it is the Board’s policy that the Board will identify those shareholders and further understand their views to
address the concerns of the Company’s shareholders. At the 2024 AGM a significant number of votes (42%) were cast against the resolution
authorising the Company to make market acquisitions of its own shares. As it was not expected that this power would be used other than in
exceptional circumstances it was not considered necessary to seek feedback and this will not be proposed again.
Board Meetings
The Board meets at least four times a year. Certain matters are considered at all Board meetings including Portfolio composition and asset
realisation strategy, capital repayments and income distributions by way of dividend, NAV and share price performance and associated matters
such as asset allocation, risks, strategy, marketing and investor relations, peer group information and industry issues. Consideration is also
given to administration and corporate governance matters, where applicable reports are received from Board committees.
Directors unable to attend a board meeting are provided with the board papers and can discuss issues arising in an informal meeting with the
Chairman or another non-executive Director.
The Chairman is responsible for ensuring the Directors receive complete information in a timely manner concerning all matters which require
consideration by the Board. Through the Board’s ongoing shareholder engagement and the reports produced by each key service provider,
the Directors are satisfied that sufficient information is provided so as to ensure such matters are taken into consideration as part of the Board’s
decision-making process.
Attendance at scheduled meetings of the Board and its committees in the 2024 financial year
BOARD
AUDIT
COMMITTEE
MANAGEMENT
ENGAGEMENT
COMMITTEE
REMUNERATION
COMMITTEE
INSIDE INFORMATION
COMMITTEE
Number of meetings during the year
4
4
1
1
1
John Hallam
4
N/A
1
1
1
Christopher Legge 4 4 1 1 1
Michael Holmberg
4
N/A
N/A
N/A
N/A
Stephen Vakil 4 4 1 1 1
In addition to these meetings, 5 ad-hoc board and board committee meetings were held during the year for various matters, primarily of an
administrative nature. These meetings were attended by those Directors available at the time.
Board Committees
The Board has established an Audit Committee, Management Engagement Committee, Remuneration Committee and an Inside Information
Committee with defined terms of reference and duties. Further details of these committees can be found in their reports on pages 42 to 49.
The terms of reference for each committee can be found on the Company’s website at www.nbddif.com.
The Board feels that due to the size and structure of the Company, establishing a Nomination Committee is unnecessary and that the Board
as a whole will consider matters relating to appointment of Directors.
For and on behalf of the Board.
John Hallam Christopher Legge
Chairman Director
29 April 2025 29 April 2025
42 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
GOVERNANCE | Audit Committee Report
Audit Committee Report
Membership
Christopher Legge - Chairman (Independent non-executive Director)
Stephen Vakil (Senior Independent non-executive Director)
Key Objectives
The Audit Committee aims to ensure effective governance over the appropriateness of the Company’s financial reporting including the
adequacy of related disclosures, the performance of the external auditor, and the management of the Company’s systems of internal
controls and business risks.
Responsibilities
• reviewing the Company’s financial results announcements and Financial Statements and monitoring compliance with relevant
statutory and listing requirements;
• reporting to the Board on the appropriateness of the Company’s accounting policies and practices including critical accounting
policies and practices;
• advising the Board on whether the Audit Committee believes the Annual Report and Financial Statements, taken as a whole, is
fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s
performance, business model and strategy;
• overseeing the relationship with the external auditor;
• considering the financial and other implications of the independence of the auditors arising from any non-audit services to be
provided by the auditor;
• reviewing the effectiveness of the Company’s risk management framework, taking into account the reports on the internal controls
of the Company’s service providers;
• considering the nature and extent of the significant risks the Company faces in achieving its strategic objectives; and
• compiling a report on the Audit Committee’s activities to be included in the Company’s Annual Report.
Audit Committee Meetings
The Audit Committee meets at least three times a year with only its members and the Audit Committee Secretary having the right to
attend. However, other Directors and representatives of the Investment Manager and Administrator will be invited to attend such
meetings on a regular basis and other non-members may be invited to attend all or part of the meeting as and when appropriate and
necessary. The Company’s independent auditor, KPMG Channel Islands Limited (“KPMG”), is also invited on a regular basis.
The Audit Committee determines, in conjunction with KPMG, whether it is necessary for it to meet the auditors without the Investment
Manager or other service providers being present.
43 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Audit Committee Report (continued)
Main Activities during the year
The Audit Committee assisted the Board in carrying out its responsibilities in relation to financial reporting requirements, risk
management and the assessment of internal controls. It also manages the Company’s relationship with the external auditor. Meetings
of the Committee generally take place prior to a Company Board meeting. The Audit Committee reports to the Board as part of a
separate agenda item on its activities and matters of particular relevance to Board members in the conduct of their work.
The Board requested that the Audit Committee advise them on whether it believes the Annual Report, taken as a whole, is fair, balanced
and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model
and strategy and the Audit Committee confirmed this to be the case.
The Audit Committee’s terms of reference were updated during the year and can be found on the Company’s website www.nbddif.com.
At its four meetings during the year, the Committee focused on:
Financial Reporting
The primary role of the Audit Committee in relation to financial reporting is to review with the Investment Manager, Administrator and
the external auditor the appropriateness of the Annual Financial Statements concentrating on, amongst other matters:
• the quality and acceptability of accounting policies and practices;
• the clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting
requirements;
• material areas in which significant judgements have been applied or there has been discussion with the external auditor;
• the viability of the Company, taking into account the principal and emerging risks it faces;
• whether the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s performance, business model and strategy; and
• any correspondence from regulators in relation to financial reporting.
To aid its review, the Audit Committee considered reports from the Investment Manager, Administrator, Sub-Administrator, Company
Secretary and also reports from the external auditor on the outcomes of their half-year review and annual audit.
The members of the Audit Committee had meetings with KPMG, where their findings in respect of both the Interim Review and the
Annual Audit were reported.
Significant Issues
In relation to the Annual Report and Financial Statements for the year ended 31 December 2024, the significant issue considered by
the Audit Committee was the valuation of the Company’s investments.
The Committee received a report from the Investment Manager on the valuation of the Portfolios and on the assumptions used in valuing
the Portfolios. It analysed the investment Portfolios of the Company in terms of investment mix, fair value hierarchy and valuation and
held detailed discussions with the Investment Manager regarding the methodology and procedures used in valuing the Portfolios.
The Committee discussed in depth with KPMG their approach to testing the appropriateness and robustness of the valuation
methodology applied by the Investment Manager to the Company’s Portfolios. KPMG did not report any significant differences between
the valuations used by the Company and the results of the work performed during their testing process. Based on their above review
and analysis the Audit Committee confirmed that it is satisfied with the valuation of the investments.
44 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Audit Committee Report (continued)
Internal Controls and Risk Management
The Audit Committee has established a process for identifying, evaluating and managing any major risks faced by the Company. The
process is subject to regular review by the Board and accords with the AIC Code.
The Audit Committee has overall responsibility for the Company’s system of internal financial and operating controls and for reviewing
its effectiveness. However, such a system is designed to manage rather than eliminate risks of failure to achieve the Company’s
business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.
The Board has undertaken a full review of the Company’s business risks, which have been analysed and recorded in a risk matrix,
which is updated regularly and is formally reviewed at each quarterly Board meeting. The Board receives, each quarter, a formal report
from the Investment Manager which details the steps taken to monitor and manage the areas of risk including those that are not directly
the responsibility of the Investment Manager and which reports the details of any known internal control failures.
The Company itself does not have an internal audit function, but instead relies on the internal audit functions and departments of the
Investment Manager. The Committee was satisfied that this function provided significant control to help mitigate the risks to the
Company.
In addition, the Audit Committee annually receives and reviews Internal Controls reports from independent sources, in respect of the
Administrator, Sub-Administrator, Registrar, Custodian and Investment Manager.
The Investment Manager has established an internal control framework to provide reasonable but not absolute assurance on the
effectiveness of the internal controls operated on behalf of its clients. The effectiveness of the internal controls is assessed by the
Investment Manager’s compliance and risk department on an ongoing basis.
The Board’s assessment of the Company’s principal risks is set out on pages 82 to 83.
By means of the procedures set out above, the Audit Committee confirms that it has reviewed the effectiveness of the Company’s
system of internal controls for the year ended 31 December 2024 and to the date of approval of this Annual Report and that no concerns
have been noted.
External Audit
The effectiveness of the external audit process is dependent on appropriate audit risk identification at the start of the audit cycle. The
Audit Committee received a detailed audit plan from KPMG, identifying their assessment of these significant risks. For the 2024 financial
year the significant risk identified was in relation to the valuation of investments. This risk is tracked through the year and the Committee
has considered the work done by the auditor to challenge management’s assumptions and estimates around these areas. The
Committee has assessed the effectiveness of the audit process in addressing these matters through the reports received from KPMG
at both the half-year and year end. In addition, the Committee has sought feedback from the Investment Manager, the Administrator
and Sub-administrator on the effectiveness of the audit process. For the 2024 financial year the Committee is satisfied that there had
been appropriate focus and challenge on the primary areas of audit risk and assessed the quality of the audit process to be appropriate.
The Audit Committee considers the re-appointment of the external auditor, including the rotation of the audit partner, and assesses their
independence on an annual basis. The external auditor is required to rotate the audit partner responsible for the Company audit every
five years. Andrew J. Salisbury, KPMG audit director, took over the role as lead audit engagement partner for the year ended 31
December 2024.
KPMG has been the Company’s external auditor since its stock exchange listing in 2010 (14 years). The Company has not formally
tendered the audit since then. The Audit Committee would normally consider putting the Company’s audit out to tender at least every
ten years (with the maximum duration of a continuous audit engagement being twenty years) and has given consideration to doing so
this coming year. However it concluded that, given the current expectation of the wind down of the Company share classes, it was not
in the best interests of the Company to do so. In its assessment of the independence of the auditor, the Audit Committee receives
details of any relationships between the Company and KPMG that may have a bearing on their independence and receives confirmation
from them that they are independent of the Company.
The Audit Committee approved the fees for audit services for 2024 after a review of the level and nature of work to be performed. The
Board was satisfied that the fees were appropriate for the scope of the work required.
45 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Audit Committee Report (continued)
Non-Audit Services
To safeguard the objectivity and independence of the external auditor from becoming compromised, the Audit Committee has a policy
governing the engagement of the external auditor to provide non-audit services. The Committee made amendments to this policy in
April 2023 and follows the certain provisions of the FRC’s Revised Ethical Standard 2019 relating to non-audit services as it applies to
public interest entities. The Audit Committee must be advised by the commissioning entity/person, and by the audit firm, of all
assignments undertaken by the external auditors that fall within the pre-approved categories as soon as practicable.
All non-audit services require prior approval by the Audit Committee. In respect of each calendar year the Audit Committee monitors
the provision of non-audit services by receiving at least half yearly a list of the non-audit services provided (and expected to be provided)
by the external auditor in that calendar year, and the fees involved, so that the Audit Committee can consider the impact on auditors’
objectivity. The Audit Committee’s policy on the Independence of External Auditor (including the provision of non-audit services) is
available on its website at www.nbddif.com
.
Auditor’s Remuneration
31 DECEMBER 2024
(£)
Audit (Guernsey)
200,400
Audit related services (review of interim report) (Guernsey)
40,900
Total
241,300
Appointment and Independence
The Audit Committee has therefore recommended to the Board that, should the Company not be placed into liquidation beforehand,
KPMG be reappointed as external auditor for the year ended 31 December 2025, and to authorise the Directors to determine their
remuneration. Accordingly, a resolution proposing the reappointment of KPMG as the Company’s auditor will be put to the shareholders
at the next AGM.
There are no contractual obligations restricting the Committee’s choice of external auditor and the Company does not indemnify the
external auditor.
The Committee’s activities formed part of the Board evaluation performed in the year. Details of this process can be found under
“Performance evaluation” on page
38. The Committee was satisfied that it had undertaken its duties efficiently and effectively.
Christopher Legge
On behalf of the Audit Committee
29 April 2025
46 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Management Engagement Committee Report
Membership
Stephen Vakil – Chairman (Senior Independent non-executive Director)
John Hallam (Chairman of the Company and Independent non-executive Director)
Christopher Legge (Independent non-executive Director)
Key Objectives
To review performance of all service providers (including the Investment Manager).
Responsibilities
• To review annually the performance, relationships and contractual terms of all service providers (including the Investment
Manager);
• Review and make recommendations on any proposed amendment to the Investment Manager Agreement (“IMA”);
• To review the performance of, and contractual arrangements with the Investment Manager including:
- Monitor and evaluate the Investment Manager’s performance and, if necessary, provide appropriate guidance;
- To consider whether an independent appraisal of the Investment Manager’s services should be made;
- To review the level and method of remuneration and notice period, using peer group comparisons (where available); and
- To ensure that the Investment Manager has a sound system of risk management and internal controls and that these
are maintained to safeguard shareholders’ investment and the Company’s assets.
Committee Meetings
Only members of the Management Engagement Committee and the Secretary have the right to attend Committee meetings. However,
representatives of the Investment Manager and Administrator may be invited by the Committee to attend meetings as and when
appropriate.
Main Activities during the year
The Management Engagement Committee met once during the year and reviewed performance, standard and value for money of the
Company’s service providers and the Investment Manager. The Management Engagement Committee reviewed the contractual terms,
disaster recovery and business continuity arrangements, information security arrangements, details of anti-bribery and corruption
policies, anti-facilitation of tax evasion policies, and the level of professional indemnity insurance of all service providers as at 12
November 2024, including the Investment Manager.
The Management Engagement Committee reviewed the Terms of Reference for the Committee and considered that they remained
appropriate.
Continued Appointment of the Investment Manager and Other Service Providers
The Board reviews investment performance at each Board meeting and the performance of the Company’s service providers are
reviewed annually as part of the Management Engagement Committee’s annual review.
Taking into consideration supplementary guidance issued by the AIC in 2020 which described certain measures by which investment
companies may assess the relationship with the manager, as in previous years the Board undertook an enhanced qualitative
assessment of the performance of the Investment Manager. The feedback from this assessment confirmed that the Investment
Manager’s focus remained on the performance of their core duties, and that there existed a high level of congruence between the duties
of the Investment Manager and the objectives of the Company. The Board does not consider it necessary to obtain an independent
appraisal of the Investment Manager’s services.
47 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Management Engagement Committee Report (continued)
Continued Appointment of the Investment Manager and Other Service Providers (continued)
As a result of the 2024 annual review it is the opinion of the Directors that the continued appointment of the current service providers,
including the Investment Manager, on the terms agreed is in the best interests of the Company’s shareholders as a whole. The
Investment Manager has extensive investment management resources and wide experience in managing portfolios of distressed
investments.
Stephen Vakil
On behalf of the Management Engagement Committee
29 April 2025
48 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Inside Information Committee Report
Membership
John Hallam (Chairman of the Company and Independent non-executive Director)
Michael Holmberg (non-executive Director)
Christopher Legge (Independent non-executive Director)
Stephen Vakil (Senior Independent non-executive Director)
Key Objectives
To identify inside information and monitor the disclosure and control of inside information.
Responsibilities
• Identify inside information as it arises;
• Review and prepare project insider lists as required; and
• Consider the need to announce or to delay the announcement of inside information.
Committee Meetings
Only members of the Inside Information Committee and the Secretary have the right to attend Inside Information Committee meetings.
However, representatives of the Investment Manager and Administrator may be invited by the Inside Information Committee to attend
meetings as and when appropriate.
Main Activities During the year
The Inside Information Committee met on 14 March 2024 and the Inside Information Committee reviewed its Terms of Reference, the
Company’s policies and procedures for inside information and personal dealing. There was no update made on the Inside Information
Committee’s terms of reference in 2024 and it was agreed that the policies and procedures remained relevant and accurate.
There were no delays to the disclosure of information during the year.
John Hallam
On behalf of the Inside Information Committee
29 April 2025
49 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Remuneration Committee Report
Membership
Stephen Vakil – Chairman (Senior Independent non-executive Director)
John Hallam (Chairman of the Company and Independent non-executive Director)
Christopher Legge (Independent non-executive Director)
Key Objectives
To review the ongoing appropriateness and relevance of the Company’s remuneration policy.
Responsibilities
• Determine the remuneration of the Directors;
• Prepare an Annual Report on Directors’ remuneration;
• Consider the need to appoint external remuneration consultants; and
• Oversee the performance evaluation of the Board; its committees and individual directors.
Committee Meetings
Only members of the Remuneration Committee and the Secretary have the right to attend Remuneration Committee meetings. However,
representatives of the Investment Manager and Administrator may be invited by the Remuneration Committee to attend meetings as and when
appropriate.
Main Activities During the year
The Remuneration Committee met once during the year and reviewed the Directors’ remuneration. The Remuneration Committee’s terms of
reference were updated during the year and can be found on the Company’s website www.nbddif.com
.
The Remuneration Committee considered the Directors’ Remuneration and agreed that the current policy remained appropriate.
A detailed Directors’ Remuneration report to shareholders from the Remuneration Committee is contained on pages 50 to 52.
Stephen Vakil
On behalf of the Remuneration Committee
29 April 2025
50 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Directors’ Remuneration Report
Annual Statement
The following report describes how the Board has applied the principles relating to Directors’ remuneration. An ordinary resolution to ratify this
report will be proposed at the AGM to be held on 30 June 2025.
Directors’ Fees
The Company paid the following fees to the Directors for the year ended 31 December 2024. These fees have remained unchanged since
2014.
ROLE
TOTAL BOARD
FEES ($)
TOTAL BOARD
FEES (£)
John Hallam
Chairman
60,000
10,000
Michael Holmberg
1
non-executive Director
-
-
Christopher Legge
non-executive Director and Chairman of the Audit Committee
50,000
10,000
Stephen Vakil
non-executive Director, Chairman of the Remuneration
Committee and Chairman of Management Engagement
Committee
45,000
10,000
Total
155,000
30,000
The Company paid the following fees to the Directors for the year ended 31 December 2023:
ROLE
TOTAL BOARD
FEES ($)
TOTAL BOARD
FEES (£)
John Hallam
Chairman
60,000
10,000
Michael Holmberg
1
non-executive Director
-
-
Christopher Legge
non-executive Director and Chairman of the Audit Committee
50,000
10,000
Stephen Vakil
non-executive Director, Chairman of the Remuneration
Committee and Chairman of Management Engagement
Committee
45,000
10,000
Total
155,000
30,000
1
Michael Holmberg has waived his right to Director fees.
No other remuneration was paid or payable by the Company during the year to any of the Directors (2023: $Nil).
Remuneration Policy
The determination of the Directors’ fees is a matter dealt with by the Board. The Board considers the remuneration policy annually to
ensure that it remains appropriately positioned. The Board reviewed the fees paid to the boards of similar investment companies. No
Director is involved in decisions relating to his or her own remuneration.
No Director has a service contract with the Company and Director appointments may be terminated at any time with no compensation
payable at termination.
51 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Directors’ Remuneration Report (continued)
Remuneration Policy (continued)
The Company’s policy is for the Directors to be remunerated in the form of fees, payable quarterly in arrears. No Director has any
entitlement to a pension and the Company has not awarded any share options or long-term performance incentives to any of the
Directors. No element of the Directors’ remuneration is performance related.
Directors are authorised to claim reasonable expenses from the Company in relation to the performance of their duties. The Company’s
policy is that the fees payable to the Directors should reflect the time spent by the Board on the Company’s affairs and the responsibilities
borne by the Directors and should be sufficient to enable high calibre candidates to be recruited. The policy is for the Chairman of the
Board and Chairman of the Audit Committee to be paid a higher fee than the other Directors in recognition of their more onerous roles
and additional time spent performing their duties. The Board may amend the level of remuneration paid within the limits of the Company’s
Articles. In 2017, the remuneration policy needed to be reviewed by attributing the company as a whole to the individual share classes.
The aggregate remuneration for each director has not changed since 2014.
The remuneration policy reflects the changing status of the Company as the existing Portfolios are realised as follows:
Company
Fee (USD)
NBDD Fee
(USD)
NBDX Fee
(USD)
NBDG Fee
(GBP)
Total
(USD)
Total
(GBP)
Chairman
40,000
10,000
10,000
10,000
60,000
10,000
Audit Committee Chairman
30,000
10,000
10,000
10,000
50,000
10,000
Other Directors
25,000
10,000
10,000
10,000
45,000
10,000
Directors’ Fees Policy
OBJECTIVE
OPERATION
MAXIMUM POTENTIAL
VALUE
PERFORMANCE METRICS
USED
To recognise time spent and
the responsibilities borne and
to attract high calibre
candidates who have the
necessary experience and
skills.
Directors’ fees are set by the
Board.
Annual fees are paid quarterly in
arrears.
Fees are reviewed annually and
against those for Directors in
companies of similar scale and
complexity.
Fees were last reviewed on 12
November 2024.
Directors do not receive benefits
and do not participate in any
incentive or pension plans.
Current fee levels are
shown in the remuneration
report.
Directors are not
remunerated based on
performance and are not
eligible to participate in any
performance related
arrangements.
Service Contracts and Policy on Payment of Loss of Office
The Directors’ appointments are not subject to any duration or limitation. Any Director may resign in writing at any time. Directors’
appointments are reviewed during the annual Board evaluation. No Director has a service contract with the Company. Directors have
agreed letters of appointment with the Company.
As detailed on page 36, all of the independent non-executive Directors are re-elected at the first AGM after their appointment and are
then subject to annual re-election. The names and biographies of the Directors holding offices at the date of this report are listed on
page 28.
52 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Directors’ Remuneration Report (continued)
Dates of Directors’ Letters of Appointment
Copies of the Directors’ letters of appointment are available for inspection by shareholders at the Company’s Registered Office and
will be available at the AGM. The dates of their letter of appointments are shown below.
DATE OF LETTER OF APPOINTMENT
John Hallam
20 April 2010 (amended on 8 May 2018)
Michael Holmberg
20 April 2010 (amended on 22 August 2018)
Stephen Vakil
5 February 2016 (amended on 8 May 2018)
Christopher Legge
12 April 2018
Directors’ Interests
The Company has not set any requirements or guidelines for Directors to own shares in the Company. The beneficial interests of the
Directors and their connected persons in the Company’s shares at 31 December 2024 are shown in the table below:
DIRECTOR
NO. OF ORDINARY
SHARES
NO. OF EXTENDED
LIFE SHARES
NO. OF NEW GLOBAL
SHARES
TOTAL NO. OF
SHARES
John Hallam
-
35,468
30,216
65,684
Michael Holmberg
-
15,661
31,590
47,251
Christopher Legge
-
-
-
-
Stephen Vakil
-
-
16,482
16,482
Advisors to the Remuneration Committee
The Remuneration Committee has not sought the paid advice or professional services by any outside person in respect of its
consideration of the Directors’ remuneration. The Remuneration Committee sought input from Neuberger Berman Europe Limited
(“NBEL”) and the Brokers during its deliberations of the remuneration policy.
Stephen Vakil
On behalf of the Remuneration Committee
29 April 2025
53 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Directors’ Responsibilities Statement in respect of the Annual Report and the Financial Statements
The directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the
financial statements in accordance with accounting principles generally accepted in the United States of America and applicable law.
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 its profit or loss for that period. In preparing these financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant and reliable;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the
financial statements;
• assess the Group’s or the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern;
and
• use the going concern basis of accounting unless liquidation is imminent.
The directors confirm that they have complied with the above requirements in preparing the financial statements.
The directors are responsible for keeping proper 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 its financial statements
comply with the Companies (Guernsey) Law, 2008. They are responsible for such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility
for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other
irregularities.
The directors of the Company have elected to prepare consolidated financial statements for the Company for the year ended 31 December
2024 as the parent of the Group in accordance with Section 244(5) of the Law.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The directors who hold office at the date of approval of this Director’s Report confirm that so far as they are aware, there is no relevant audit
information of which the Company’s auditor is unaware, and that each Director has taken all the steps they ought to have taken as a director
to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.
Responsibility statement of the directors in respect of the Annual Report
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group; and
• the Annual Report includes a fair review of the development and performance of the business and the position of the issuer, together with
a description of the principal risks and uncertainties that they face.
We consider the Annual Report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Group’s position and performance, business model and strategy.
John Hallam Christopher Legge
Chairman Director
29 April 2025 29 April 2025
54 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Independent Auditor’s Report to the Members of NB Distressed Debt Investment Fund Limited
Our opinion is unmodified
We have audited the consolidated financial statements of NB Distressed Debt Investment Fund Limited (the “Company”) and its
subsidiaries (together, the "Group"), which comprise the consolidated statement of assets and liabilities including the consolidated
condensed schedule of investments as at 31 December 2024, the consolidated statements of operations, changes in net assets
and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements:
• give a true and fair view of the financial position of the Group as at 31 December 2024, and of the Group’s financial
performance and cash flows for the year then ended;
• are prepared in accordance with U.S. generally accepted accounting principles; and
• comply with the Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company and
Group in accordance with, UK ethical requirements including the FRC Ethical Standard as required by the Crown Dependencies'
Audit Rules and Guidance. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our
opinion.
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated
financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by us, 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 consolidated
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In
arriving at our audit opinion above, the key audit matter was as follows (unchanged from 2023):
The risk
Our response
Valuation of Investments, at fair value
(“Investments”)
$36,677,885 (2023: $60,883,590)
Refer to the Audit Committee Report on
page 42, the Consolidated Condensed
Schedule of Investments on page 63,
Note 2 Summary of Accounting Policies,
and Note 2(f) Fair Value of Financial
Instruments
Basis:
The Group’s investment portfolio is
carried at fair value in accordance with
US generally accepted accounting
principles. It represents a significant
proportion (58% (2023: 76%)), and is
the principal driver, of the Group’s net
asset value.
The Group’s holdings in quoted and
unquoted equity and debt investments,
representing 31% of the fair value of
investments, are valued at their bid
price using broker quotes (including use
of single broker quotes) or third party
pricing service providers (the “Price
Quotes”).
Our audit procedures included:
Control evaluation:
We assessed and evaluated the design
and implementation of the control in
place over the valuation of investments.
Challenging managements’
assumptions and inputs including use
of KPMG valuation specialists:
For Investments where market quotes
were available, we obtained prices from
third party data sources and pricing
vendors.
For Internally Generated Valuations and
single broker quoted investments, we
performed, as applicable, the following
procedures with the support of our KPMG
valuation specialists:
55 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Independent Auditor’s Report to the Members of NB Distressed Debt Investment Fund Limited
(continued)
The risk
Our response
Where no Price Quotes are available or
they may not be representative of fair
value, the Group will utilise the
resources of the Investment Manager to
augment its own fair value analysis to
determine the most appropriate fair
value for such investments (the
“Internally Generated Valuations”). 69%
of the fair value of Investments were
valued using Internally Generated
Valuations.
Risk:
The valuation of the Group’s
investments is considered a significant
area of our audit, given that it represents
the majority of the net assets of the
Group.
The valuation risk for both the Internally
Generated Valuations and single broker
quoted investment valuations
incorporate both a risk of fraud and error
given the significance of estimates and
judgments that may be involved in the
determination of fair value.
•
We obtained and read the fair
valuation memoranda prepared by
the Investment Manager, including
their fair value analysis to corroborate
broker prices against relevant market
metrics and valuation methods;
• We assessed the appropriateness of
the valuation approach and
methodology applied to each
investment and where relevant,
derived an independent reference
price;
• We compared the assumptions used
in the valuations to observable
market data or supporting
documentation;
•
We corroborated significant inputs
used to supporting documentation;
•
We considered market transactions
in close proximity to the year end and
assessed their appropriateness as
being representative of fair value; and
•
We assessed the effect of the
investee entity’s financial
performance upon the fair value.
Assessing disclosures:
We considered the Group’s disclosures
(Note 2(c)) in relation to the use of
estimates and judgements regarding the
valuation of investments and the Group's
investment valuation policies (Note 2(f))
adopted and fair value disclosures.
Our application of materiality and an overview of the scope of our audit
Materiality for the consolidated financial statements as a whole was set at $1,300,000, determined with reference to a benchmark
of group net assets of $63,495,265 of which it represents approximately 2.0% (2023: 2.0%).
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in
individual account balances add up to a material amount across the financial statements as a whole. Performance materiality for
the Group was set at 75% (2023: 75%) of materiality for the financial statements as a whole, which equates to $975,000. We
applied this percentage in our determination of performance materiality because we did not identify any factors indicating an
elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding $65,000, in addition to other
identified misstatements that warranted reporting on qualitative grounds.
Our audit of the Group was undertaken to the materiality level specified above, which has informed our identification of significant
risks of material misstatement and the associated audit procedures performed in those areas as detailed above.
The group team performed the audit of the Group as if it was a single aggregated set of financial information. The audit was
performed using the materiality level set out above and covered 100% of total Group net increase in net assets resulting from
operations and total Group assets and liabilities.
56 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Independent Auditor’s Report to the Members of NB Distressed Debt Investment Fund Limited
(continued)
Going concern
The directors have prepared the consolidated financial statements on the going concern basis as they do not intend to liquidate
the Group or the Company or to cease their operations, and as they have concluded that the Group and the Company's financial
position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast
significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the consolidated
financial statements (the “going concern period").
In our evaluation of the directors' conclusions, we considered the inherent risks to the Group and the Company's business model
and analysed how those risks might affect the Group and the Company's financial resources or ability to continue operations over
the going concern period. The risks that we considered most likely to affect the Group and the Company's financial resources or
ability to continue operations over this period was availability of capital to meet operating costs and other financial commitments.
We considered whether this risk could plausibly affect the liquidity in the going concern period by comparing severe, but plausible
downside scenarios that could arise from this risk against the level of available financial resources indicated by the Company’s
financial forecasts.
We considered whether the going concern disclosure in note 2(a) to the financial statements gives a full and accurate description
of the directors' assessment of going concern.
Our conclusions based on this work:
• we consider that the directors' use of the going concern basis of accounting in the preparation of the consolidated financial
statements is appropriate;
• we have not identified, and concur with the directors' assessment that there is not, a material uncertainty related to events or
conditions that, individually or collectively, may cast significant doubt on the the Group and the Company's ability to continue
as a going concern for the going concern period; and
• we found the going concern disclosure in the notes to the consolidated financial statements to be acceptable.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that
the Group and the Company will continue in operation.
Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
• enquiring of management as to the Group’s policies and procedures to prevent and detect fraud as well as enquiring whether
management have knowledge of any actual, suspected or alleged fraud;
• reading minutes of meetings of those charged with governance; and
• using analytical procedures to identify any unusual or unexpected relationships.
As required by auditing standards, and taking into account possible incentives or pressures to misstate performance and our
overall knowledge of the control environment, we perform procedures to address the risk of management override of controls, in
particular the risk that management may be in a position to make inappropriate accounting entries, and the risk of bias in
accounting estimates such as valuation of single broker quoted investments and Internally Generated Valuations.
On this audit we do not believe there is a fraud risk related to revenue recognition because the Group’s revenue streams are
simple in nature with respect to accounting policy choice, and are easily verifiable to external data sources or agreements with
little or no requirement for estimation from management. We did not identify any additional fraud risks.
We performed procedures including:
• identifying journal entries and other adjustments to test based on risk criteria and comparing any identified entries to
supporting documentation;
• incorporating an element of unpredictability in our audit procedures; and
• assessing significant accounting estimates for bias.
57 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Independent Auditor’s Report to the Members of NB Distressed Debt Investment Fund Limited
(continued)
Further detail in respect of valuation of single broker quoted investments and Internally Generated Valuations is set out in the key
audit matter section of in this report.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the consolidated
financial statements from our general commercial and sector experience and through discussion with management (as required
by auditing standards), and from inspection of the Group’s regulatory and legal correspondence, and discussed with management
the policies and procedures regarding compliance with laws and regulations. As the Group is regulated, our assessment of risks
involved gaining an understanding of the control environment including the entity’s procedures for complying with regulatory
requirements.
The Group is subject to laws and regulations that directly affect the consolidated financial statements including financial reporting
legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our
procedures on the related financial statement items.
The Group is subject to other laws and regulations where the consequences of non-compliance could have a material effect on
amounts or disclosures in the consolidated financial statements, for instance through the imposition of fines or litigation or impacts
on the Group and the Company’s ability to operate. We identified financial services regulation as being the area most likely to
have such an effect, recognising the regulated nature of the Group’s activities and its legal form. Auditing standards limit the
required audit procedures to identify non-compliance with these laws and regulations to enquiry of management and inspection
of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident
from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the consolidated financial statements, even though we have properly planned and performed our audit in
accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the
events and transactions reflected in the consolidated financial statements, the less likely the inherently limited procedures required
by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance
with all laws and regulations.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual
report but does not include the consolidated financial statements and our auditor's report thereon. Our opinion on the consolidated
financial statements does not cover the other information and we do not express an audit opinion or any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. 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.
We have nothing to report on other matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report
to you if, in our opinion:
• the Company has not kept proper accounting records; or
• the consolidated financial statements are not in agreement with the accounting records; or
• we have not received all the information and explanations, which to the best of our knowledge and belief are necessary for
the purpose of our audit.
58 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
GOVERNANCE | Independent Auditor’s Report
Independent Auditor’s Report to the Members of NB Distressed Debt Investment Fund Limited
(continued)
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 53, the directors are responsible for: the preparation of the consolidated
financial statements including being satisfied that they give a true and fair view; such internal control as they determine is
necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error; assessing the Group and 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 liquidation is imminent.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a
high level of assurance, but does not 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
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated
financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities
.
The purpose of this report and restrictions on its use by persons other than the Company's members, as
a body
This report is made solely to the Company’s members, as a body, in accordance with section 262 of the Companies (Guernsey)
Law, 2008. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or
for the opinions we have formed.
Andrew J. Salisbury
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors
Guernsey
29 April 2025
59 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Consolidated Statement of Assets and Liabilities
Consolidated Statement of Assets and Liabilities
AS AT 31 DECEMBER 2024 AND 31 DECEMBER 2023
(EXPRESSED IN US DOLLARS EXCEPT WHERE STATED OTHERWISE)
31 DECEMBER 2024
31 DECEMBER 2023
Assets
Investments, at fair value (2024: cost of $60,011,510; 2023: cost of $90,284,529)
36,677,885
60,883,590
Forward currency contracts, at fair value
2,459,931
18,235
Total return swaps, at fair value (2024: cost of $Nil, 2023: cost of $Nil)
-
3,648,201
Cash and cash equivalents
14,403,459
4,809,578
Restricted cash:
Forward currency contracts collateral
-
790,000
Total return swap collateral
10,970,000
10,970,000
64,511,275
81,119,604
Other assets
Interest receivables
763,745
691,898
Withholding tax receivable
-
251,051
Other receivables and prepayments
53,065
57,691
Total assets
65,328,085
82,120,244
Liabilities
Forward currency contracts, at fair value
11,319
1,545,570
Accrued expenses and other liabilities
375,287
395,627
Credit default swap, at fair value (2024: cost of $61,957; 2023: cost of $19,860)
19,525
21,309
Total return swaps, at fair value (2024: cost of $Nil, 2023: cost of $Nil)
126,689
-
Due to broker
1,300,000
-
Total liabilities
1,832,820
1,962,506
Net assets
63,495,265
80,157,738
Net assets attributable to Ordinary Shares (shares 2024: 15,382,770;
2023: 15,382,770)
11,624,114
12,415,231
Net asset value per Ordinary Share
0.7557
0.8071
Net assets attributable to Extended Life Shares (shares 2024: 38,731,819;
2023: 44,234,790)
35,907,610
45,614,485
Net asset value per Extended Life Share
0.9271
1.0312
Net assets attributable to New Global Shares (shares 2024: 25,123,440;
2023: 27,821,698)
£12,746,359
£17,358,035
Net asset value per New Global Share
£0.5073
£0.6239
Net assets attributable to New Global Shares (USD equivalent)
15,963,541
22,128,022
Net asset value per New Global Share (USD equivalent)
0.6354
0.7954
The Financial Statements were approved and authorised for issue by the Board of Directors on 29 April 2025 and signed on its behalf by:
John Hallam Christopher Legge
Chairman Director
The accompanying notes on pages 71 to 88 are an integral part of the Consolidated Financial Statements.
60 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FOR THE YEAR ENDED 31 DECEMBER 2024 AND 31 DECEMBER 2023
(EXPRESSED IN US DOLLARS)
31 DECEMBER 2024
31 DECEMBER 2023
Income
Interest income
3,112,539
2,899,273
3,112,539
2,899,273
Expenses
Professional and other expenses
517,253
531,886
Audit fee
305,193
316,352
Directors’ fees and expenses
192,157
193,450
Company secretary fee
114,400
116,888
Administration fee
86,775
87,547
D&O insurance fee
69,940
105,471
Loan administration and custody fees
28,412
30,743
1,314,130
1,382,337
Net investment income
1,798,409
1,516,936
Realised and unrealised (loss)/gain from investments and foreign exchange transactions
Net realised loss on investments, credit default swap, total return swap and forward currency
transactions
(15,957,036)
(92,697)
Net change in unrealised gain on investments, credit default swap, total return swap and forward
currency transactions
6,291,633
1,542,286
Realised and unrealised (loss)/gain from investments and foreign exchange transactions
(9,665,403)
1,449,589
Net (decrease)/increase in net assets resulting from operations
(7,866,994)
2,966,525
The accompanying notes on pages 71 to 88 are an integral part of the Consolidated Financial Statements.
FINANCIAL STATEMENTS |
Consolidated Statement of Operations
Consolidated Statement of Operations
61 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Consolidated Statement of Changes in Net Assets
FOR THE YEAR ENDED 31 DECEMBER 2024
(EXPRESSED IN US DOLLARS)
31 DECEMBER 2024
ORDINARY SHARES
31 DECEMBER 2024
EXTENDED LIFE SHARES
31 DECEMBER 2024
NEW GLOBAL SHARES
31 DECEMBER 2024
AGGREGATED
Net assets at the beginning of the year
12,415,231
45,614,485
22,128,022
80,157,738
Net investment income
10,160
773,862
1,014,387
1,798,409
Net realised loss on investments, credit default swap and
forward currency transactions
(1,009,363)
(14,426,978)
(520,695)
(15,957,036)
Net change in unrealised gain/(loss) on investments, credit
default swap and forward currency transactions
208,086
10,092,881
(4,009,334)
6,291,633
Dividends
-
(654,675)
(772,349)
(1,427,024)
Shares redeemed during the year
-
(5,491,965)
(1,876,490)
(7,368,455)
Net assets at the end of the year
11,624,114
35,907,610
15,963,541
63,495,265
FOR THE YEAR ENDED 31 DECEMBER 2023
(EXPRESSED IN US DOLLARS)
31 DECEMBER 2023
ORDINARY SHARES
31 DECEMBER 2023
EXTENDED LIFE SHARES
31 DECEMBER 2023
NEW GLOBAL SHARES
31 DECEMBER 2023
AGGREGATED
Net assets at the beginning of the year
11,890,321
58,477,990
24,778,428
95,146,739
Net investment income
21,599
711,561
783,776
1,516,936
Net realised (loss)/gain on investments, credit default swap
and forward currency transactions
(229,535)
726,939
(590,101)
(92,697)
Net change in unrealised gain/(loss) on investments, credit
default swap and forward currency transactions
732,846
955,658
(146,218)
1,542,286
Shares redeemed during the year
-
(15,257,663)
(2,697,863)
(17,955,526)
Net assets at the end of the year
12,415,231
45,614,485
22,128,022
80,157,738
The accompanying notes on pages 71 to 88 are an integral part of the Consolidated Financial Statements.
FINANCIAL STATEMENTS | Consolidated Statement of Changes in Net Assets
62 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 31 DECEMBER 2024 AND 31 DECEMBER 2023
(EXPRESSED IN US DOLLARS)
31 DECEMBER 2024
31 DECEMBER 2023
Cash flows from operating activities:
Net (decrease)/increase in net assets resulting from operations
(7,866,994)
2,966,525
Adjustment to reconcile net (decrease)/increase in net assets resulting from operations to net
cash flow provided by operations:
Net realised loss on investments, credit default swap, total return swap and forward currency
transactions
15,957,036
92,697
Net change in unrealised gain on investments, credit default swap, total return swap and forward
currency transactions
(6,291,633)
(1,542,286)
Accretion of discount on loans and bonds
56,771
91,550
Changes in due to broker
1,300,000
-
Changes in interest receivable
(71,847)
(95,874)
Changes in receivables for investments sold
-
498,514
Changes in other receivables and prepayments
4,626
14,613
Changes in withholding tax receivable
251,051
194,711
Changes in accrued expenses and other liabilities
(20,340)
112,978
Cash received on settled forward currency contracts and spot currency contracts
(34,386)
(1,975,089)
Payment in kind interest
(2,405,907)
(1,965,980)
Purchase of investments
1
121,400
(317,725)
Sale of investments
1
16,638,399
16,634,461
Net cash provided by operating activities
17,638,176
14,709,095
Cash flows from financing activities:
Shares redeemed during the year
(7,368,455)
(17,955,526)
Dividend paid
(1,427,024)
-
Net cash used in from financing activities
(8,795,479)
(17,955,526)
Net increase/(decrease) in cash, cash equivalents and restricted cash
8,842,697
(3,246,431)
Cash and cash equivalents at the beginning of the year
4,809,578
8,733,589
Restricted cash at the beginning of the year
11,760,000
11,060,000
Effect of exchange rate changes on cash and cash equivalents
(38,816)
22,420
Cash and cash equivalents at the end of the year
14,403,459
4,809,578
Restricted cash at the end of the year
10,970,000
11,760,000
Supplemental cash flow information
There were no reorganisations requiring disclosure for the year ended 31 December 2024 (31 December 2023: None).
1
Included in these figures is $2,405,907 (2023: $1,965,980) of non-cash transactions. These arose due to the repricing and restructuring of certain investments during the year.
The accompanying notes on pages 71 to 88 are an integral part of the Consolidated Financial Statements.
63 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Consolidated Condensed Schedule of Investments
Consolidated Condensed Schedule of Investments (by financial instrument)
AS AT 31 DECEMBER 2024
(EXPRESSED IN US DOLLARS)
COST
FAIR VALUE
ORDINARY
SHARES
(%)
1
EXTENDED
LIFE
SHARES
(%)
1
NEW GLOBAL
SHARES
(%)
1
TOTAL
COMPANY
(%)
1
Portfolio of Distressed Investments
Bank Debt Investments
47,834,123
21,784,252
0.00
19.18
93.33
34.31
Private Equity
4,907,312
8,837,916
18.51
17.71
2.04
13.92
Short term Investments
US Treasury Bills
7,270,075
6,055,717
35.29
5.44
0.00
9.54
Total Investments
60,011,510
36,677,885
53.80
42.33
95.37
57.77
Portfolio per share class
Ordinary Shares
5,459,638
6,254,171
53.80
-
-
9.85
Extended Life Shares
22,446,527
15,199,913
-
42.33
-
23.94
New Global Shares
32,105,345
15,223,801
-
-
95.37
23.98
60,011,510
36,677,885
53.80
42.33
95.37
57.77
Credit Default Swap
Ordinary Shares
(17,367)
(5,473)
(0.05)
-
-
(0.01)
Extended Life Shares
(44,590)
(14,052)
-
(0.04)
-
(0.02)
(61,957)
(19,525)
(0.05)
(0.04)
-
(0.03)
Forward Currency Contracts
Assets
Ordinary Shares
-
549,259
4.73
-
-
0.87
Extended Life Shares
-
1,910,672
-
5.32
-
3.01
-
2,459,931
4.73
5.32
-
3.88
Liabilities
Ordinary Shares
-
(4,289)
(0.04)
-
-
(0.01)
Extended Life Shares
-
(7,030)
-
(0.02)
-
(0.01)
-
(11,319)
(0.04)
(0.02)
-
(0.02)
Total Return Swap
2
Ordinary Shares
-
(35,412)
(0.30)
-
-
(0.06)
Extended Life Shares
-
(91,277)
-
(0.26)
-
(0.14)
-
(126,689)
(0.30)
(0.26)
-
(0.20)
1
This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
2
The trade claim was structured through a fully funded total return swap with a major US financial institution. See Note 3.
The accompanying notes on pages 71 to 88 are an integral part of the Consolidated Financial Statements.
64 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Consolidated Condensed Schedule of Investments
Consolidated Condensed Schedule of Investments (by financial instrument) (continued)
AS AT 31 DECEMBER 2023
(EXPRESSED IN US DOLLARS)
COST
FAIR VALUE
ORDINARY
SHARES
(%)
1
EXTENDED
LIFE
SHARES
(%)
1
NEW GLOBAL
SHARES
(%)
1
TOTAL
COMPANY
(%)
1
Portfolio of Distressed Investments
Bank Debt Investments
45,428,216
27,125,693
-
20.66
79.99
33.83
Private Equity
17,788,091
23,948,613
24.40
37.62
17.00
29.88
Private Note
19,741,373
3,724,142
2.22
7.56
-
4.65
Short term Investments
US Treasury Bills
7,326,847
6,085,142
33.20
4.30
-
7.59
Total Investments
90,284,527
60,883,590
59.82
70.14
96.99
75.95
Portfolio per share class
Ordinary Shares
6,993,271
7,426,240
59.82
-
-
9.26
Extended Life Shares
48,959,822
31,996,330
-
70.14
-
39.92
New Global Shares
34,331,434
21,461,020
-
-
96.99
26.77
90,284,527
60,883,590
59.82
70.14
96.99
75.95
Credit Default Swap
Ordinary Shares
(5,567)
(5,973)
(0.05)
-
-
(0.01)
Extended Life Shares
(14,293)
(15,336)
-
(0.03)
-
(0.01)
(19,860)
(21,309)
(0.05)
(0.03)
-
(0.02)
Forward Currency Contracts
Assets
Ordinary Shares
-
3,808
0.03
-
-
-
Extended Life Shares
-
14,427
-
0.03
-
0.02
-
18,235
0.03
0.03
-
0.02
Liabilities
Ordinary Shares
-
(348,550)
(2.81)
-
-
(0.44)
Extended Life Shares
-
(1,197,020)
-
(2.63)
-
(1.49)
-
(1,545,570)
(2.81)
(2.63)
-
(1.93)
Total Return Swap
2
Ordinary Shares
-
1,018,720
8.21
-
-
1.27
Extended Life Shares
-
2,629,481
-
5.76
-
3.28
-
3,648,201
8.21
5.76
-
4.55
1
This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
2
The trade claim was structured through a fully funded total return swap with a major US financial institution. See Note 3.
The accompanying notes on pages 71 to 88 are an integral part of the Consolidated Financial Statements.
65 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Consolidated Condensed Schedule of Investments
Consolidated Condensed Schedule of Investments
Investments with the following issuers comprised greater than 5% of Total Company NAV
1
This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
The accompanying notes on pages 71 to 88 are an integral part of the Consolidated Financial Statements.
AS AT 31 DECEMBER 2024
(EXPRESSED IN US DOLLARS)
COUNTRY
INDUSTRY
NOMINAL
COST
FAIR VALUE
ORDINARY
SHARES
(%)
1
EXTENDED
LIFE
SHARES
(%)
1
NEW
GLOBAL
SHARES
(%)
1
TOTAL
COMPANY
(%)
1
Investments at fair value
AB Zwolle Term Loan 4.36%
5/31/2025 (Bank Debt Investments)
Netherlands
Commercial
Mortgage
21,413,112
15,194,276
9,691,940
-
11.61
33.80
14.91
Package Holdings 1
(Private Equity)
Luxembourg
Containers &
Packaging
11,108,610
-
6,762,594
15.69
13.17
-
10.40
Package Holdings 6
(Private Equity)
Luxembourg
Containers &
Packaging
2,948,481
1,893,980
937,623
2.18
1.83
-
1.44
TP Ferro Concesionaria, S.A EUR
Term Loan 25% 6/1/2025
(Bank Debt Investments)
Spain
Surface
Transport
18,787,735
18,531,522
3,890,940
-
5.28
12.14
5.99
TP Ferro Concesionaria, S.A 2017
EUR Term Loan B 25% 6/1/2025
(Bank Debt Investments)
Spain
Surface
Transport
755,816
842,679
156,529
-
0.21
0.49
0.24
TP Ferro PIK 5C 7/23
(Bank Debt Investments)
Spain
Surface
Transport
462,210
462,210
92,442
-
0.12
0.29
0.14
TP Ferro Concesionaria, S.A 2017
USD Term Loan A 25% 6/1/2025
(Bank Debt Investments)
Spain
Surface
Transport
3,753,886
3,753,886
750,777
-
1.01
2.35
1.15
TP Ferro Concesionaria, S.A 2017
USD Term Loan C 25% 6/1/2025
(Bank Debt Investments)
Spain
Surface
Transport
326,958
326,958
65,392
-
0.09
0.20
0.10
TP Ferro PIK 5A 25% 6/1/2025
(Bank Debt Investments)
Spain
Surface
Transport
665,658
665,658
133,132
-
0.18
0.42
0.20
TP Ferro PIK 5B 25% 6/1/2026
(Bank Debt Investments)
Spain
Surface
Transport
379,839
379,839
75,968
-
0.10
0.24
0.12
Hotel Puerta America PIK T/L EUR
(Bank Debt Investments)
Spain
Lodging &
Casinos
4,178,566
4,599,106
4,184,118
-
-
26.21
6.44
Hotel Puerta America PIK Addon
EUR (Bank Debt Investments)
Spain
Lodging &
Casinos
1,649,372
1,796,090
1,651,563
-
-
10.35
2.54
Hotel Puerta America PIK PPL EUR
(Bank Debt Investments)
Spain
Lodging &
Casinos
1,090,003
1,281,898
1,091,451
-
-
6.84
1.68
Hotel Puerta America
(Private Equity)
Spain
Lodging &
Casinos
934
3,013,333
-
-
-
-
-
US Treasury N/B 1.500% 02/15/30
(US Treasury Bills)
United
States
United States
6,975,000
7,270,075
6,055,717
34.05
5.28
-
9.32
60,011,510
35,540,186
51.92
38.88
93.33
54.67
66 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Consolidated Condensed Schedule of Investments
Consolidated Condensed Schedule of Investments (continued)
Investments with the following issuers comprised greater than 5% of Total Company NAV
1
This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
The accompanying notes on pages 71 to 88 are an integral part of the Consolidated Financial Statements.
AS AT 31 DECEMBER 2023
(EXPRESSED IN US DOLLARS)
COUNTRY
INDUSTRY
NOMINAL
COST
FAIR VALUE
ORDINARY
SHARES
(%)
1
EXTENDED
LIFE
SHARES
(%)
1
NEW
GLOBAL
SHARES
(%)
1
TOTAL
COMPANY
(%)
1
Investments at fair value
White Energy Holding Company
LLC (Private Equity)
United
States
Oil & Gas
367
9,174,989
11,010,000
-
17.23
14.24
13.74
AB Zwolle Term Loan 4.36%
5/31/2025 (Bank Debt Investments)
Netherlands
Commercial
Mortgage
20,223,504
14,595,720
10,879,528
-
10.57
27.37
13.57
Package Holdings 1
(Private Equity)
Luxembourg
Containers &
Packaging
11,108,610
-
9,473,309
21.32
14.96
-
11.82
Package Holdings 6
(Private Equity)
Luxembourg
Containers &
Packaging
2,948,481
1,893,980
1,313,564
2.97
6.38
-
1.64
TP Ferro Concesionaria, S.A EUR
Term Loan 25% 6/1/2025
(Bank Debt Investments)
Spain
Surface
Transport
18,787,735
18,531,522
4,150,774
-
4.57
9.35
5.18
TP Ferro Concesionaria, S.A 2017
USD Term Loan A 25% 6/1/2025
(Bank Debt Investments)
Spain
Surface
Transport
2,945,545
2,945,545
2,945,545
-
3.23
6.66
3.67
TP Ferro Concesionaria, S.A 2017
EUR Term Loan B 25% 6/1/2025
(Bank Debt Investments)
Spain
Surface
Transport
593,063
666,784
655,127
-
0.72
1.48
0.82
TP Ferro PIK 5A 25% 6/1/2025
(Bank Debt Investments)
Spain
Surface
Transport
522,319
522,319
522,319
-
0.57
1.18
0.65
TP Ferro PIK 5C 7/23
(Bank Debt Investments)
Spain
Surface
Transport
361,262
361,262
361,262
1.00
0.40
0.82
0.45
TP Ferro PIK 5B 25% 6/1/2026
(Bank Debt Investments)
Spain
Surface
Transport
298,046
298,046
298,046
-
0.33
0.67
0.37
TP Ferro Concesionaria, S.A 2017
USD Term Loan C 25% 6/1/2025
(Bank Debt Investments)
Spain
Surface
Transport
256,553
256,553
256,553
-
0.28
0.58
0.32
Hotel Puerta America PIK T/L
7.25% 1/9/27 EUR (Bank Debt
Investments)
Spain
Lodging &
Casinos
3,901,657
4,293,218
4,215,146
-
-
19.05
5.26
Hotel Puerta America PIK Add on
7.25% 1/9/27 EUR (Bank Debt
Investments)
Spain
Lodging &
Casinos
1,540,070
1,675,349
1,663,811
-
-
7.52
2.08
Hotel Puerta America T/L Profit
Participation (EUR PIK)
(Bank Debt Investments)
Spain
Lodging &
Casinos
1,090,003
1,281,898
1,177,582
-
-
5.32
1.47
US Treasury N/B 1.500% 02/15/30
(US Treasury Bills)
United
States
United States
6,975,000
7,326,847
6,085,143
33.20
4.30
-
7.59
63,824,032
55,007,709
58.49
63.54
94.24
68.63
67 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Consolidated Condensed Schedule of Investments (by geography)
A
S AT 31 DECEMBER 2024
(EXPRESSED IN US DOLLARS)
COST
FAIR VALUE
ORDINARY
SHARES
(%)
1
EXTENDED LIFE
SHARES
(%)
1
NEW GLOBAL
SHARES
(%)
1
TOTAL
COMPANY
(%)
1
Geographic diversity of Portfolios
Portfolio of Distressed Investments
Luxembourg
1,893,980
7,700,216
18.51
15.45
-
12.13
Netherlands
15,194,275
9,691,940
-
11.97
33.80
15.26
Spain
35,653,180
12,092,312
-
7.21
59.53
19.05
United States
-
1,137,700
-
2.26
2.04
1.79
Short term Investments (US Treasury Bills)
United States
7,270,075
6,055,717
35.29
5.44
-
9.54
60,011,510
36,677,885
53.80
42.33
95.37
57.77
1
This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
The accompanying notes on pages 71 to 88 are an integral part of the Consolidated Financial Statements.
FINANCIAL STATEMENTS | Consolidated Condensed Schedule of Investments
68 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Consolidated Condensed Schedule of Investments (by geography) (continued)
A
S AT 31 DECEMBER 2023
(EXPRESSED IN US DOLLARS)
COST
FAIR VALUE
ORDINARY
SHARES
(%)
1
EXTENDED LIFE
SHARES
(%)
1
NEW GLOBAL
SHARES
(%)
1
TOTAL
COMPANY
(%)
1
Geographic diversity of Portfolios
Portfolio of Distressed Investments
Luxembourg
1,893,980
10,786,873
24.28
17.04
-
13.46
Netherlands
14,595,720
10,879,528
-
10.57
27.37
13.57
Spain
33,845,829
16,246,165
-
10.09
52.62
20.27
United States
32,622,153
16,885,882
2.34
28.14
17.00
21.06
Short term Investments (US Treasury Bills)
United States
7,326,847
6,085,142
33.20
4.30
-
7.59
90,284,529
60,883,590
59.82
70.14
96.99
75.95
1
This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
The accompanying notes on pages 71 to 88 are an integral part of the Consolidated Financial Statements.
FINANCIAL STATEMENTS | Consolidated Condensed Schedule of Investments
69 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Consolidated Condensed Schedule of Investments (by sector)
AS AT 31 DECEMBER 2024
(EXPRESSED IN US DOLLARS)
COST
FAIR VALUE
ORDINARY
SHARES
(%)
1
EXTENDED LIFE
SHARES
(%)
1
NEW GLOBAL
SHARES
(%)
1
TOTAL
COMPANY
(%)
1
Industry diversity of Portfolios
Portfolio of Distressed Investments
Commercial Mortgage
15,194,275
9,691,940
-
11.97
33.80
15.27
Containers & Packaging
1,893,980
7,700,217
18.51
15.45
-
12.13
Lodging & Casinos
10,690,426
6,927,131
-
-
43.39
10.91
Oil & Gas
-
1,137,700
-
2.26
2.04
1.79
Surface Transport
24,962,754
5,165,180
-
7.21
16.14
8.13
Short term Investments
US Treasury Bills
7,270,075
6,055,717
35.29
5.44
-
9.54
60,011,510
36,677,885
53.80
42.33
95.37
57.77
1
This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
The accompanying notes on pages 71 to 88 are an integral part of the Consolidated Financial Statements.
FINANCIAL STATEMENTS | Consolidated Condensed Schedule of Investments
70 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Consolidated Condensed Schedule of Investments (by sector) (continued)
AS AT 31 DECEMBER 2023
(EXPRESSED IN US DOLLARS)
COST
FAIR VALUE
ORDINARY
SHARES
(%)
1
EXTENDED LIFE
SHARES
(%)
1
NEW GLOBAL
SHARES
(%)
1
TOTAL
COMPANY
(%)
1
Industry diversity of Portfolios
Portfolio of Distressed Investments
Auto Components
3,705,793
2,151,740
0.11
3.35
2.76
2.68
Commercial Mortgage
14,595,720
10,879,528
-
10.57
27.37
13.57
Containers & Packaging
1,893,980
10,786,873
24.28
17.04
-
13.46
Financial Intermediaries
19,741,371
3,724,142
2.23
7.56
-
4.65
Lodging & Casinos
10,263,797
7,056,540
-
-
31.89
8.80
Oil & Gas
9,174,989
11,010,000
-
17.23
14.24
13.74
Surface Transport
23,582,032
9,189,625
-
10.09
20.73
11.46
Short term Investments
US Treasury Bills
7,326,847
6,085,142
33.20
4.30
-
7.59
90,284,529
60,883,590
59.82
70.14
96.99
75.95
1
This is the Fair Value expressed as a percentage of total Ordinary Share NAV, Extended Life Share NAV, New Global Share NAV and Company NAV.
The accompanying notes on pages 71 to 88 are an integral part of the Consolidated Financial Statements.
FINANCIAL STATEMENTS | Consolidated Condensed Schedule of Investments
71 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 1 – ORGANISATION AND DESCRIPTION OF BUSINESS
NB Distressed Debt Investment Fund Limited (the “Company”) is a closed-ended investment company registered and incorporated in Guernsey
under the provisions of the Companies (Guernsey) Law, 2008 (as amended) (the “Companies Law”) with registration number 51774. The
Company’s shares are traded on the Specialist Fund Segment (“SFS”) of the London Stock Exchange (“LSE”). All share classes are in the
harvest period.
The Company’s objective is to provide investors with attractive risk-adjusted returns through long-biased, opportunistic stressed, distressed
and special situation credit-related investments while seeking to limit downside risk by, amongst other things, focusing on senior and senior
secured debt with both collateral and structural protection.
The Company’s share capital is denominated in US Dollars for Ordinary Shares and Extended Life Shares and Pounds Sterling for New Global
Shares.
NOTE 2 – SUMMARY OF ACCOUNTING POLICIES
(a) Basis of Preparation
The accompanying Consolidated Financial Statements (“Financial Statements”) give a true and fair view of the assets, liabilities, financial
position and return and have been prepared in conformity with U.S. generally accepted accounting principles (“US GAAP”) and Companies
Law and are expressed in US Dollars. All adjustments considered necessary for the fair presentation of the financial statements, for the year
presented, have been included.
The Company is regarded as an Investment Company and follows the accounting and reporting guidance in Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) and Financial Services — Investment Companies Topic 946: Amendments to the
Scope, Measurement, and Disclosure Requirements (Topic 946). Accordingly, the Company reflects its investments on the Consolidated
Statement of Assets and Liabilities at their estimated fair values, with unrealised gains and losses resulting from changes in fair value reflected
in net change in unrealised gain/(loss) on investments, credit default swap, total return swap and forward currency transactions in the
Consolidated Statement of Operations.
The Board recognises that the Portfolios (the Ordinary Share Class; the Extended Life Share Class; and the New Global Share Class) are
now in their harvest periods. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational
existence for the twelve months from the date these accounts are signed and the foreseeable future. Thus, they continue to prepare the
Financial Statements on a going concern basis, as liquidation is not imminent.
(b) Principles of Consolidation
The Financial Statements include the results of the Company and its wholly-owned subsidiaries, whose accounting policies are consistent with
those of the Company. The Financial Statements include full consolidation of any owned subsidiaries, except where the effect on the
Company’s financial position and results of operations are immaterial. Transactions between the Company and the subsidiaries have been
eliminated on consolidation.
Wholly-owned subsidiaries, London Lux Masterco 1 S.a.r.l., London Lux Debtco 1 S.a.r.l. and London Lux Propco 1 S.a.r.l. are incorporated
in Luxembourg.
(c) Use of Estimates
The preparation of these Financial Statements in conformity with US GAAP requires that the Directors make estimates and assumptions (as
mentioned in detail in note 2 (f) below) that affect the reported amounts of assets and liabilities at the date of the financial statements and
reported amounts of income and expenses during the reporting year.
Actual results could differ significantly from these estimates.
(d) Cash and Cash Equivalents and Restricted Cash
The Company holds cash and cash equivalents in US Dollar and non-US Dollar denominated currencies with original maturities of less than
90 days that are both readily convertible to known amounts of cash. As at 31 December 2024, the Company has cash balances in various
currencies equating to $25,373,459 (Cost: $25,392,830) (31 December 2023: $16,569,578 (Cost: $16,566,075) including cash and cash
equivalents of $14,403,459 (31 December 2023: $4,809,578) as well as restricted cash of $10,970,000 (31 December 2023: $11,760,000).
Restricted cash of $10,970,000 (31 December 2023: $10,970,000) is collateral for the total return swap positions and restricted cash of $Nil
(31 December 2023: $790,000) is collateral for forward currency contracts.
72 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 2 – SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(e) Foreign Currency Translation
Assets and liabilities denominated in foreign currency are translated into US Dollars at the currency exchange rates on the date of valuation.
On initial recognition, foreign currency sales and purchases transactions are recorded and translated at the spot exchange rate at the
transaction date and for all other transactions, the average rate is applied. Non-monetary assets and liabilities are translated at the historic
exchange rate.
The Company does not separate the changes relating to currency exchange rates from those relating to changes in fair value of the
investments. These fluctuations are included in the net realised gain(loss) and net change in unrealised gain/(loss) on investments, credit
default swap, total return swap and forward currency transactions in the Consolidated Statements of Operations.
(f) Fair Value of Financial Instruments
The fair value of the Company's assets and liabilities that qualify as financial instruments under FASB ASC 825, Financial Instruments,
approximate the carrying amounts presented in the Consolidated Statement of Assets and Liabilities.
Fair value prices are estimates made at a discrete point in time, based on relevant market data, information about the financial instruments,
and other factors.
The Company follows guidance in ASC 820, Fair Value Measurement (“ASC 820”), where fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Fair value is determined using available market information and appropriate valuation methodologies. Estimates of fair value of financial
instruments without quoted market prices are subjective in nature and involve various assumptions and estimates that are matters of
judgement. Accordingly, fair values are not necessarily indicative of the amounts that will be ultimately realised on disposal of financial
instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value
amounts.
The following estimates and assumptions were used as at 31 December 2024 and 31 December 2023 to estimate the fair value of each class
of financial instruments:
• Cash and cash equivalents - The carrying value reasonably approximates fair value due to the short-term nature of these instruments.
• Quoted investments are valued according to their bid price at the close of the relevant reporting date. Investments in private securities
are priced at the bid price using a pricing service for private loans. If a price cannot be ascertained from the above sources, the Company
will seek bid prices from third party broker/dealer quotes for the investments.
• In cases where no third-party price is available, or where the Investment Manager determines that the provided price is not an accurate
representation of the fair value of the investment (e.g. level 3 investments included overleaf), the Investment Manager determines the
valuation based on its fair valuation policy. Further information on valuations is provided in Note 2 (g), “Investment transactions,
investment income/expenses and valuation”, on page 76.
• Forward currency contracts are revalued using the forward exchange rate prevailing at the Consolidated Statement of Assets and
Liabilities date.
• Total Return Swaps are priced using mark to market prices provided by a third-party broker.
• Credit Return Swaps are priced using a pricing service provided by Markit Partners.
Fair value measurements are determined within a framework that establishes a three-tier hierarchy which maximises the use of observable
market data and minimises the use of unobservable inputs to establish a classification of fair value measurements for disclosure purposes.
Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk,
such as the risk inherent in a particular valuation technique used to measure fair value using a pricing model and/or the risk inherent in the
inputs for the valuation technique. Inputs may be observable or unobservable.
Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from
sources independent of the Company. Unobservable inputs reflect the Company’s own assumptions about the assumptions market participants
would use in pricing the asset or liability based on the information available. The inputs or methodology used for valuing assets or liabilities
may not be an indication of the risks associated with investing in those assets or liabilities.
73 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(f) Fair Value of Financial Instruments (continued)
ASC 820 classifies the inputs used to measure these fair values into the following hierarchy:
Level 1: Quoted prices are available in active markets for identical investments as of the reporting date.
Level 2: Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date,
and fair value is determined through the use of models or other valuation methodologies.
Level 3: Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment.
The inputs used in the determination of the fair value require significant management judgement or estimation.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the
lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to
the fair value measurement in its entirety requires judgement and considers factors specific to each investment.
The following is a summary of the levels within the fair value hierarchy in which the Company invests:
FAIR VALUE OF FINANCIAL INSTRUMENTS AS AT 31 DECEMBER 2024
(EXPRESSED IN US DOLLARS)
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
Bank Debt Investments
-
-
21,784,252
21,784,252
Private Equity
-
-
8,837,916
8,837,916
US Treasury Bills
6,055,717
-
-
6,055,717
Investments at fair value
6,055,717
-
30,622,168
36,677,885
Credit Default Swap
-
(19,525)
-
(19,525)
Total Return Swap
-
-
(126,689)
(126,689)
Forward Currency Contracts - Assets
-
2,459,931
-
2,459,931
Forward Currency Contracts - Liabilities
-
(11,319)
-
(11,319)
Total investments that are accounted for at fair value
6,055,717
2,429,087
30,495,479
38,980,283
FAIR VALUE OF FINANCIAL INSTRUMENTS AS AT 31 DECEMBER 2023
(EXPRESSED IN US DOLLARS)
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
Bank Debt Investments
-
-
27,125,693
27,125,693
Private Equity
-
-
23,948,613
23,948,613
Private Note
-
-
3,724,142
3,724,142
US Treasury Bills
6,085,142
-
-
6,085,142
Investments at fair value
6,085,142
-
54,798,448
60,883,590
Credit Default Swap
-
(21,309)
-
(21,309)
Total Return Swap
-
-
3,648,201
3,648,201
Forward Currency Contracts - Assets
-
18,235
-
18,235
Forward Currency Contracts - Liabilities
-
(1,545,570)
-
(1,545,570)
Total investments that are accounted for at fair value
6,085,142
(1,548,644)
58,446,649
62,983,147
74 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to Consolidated Financial Statements
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(f) Fair Value of Financial Instruments (continued)
The following table summarises the significant unobservable inputs the Company used to value its investments categorised within Level 3
as at 31 December 2024. The table is not intended to be all-inclusive but instead captures the significant unobservable inputs relevant to
our determination of fair values.
TYPE
SECTOR
FAIR VALUE ($)
PRIMARY VALUATION
TECHNIQUE
SIGNIFICANT
UNOBSERVABLE INPUTS
RANGE INPUT
Bank Debt Investments Commercial Mortgage 9,691,939 Market Comparatives Discount Rate 10%
Bank Debt Investments Lodging & Casinos 6,927,132 Market Comparatives Discount Rate 15%
Bank Debt Investments
Surface Transport
5,165,180
Market Information
Unadjusted Broker Quote
N/A
Private Equity Containers & Packaging 7,700,217 Market Comparatives EBITDA Multiple 10.75X
Private Equity Oil & Gas 1,137,700 Market Information Unadjusted Broker Quote N/A
Total Return Swap Surface Transport (126,689) Market Information Unadjusted Broker Quote N/A
Total
30,495,479
The following table summarises the significant unobservable inputs the Company used to value its investments categorised within Level 3 as
at 31 December 2023. The table is not intended to be all-inclusive but instead captures the significant unobservable inputs relevant to our
determination of fair values.
TYPE
SECTOR
FAIR VALUE ($)
PRIMARY VALUATION
TECHNIQUE
SIGNIFICANT
UNOBSERVABLE INPUTS
RANGE INPUT
Bank Debt Investments
Commercial Mortgage
10,879,528
Market Comparatives
Discount Rate
10%
Bank Debt Investments
Lodging & Casinos
7,056,540
Market Comparatives
Discount Rate
15%
Bank Debt Investments
Surface Transport
9,189,625
Market Information
Unadjusted Broker Quote
N/A
Private Equity
Auto Components
2,151,740
Market Information
EBITDA Multiple
4.5X
Private Equity
Containers & Packaging
10,786,873
Market Comparatives
EBITDA Multiple
10.75X
Private Equity
Oil and Gas
11,010,000
Market Information
Unadjusted Broker Quote
N/A
Private Note
Financial Intermediaries
3,724,142
Market Information
Unadjusted Broker Quote
N/A
Total Return Swap
Surface Transport
3,648,201
Market Information
Unadjusted Broker Quote
N/A
Total
58,446,649
Changes in any of the above inputs may positively or adversely impact the fair value of the relevant investments.
Level 3 assets are valued using single bid-side broker quotes or by good faith methods of the Investment Manager. For single broker quotes
the Investment Manager uses unobservable inputs to assess the reasonableness of the broker quote. For good faith valuations, the Investment
Manager directly uses unobservable inputs to produce valuations. The significant unobservable inputs used in Level 3 assets as at 31
December 2024 and 31 December 2023 are outlined in the tables above.
These inputs vary by asset class. For example, real estate asset valuations may utilise discounted cash flow models using an appropriate
discount rate. Other assets may be valued based on analysis of the liquidation of the underlying assets. In general, increases/(decreases) to
per unit valuation inputs will result in increases/(decreases) to investment value.
Similarly, increases/(decreases) of asset realisation inputs (liquidation estimate, letter of intent, etc.) will also result in increases/(decreases)
in value. In situations where discounted cash flow models are used, increasing/(decreasing) discount rates or increasing/(decreasing) weighted
average life, in isolation, will generally result in (decreased)/increased valuations.
75 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(f) Fair Value of Financial Instruments (continued)
The following is a reconciliation of opening and closing balances of assets and liabilities measured at fair value on a recurring basis using Level 3 inputs:
FOR THE YEAR ENDED 31 DECEMBER 2024
(EXPRESSED IN US DOLLARS)
BANK DEBT
INVESTMENTS
PRIVATE EQUITY
TRADE CLAIM
PRIVATE NOTE
TOTAL
Balance, 31 December 2023
27,125,693
23,948,613
3,648,201
3,724,142
58,446,649
Purchases (includes purchases-in-kind)
2,405,907
-
-
-
2,405,907
Sales and distributions
-
(11,090,945)
-
(5,480,178)
(16,571,123)
Realised loss on sale of investments
-
(1,789,836)
-
(14,261,195)
(16,051,031)
Unrealised (loss)/gain on investments
(7,747,348)
(2,229,916)
(3,774,890)
16,017,231
2,265,077
Balance, 31 December 2024
21,784,252
8,837,916
(126,689)
-
30,495,479
Change in unrealised (loss)/gain on investments included
in Audited Consolidated Statement of Operation for Level 3
investments held as at 31 December 2024
(7,747,348)
(2,229,916)
(3,774,890)
16,017,231
2,265,077
The Company's policy is to recognise transfers into and out of Level 3 as of the actual date of the event or change in circumstances that caused the
transfer. During the year the Company had no transfers out of Level 3 into Level 2 of fair value amounting to $Nil. The Company had no transfers across
fair value amounting levels during the year.
The following is a reconciliation of opening and closing balances of assets and liabilities measured at fair value on a recurring basis using Level 3 inputs:
FOR THE YEAR ENDED 31 DECEMBER 2023
(EXPRESSED IN US DOLLARS)
BANK DEBT
INVESTMENTS
PRIVATE EQUITY
TRADE CLAIM
PRIVATE NOTE
TOTAL
Balance, 31 December 2022
27,358,457
13,492,057
1,558,420
8,362,230
50,771,164
Purchases (includes purchases-in-kind)
2,303,563
-
-
-
2,303,563
Sales and distributions
(2,508,112)
-
-
(4,511,654)
(7,019,766)
Realised gain on sale of investments
(70,506)
-
-
3,794,178
3,723,672
Unrealised gain/(loss) on investments
42,291
(553,444)
2,089,781
(3,920,612)
(2,341,984)
Transfers from Level 2 into Level 3
-
11,010,000
-
-
11,010,000
Balance, 31 December 2023
27,125,693
23,948,613
3,648,201
3,724,142
58,446,649
Change in unrealised gain/(loss) on investments included
in Audited Consolidated Statement of Operation for Level 3
investments held as at 31 December 2023
(98,561)
(553,444)
2,089,781
(3,920,612)
(2,482,836)
The Company's policy is to recognise transfers into and out of Level 3 as of the actual date of the event or change in circumstances that caused the
transfer. During the year the Company had no transfers out of Level 3 into Level 2 of fair value amounting to $Nil. The Company had one transfer out of
Level 2 into Level 3 of fair value amounting to $11,010,000 as only a single broker quote was observable.
76 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(g) Investment transactions, investment income/expenses and valuation
Investment transactions are accounted for on a trade-date basis. Upon sale or maturity, the difference between the consideration received
and the cost of the investment is recognised as a realised gain or loss under Net realised gain/(loss) on investments, credit default swap,
total return swap and forward currency transactions in the Consolidated Statement of Operations. The cost is determined based on the
specific identification method. All transactions relating to the restructuring of current investments are recorded at the date of such
restructuring. The difference between the fair value of the new consideration received and the cost of the original investment is recognised
as a realised gain or loss. Unrealised gains and losses on an investment are the difference between the cost if purchased during the year
or fair value at the previous year end and the fair value at the current year end. Unrealised gains and losses are included under Net change
in unrealised (loss)/gain on investments, credit default swap, warrants and forward currency transactions in the Consolidated Statement of
Operations.
For the year ended 31 December 2024, $56,771 (31 December 2023: $91,550) was recorded to reflect accretion of discount on loans and
bonds during the year and is included as Interest Income in the Consolidated Statement of Operations.
Interest earned on debt instruments is accounted for, net of applicable withholding taxes and it is recognised as income over the terms of
the loans and bonds. Discounts received or premiums paid in connection with the acquisition of loans and bonds are amortised into interest
income using the effective daily interest method over the contractual life of the related loan and bond. If a loan is repaid prior to maturity, the
recognition of the fees and costs is accelerated as appropriate. The Company raises a provision when the collection of interest is deemed
doubtful. Dividend income is recognised on the ex-dividend date net of withholding tax.
Payment-in-kind (“PIK”) interest is computed at the contractual rate specified in the loan agreement for any portion of the interest which may
be added to the principal balance of a loan rather than paid in cash by the obligator on the scheduled interest payment date. PIK interest is
periodically added to the principal balance of the loan and recorded as interest income. The Investment Manager places a receivable on
non-accrual status when the collection of principal or interest is deemed doubtful. The amount of interest income recorded, plus initial costs
of underlying PIK interest is reviewed periodically to ensure that these do not exceed fair value of those assets.
The Company carries investments on its Consolidated Statement of Assets and Liabilities at fair value in accordance with US GAAP, with
changes in fair value recognised in the Consolidated Statement of Operations in each reporting period. Fair value is defined as the price that
would be received on the sale of an asset or paid to transfer a liability (i.e. the “exit price”) in an orderly transaction between market
participants at the measurement date.
Quoted investments are valued according to their bid price at the close of the relevant reporting date. Investments in private securities are
priced at the bid price using a pricing service for private loans.
If a price cannot be ascertained from the above sources the Company will seek bid prices from third party broker/dealer quotes for the
investments. The Investment Manager believes that bid price is the best estimate of fair value and is in line with the valuation policy adopted
by the Company.
In cases where no third party price is available, or where the Investment Manager determines that the provided price is not an accurate
representation of the fair value of the investment, the Administrator will value such investments with the input of the Investment Manager
who will determine the valuation based on its fair valuation policy. As part of the investment fair valuation policy, the Investment Manager
prepares a fair valuation memorandum for each such investment presenting the methodology and assumptions used to derive the price.
This analysis is presented to the Investment Manager’s Valuation Committee for approval.
The following criteria are considered when applicable:
• The valuation of other securities by the same issuer for which market quotations are available;
• The reasons for absence of market quotations;
• The soundness of the security, its interest yield, the date of maturity, the credit standing of the issue and the current general interest
rates;
• Any recent sales prices and/or bid and ask quotations for the security;
• The value of similar securities of issuers in the same or similar industries for which market quotations are available;
• The economic outlook of the industry;
• The issuer’s position in the industry;
• The financial statements of the issuer; and
• The nature and duration of any restriction on disposition of the security.
77 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(h) Derivative Contracts
The Company may, from time to time, hold derivative financial instruments for the purposes of managing foreign currency exposure and to
provide a measure of protection against defaults of corporate or sovereign issuers. These derivatives are measured at fair value in conformity
with US GAAP with changes in fair value recognised under Realised and unrealised (loss)/gain from investments and foreign exchange in
the Consolidated Statement of Operations in each reporting period.
As part of the Company’s investment strategy, the Company enters into over-the-counter (“OTC”) derivative contracts which may include
forward currency contracts, credit default swaps and total return swaps.
Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies on the reporting date and the
value recorded in the financial statements represents net unrealised gain and loss on forwards as at 31 December. Forward contracts are
generally categorised in Level 2 of the fair value hierarchy.
The credit default swap has been entered into on the OTC market. The fair value of the credit default swap contract is derived using a pricing
service provided by Markit Partners. Markit Partners use a pricing model that is widely accepted by marketplace participants. Their pricing
model takes into account multiple inputs including specific contract terms, interest rate yield curves, interest rates, credit curves, recovery
rates, and current credit spreads obtained from swap counterparties and other market participants. Many inputs into the model do not require
material subjectivity as they are observable in the marketplace or set per the contract. Other than the contract terms, valuation is mainly
determined by the difference between the contract spread and the current market spread. The contract spread (or rate) is generally fixed
and the market spread is determined by the credit risk of the underlying debt or reference entity. If the underlying debt is liquid and the OTC
market for the current spread is active, credit default swaps are categorised in Level 2 of the fair value hierarchy. If the underlying debt is
illiquid and the OTC market for the current spread is not active, credit default swaps are categorised in Level 3 of the fair value hierarchy.
The total return swap is valued using a mark to market prices provided by a third-party broker.
(i) Taxation
The Company is not subject to income taxes in Guernsey; however, it may be subject to taxes imposed by other countries on income it
derives from investments.
Such taxes are reflected in the Consolidated Statement of Operations. In accordance with US GAAP, management is required to determine
whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including
resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognised is
measured as the largest amount of benefit that is greater than fifty percent likely of being realised upon ultimate settlement. De-recognition
of a tax benefit previously recognised could result in the Company recording a tax liability that would reduce net assets. US GAAP also
provides guidance on thresholds, measurement, de-recognition, classification, interest and penalties, accounting in interim periods,
disclosure, and transition that is intended to provide better financial statement comparability among different entities.
There were no uncertain tax positions as at 31 December 2024 or 31 December 2023. The Company files its tax returns as prescribed by
the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and
certain state, local, and other foreign tax regulators. State, local and foreign tax returns, if applicable, are generally subject to audit according
to varying limitations dependent upon the jurisdiction. As of 31 December 2024, the Company's U.S. federal income tax returns are subject
to examination under the three-year statute of limitations.
During the year ended 31 December 2024, the Company recorded current income tax expense $Nil (31 December 2023 income tax expense:
$Nil). Deferred taxes are recorded to reflect the tax consequences of future years’ differences between the tax basis of assets and their
financial reporting basis. The deferred tax benefit recorded for the year ended 31 December 2024 was $Nil (31 December 2023 deferred tax
benefit: $Nil). The net total income tax benefit/expense from realised/unrealised gains/(losses) on investments for the year ended 31
December 2024 was $Nil (31 December 2023 income tax expense: $Nil).
(j) Operating Expenses
Operating expenses are recognised on an accruals basis. Operating expenses include amounts directly or indirectly incurred by the Company
as part of its operations. Each share class will bear its respective pro-rata share based on its respective Net Asset Value (‘NAV’) of the
ongoing costs and expenses of the Company. Each share class will also bear all costs and expenses of the Company determined by the
Directors to be attributable solely to it. Any costs incurred by a share buyback are charged to that share class.
(k) Payables/Receivables on Investments Purchased/Sold
At 31 December 2024, $Nil (31 December 2023: $Nil) was receivable on investments purchased/sold represents amounts due for
investments purchased/sold that have been contracted for but not settled on the Consolidated Statement of Assets and Liabilities.
78 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 3 – DERIVATIVES
In the normal course of business, the Company uses derivative contracts in connection with its proprietary trading activities. Investments in
derivative contracts are subject to additional risks that can result in a loss of all or part of the derivative investment. The Company’s derivative
activities and exposure to derivative contracts are classified by the following primary underlying risks: foreign currency exchange rate, credit,
and equity price. In addition to its primary underlying risks, the Company is also subject to additional counterparty risk due to inability of its
counterparties to meet the terms of their contracts.
Forward Currency Contracts
The Company enters into forwards for the purposes of managing foreign currency exposure.
Credit Default Swap
The Company uses credit default swap agreements on corporate or sovereign issues to provide a measure of protection against defaults of
the issuers (i.e., to reduce risk where a Company owns or has exposure to the referenced obligation) from time to time.
There was one credit default swap position (Brazilian Government) held as at 31 December 2024 (31 December 2023: one).
Total Return Swap
The Company entered into two fully funded total return swaps on 2 May 2011 and 18 April 2012. These swaps matured on 25 February 2020
and rolled over into a new swap agreement. New ISDA regulations enacted in 2019 require booking the total return swaps with cash collateral
maintained vs fully funded swaps.
The new swap rolls on an annual basis. The swap was booked on 02 March 2023 and matured on 01 February 2024. A realised event
occurred on the value of the swap as at 01 February 2024 of $1,343,355. The next maturity will occur on 01 February 2025. The value of
the swap, exclusive of related cash collateral, as at 31 December 2024 is ($126,749) (31 December 2023: $3,648,201) representing a
change in market value of ($1,470,104) in the period since the 01 February 2023 maturity.
As at 31 December 2024 the net value of the swap and related cash collateral was $10,843,311 (31 December 2023: $14,618,201)
(comprised of restricted cash collateral of $10,970,000 (31 December 2023: $10,970,000) and total return swap liability of ($126,689) (31
December 2023: swap asset of $3,648,201), as reflected in the Consolidated Statement of Assets and Liabilities. The underlying asset of
the swaps is denominated in Brazilian Real and the foreign exchange exposure is hedged to offset any change in value in underlying asset
due to the FX movements.
Derivative activity
For the year ended 31 December 2024 and 31 December 2023 the volume of the Company’s derivative activities based on their notional
amounts and number of contracts, categorised by primary underlying risk, are as follows:
31 DECEMBER 2024
LONG EXPOSURE
SHORT EXPOSURE
PRIMARY UNDERLYING RISK
NOTIONAL AMOUNTS
NUMBER OF CONTRACTS
NOTIONAL AMOUNTS
NUMBER OF CONTRACTS
Foreign exchange risk
Forward Currency Contracts
$129,525,308
68
$104,814,523
76
Credit risk
Credit Default Swap
$9,971,000
1
-
-
Total Return Swap
-
-
$10,960,348
2
31 DECEMBER 2023
LONG EXPOSURE
SHORT EXPOSURE
PRIMARY UNDERLYING RISK
NOTIONAL AMOUNTS
NUMBER OF CONTRACTS
NOTIONAL AMOUNTS
NUMBER OF CONTRACTS
Foreign exchange risk
Forward Currency Contracts
$127,841,170
61
$125,731,102
77
Credit risk
Credit Default Swap
$9,971,000
1
-
-
Total Return Swap
-
-
$10,960,348
2
79 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 3 – DERIVATIVES (CONTINUED)
Derivative activity (continued)
The following tables show, as at 31 December 2024 and 31 December 2023, the fair value amounts of derivative contracts included in the
Consolidated Statement of Assets and Liabilities, categorised by primary underlying risk. Balances are presented on a gross basis prior to
application of the impact of counterparty and collateral netting. Total derivative assets and liabilities are adjusted on an aggregate basis to
take into account the effects of master netting arrangements and, where applicable, have been adjusted by the application of cash collateral
receivables and payables with its counterparties. The tables also identify, as at 31 December 2024 and 31 December 2023, the realised and
unrealised gain and loss amounts included in the Consolidated Statement of Operations, categorised by primary underlying risk:
31 DECEMBER 2024
PRIMARY UNDERLYING RISK
DERIVATIVE
ASSETS
($)
DERIVATIVE
LIABILITIES
($)
REALISED GAIN
(LOSS)
($)
NET CHANGE IN
UNREALISED GAIN
(LOSS)
($)
Foreign currency exchange rate
Forward Currency Contracts
2,459,931
(11,319)
(32,722)
3,975,946
Credit
Purchased protection
Credit Default Swap
-
(19,525)
(48,132)
43,882
Total Return Swap
-
(126,689)
-
(3,774,889)
31 DECEMBER 2023
PRIMARY UNDERLYING RISK
DERIVATIVE
ASSETS
($)
DERIVATIVE
LIABILITIES
($)
REALISED GAIN
(LOSS)
($)
NET CHANGE IN
UNREALISED GAIN
(LOSS)
($)
Foreign currency exchange rate
Forward Currency Contracts
18,235
(1,545,570)
(1,975,088)
(269,987)
Credit
Purchased protection
Credit Default Swap
-
(21,309)
(84,550)
3,223
Total Return Swap
3,648,201
-
-
2,078,684
Offsetting assets and liabilities
Amounts due from and to brokers are presented on a net basis, by counterparty, to the extent the Company has the legal right to offset the
recognised amounts and intends to settle on a net basis.
The Company presents on a net basis the fair value amounts recognised for OTC derivatives executed with the same counterparty under
the same master netting agreement.
The Company is required to disclose the impact of offsetting assets and liabilities presented in the Consolidated Statement of Assets and
Liabilities to enable users of the Financial Statements to evaluate the effect or potential effect of netting arrangements on its financial position
for recognised assets and liabilities.
These recognised assets and liabilities include financial instruments and derivative contracts that are either subject to an enforceable master
netting arrangement or similar agreement or meet the following right of set off criteria:
• each of the two parties owes the other determinable amounts;
• the Company has the right to set off the amounts owed with the amounts owed by the other party;
• the Company intends to set off; and
• the Company’s right of set off is enforceable at law.
80 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 3 – DERIVATIVES (CONTINUED)
Offsetting assets and liabilities (continued)
The Company is subject to enforceable master netting agreements with its counterparties of credit default swap, the total return swaps and
foreign currency exchange contracts. These agreements govern the terms of certain transactions and reduce the counterparty risk associated
with relevant transactions by specifying offsetting mechanisms and collateral posting arrangements at pre‑arranged exposure levels.
Derivative activity
The following tables, as at 31 December 2024, show the gross and net derivatives assets and liabilities by contract type and amount for
those derivatives contracts for which netting is permissible.
31 DECEMBER 2024
(EXPRESSED IN US DOLLARS)
AMOUNTS NOT OFFSET IN THE
CONSOLIDATED STATEMENT
OF ASSETS AND LIABILITIES
DESCRIPTION
GROSS
AMOUNTS
OF
RECOGNISE
D ASSETS
GROSS AMOUNTS
OFFSET IN THE
CONSOLIDATED
STATEMENTS OF
ASSETS AND
LIABILITIES
NET AMOUNTS OF
RECOGNISED ASSETS
PRESENTED IN THE
CONSOLIDATED
STATEMENT OF ASSETS
AND LIABILITIES
FINANCIAL
INSTRUMENTS
(POLICY
ELECTION)
FINANCIAL
COLLATERAL
RECEIVED
1
NET
AMOUNT
Forward currency
contracts
2,459,931
-
2,459,931
(11,319)
-
2,448,612
Total
2,459,931
-
2,459,931
(11,319)
-
2,448,612
AMOUNTS NOT OFFSET IN THE
CONSOLIDATED STATEMENT
OF ASSETS AND LIABILITIES
DESCRIPTION
GROSS
AMOUNTS OF
RECOGNISED
LIABILITIES
GROSS AMOUNTS
OFFSET IN THE
CONSOLIDATED
STATEMENTS OF
ASSETS AND
LIABILITIES
NET AMOUNTS OF
RECOGNISED ASSETS
PRESENTED IN THE
CONSOLIDATED
STATEMENT OF ASSETS
AND LIABILITIES
FINANCIAL
INSTRUMENTS
(POLICY
ELECTION)
FINANCIAL
COLLATERAL
PLEDGED
1
NET
AMOUNT
Forward currency
contracts
(11,319)
-
(11,319)
11,319
-
-
Total return swaps
(126,689)
-
(126,689)
-
10,843,311
10,716,622
Credit default swap
(19,525)
-
(19,525)
-
-
(19,525)
Total
(157,533)
-
(157,533)
11,319
10,843,311
10,697,097
1
The amount netted off is a portion of the total collateral as per the Consolidated Statement of Assets and Liabilities.
81 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 3 – DERIVATIVES (CONTINUED)
Offsetting assets and liabilities (continued)
Derivative activity (continued)
The following table, as at 31 December 2023, show the gross and net derivatives assets and liabilities by contract type and amount for those
derivatives contracts for which netting is permissible.
31 DECEMBER 2023
(EXPRESSED IN US DOLLARS)
AMOUNTS NOT OFFSET IN THE
CONSOLIDATED STATEMENT
OF ASSETS AND LIABILITIES
DESCRIPTION
GROSS
AMOUNTS
OF
RECOGNISE
D ASSETS
GROSS AMOUNTS
OFFSET IN THE
CONSOLIDATED
STATEMENTS OF
ASSETS AND
LIABILITIES
NET AMOUNTS OF
RECOGNISED ASSETS
PRESENTED IN THE
CONSOLIDATED
STATEMENT OF ASSETS
AND LIABILITIES
FINANCIAL
INSTRUMENTS
(POLICY
ELECTION)
FINANCIAL
COLLATERAL
RECEIVED
1
NET
AMOUNT
Forward currency
contracts
18,235
-
18,235
(18,235)
-
-
Total return swaps
3,648,201
-
3,648,201
-
-
3,648,201
Total
3,666,436
-
3,666,436
(18,235)
-
3,648,201
AMOUNTS NOT OFFSET IN THE
CONSOLIDATED STATEMENT
OF ASSETS AND LIABILITIES
DESCRIPTION
GROSS
AMOUNTS OF
RECOGNISED
LIABILITIES
GROSS AMOUNTS
OFFSET IN THE
CONSOLIDATED
STATEMENTS OF
ASSETS AND
LIABILITIES
NET AMOUNTS OF
RECOGNISED ASSETS
PRESENTED IN THE
CONSOLIDATED
STATEMENT OF ASSETS
AND LIABILITIES
FINANCIAL
INSTRUMENTS
(POLICY
ELECTION)
FINANCIAL
COLLATERAL
RECEIVED
1
NET
AMOUNT
Forward currency
contracts
(1,545,570)
-
(1,545,570)
18,235
790,000
(737,335)
Credit default swap
(21,309)
-
(21,309)
-
-
(21,309)
Total
(1,566,879)
-
(1,566,879)
18,235
790,000
(758,644)
1
The amount netted off is a portion of the total collateral as per the Consolidated Statement of Assets and Liabilities.
82 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 4 – RISK FACTORS
The Company’s investments are subject to various risk factors including market and credit risk, interest rate and foreign exchange risk, and
the risks associated with investing in private securities. Investments in private securities and partnerships are illiquid, and there can be no
assurances that the Company will be able to realise the value of such investments in a timely manner. Additionally, the Company’s
investments may be highly concentrated in certain industries. Non-US dollar denominated investments may result in foreign exchange losses
caused by devaluations and exchange rate fluctuations. In addition, consequences of political, social, economic, diplomatic changes or
public health condition may have disruptive effects on market prices or fair valuations of foreign investments.
Market Risk
Market risk is the potential for changes in the value of investments. Categories of market risk include, but are not limited to, interest rates.
Interest rate risks primarily result from exposures to changes in the level, slope and curvature of the yield curve, the volatility of interest rates
and credit spreads. Details of the Company’s investment Portfolio as at 31 December 2024 and 31 December 2023 are disclosed in the
Consolidated Condensed Schedule of Investments. Each separate investment exceeding 5% of net assets is disclosed separately.
Credit Risk
The Company may invest in a range of corporate and other bonds and other credit sensitive securities. Until such investments are sold or
are paid in full at maturity, the Company is exposed to credit risk relating to whether the issuer will meet its obligations when the securities
fall due. Distressed debt securities by nature are securities in companies which are in default or are heading into default and will expose the
Company to a higher than normal amount of credit risk.
The Company may invest a relatively large percentage of its assets in issuers located in a single country, a small number of countries, or a
particular geographic region. As a result, the Company’s performance may be closely aligned with the market, currency or economic, political
or regulatory conditions and developments in those countries or that region, and could be more volatile than the performance of more
geographically diversified investments. Refer to the Consolidated Condensed Schedules of Investments on pages 65 to 70 for concentration
of credit risk.
The Company maintains positions in a variety of securities, derivative financial instruments and cash and cash equivalents in accordance
with its investment strategy and guidelines. The Company’s trading activities expose the Company to counterparty credit risk from brokers,
dealers and other financial institutions (collectively, “counterparties”) with which it transacts business. “Counterparty credit risk” is the risk
that a counterparty to a trade will fail to meet an obligation that it has entered into with the Company, resulting in a financial loss to the
Company. The Company’s policy with respect to counterparty credit risk is to minimise its exposure to counterparties with perceived higher
risk of default by dealing only with counterparties that meet the credit standards set out by the Investment Manager.
All the Company's cash and investment assets other than derivative financial instruments are held by the Custodian. The Custodian
segregates the assets of the Company from the Custodian’s assets and other Custodian clients. Management believes the risk is low with
respect to any losses as a result of this concentration. The Company conducts its trading activities with respect to non-derivative positions
with a number of counterparties. Counterparty credit risk borne by these transactions is mitigated by trading with multiple counterparties.
In addition, the Company may trade in OTC derivative instruments and in derivative instruments which trade on exchanges with generally a
limited number of counterparties and as a consequence the Company is subject to counterparty credit risk related to the potential inability of
counterparties to these derivative transactions to perform their obligations to the Company. The Company’s exposure to counterparty credit
risk associated with counterparty non-performance is generally limited to the fair value (derivative assets and liabilities) of OTC derivatives
reported as net assets, net of collateral received or paid, pursuant to agreements with each counterparty. The Investment Manager attempts
to reduce the counterparty credit risk of the Company by establishing certain credit terms in its International Swaps and Derivatives
Association (ISDA) Master Agreements (with netting terms) with counterparties, and through credit policies and monitoring procedures.
Under ISDA Master Agreements in certain circumstances (e.g. when a credit event such as a default occurs) all outstanding transactions
under the agreement are terminated, the termination value is assessed and only a single net amount is due or payable in settlement of all
transactions. The Company receives and gives collateral in the form of cash and marketable securities and it is subject to the ISDA Master
Agreement Credit Support Annex. This means that securities received/given as collateral can be pledged or sold during the term of the
transaction. The terms also give each party the right to terminate the related transactions on the other party’s failure to post collateral.
Exchange-traded derivatives generally involve less counterparty exposure because of the margin requirements of the individual exchanges.
Generally, these contracts can be closed out at the discretion of the Investment Manager and are governed by the futures and options
clearing agreements signed with the future commission merchants (“FCMs”). FCMs have capital requirements intended to assure that they
have sufficient capital to protect their customers in the event of any inadequacy in customer funds arising from the default of one or more
customers, adverse market conditions, or for any other reason. The credit risk relating to derivatives is detailed further in Note 3.
83 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 4 – RISK FACTORS (CONTINUED)
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as and when these fall due.
Liquidity risk is managed by the Investment Manager so as to ensure that the Company maintains sufficient working capital in cash or
near cash form so as to be able to meet the Company’s ongoing requirements as these are budgeted for.
Other Risks
Legal, tax and regulatory changes could occur during the term of the Company that may adversely affect the Company. The regulatory
environment for alternative investment vehicles is evolving, and changes in the regulation of alternative investment vehicles may
adversely affect the value of investments held by the Company or the ability of the Company to pursue its trading strategies.
The impact of these risks can have a substantial impact on the valuation and ultimately the realisation of assets.
Market disruptions associated with current geopolitical events have had a global impact, and uncertainty exists as to their implications.
Such disruptions can potentially adversely affect the assets, and thus the performance, of the Company. The Board continues to monitor
this situation.
NOTE 5 – SHARE CAPITAL
The Company’s authorised share capital consists of:
10,000 Class A Shares authorised, of par value $1 each (which carry no voting rights); and, an unlimited number of shares of no par
value which may, upon issue, be designated as Ordinary Shares, Extended Life Shares or New Global Shares and Subscription Shares
(each of which carry voting rights) or Capital Distribution Shares.
The issued share capital of the Company consists of Ordinary Shares, Class A Shares and Extended Life Shares, all denominated in
US dollars, and New Global Shares denominated in Pounds Sterling. Shareholders of Ordinary Shares, Extended Life Shares and New
Global Shares have the right to attend and vote at any general meeting of the Company. Class A shareholders do not have the right to
attend and vote at a general meeting of the Company save where there are no other shares of the Company in issue.
The Class A Shares are held by Suntera Trustees (Guernsey) Limited (formerly named Carey Trustees Limited) (the “Trustee”), pursuant
to a Purpose Trust established under Guernsey law. Under the terms of the NBDDIF Purpose Trust Deed, the Trustee holds the Class
A Shares for the purpose of exercising the right to receive notice of general meetings of the Company but the Trustee shall only have
the right to attend and vote at general meetings of the Company when there are no other shares of the Company in issue.
The original investment period expired on 10 June 2013 and a proposal was made to Ordinary Shareholders to extend the investment
period by 21 months to 31 March 2015. A vote was held at a class meeting of shareholders on 8 April 2013 where the majority of
shareholders voted in favour of the proposed extension.
Following this meeting and with the Ordinary Shareholders approval of the extension, a new class, the Extended Life Shares, was
created and the Extended Life Shares were issued to 72% of initial Investors who elected to convert their Ordinary Shares to Extended
Life Shares. The rest of investors remain invested on the basis of the existing investment period.
84 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 5 – Share Capital
The New Global Share Class was created in March 2014 and its investment period ended on 31 March 2017.
As at 31 December 2024, the Company had the following number of shares in issue:
Issued and fully
paid up
31 DECEMBER 2024 31 DECEMBER 2023
Class A Shares
2
2
Ordinary Share Class of no par value (Nil in treasury; 2023: Nil)
15,382,770
15,382,770
Extended Life Share Class of no par value (Nil in treasury; 2023: Nil)
38,731,819
44,234,790
New Global Share Class of no par value (Nil in treasury; 2023: Nil)
25,123,440
27,821,698
Reconciliation of the number of shares in issue in each class (excluding Class A) as at 31 December 2024:
ORDINARY
SHARES
EXTENDED LIFE
SHARES
NEW GLOBAL
SHARES
TOTAL
Balance as at 31 December 2023
15,382,770
44,234,790
27,821,698
87,439,258
Shares redeemed during the year
-
(5,502,971)
(2,698,258)
(8,201,229)
Buybacks (Shares repurchased)
-
-
-
-
Balance as at 31 December 2024
1
15,382,770
38,731,819
25,123,440
79,238,029
1
Balance of issued shares used to calculate NAV
Reconciliation of the number of shares in issue in each class (excluding Class A) as at 31 December 2023:
ORDINARY
SHARES
EXTENDED LIFE
SHARES
NEW GLOBAL
SHARES
TOTAL
Balance as at 31 December 2022
15,382,770
60,116,016
31,023,609
106,522,395
Shares redeemed during the year
-
(15,881,226)
(3,201,911)
(19,083,137)
Buybacks (Shares repurchased)
-
-
-
-
Balance as at 31 December 2023
1
15,382,770
44,234,790
27,821,698
87,439,258
1
Balance of issued shares used to calculate NAV
Distributions
Set out below are details of the capital returns by way of compulsory partial redemptions approved during the year ended 31 December
2024 and 31 December 2023.
31 DECEMBER 2024
ORDINARY SHARE CLASS
EXTENDED LIFE SHARE CLASS
NEW GLOBAL SHARE CLASS
DISTRIBUTION
AMOUNT
NUMBER OF
SHARES
PER SHARE
AMOUNT
DISTRIBUTION
AMOUNT
NUMBER OF
SHARES
PER SHARE
AMOUNT
DISTRIBUTION
AMOUNT
NUMBER OF
SHARES
PER SHARE
AMOUNT
26 November 2024
-
-
-
$5,491,965
5,502,971
$0.9980
£1,493,486
2,698,258
£0.5535
-
-
-
$5,491,965
5,502,971
$0.9980
£1,493,486
2,698,258
£0.5535
31 DECEMBER 2023
ORDINARY SHARE CLASS
EXTENDED LIFE SHARE CLASS
NEW GLOBAL SHARE CLASS
DISTRIBUTION
AMOUNT
NUMBER OF
SHARES
PER SHARE
AMOUNT
DISTRIBUTION
AMOUNT
NUMBER OF
SHARES
PER SHARE
AMOUNT
DISTRIBUTION
AMOUNT
NUMBER OF
SHARES
PER SHARE
AMOUNT
02 May 2023
-
-
-
$8,149,711
8,487,514
$0.9602
$2,697,863
3,201,911
$0.8426
29 June 2023
-
-
-
$3,352,980
3,753,056
$0.8934
-
-
-
11 September 2023
-
-
-
$3,754,972
3,640,656
$1.0314
-
-
-
-
-
$15,257,663
15,881,226
$2,697,863
3,201,911
85 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 5 – SHARE CAPITAL (CONTINUED)
Set out below are details of the distributions by way of dividend approved during the year ended 31 December 2024 and 31 December
2023.
ORDINARY SHARE CLASS
EXTENDED LIFE SHARE CLASS
NEW GLOBAL SHARE CLASS
DATE
DISTRIBUTION
AMOUNT
NUMBER
OF SHARES
PER SHARE
AMOUNT
DISTRIBUTION
AMOUNT
NUMBER
OF SHARES
PER SHARE
AMOUNT
DISTRIBUTION
AMOUNT
NUMBER OF
SHARES
PER SHARE
AMOUNT
21 November 2024
-
-
-
$654,675
44,234,786
$0.0148
£612,077
27,821,694
£0.022
-
-
-
$654,675
44,234,786
$0.0148
£612,077
27,821,694
£0.022
There were no distributions by way of dividend for the year ended 31 December 2023.
Buybacks
No shares were repurchased by the Company during either the year ended 31 December 2024 and 31 December 2023.
NOTE 6 – MATERIAL AGREEMENTS AND RELATED PARTY TRANSACTIONS
Investment Management Agreement (“IMA”)
The Board is responsible for managing the business affairs of the Company but delegates certain functions to the Investment Manager
under an IMA dated 9 June 2010 (as amended).
On 17 July 2014, the Company, the Manager and the AIFM made certain classificatory amendments to their contractual arrangements
for the purposes of the AIFM Directive. The Sub-Investment Management Agreement was terminated on 17 July 2014 and Neuberger
Berman Investment Advisers LLC (formerly Neuberger Berman Fixed Income LLC), which was the Sub-Investment Manager, was
appointed as the AIFM per the amended and restated IMA dated 17 July 2014. Under this agreement, the AIFM is responsible for risk
management and day-to-day discretionary management of the Company’s Portfolios (including uninvested cash). The risk management
and discretionary portfolio management functions are performed independently of each other within the AIFM structure. The AIFM is not
required to, and generally will not, submit individual investment decisions for approval by the Board. The Manager, Neuberger Berman
Europe Limited, was appointed under the same IMA to provide, amongst other things, certain administrative services to the Company.
On 31 December 2017 the Company entered into an Amendment Agreement amending the IMA. On the 30 January 2023 the Company
entered into an Amendment Agreement amending the IMA for data protection purposes to note the obligation on the recipient UK
investment manager to comply with the new SCCs in transferring personal data to the US AIFM.
Per the IMA and in relation to the Ordinary Shares and Extended Life Shares, the Manager was entitled to a management fee, which
shall be accrued daily, and was payable monthly in arrears, at a rate of 0.125% per month of the respective NAVs of the Ordinary Share
and Extended Life Share classes. Soft commissions were not used.
Per the IMA and in relation to the New Global Shares, the Manager was entitled to a management fee, which accrued daily, and was
payable monthly in arrears, at a rate of 0.125% per month of the NAV of the New Global Share Class (excluding, until such time as the
New Global Share Class had become 85% invested, any cash balances (or cash equivalents)). The 85% threshold was crossed on 16
June 2015 and from such date the Company was charged 0.125% per month on the NAV of the New Global Share Class.
Effective 18 March 2021, the Investment Manager had waived its entitlement to all fees from the Company. Accordingly, there was no
management fees expensed in the year or the preceding financial year nor were any fees outstanding at either 31 December 2024 or
31 December 2023.
Administration, Company Secretarial and Custody Agreements
Effective 1 March 2015, the Company entered into an Administration and Sub-Administration Agreement with U.S. Bank Global Fund
Services (Guernsey) Limited and U.S. Bank Global Fund Services (Ireland) Limited, a wholly-owned subsidiary of U.S. Bancorp (the
“Administration Agreement”). Under the terms of the Administration Agreement, Sub-Administration services are delegated to U.S. Bank
Global Fund Services (Ireland) Limited (the “Sub-Administrator”). The Sub-Administration Service Level Agreement was amended and
approved on 21 February 2018.
86 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 6 – MATERIAL AGREEMENTS AND RELATED PARTY TRANSACTIONS (CONTINUED)
Administration, Company Secretarial and Custody Agreements (continued)
The Sub-Administrator is responsible for the day-to-day administration of the Company (including but not limited to the calculation and
publication of the estimated daily NAV).
Under the terms of the Administration Agreement, the Sub-Administrator is entitled to a fee of 0.09% for the first $500m of net asset
value, 0.08% for the next $500m and 0.07% for any remaining balance, accrued daily and paid monthly in arrears and subject to an
annual minimum of $100,000.
Effective 28 February 2015, the Company entered into a Custody Agreement with U.S. Bank National Association (the “Custodian”) to
provide loan administration and custody services to the Company. Under the terms of the Custody Agreement the Custodian is entitled
to an annual fee of 0.025% of net asset value with a minimum annual fee of $25,000.
Effective 20 June 2017, Suntera (Guernsey) Limited (formerly named Carey Commercial Limited) was appointed the Company
Secretary. The Company Secretary is entitled to an annual fee of £76,850 plus fees for ad-hoc board meetings and additional services.
For the year ended 31 December 2024, the administration fee expense was $86,775 (31 December 2023: $87,547), the secretarial fee
was $114,400 of which $Nil
1
was in relation to the administration of the ongoing buyback programme, (31 December 2023: $116,888
1
)
and the loan administration and custody fee expense was $28,412
1
(31 December 2023: $30,743
1
). At 31 December 2024, the
administration fee payable is $6,983
1
(31 December 2023: $5,852
1
), the secretarial fee payable is $29,441
1
(31 December 2023:
$25,450
1
) and the loan administration and custody fee payable is $9,500
1
(31 December 2023: $9,088
1
).
1
Amounts are included under Accrued expenses and other liabilities in the Consolidated Statement of Assets and Liabilities and Consolidated Statement of Operations
Directors’ Remuneration and Other Interests
The Directors are related parties and are remunerated for their services at a fee of $45,000 plus £10,000 each per annum ($60,000 plus
£10,000 for the Chairman, $50,000 plus £10,000 for the Chairman of the Audit Committee). For the year ended 31 December 2024, the
Directors’ fees and travel expenses amounted to $192,157 (31 December 2023: $193,450). Michael J. Holmberg, the non-independent
Director, has waived the fees for his services as a Director. There were no other related interests for the year ended 31 December 2024.
The Company has not set any requirements or guidelines for Directors to own shares in the Company. The beneficial interests of the
Directors and their connected persons in the Company’s shares as at 31 December 2024 are shown in the table below:
DIRECTOR
NO. OF ORDINARY
SHARES
NO. OF EXTENDED LIFE
SHARES
NO. OF NEW GLOBAL
SHARES
TOTAL NO. OF
SHARES
John Hallam
-
35,468
30,216
65,684
Michael Holmberg
-
15,661
31,590
47,251
Christopher Legge
-
-
-
-
Stephen Vakil
-
-
16,482
16,482
87 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 7 – FINANCIAL HIGHLIGHTS
ORDINARY
SHARES
EXTENDED LIFE
SHARES
NEW GLOBAL
SHARES
ORDINARY
SHARES
EXTENDED LIFE
SHARES
NEW GLOBAL
SHARES
($)
($)
(£)
($)
($)
(£)
PER SHARE OPERATING
PERFORMANCE
YEAR ENDED
31 DECEMBER
2024
YEAR ENDED
31 DECEMBER
2024
YEAR ENDED
31 DECEMBER
2024
YEAR ENDED
31 DECEMBER
2023
YEAR ENDED
31 DECEMBER
2023
YEAR ENDED
31 DECEMBER
2023
Net asset value per share at
beginning of the year
0.8071
1.0312
0.6239
0.7730
0.9728
0.6640
Impact of capital distribution
-
(0.0017)
(0.0016)
-
0.0069
0.0001
Impact of dividend distribution
-
(0.0150)
(0.0222)
-
-
-
I
ncome from investment
operations
1
Net investment
income
0.0007
0.0177
0.0291
0.0014
0.0139
0.0214
Net realised and unrealised
(loss)/gain
from investments and
foreign exchange
(0.0521)
(0.1051)
(0.1219)
0.0327
0.0376
(0.0616)
(loss)/gain from investment
operations
(0.0514)
(0.0874)
(0.0928)
0.0341
0.0515
(0.0402)
Net asset value per share at
end of the year
2
0.7557
0.9271
0.5073
0.8071
1.0312
0.6239
1
Weighted average number of shares outstanding was used for calculation.
2
Each share classes net assets includes the underlying assets and liabilities directly attributable to the respective share class.
ORDINARY
SHARES
EXTENDED LIFE
SHARES
NEW GLOBAL
SHARES
ORDINARY
SHARES
EXTENDED LIFE
SHARES
NEW GLOBAL
SHARES
($)
($)
(£)
($)
($)
(£)
NAV TOTAL RETURN
2, 3
YEAR ENDED
31 DECEMBER
2024
YEAR ENDED
31 DECEMBER
2024
YEAR ENDED
31 DECEMBER
2024
YEAR ENDED
31 DECEMBER
2023
YEAR ENDED
31 DECEMBER
2023
YEAR ENDED
31 DECEMBER
2023
NAV Total Return
(6.37%)
(10.10%)
(18.69%)
4.41%
6.00%
(6.04%)
2
NAV Total Return is calculated for the Ordinary Shares, Extended Life Shares and New Global Shares only and is calculated based on movement in the NAV and does not
reflect any movement in the market value of the shares. A shareholder’s return may vary from these returns based on participation in new issues, the timing of capital
transactions etc. It assumes that all income distributions of the Company, paid by way of dividend, were reinvested, without transaction costs. Class A shares are not
presented as they are not profit participating shares.
3
An individual shareholder’s return may vary from these returns based on the timing of the shareholder’s subscriptions.
ORDINARY
SHARES
EXTENDED LIFE
SHARES
NEW GLOBAL
SHARES
ORDINARY
SHARES
EXTENDED LIFE
SHARES
NEW GLOBAL
SHARES
($)
($)
(£)
($)
($)
(£)
RATIO TO AVERAGE NET ASSETS
YEAR ENDED
31 DECEMBER
2024
YEAR ENDED
31 DECEMBER
2024
YEAR ENDED
31 DECEMBER
2024
YEAR ENDED
31 DECEMBER
2023
YEAR ENDED
31 DECEMBER
2023
YEAR ENDED
31 DECEMBER
2023
Net investment income
0.08%
1.73%
4.91%
0.18%
1.40%
3.24%
Total expenses
(1.43%)
(1.45%)
(2.34%)
(1.28%)
(1.38%)
(2.21%)
88 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
NOTE 8 – RECONCILIATION OF NET ASSET VALUE TO PUBLISHED NAV
In preparing the Financial Statements, there were adjustments relating to investment valuations. The impact of these adjustments on the
NAV per Ordinary Share, Extended Life Share and New Global Share is detailed below:
ORDINARY
SHARE CLASS
NET ASSETS
($)
ORDINARY
SHARE CLASS
NAV PER SHARE
($)
EXTENDED LIFE
SHARE CLASS
NET ASSETS
($)
EXTENDED LIFE
SHARE CLASS
NAV PER SHARE
($)
NEW GLOBAL
SHARE CLASS
NET ASSETS
(£)
NEW GLOBAL
SHARE CLASS
NAV PER SHARE
(£)
Published net assets as at 31 December 2024
12,237,190
0.7955
38,372,870
0.9907
13,478,756
0.5365
Valuation adjustments
(613,076)
(0.0398)
(2,465,260)
(0.0636)
(732,397)
(0.0292)
Net assets per Consolidated Financial
Statements
11,624,114
0.7557
35,907,610
0.9271
12,746,359
0.5073
ORDINARY
SHARE CLASS
NET ASSETS
($)
ORDINARY
SHARE CLASS
NAV PER SHARE
($)
EXTENDED LIFE
SHARE CLASS
NET ASSETS
($)
EXTENDED LIFE
SHARE CLASS
NAV PER SHARE
($)
NEW GLOBAL
SHARE CLASS
NET ASSETS
(£)
NEW GLOBAL
SHARE CLASS
NAV PER SHARE
(£)
Published net assets as at 31 December 2023
12,323,608
0.8011
45,378,194
1.0258
17,358,035
0.6239
Valuation adjustments
91,623
0.0060
236,291
0.0054
-
-
Net assets per Consolidated Financial
Statements
12,415,231
0.8071
45,614,485
1.0312
17,358,035
0.6239
NOTE 9 – SUBSEQUENT EVENTS
The Directors have evaluated subsequent events up to 29 April 2025, which is the date that the financial statements were available to
be issued.
The Company has received a total of $5.3 million in respect of the exit of a Surface Transport asset which was held in the NBDX and
NBDG share classes.
The Company has received a total of $1.47 million in respect of the exit of an Oil and Gas asset which was held in the NBDX and NBDG
share classes.
NBDG reported a capital distribution and income distribution by way of dividend in March for £1,212,873 and £796,413 respectively.
Shareholder will receive their respective distributions on 8 April 2025 and 7 April 2025.
There are no further items that require disclosure or adjustment to Financial Statements.
89 NB DISTRESSED DEBT INVESTMENT FUND LIMITED
Contact Details
Directors
John Hallam (Chairman)
Michael Holmberg
Christopher Legge
Stephen Vakil
All c/o the Company's registered office.
Registered Office
1
st
& 2
nd
Floors, Elizabeth House
Les Ruettes Brayes
St Peter Port
Guernsey
GY1 1EW
Company Secretary
Suntera (Guernsey) Limited (formerly named
Carey Commercial Limited)
Alternative Investment Fund Manager
Neuberger Berman Investment Advisers LLC
Manager
Neuberger Berman Europe Limited
Custodian and Principal Bankers
US Bank National Association
Designated Administrator
U.S. Bank Global Fund Services (Guernsey)
Limited
Independent Auditor
KPMG Channel Islands Limited
Sub–Administrator
U.S. Bank Global Fund Services (Ireland)
Limited
Financial Adviser and Corporate Broker
Jefferies International Limited
Solicitors to the Company (as to English
law and U.S. securities law)
Herbert Smith Freehills LLP
Advocates to the Company (as to
Guernsey law)
Carey Olsen
Registrar
MUFG Corporate Markets (UK) Limited
(formerly named Link Market Services
(Guernsey) Limited)
UK Transfer Agent
MUFG Pension & Market Services (formerly
named Link Group)
Central Square
29 Wellington Street
Leeds
LS1 4DL
United Kingdom
Shareholders holding shares directly and not
through a broker, saving scheme or ISA and
have queries in relation to their shareholdings
should contact the Registrar on +44 (0)371 664
0445. (Calls are charged at the standard
geographic rate and will vary by provider. Calls
outside the United Kingdom will be charged at
the applicable international rate. Lines are
open between 9 a.m. to 5:30 p.m. (excluding
bank holidays)). Shareholders can also access
their details via the Registrar’s website:
www.signalshares.com.
Full contact details of the Company’s
advisers and Manager can be found on the
Company’s website.
ADDITIONAL INFORMATION | Contact Details