17th Oct 2022 07:00
RNS Number : 020D Seraphim Space Investment Trust PLC 17 October 2022 160SERAPHIM SPACE INVESTMENT TRUST PLC
("SSIT" or "the Company")
Full Year Results
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Seraphim Space Investment Trust plc (LSE: SSIT), the worl's first SpaceTech investment company, announces its auite results for the financial year ene 30 June 2022.
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The full year report can be foun here an the summary is below:
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Financial Summary
114 July 2021 - the ate the Company's orinary shares were amitte to traing on the Lonon Stock Exchange's main market following completion of its IPO.
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Highlights
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183160160160160160 Net assets of 163239.3m at 30 June 2022
183160160160160160 10.0m shares issue pursuant to IPO, further 89.4m shares issue pursuant to acquisition of portfolio of holings in 19 companies acquire from Seraphim Space LP
183160160160160160 Positive growth in NAV per share since IPO, up 1.9% over the perio to 99.97p with the strength of the private company portfolio (incluing FX gains) offset by weakening valuations of the liste portfolio
183160160160160160 NAV per share for three months ene 30 June 2022 own 4.1% principally ue to liste portfolio an the reuction in liste comparables (where use for the valuation of private portfolio companies)
183160160160160160 Valuation of liste portfolio, representing 7.8% of NAV, materially impacte by weakening equity market performance an broaer sector rotation away from high-growth an technology companies
183160160160160160 Strong levels of investment activity with seven new investments an nine follow-on transactions close uring the perio with aggregate cost of 16387.1m.
183160160160160160 Portfolio now comprises 26 companies value at 163186.1m, being 104.3% of cost
183160160160160160 Portfolio performance unerpinne by growth of climate capabilities an government bugets for Space-relate efence with 94% of aggregate revenues of the private companies in the top 10 holings (nine companies representing 79% of fair value) being climate- or efence-relate
183160160160160160 Private companies in top 10 holings reporte fair value-weighte average annual revenue an bookings growth of 1.3% an 71.2% respectively
183160160160160160 Ongoing investor appetite for SpaceTech sector is reflecte in private company portfolio, which collectively raise 703m of new equity capital over the perio recent rouns establishe enterprise valuations at 30 June 2022 for most private company portfolio holings
183160160160160160 Portfolio companies, overall, well capitalise for year ahea, whilst SSIT has strong buffer of liqui resources of 1637.7m at 30 June 2022, to fun portfolio requirements an selectively continue to a to portfolio
183160160160160160 Angela Lane joine SSIT's Boar
183160160160160160 Three key appointments mae to SSIT's Investment Manager, Seraphim Space Manager LLP ("Seraphim Space"): Sarah Shackleton as COO, Patrick McCall as Venture Partner an Anre Ronsoehr as Investment Principal
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Top 10 Holings as at 30 June 2022
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UK
3.0
8.1
3.4
Satellite Vu1
UK
4.6
7.8
3.3
Astroscale
In Orbit Services
Asia
9.4
7.7
3.2
Top 10 investments
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144.8
161.8
67.6
Other investments
33.7
24.3
10.1
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Total investments
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178.4
160160160160160160160160160 186.1
77.8
1Participant in Seraphim Space Accelerator an/or Amazon AWS Space Accelerator affiliate to Seraphim Space
2 Liste
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Post Perio Highlights
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183160160160160160 Further 1638.9m eploye, with three new investments an four follow-on transactions
183160160160160160 New investments inclue Voyager Space Holings, a next generation "Space Prime" looking to buil worl's first commercial Space station, an Taranis, an agriculture-focuse AI company that uses Earth observation ata to optimise crop yiels an increase global foo supply
183160160160160160 Follow-on funing inclue PlanetWatchers, which focuses on crop insurance market 160
183160160160160160 Development of Seraphim Space's enhance ESG framework to review prospective an ongoing SSIT portfolio companies' exposure to climate, sustainability an social impact risk as part of its investment process complete proprietary tool now ientifies gaps where Seraphim Space can assist portfolio companies in eveloping enhance processes to reach their ESG objectives in their own operations an throughout their value an supply chains
183160160160160160 Generation Space, the US arm of Seraphim Space, commence its Space Accelerator programme in the US, operating alongsie its existing European Space Accelerator programme an generating aitional high-quality eal flow
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Will Whitehorn, Chair of Seraphim Space Investment Trust plc, commente: "Despite the global economic heawins, the Boar is please with the progress mae to ate an remains very positive about the scale of opportunity for the Company. In particular, a combination of the climate crisis an the war in Ukraine has resulte in significant increases in government bugets for the acquisition of SpaceTech-relate capabilities. The Company is well positione to benefit from these secular trens, with material proportions of the portfolio companies' revenue relating to efence an/or climate an sustainability.
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The funamentals riving the change in the SpaceTech sector remain robust. In aition, as governments are significant customers to many portfolio companies, we expect this to provie some protection against potential reuce eman within the commercial sector in the face of rising inflation an interest rates. We remain confient that, espite the volatility which continues to impact markets globally, the Company is well place to achieve its investment objective of generating capital growth over the long term."
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Mark Boggett, Chief Executive Officer, Seraphim Space Manager LLP, sai:160We are elighte to report that the NAV of the portfolio has increase since the time of the Company's IPO in July 2021, espite the macro-economic backrop. During this time, we have further valiate Seraphim Space's moel an strengthene our status as the leaing specialist SpaceTech investor globally. Our position at the epicentre of the New Space ecosystem continues to generate large volumes of high-quality investment opportunities from see stage through to pre-IPO funing rouns. We expect this to be further enhance uring the year ahea through the expansion into the US market of our affiliate accelerator activities an our new US subsiiary, Generation Space LLC.
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We believe that the Company's portfolio is well place to weather whatever macro-economic challenges lie ahea, with our portfolio companies remaining well capitalise. With the secular trens relating to global security, foo security, climate change an sustainability expecte to accelerate, we woul anticipate that eman for the proucts an services of the Company's portfolio companies - particularly from governments - will continue to grow an shoul result in the portfolio elivering strong growth metrics over the long term."
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A copy of the Annual Report has been submitte to the National Storage Mechanism an will shortly be available for inspection here.
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The Company will also be hosting a virtual presentation for analysts at 9.30 am toay an an online presentation for retail investors at 11 am. To register for either event, please contact SEC Newgate at160[email protected].
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Meia Enquiries
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Seraphim Space Manager LLP (via SEC Newgate) Mark Boggett, CEO / James Bruegger, CIO / Rob Desborough 160160160160160160160160160160
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SEC Newgate (Communications avisers)160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160160160160160160160 160[email protected]160 Emma Kane / Clotile Gros / George Esmon 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160+44 (0) 20 377 6767160
Deutsche Bank160 Mark Hankinson / Gavin Deane / Neil Coleman160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160160160160160160160160160160160160160 +44 (0) 20 74 8000160
J.P. Morgan Cazenove William Simmons / J233r233mie Birnbaum / Rupert Buge160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160 +44 (0) 20 7742 4000160
Ocorian Aministration (UK) Limite160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160 160160[email protected]160
Lorna Zimny160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160 160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160 160+44 (0) 28 9078 880
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Notes to Eitors:
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Seraphim Space Investment Trust plc is the worl's first liste fun focuse on SpaceTech. The Company seeks exposure preominantly to early an growth stage privately finance SpaceTech businesses that have the potential to ominate globally an that are category leaers with first mover avantages in areas such as climate, communications, mobility an cyber security.
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The Company liste on the Lonon Stock Exchange on 14 July 2021, following an oversubscribe IPO raising 16310.0m of fresh capital.160 As at 30 June 2022, the Company ha net assets of 163239.3m an exposure to more than 2 Space Tech companies.
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Seraphim Space Investment Trust plc is manage by Seraphim Space Manager LLP.
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Further information is available at:160160 https://investors.seraphim.vc
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About the Company Seraphim Space Investment Trust PLC (the "Company" or "SSIT") is the worl's first liste SpaceTech fun.160 It is an externally manage close-ene investment company that was launche in July 2021.160 SSIT seeks to generate capital growth over the long term through investment in a iversifie, international portfolio of preominantly early an growth stage privately finance SpaceTech businesses that have the potential to ominate globally an are category leaers with first mover avantages in areas such as global security, foo security, climate change an sustainability. The Company's shares are trae on the Lonon Stock Exchange's main market.
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Fin us online: https://investors.seraphim.vc/
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Investment Manager
The Company is manage by Seraphim Space Manager LLP (the "Investment Manager" or "Seraphim Space"), the worl's leaing SpaceTech investment group. The Investment Manager's team consists of seasone venture capitalists an some of the Space sector's most successful entrepreneurs who scale their businesses to multi-billion Dollar outcomes.
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The Investment Manager has supporte more than 80 SpaceTech companies across its fun management an accelerator activities since 2016 an has a proven track recor of elivering value.
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Positione at the heart of the global SpaceTech ecosystem, the Investment Manager has a unique moel, using information asymmetry generate from its global eal flow, partnerships with leaing inustry players an primary research to back the most notable emerging SpaceTech companies shaping a new inustrial revolution.
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The Investment Manager is a signatory to the UN Principles for Responsible Investment ("UN PRI"). Its first UN PRI report is ue in 2024.
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Please note that the Glossary on provie below provies efinitions for efine terms use through the report.
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Key Highlights As at 30 June 2022
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Key Performance Inicators
For the Perio from 14 July 20211 to 30 June 2022
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Financial Summary
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114 July 2021 - the ate the Company's orinary shares were amitte to traing on the Lonon Stock Exchange's main market following completion of its IPO.
2 Alternative performance measure - see Alternative Performance Measures section below.
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Why Invest in SpaceTech?
"Raical avances in the alreay significant 366bn Space inustry mean a ata an connectivity tsunami is about to transform the worl as we know it, unlocking trillions of ollars of value."
James Bruegger
CIO, Seraphim Space
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100x reuction in costs of reaching orbit
Thanks to innovations such as reusable rockets an miniaturise satellites mae out of smartphone components, low-cost access to Space is now a reality.
We have lift-off! Inflection point reache
In the next few years, hunres of companies are planning on launching 10x as many satellites than in the entire history of the Space Age combine.
Space 2.0 New planetary scale igital infrastructure
New large-scale constellations of small satellites are enabling real time, high-resolution, low-cost ata in abunance. These capabilities are set to have a transformative impact on many inustry verticals, helping to unlock trillions of Dollars in value in areas such as global security, foo security, climate an sustainability, connectivity, mobility, internet of things an smart cities.
Reshaping our worl for the better
Harnessing the infinite possibilities of Space, our companies are at the frontier of tomorrow helping to solve the Earth's most pressing problems. SpaceTech has a unique an critical role to play in helping to eliver a safer, more just an more sustainable future.
Science fiction turning into science fact
Space is at the nexus of mega-trens that will help efine societal change over the forthcoming ecaes. The era of riverless cars, flying taxis an robots will be powere by SpaceTech. The shift to orbit of everything from tourism, energy prouction, manufacturing, ata centres an mineral extraction has alreay begun.
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Resilient an Growing Market
Sector Highlights
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The year ene 30 June 2022 was one of the most significant in ecaes for the Space sector. It was a year of recor investment an IPOs an one which witnesse Space tourism become a reality. It was also a perio that reinforce the unique role SpaceTech has in reshaping our worl for the better, be that helping to aress the climate crisis or combat Russian aggression in Ukraine.
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Seraphim Space tracks global venture capital activity within the SpaceTech market. Collating information rawn from both public an private sources on iniviual transactions, Seraphim Space publishes a quarterly SpaceTech venture capital inex (the "Seraphim Space Inex")1 that provies insights into the latest trens in the SpaceTech investment market. The charts below are rawn from this inex.
1 Source: Crunchbase company websites press releases Seraphim Space analysis
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Trailing 12-months SpaceTech investment activity inex
The Seraphim Space Inex is a barometer of the investment activity within the Space sector, showing the global volume an value of venture capital eals within the Space sector on a 12-month trailing basis, normalise against Q1 2018.
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Over the last two years, there has been a substantial increase in both the amount of capital investe an number of companies finance.
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In particular, the amount of growth capital provie to later stage companies has grown very significantly uring this time, principally as the result of very sizeable transactions for 'mega constellations' from the likes of SpaceX an OneWeb.
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SpaceTech annual investment tracker (bn investe)
Over the past five years, the amount of private capital investe in the Space sector has grown. This has seen each year surpassing the previous year's investment recor.
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2021 saw a total of 12.1bn investe across 376 transactions, representing a 8% increase on the previous recor set in 2020.
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Notwithstaning current macro-economic heawins, investment activity uring the first half of 2022 has remaine strong, with overall investment levels matching those of the equivalent perio last year.160 With 217 companies having alreay close funing rouns so far this year, 2022 looks set to break the recor once again for the number of SpaceTech companies receiving investment.
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Public Market Turbulence
A recor 16 SpaceTech businesses went public in the year ene 30 June 2022, collectively raising over 7bn in capital. Like most companies that have recently gone public via mergers with special purpose acquisition companies ("SPACs"), these SpaceTech businesses (incluing three of the Company's portfolio companies) have seen their share prices hit baly in the wake of worsening macro-economic conitions.
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Given the relatively unique characteristic of SPACs, to ate, the poor performance of SpaceTech SPACs has not manifeste itself in the private finance market in terms of investment activity an the poor share price performance of the SpaceTech SPACs in SSIT's portfolio is not a reflection of their commercial performance, which has been robust relative to forecasts.
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Rolling 12-month SpaceTech investment by sub-sector (bn)
The sub-sectors relating to Space's new infrastructure - namely Launch (principally rockets) an Platforms (i.e. satellite constellations) - have typically accounte for the vast majority of capital investe. This is to be expecte given the more capital-intensive nature of these businesses.
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During the 12 months ene 30 June 2022, this has change, with less capital committe to rocketry an satellite businesses, offset by sizeable increases in the amount of capital being eploye into both rone-relate companies an those in the Beyon Earth category. Beyon Earth relates to businesses operating in the in-orbit economy such as satellite servicing, orbital ebris removal an commercial Space stations.
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Number of SpaceTech eals by region (last 12 months)
North America has consistently accounte for c.0% of all transactions complete in recent years. Europe, le by the UK, has typically represente c.2% of eals, an Asia, le by China, c.20%.
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All three of these regions have seen sustaine growth in the number of transactions complete.
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The year ene 30 June 2022 saw North American eal volumes increase by 3%, Europe by 34% an Asia by 94%.
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Chair's Statement
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"Despite the global economic heawins, the Boar is please with the progress mae to ate an remains very positive about the scale of opportunity for the Company. In particular, a combination of the climate crisis an the war on Ukraine highlighting the continue focus on global security has resulte in significant increases in government bugets for the acquisition of SpaceTech-relate capabilities. The Company is well positione to benefit from these secular trens, with material proportions of the portfolio companies' revenues relating to efence an/or climate an sustainability."
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Will Whitehorn160160
Chair
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I am please to present the first Annual Report of Seraphim Space Investment Trust PLC, covering the perio from incorporation on 14 May 2021 to 30 June 2022 (the "Perio").
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I woul like to thank all those investors who subscribe in the IPO on 14 July 2021 as well as the investors in Seraphim Space LP (the "LP Fun") for their support. I woul also like to thank the Company's Investment Manager, avisers an other service proviers an my fellow Directors for all their efforts that contribute to a successful launch an to the operation of the Company since then.
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Progress Since IPO
At IPO, the Company raise 16310.0m from a broa range of investors alongsie the acquisition of a portfolio of investments in 1 SpaceTech companies from the LP Fun for 16328.4m, which was substantially use to subscribe for 28.4m orinary shares in the Company at the IPO issue price. Per the terms of the agreement, four aitional assets were subsequently acquire from the LP Fun prior to 31 December 2021. The investors in the LP Fun consequently subscribe for 61.0m aitional orinary shares (at the IPO issue price). The aggregate value of all aitional share issuances following the IPO was 16389.4m.
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SSIT investe 16387.1m of the IPO funs in seven new portfolio companies an nine existing portfolio companies uring the Perio. Highlights inclue leaing investment rouns in six companies an investing in category-leaing companies in the UK, US, EU, Mile East an Asia, with 38% of the portfolio being source through accelerator programmes manage by an affiliate of the Investment Manager.
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At 30 June 2022, the Company ha investments in 26 SpaceTech companies with an aggregate value of 163186.1m an cash reserves of 1637.7m. Since then, the Company has investe a further 1638.9m.
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As we inicate in the IPO prospectus, we anticipate that the procees from the IPO woul be largely committe within a six-to-12-month perio. The war on Ukraine an the global macro-environment have ha a significant impact on global markets. As a consequence, the Company has eliberately slowe its pace of eployment in orer to reserve cash to follow its rights in existing portfolio companies whilst continuing to actively seek new target companies to a to the portfolio, albeit investing smaller units of investment. As outline in the Investment Manager's Report, overall, the portfolio is well-capitalise.
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NAV
Given the macro-economic backrop I am please to report that the NAV per share increase by 1.9% since the IPO, from 98.1p (after IPO costs) to 99.97p at 30 June 2022.
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Despite the challenging macro-economic environment, the private companies in the portfolio (which account for 88% by number an 90% by fair value of the portfolio) largely performe well over the Perio, with fair value reaching 122.% of cost (117.1% excluing FX impact), principally riven by the mark-ups of ALL.SPACE (formerly Isotropic Systems), D-Orbit, Altitue Angel, PlanetWatchers an Satellite Vu.160 The Investment Manager's Report inclues a more etaile review of the performance of portfolio companies.
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Contrastingly, the liste element of the portfolio (16323.1m ecrease in fair value vs. cost) mirrore the negative share price performance of technology an growth stocks on public markets worlwie, precipitate by rising interest rates, global energy prices, high inflation an the war on Ukraine. These portfolio companies all liste as part of SPAC mergers in 2021, an their performance has suffere in line with the overall SPAC market, as explaine in the Resilient an Growing Market section in the annual report.
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With 21 of the Company's 26 holings enominate in currencies other than Sterling, foreign exchange variations (+16316.8m) contribute positively to NAV, principally as a result of Sterling weakening against the Dollar uring the perio.
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Share Price
The Company's share price fell over the perio since IPO an, at 30 June 2022, was 3.0p, a ecrease of 47% base on the IPO issue price of 100.0p.
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The shares trae at a premium to net asset value until 19 January 2022. Inevitably, the Company's share price has not been immune to the significant volatility being experience by global stock markets in 2022 an, in particular, the heavy falls suffere by growth an technology stocks. Since the Perio en, the share price suffere further reuctions to a low of 48.0p on 13 July 2022 but has since improve to 3.1p (at 14 October 2022), a iscount of 46.9%.
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Given the iscrepancy of performance between NAV an share price over the perio, the Boar has consiere buying back shares as part of share rating management. However, we conclue that it was in the best interests of shareholers to reserve the Company's cash to support the portfolio an make selective new investments.
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Earnings an Divien
The Company mae a revenue loss after tax of 1634.3m for the Perio, equal to (1.94)p per share.
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The Company is focuse on achieving capital growth over the long term. Given the nature of the Company's investments, we o not anticipate recommening to pay a ivien in the foreseeable future.
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Responsible Investment
During the perio, the Investment Manager engage with a sustainability consultancy to evelop a comprehensive Responsible Investment Policy an proprietary ue iligence tool in orer to assess sustainability opportunities an ESG risks associate with each potential investment an facilitate post-investment oversight an risk management of ESG matters.160 The Investment Manager's Responsible Investment Policy an associate proceures will continue to evolve as best practice is progressively being establishe.160
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The Boar is keen to emonstrate the Company's commitment to responsible investing through objective reporting metrics for ESG factors. However, ESG language an terminology is in a complex phase of evolution with respect to the stanarisation of measuring or scoring ESG factors.160 The Boar will continue to work closely with the Investment Manager on unerstaning an reporting ESG factors. More etail, incluing ESG case stuies, on the Investment Manager's Responsible Investment Policy in the annual report.
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Reuction of Share Premium Account
As state in the IPO prospectus, the Company resolve that the amount staning to the creit of its share premium account immeiately following the IPO be cancelle an creite to other reserves. The share premium account was cancelle by a court orer ate 14 December 2021. Following court approval, 163173.2m previously hel in the share premium account was cancelle an creite to other reserves. We o not inten to use these reserves to fun ivien payments.
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Boar
Angela Lane was appointe as a non-executive Director of the Company with effect from 1 January 2022, completing the recruitment process for a fourth Director that commence prior to the IPO. Angela is a FCA an has ecaes of experience working with private equity owne companies an investment companies an as chair of auit an remuneration committees. With effect from the conclusion of this year's Annual General Meeting, Angela will succee Christina McComb as Chair of the Auit Committee an Christina will succee me as Chair of the Management Engagement Committee.
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Availability of Annual Reports
In the interests of the environment an for ease of access, the Annual Reports to shareholers will be available on the Company's website an can be viewe an ownloae at https://investors.seraphim.vc/. Copies of the Annual Reports will only be available on request.
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Annual General Meeting
The AGM of the Company will be hel at 11.00 a.m. on 17 November 2022 at Seraphim Space's offices, 1 Fleet Place, Lonon, EC4M 7WS (GPS postcoe EC4M 7RA).160 The AGM will inclue a presentation from the Investment Manager (a vieo of the presentation will be ae to the website as soon as practicable after the AGM). Details of the resolutions to be propose at the AGM, together with explanations, will be inclue in the notice of meeting to be istribute to shareholers on 19 October 2022.160 As a matter of goo practice, all resolutions will be conucte on a poll an the results will be announce to the market as soon as possible after the AGM.
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All of the Directors an representatives of the Investment Manager will be available at the AGM to answer shareholer questions.160 We o recognise that some shareholers may be unable to come to the AGM an, if you have any questions about the Annual Report, the investment portfolio or any other matter relevant to the Company, please write to us via email at [email protected] or by post to The Company Secretary, Seraphim Space Investment Trust PLC, th Floor, 20 Fenchurch Street, Lonon, EC3M 3BY. If you are unable to atten the AGM, I urge you to submit your proxy votes in goo time for the meeting, following the instructions enclose with the proxy form. If you vote against any of the resolutions, we woul be intereste to hear from you so that we can unerstan the reasons behin any objections.
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Events After the Perio En
Since 30 June 2022, seven further investments (three new investments an four follow-on investments) have been conclue for an aggregate cost of 1638.9m, an terms agree on one further potential aition to the portfolio.
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Sterling has experience continue weakness, reaching a low against the Dollar on 27 September 2022. Using exchange rates at the close of business on 27 September an 14 October 2022, with all other variables hel constant, the NAV per share as at 30 June 2022 woul have been 108.4p an 10.72p, respectively.
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Portfolio company D-Orbit requires specific mention ue to the potential NAV materiality of a transaction that was unerway at the en of the Perio. As outline in more etail in the Investment Manager's Report, uring January 2022 D-Orbit announce its propose business combination with the NASDAQ-liste SPAC, Breeze Holings Acquisition Corp. (NASDAQ: BREZ). Given the traing volatility of the wier SPAC market, this transaction was mutually terminate on 12 August 2022. Notwithstaning this, we are excite about the future of D-Orbit an its quest to create sustainable Space logistics infrastructure. D-Orbit is now raising funing in the private markets. As iscusse in the Investment Manager's Report, this business is performing robustly.
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Outlook
The funamentals riving the change in the SpaceTech sector remain robust. In aition, as governments are significant customers to many portfolio companies, we expect this to provie some protection against potential reuce eman within the commercial sector in the face of rising inflation an interest rates. We remain confient that, espite the volatility which continues to impact markets globally, the Company is well place to achieve its investment objective of generating capital growth over the long term.
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Our Investment Manager is actively pursuing an extensive pipeline of investment opportunities, taking a iscerning approach to progressing those opportunities that offer the best risk-ajuste returns for our shareholers, with quality of the investment thesis paramount. It is taking a pruent approach to the allocation of cash between supporting existing portfolio companies through follow-on investments, making new investments an managing the Company's working capital requirements until such time as market sentiment improves an the Company is able to raise aitional capital.
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As I sai at the beginning of my Statement, espite the challenging macro-economic environment an global stock market volatility, we remain confient that160 the Company is well place to achieve its investment objective of generating capital growth over the long term.
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Will Whitehorn160160
Chair
1 October 2022
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Investment Manager's Report
"We are elighte to report that the NAV of the Company's portfolio has increase since the time of the IPO in July 2021, espite the macro-economic backrop. During this time, we have further valiate Seraphim Space's moel an strengthene our status as the leaing specialist SpaceTech investor globally. Our position at the epicentre of the New Space ecosystem continues to generate large volumes of high-quality investment opportunities from see stage through to pre-IPO funing rouns. We expect this to be further enhance uring the year ahea through the expansion into the US market of our affiliate accelerator activities an our new US subsiiary, Generation Space LLC.
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We believe that the Company's portfolio is well place to weather whatever macro-economic challenges lie ahea with our portfolio companies remaining well capitalise."
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Mark Boggett
CEO
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Overview
Having raise 16310m gross procees through an IPO in July 2021 to take avantage of the rapily growing SpaceTech market, we are please with the rate of capital eployment. In the Perio, we acquire investments in 19 companies from the LP Fun an mae seven investments into new companies an nine follow-on investments.
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In line with the Company's strategy, we have continue to focus on investing in the evelopment of a igital infrastructure in Space, which leaing investment banks forecast has the potential to become a trillion market opportunity. This Space infrastructure will catalyse a broa range of megatrens incluing global security, foo security, climate change an sustainability. Other broa areas aresse inclue mobility, communications, smart cities an IoT.
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The businesses backe by the Company are at the forefront of the application of innovative Space-relate technologies an atasets that are isrupting a wie array of sectors here on Earth that inclue insurance, agriculture, communications, property, natural resources, transport, maritime an global security.
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Our investment activity has seen us elivering on many of the strategic objectives we set at the time of the Company's IPO. The portfolio has been enhance by the aition of some of the SpaceTech sector's highest profile, category-leaing growth companies. We have also increase investment in high conviction companies in the portfolio an continue to buil out our roster of high potential, early stage companies, where our affiliate accelerator activities provie a unique pipeline of high-quality investment opportunities. Inee, 10 of the companies that the Company has investe in were participants in the Seraphim Space Accelerator an/or the Amazon AWS Space Accelerator, both affiliate to Seraphim Space.
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Of particular importance, we have continue to broaen our portfolio of climate- an sustainability-relate investments in areas such as climate monitoring, foo security an Space sustainability. In line with our Responsible Investment Policy (further etails of which can be foun below), each of our investments is aligne with at least one of the Unite Nations' Sustainable Development Goals ("SDGs"). We expect the importance of SpaceTech in helping to achieve many SDGs an combat climate change will continue to grow over the course of the next several years.
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Notwithstaning the broaer macro-economic heawins, the prospects for both our portfolio an the wier SpaceTech ecosystem remain robust. Global security, foo security an humanitarian support remain key rivers unerpinning growth in the Space omain, followe by climate an sustainability themes. The Company's portfolio is well positione to benefit from these secular trens, with material proportions of the portfolio companies' revenues relating to efence an/or climate an sustainability. Base on portfolio company estimates, 94% of the 1H 2022 aggregate revenue of all nine private companies in the top 10 holings representing 79% of fair value (62% of NAV) is either climate/sustainability- or efence-relate.
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As highlighte in the Resilient an Growing Market section above, SpaceTech investment grew in 2021 to 12.1bn. Investor appetite is reflecte within the Company's portfolio, where a total of 703m of capital was raise by private portfolio companies in the year ene 30 June 2022, in aition to the 380m of capital raise by the two portfolio companies which complete SPAC mergers. As a consequence, all of our material holings (the 12 portfolio companies whose fair value represents 1.% or more of NAV) are believe to have sufficient cash to operate through until at least 30 June 2023 (10 holings) or are currently funraising (two holings) an are expecte to successfully exten their cash runway.
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Overall, the unerlying financial performance of the portfolio over the last year has been goo. Fair value-weighte average revenues of the nine private companies in the top 10 holings, representing 79% of fair value (62% of NAV) as at 30 June 2022, grew by 1.3% in the year ene 30 June 2022, with fair value-weighte average bookings (contracte future revenues) growing by 71.2% over the same perio. We are particularly please with the soli growth rates of bookings which reflect the strong unerlying performance of the businesses as they evelop their commercial operations.
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Most of the portfolio is in the early stages of making an impact on their sizeable aressable markets an, in light of the key trens unerpinning the growth of the Company's portfolio etaile above, we expect these companies to scale up significantly.
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With the Company's Lonon Stock Exchange listing having reinforce Seraphim Space's position as the leaing specialist SpaceTech investor globally, we remain optimistic about both the overall trajectory of the portfolio an our ongoing ability to continue to buil out our roster of investments into some of the sector's highest potential companies an most talente entrepreneurial teams. We continue to be iscipline regaring our investment selection an iligence processes.
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KEY THEME: Global Security
We are living in a perio of increase global security threats, likely greater than any time since the Col War. Global governments have respone with increasing efence bugets to 2.1tn[1] in 2021.
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Space has always been use for global security, proviing GPS, signal intelligence (SIGINT), satellite imagery an infiel communications. However, there have been significant changes in the last 10 years as governments are increasingly contracting with private companies. For example, the National Reconnaissance Office, the agency responsible for operating the US' intelligence satellites, now has five-year multi-billion Dollar contracts to acquire satellite imagery from private companies. The US Space Force will also spen over 2bn in satellite communications services through its procurement contracts in 2022 an 2023[2]. This move towar private procurement, represents an enormous opportunity for the private SpaceTech sector, with the US government buget proposal for its Space Force alone rising to 24.bn in 2023[3].
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Some of the Company's portfolio companies are at the forefront of proviing solutions to global security threats, incluing:
183160160160160160 ICEYE, which is proviing high resolution, high revisit rate synthetic aperture raar ata to the Ukrainian government, with a eicate satellite an access to its constellation.
183160160160160160 HawkEye 360, which has the capability to etect an geolocate global positioning system ("GPS") interference, with analysis of ata over Ukraine revealing extensive GPS interference activity.
183160160160160160 Xona Space Systems, which is eveloping resilient Space-base positioning, navigation an timing, which will augment an act as a backup for GPS for global security an commercial applications.
183160160160160160 Arqit, which elivers unhackable encryption, essential for secure global communications.
183160160160160160 Satellite Vu, which is eveloping thermal imaging satellites able to ientify the thermal footprints of terrestrial objects.
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KEY THEME: Space Sustainability
On 4 October 197 humans launche Sputnik 1, the worl's first artificial Earth satellite. Since then, an estimate 13,000[4] satellites have been launche into Space, powering some of humanity's most critical infrastructure incluing global navigation, communications an weather monitoring. What has not change over the last 6 years, is that all satellites are esigne for single use an most of them are launche on expenable or partially expenable launch vehicles.
Consequently, humanity has create a massive amount of space ebris (human-mae objects that no longer serve a purpose, such as efunct satellites, spent rocket boies an other smaller objects). The US Department of Defense is currently tracking 27,000[] objects larger than 10cm in low Earth orbit ("LEO").
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With every aitional piece of space ebris, the likelihoo of collisions with critically important structures, incluing the International Space Station an its astronauts an the currently c.,00[6] active satellites, is increasing rapily. In a worst-case scenario, an initial collision woul lea to a chain reaction of cascaing collisions possibly estroying all spacecraft in LEO, the so-calle Kessler Synrome.
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Ensuring the safe an sustainable use of space for future generations is a critically important challenge. Northern Sky Research estimates that it represents a 14.3bn[7] financial opportunity over the ecae to 2031.
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Some of the Company's portfolio companies are seeking to ensure the safe an sustainable use of space for future generations an each is a market leaer in its category, incluing:
183160160160160160 LeoLabs, which operates groun-base raar stations to improve the characterisation an tracking of space ebris in real-time to enable collision avoiance.
183160160160160160 Astroscale, which operates servicer spacecrafts to exten satellites' useful lives an actively e-orbit space ebris.
183160160160160160 D-Orbit, which provies space logistics services, incluing e-orbiting satellites at their en-of-life.
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KEY THEME: Humanitarian Support
Climate change is increasing the severity an frequency of natural isasters. Annually, these events result in significant loss of lives, as well as hunres of billions of Dollars in economic losses.
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The US alone sustaine climate isaster-relate losses of 14bn in 2021[8] riven by hurricanes, flooing an wilfires. It is vital, therefore, that first responers an isaster relief agencies are equippe with the best tools to help them save more lives an prevent losses.
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The Space inustry plays a critical role in proviing isaster relief services, primarily through remote sensing an communications. A plethora of new sensors supporte by new low-cost satellites can provie responsive an etaile coverage of a scene following a isaster to provie situational awareness. New atasets an the application of machine learning is use to ientify any environments of high risk in orer to take preventive measures. Also, terrestrial communications infrastructure is often estroye uring events, making satellite connectivity the only viable means of communication that is vitally important to rescue operations.
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Some of the Company's portfolio companies are performing a critical role in proviing humanitarian support services, incluing:
183160160160160160 ICEYE, which operates the largest commercial raar imaging constellation, capable of imaging at night an through clous, to ientify areas of most amage following floos an other natural isasters.
183160160160160160 AST SpaceMobile, which is builing a constellation of satellites capable of connecting irectly with hansets, turning any conventional mobile phone into a satellite phone for connectivity in remote an isaster-stricken areas.
183160160160160160 ALL.SPACE (formerly Isotropic Systems), which is eveloping a satellite antenna capable of simultaneously connecting with multiple satellites from ifferent operators to provie reliable communications for first responers an critical infrastructure
183160160160160160 Spire Global, which operates one of the worl's largest constellation of weather satellites to provie more accurate forecasting of events such as hurricanes.
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Investment Activity
In the Perio ene 30 June 2022
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Initial Portfolio
At its IPO on 14 July 2021, the Company acquire holings in 1 businesses (the "Initial Portfolio") from the LP Fun for a total cost of 16328.4m (which is the fair value of the holing prior to its transfer), which was re-investe by the LP Fun investors back into the Company through the issue of 28.4m shares at the IPO price of 100.0p.
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Post-IPO investment activity
Following the acquisition of the Initial Portfolio explaine above, a further 16310.0m was investe uring the Perio into a mixture of the Retaine Assets (acquire through an aitional share issuance), new investments an follow-on investments into existing portfolio companies as outline in the table below.
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1Participant in Seraphim Space Accelerator an/or Amazon AWS Space Accelerator affiliate to the Investment Manager.2These are very early stage companies in which small (typically less than 1631m) initial investments are mae an provie early access to companies which coul become caniates for substantial growth investment in subsequent rouns shoul they progress strongly.
3 Only inclues investments mae after the acquisition of the Initial Portfolio at the time of the IPO
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Retaine Assets
A bining commitment was mae at the time of the IPO to acquire from the LP Fun its remaining investments, being holings in four further businesses (the "Retaine Assets"), pening the outcome of corporate activity unerway with each business at that time.160160160
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The Retaine Assets were subsequently acquire uring the perio ene 31 December 2021 for a total consieration of 16362.9m which is the fair value, of which 16361.0m was re-investe by the LP Fun investors back into the Company through subsequent share issues at the IPO price.
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The holings in Spire Global an Arqit were acquire in, respectively, August an September 2021 following the completion of their respective SPAC mergers. In each case, the acquisition price was base on the five-ay weighte average share price post market ebut. The holing in ICEYE was acquire in December 2021 following the conclusion of its Series D funing roun at the same share price as the roun. In the case of D-Orbit, its potential SPAC transaction ha not conclue by 31 December 2021 so this asset was acquire at the price of the May 2021 valuation in accorance with terms agree at the time of the IPO.
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New investments
During the Perio a total of 16334.6m was investe into four aitions to the Company's main portfolio: HawkEye 360, Astroscale, Pixxel an Tomorrow.io. All four companies are amongst the highest profile businesses in the New Space ecosystem.
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HawkEye 360 is the worl's leaing commercial provier of Space-base raio frequency ("RF") ata an analytics. It operates its own constellation of satellites to collect, ientify, process an geolocate a broa set of RF signals generate on Earth from very high frequency raios, raars, cell towers, satellite phones, emergency beacons an more. Its avance analytical proucts help first responers save lives, law enforcement halt hien illegal activities such as illegal fishing an telecoms operators utilise spectrum. Its capabilities inclue mapping signals of interest, creating surveys of global spectrum usage an proviing eeper visibility of maritime activities. In November 2021, the Company investe 2.0m (16318.7m) in the company's 14m Series D funing roun. The Company was the co-lea investor in this roun alongsie Insight Partners.
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Astroscale is the global leaer in the Space sustainability market.160 The company has built a set of capabilities aroun in-orbit monitoring, refuelling, upgraing, repairing an isposing of satellites. Ongoing an planne missions are focuse on emonstrating capabilities aroun en-of-life isposal of low Earth orbit satellites, active removal of Space ebris an life extension of satellites. In November 2021, the Company investe 12.m (1639.4m) in the company's 112m Series F funing roun. The roun was le by THE FUND Limite Partnership in Japan an also inclue backing from Japan Growth Capital Investment Corporation an AXA Life Insurance Co.
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Pixxel is eveloping a constellation of satellites for the frequent collection of high-resolution hyperspectral imagery. Its imagery has the ability to 'see' in 0x more etail than conventional optical images in spectral bans invisible to the nake eye. The ata is use to better unerstan the chemical contents on the groun, which is crucial for sustainability applications such as the monitoring of crop health, measuring climate risk, classifying biomass or etecting pipeline leaks. The business launche its first satellite in April this year an is currently completing trials with a roster of large corporate customers primarily across agriculture, mining an carbon sequestration. In March 2022, the Company investe 3m (1632.3m) in the company's 2m Series A funing roun le by Raical Ventures. The funing is being use to eploy the first phase of Pixxel's constellation.
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Tomorrow.io is an innovator in the weather preiction market offering actionable insights to enterprise customers. It offers ecision-making services to inustries particularly impacte by weather incluing aviation, railways, shipping, utilities, insurance an logistics. Customers receive hyper-local weather-base information paire with recommenations for operational ecision-making such as staff rotas an consumer communications. The business provies its services to customers through its enterprise software as a service ("SaaS") web an mobile platforms powere by proprietary AI analytics. It is currently also eveloping a raar an microwave-base weather satellite constellation to expan its source ata an enhance its prouct capabilities. In June 2022, the Company investe .0m (1634.2m) in the business. The funing is being use to avance the evelopment of the business' satellite constellations.
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There were also aitions to the Company's see investments in very early stage companies. Such investments provie early access to companies which coul become caniates for substantial growth investment in subsequent rouns shoul they progress strongly. During the perio to 30 June 2022, a further 1631.2m was investe into three such see stage businesses in areas covering Space sustainability, IoT an ege computing.
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Follow-on investments
1631.3m of aitional funing was investe into nine companies uring the perio. This eployment was consistent with the strategy articulate at the time of the Company's IPO of seeking to increase the level of support for those portfolio companies which we have the greatest conviction in.
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In July 2021, the Company investe 3.1m (1632.1m) in LeoLabs, which is the worl's first an only supplier of commercial raar tracking services for objects in low Earth orbit, through a combination of primary an seconary share subscriptions. This investment forme part of the company's 6m Series B funing roun, which was le by Insight Partners. The funing is being use to continue the buil out of LeoLabs' network of antennas aroun the worl, with new sites continuing to be ae in line with expectations. Commercial contract wins uring the perio inclue OneWeb, which means LeoLabs now has the worl's three largest constellations - Starlink, OneWeb an Planet - as customers. As a result, the company is proviing operational support for more than 2,400 active satellites, representing approximately 60% of all operational satellites in lower Earth orbit.
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In August 2021, the Company investe a total of 2.6m (1631.9m) in Xona Space Systems which is eveloping the worl's first smallsat GPS constellation in low Earth orbit which has the capability of aressing the shortcomings of public GPS systems by elivering centimetre level accuracy along with enhance security. This forme part of Xona Space System's 10m See funing roun where the Company was the lea investor. In May 2022, the Company investe a further 2.m (1632.0m) in a 12.m convertible loan note roun which inclue investment from Lockhee Martin. The latest funing will be use to launch an test the company's initial emonstration satellite payloas, the first of which was launche into orbit in May 2022.
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In September 2021, the Company investe 2.0m (16318.0m) in the 37m Series B funing roun of ALL.SPACE (formerly Isotropic Systems), which has evelope an antenna which can connect up to satellites uniquely in any orbit (LEO, MEO an GEO). This provies resilient connectivity for mobility in cars, boats an planes aressing a multi-billion Dollar market opportunity. The Company was the lea investor in this roun, investing alongsie AEI Horizon an Promus Ventures, with the funing being use to bring the company's first prouct to market. Post investment, ALL.SPACE achieve all targete technical milestones, winning significant contracts through the perio with marque customers in the communications an efence markets.
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In October 2021, the Company investe 1634.0m in Satellite Vu, which is eveloping an infrare imaging satellite constellation with high resolution which is capable of monitoring the heat signature of any builing on Earth every few hours. The Company was the lea investor in the 1631m Series A funing roun investing alongsie Molten Ventures, Contrarian Ventures, In-Q-Tel an Lockhee Martin Ventures. The funing is being use to launch Satellite Vu's first satellite, which is expecte to take place in 2023.
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In December 2021, the Company investe 2m (16318.7m) in the 136m Series D funing roun of ICEYE, originally one of the Retaine Assets. The Company was the lea investor in this roun investing alongsie BAE Systems, Cobham Ventures, True Ventures an Molten Ventures.160 ICEYE has built the worl's first an largest constellation of miniaturise satellites that use raars to capture information about the Earth, ay an night an in all weather conitions. The funing is being use to continue to buil out the company's constellation an further evelop its information solutions for monitoring an mitigating natural catastrophes.
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In February 2022, the Company investe 2m (1631.m) in Egybees, a software company which has evelope an AI powere augmente reality platform using satellite ata for real-time information overlays for any vieo stream, enabling efence, public safety an critical infrastructure comman centres to accomplish life-saving missions. The Company investe as part of an internal 8m brige roun to further the company's capabilities for stanarising satellite imagery from any source.
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Portfolio Performance
In the perio ene 30 June 2022
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Private portfolio
The private portfolio, which comprises the main part of the Company's investments representing 90% of fair value an 70% of NAV, performe well, with its fair value closing the perio at 122% of cost (117% excluing FX gains). We believe that the issues impacting the liste portfolio largely reflect the performance of the broaer SPAC market (as explaine in the Resilient an Growing Market section above) which o not impact the private holings in the portfolio. These businesses continue to eliver soli revenue an bookings growth, riven by soli funamentals in their core focus areas (especially global security an climate/ sustainability), an the impact of the war on Ukraine.
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Excluing the impact of FX gains, uring the perio, seven of the main portfolio companies saw increases in their fair value. Across these seven companies the fair value-weighte average increase in their fair values was 146%. Three of these companies (Xona Space Systems, Satellite Vu, ALL.SPACE (formerly Isotropic Systems)) saw their fair value increase as a result of having close new funing rouns (each of which inclue substantial investment from new arm's length investors). The fair value-weighte average increase in valuations for these businesses compare against their last funing rouns was 220%. Two other companies (D-Orbit, Altitue Angel) saw their valuations increase as a result of achieving material technical an/or commercial milestones. In accorance with the International Private Equity an Venture Capital Valuation Guielines, the fair values of these businesses have been calculate base on an analysis of a number of comparable liste companies an/or transactions. The fair value-weighte average increase in the carrying value of these two businesses was 108%. PlanetWatchers also saw an increase to its valuation base on the iscounte price of a new funing roun in which the Company was a co-lea an which was agree prior to the en of the Perio an has subsequently complete.
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Inevitably, there have also been some isappointments within the private portfolio, with four companies marke own (30 June 2022 aggregate fair value of 72% of cost). In two instances (Astroscale, Egybees), fair values fell ue to the application of a iscount to the last roun. In the case of Astroscale, this was ue to setbacks in achieving a key technical milestone on its latest satellite servicing emonstration mission. In the case of Egybees, the mark own was applie ue to material unerperformance relative to expectations. In both cases, we remain optimistic about the long-term prospects of the businesses.
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Fair value was written own to 163NIL for the holings of two early stage companies (equivalent to a cost of 1631.9m in total), both of which were see companies an part of the Initial Portfolio. During the perio we took the ecision not to participate in the investment rouns of these companies as both ha faile to execute against key commercial an technology-relate milestones. These write offs of moest holings in early stage companies illustrate our iscipline investment approach an are a timely reminer that, in line with the Company's investment policy, not all of our investments will succee. But those that we continue to support are expecte to eliver substantial returns over the long term that will more than offset the isappointments.
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Liste portfolio
Like many other liste technology stocks an recently complete SPAC mergers, the share prices of the three liste portfolio companies (Arqit, Spire Global, an AST SpaceMobile), which complete their SPAC mergers uring 2021, have performe poorly since acquisition (as explaine in the Growing an Resilient Market section above). Base on the companies' closing share prices on 30 June 2022, the fair value of the liste portfolio was 4% of cost (36% excluing the impact of FX gains).
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Notwithstaning the isappointing share price performance of each of these companies since acquisition, we maintain strong conviction in the funamentals of each business, with an expectation that each one will ultimately eliver a positive return for the Company. Each has first mover avantage an market leaership in emerging, very large market opportunities which hol the potential of elivering billions in revenue over the longer term. Following their respective SPAC mergers an base on their latest set of quarterly results, each business is well capitalise.
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The Arqit (NASDAQ: ARQQ fair value/cost:1%) share price was highly volatile uring the Perio, reaching a peak of 38.06 on 30 November 2021 before falling rapily uring the first half of 2022 to close the Perio at 6.31. Having commence commercialisation of its groun-breaking cyber security quantum proucts, the business reporte significant commercial progress an generate operating income of 12.3m (key clients inclue the European Space Agency, Virgin Orbit an AUClou) uring the first half of its financial year ene 30 September 2022 (c.30m revenue guiance for that financial year). An aitional 14 patent claims on five patents were file in the first half of its FY2022, bringing Arqit's total to 1,80 patent claims on 26 patents file or grante in the UK. At 31 March 2022, Arqit ha a cash balance of 82.2m (30 September 2021: 87.0m).
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Spire Global (NYSE: SPIR fair value/cost: 22%) has in recent quarters elivere consistently strong results, with recurring revenue as at 30 June 2022 of 8.3m, a year-on-year increase of 133%. Spire has a broa customer base which it serves with ata an analytical proucts rawn from its giant satellite constellation of over 100 smallsats, which collect avance weather ata an track maritime an aviation traffic flows. With 72.m of cash an access to a 120m creit facility at 30 June 2022, the business has inicate that it is now fune through to cash flow breakeven, which it expects to achieve within the next 24 months. In line with our continuing confience in the company, we investe an aitional 1632.m into the company in early 2022.
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Although the timing of the launch of its first emonstration satellite suffere from a series of elays, AST SpaceMobile (NASDAQ: ASTS fair value/cost: 3%) has mae soli progress launching its first satellite, BlueWalker 3, in September 2022, the largest satellite ever launche in low Earth orbit. AST SpaceMobile is now unertaking in-orbit irect-to-cell phone testing on six continents, incluing North America. It has now file in excess of 2,400 patent claims worlwie an has evelope relationships with mobile network operators who collectively have more than 1.8bn subscribers aroun the worl. The business ha in excess of 200m of cash an cash equivalents at 30 June 2022.
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Valuation Changes in the Three Months Ene 30 June 2022
During the quarter ene 30 June 2022, the fair value (ajuste for acquisitions over the perio) fell by 1639.2m, reucing fair value to 104% of cost (98% excluing FX gains).
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The principal etractors were the liste portfolio (Arqit -16318.0m, Spire Global -1631.m, AST SpaceMobile -1631.3m), D-Orbit (-1636.2m, principally a result of falls in the prices of the comparable liste companies use in calculating its fair value) an mark owns of Astroscale an Egybees (-1632.4m in total) ue to unerperformance relative to expectations.160
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Partially offsetting the mark owns were a number of valuation increases, incluing Altitue Angel (163.3m, riven by achievement of important technical milestones) an PlanetWatchers (1634.9m, partially reflecting the next funing roun price).
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Valuation Policy
The Company's investments are classifie, recognise an measure at fair value. The Company's valuation policy is base on the International Private Equity an Venture Capital Valuations Guielines 2018. The Boar is responsible for approval of the fair value of investments, following etaile review an appropriate challenge of the Investment Manager's propose fair value calculations. The valuations are also reviewe an challenge annually by the external Auitor as part of the auit.160
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The fair value of liste investments is base on available market price an is typically the closing bi price on the valuation ate.
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The typical valuation methoologies for private company investments are:
183160160160160160 calibrate price of recent investment (cost or last roun value, calibrate for aitional information since such investment ate)
183160160160160160 milestones (scenario analysis base on achievement of a key technical or commercial milestone)
183160160160160160 multiples (of establishe revenue or earnings, where relevant)
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The methoology applie takes into account the nature, facts an circumstances of the iniviual investments an uses reasonable ata, market inputs, assumptions an estimates in orer to etermine fair value. A level of jugement is require to assess an review such factors, particularly when calibrating the price of recent investment or scenario analysis in the milestones approach. Further information on valuations is inclue in the financial statements below.
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Performance of the Company
In the perio ene 30 June 2022
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Portfolio Attribution
183160160160160160 16328.4m aggregate cost of Initial Portfolio acquire at IPO.
183160160160160160 16310.0m aggregate cost of aitional investments, incluing Retaine Assets, complete uring Perio (excluing the Initial Portfolio acquisition).
183160160160160160 163186.1m fair value of portfolio at en of Perio.
183160160160160160 +4.3% increase in closing portfolio fair value vs. portfolio cost, incluing FX movements.
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NAV
183160160160160160 16310.0m raise in IPO.
183160160160160160 16328.4m equity issue at the time of the IPO in connection with the acquisition of the Initial Portfolio.
183160160160160160 16361.0m equity issue post-IPO in connection with the acquisition of the Retaine Assets.
183160160160160160 16364.2m increase in NAV (36.7% increase) over the Perio from IPO to 163239.3m (31 December 2021: 16320.6m).
183160160160160160 1637.7m liqui resources (24.1% of NAV) at 30 June 2022 (31 December 2021: 16370.0m).
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NAV increase from 16317.1m to 163239.3m uring the Perio. This increase of 16364.2m was primarily a result of the aitional 16361.0m of share issues relating to the acquisition of the Retaine Assets an 1637.7m of portfolio fair value increase (incluing FX movements). Please see further below for etails of the fair value movement over the perio, where private companies in aggregate have shown an increase in fair value (incluing gains from FX), partially offset by a ecrease in fair value from liste companies.160160160
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The 'Other' category in the chart above consists of management fees (1632.7m) an operating expenses (1631.8m), partially offset by interest (1630.1m) receive.
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61.0m shares were issue uring the perio, increasing the Company's issue share capital by 34.2%.160 The NAV per share increase from 98.1p (after IPO costs) to 99.97p over the Perio.
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The Company is targeting an annualise total return on the Company's portfolio of at least 20% over the long term. The Company has no formal benchmark inex but has tracke its NAV per share an share price movements against the following the inices for reference.
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183160160160160160 MSCI Worl Aero an Defence Inex (163) - a significant proportion of portfolio companies' revenues are erive from the broaer aerospace an efence inustry an/or companies have governments as significant customers
183160160160160160 MSCI Worl Climate Change Inex (163) - a significant proportion of portfolio companies' revenues are erive from climate change proucts an services
183160160160160160 FTSE All-Share Inex (163) - the Company is liste on the Lonon Stock Exchange
183160160160160160 NASDAQ (163) - the Company invests in SpaceTech, a subset of the broaer technology market, an two of its liste holings are liste on NASDAQ
183160160160160160 Dow Jones Global Technology Inex (163) - the Company invests globally in SpaceTech, a subset of the broaer technology market
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As explaine in the Share Price section, the Company's share price has been significantly more volatile than its NAV per share. The share price has been impacte by general market volatility, particularly that experience by technology an growth stocks, while the NAV per share has remaine resilient, in line with performance of the unerlying portfolio companies which continue to show growth as outline above.
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Post Perio Developments
Investment activity has continue since the en of the Perio, with a further 1638.9m investe. Three further investments totalling 1636.7m have been complete in the main portfolio, with two new investments totalling 1634.2m an one follow-on investment of 1632.m into an existing portfolio company.
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The new aitions are Voyager Space Holings, a next generation 'Space Prime' (prime contractor contracte by government agencies for Space projects) looking to buil the worl's first commercial Space station, an Taranis, an agriculture focuse AI company that uses Earth observation ata to optimise crop yiels an increase global foo supply.
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In aition, there were three follow-on investments an one new investment, totalling 1632.1m, into see/ early stage portfolio companies.
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In September 2022, PlanetWatchers close a 11m funing roun at a significant uplift (13% increase) on its previous roun. This funing roun will enable the business to continue to expan its crop amage analytics offering in the US crop insurance market. As the term sheet for this funing roun was signe prior to the en of the Perio, Seraphim Space was a lea in the roun, there was significant thir party involvement in the roun an the roun close prior to finalisation of the fair value, the Company recognise this uplift in its fair value for the Perio, iscounte by 1% for execution uncertainty.
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D-Orbit ha previously announce on 27 January 2022 that it ha reache an agreement with Breeze Holings Acquisition Corp. (NASDAQ: BREZ), a publicly-trae SPAC, to unertake a business combination to enable the company to become a public company. This transaction remaine subject to a number of outstaning conitions, but, if complete, coul have resulte in a substantial increase in the value of the Company's holing in D-Orbit.160 On 12 August 2022, D-Orbit an Breeze announce that they ha reache a mutual agreement to terminate the planne SPAC merger ue to the significant changes in the financial markets.
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In spite of not consummating its SPAC merger, D-Orbit has continue to perform strongly, completing an aitional four missions with its ION satellite carrier spacecraft for its in-orbit Space taxi elivery service. The business has now complete a total of six of these missions an has transporte more than 80 payloas into orbit, in the process achieving a number of worl firsts. This track recor compares very favourably against that of most other launch-relate companies that have gone public recently, many of which are currently value at a significant premium to the Company's carrying value for its holing in D-Orbit.
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As reporte at the interim stage, the Company's valuation methoology for D-Orbit is principally base on the analysis of a number of comparable liste companies an using a range of ifferent financial an milestone metrics in accorance with the International Private Equity an Venture Capital Valuation Guielines. At 30 June 2022, this methoology i not assume a successful completion of the SPAC merger. As mentione earlier, the reuction in the fair value of the company from the previous quarter was ue to the valuations of the comparable liste companies having fallen substantially uring the quarter.
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New Team Members
During the Perio, we ae strength an epth to the team through a iscipline approach to recruitment, ensuring new members are a goo fit for our culture an bring aitional knowlege an expertise. Key new hires inclue:
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Sarah Shackleton joine the team as Chief Operating Officer following a long an istinguishe career in the private equity an investment banking sectors, working for almost 1 years as a Partner of Development Partners International, one of the leaing private equity firms investing in Africa an overseeing c2.8bn in assets uner management. She was responsible for legal, compliance, HR, IT, operations, facilities an ESG at the firm.
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Patrick McCall joine as Venture Partner to provie aitional strategic support to portfolio companies. He has a long an istinguishe career in the Space, communication an transport sectors. He worke for two ecaes in the senior team riving the expansion of the Virgin Group an as the Chair of Virgin Orbit an Virgin Galactic. His achievements inclue financing the evelopment of Virgin Galactic an Virgin Orbit, culminating in the flotations of both companies. He also playe a key role in agreeing the launch agreement for Virgin Orbit from the Spaceport in Cornwall.
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Anre Ronsoehr joine as Investment Principal following a career focusse on the Space sector, working for almost a ecae at Virgin Management, the family office of Sir Richar Branson. Anre co-le the see investment in One Web in 201 an was instrumental in investments into Virgin Galactic an Virgin Orbit. During this time, Anre worke closely with the boars an C-level teams of each of these three pioneering Space businesses, helping shape them into the billion businesses they are toay.
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Maureen Haverty joine as Vice Presient following a successful career in the New Space inustry. Maureen was an early employee an Chief Operating Officer at Apollo Fusion, a Space start-up, that was acquire for 14m by Astra, a NASDAQ-liste Space services an rocket launch company. At Astra, Maureen worke on acquisitions, strategic partnerships an venture capital investments.
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Ann Winbla joine the Investment Avisory Committee. She co-foune Hummer Winbla Venture Partners in 1989, which was the first venture firm focuse exclusively on software. In her 30-year career as a Silicon Valley-base venture capitalist, Ann's firm has launche over 160 enterprise software companies an le investments that pioneere successful companies across the enterprise software sector: business intelligence, analytics, software evelopment, integration, ata centre optimisation, clou computing an security.
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Outlook
With the secular trens relating to global security, foo security, climate change an sustainability expecte to accelerate, we woul anticipate that eman for the proucts an services of the Company's portfolio companies - particularly from governments - will continue to grow an shoul result in the portfolio elivering strong growth metrics over the long term.160
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We believe that the Company's cash reserves of 1637.7m at 30 June 2022 shoul be sufficient to provie the necessary levels of support to the portfolio over the course of the 12 months from the ate of this report, with a potential further 16318.6m of liquiity available in the holings of liste companies. As at 14 October cash was 16343.8m. Whilst we expect to continue to iversify the portfolio with selective new investments, uncertainty aroun the timing of market recovery (an, therefore, our ability to raise new equity capital) means that the size of new investments will likely be consierably smaller on average when compare to the Perio since the Company's IPO.160 Furthermore, the balance of investment activity is likely to be more weighte in favour of supporting the existing portfolio, with the Company intening to reserve the majority of available cash (after operating expenses) to support the funing rouns of existing portfolio companies, with the remainer being available for new investments.
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Mark Boggett
CEO
Seraphim Space Manager LLP160160160160160160
Investment Manager
1 October 2022
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Portfolio Snapshot
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3In respect of each private portfolio company, from ate of first investment by the Company to 30 June 2022 Source: portfolio company ata.
4Fair value-weighte average (as efine in the Glossary below) year-on-year growth for the 12 months ene 30 June 2022 of the private companies in the top 10 holings, representing 79% of fair value (62% of NAV) as at 30 June 2022. Bookings refers to contracte future revenues.
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Portfolio at 30 June 2022
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Holings
UK
3.0
8.1
3.4
3.2
160
2Satellite Vu
UK
4.6
7.8
3.3
7.8
160
Astroscale
In Orbit Services
Asia
9.4
7.7
3.2
9.3
160
160
160
160
Top 10 investments
160
160
144.8
161.8
67.6
171.2
Xona Space Systems
Navigation
US
4.4
.1
2.1
2.7
Tomorrow.io
Data Platform
US
4.2
4.1
1.7
-
Egybees
Drones Unmanne Aerial Vehicles
US
2.9
2.
1.0
1.
Pixxel
Asia
2.3
2.
1.0
-
AST SpaceMobile
Satcoms
US
4.4
2.4
1.0
2.8
Spire Global
Earth Observation
US
9.9
2.2
0.9
2.8
Other non-see investments
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160
28.2
18.7
7.8
9.7
See investments
.
.6
2.3
1.9
Total investments2
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160
178.4
160160160160160160160160160160160 186.1
77.8
182.8
Net current assets
3.2
22.2
67.8
Total assets
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160
160
239.3
100.0
20.6
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1 inclues follow on investments, where relevant, mae since 31 December 2021 of 1637.8m
2 inclues all portfolio holings, incluing the Initial Portfolio acquire at the time of the IPO
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Case stuy - ICEYE
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Overview
ICEYE has built the worl's first an largest constellation of miniaturise satellites that use raars to capture information about the Earth ay an night an in all weather conitions.
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Satellites that use optical cameras to take images of the Earth have spawne, in recent ecaes, the bn 'Earth Observation' market. However, with two-thirs of the worl either in arkness or covere by clou at any given time, much of the worl cannot be image from Space using traitional optical cameras. By using raars rather than cameras to take images, it is possible to monitor the Earth ay an night an in all weather conitions.
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Previously the preserve of just a hanful of nation-states, ICEYE has built the worl's largest constellation of raar satellites that are 1/ 100th of the size an cost of incumbent systems. Through its constellation, ICEYE aims to provie actionable information on every square metre of the Earth every hour for sectors that inclue maritime, isaster management, insurance, finance, security an intelligence.
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Seraphim Space first investe in ICEYE in 2017, ahea of the launch of their first satellite. Seraphim Space-manage funs have participate in every subsequent funing roun. The Company le ICEYE's 137m Series D funing roun in December 2021.
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The Opportunity
ICEYE is currently focuse on the government an insurance sectors. Governments use ICEYE's satellites for a range of civil- an efence-relate applications. For example, the Brazilian Government uses ICEYE to monitor illegal eforestation in the Amazon, whilst the Ukrainian Government recently announce a eal to procure exclusive imagery from ICEYE to help support its war efforts.
Within the insurance sector, natural catastrophes result in enormous losses1. As a consequence of climate change, these events are increasing in both frequency an intensity. ICEYE's ata an analytics are helping insurers automate claims through builing level floo assessments, helping size event losses in a fraction of the time an for a fraction of the cost.
ICEYE's ultimate vision is to monitor change at global scale an in close to real time. The company believes that fusing these insights with other atasets will unlock market opportunities of potentially an orer of magnitue bigger than the alreay sizeable markets it is aressing toay.
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Our Thesis
8226160160160160160160 Synthetic aperture raar's ("SAR") unique ability to provie reliable imaging capability ay an night an in all weather conitions hols the key to unlocking the true potential of Space ata to have a massive impact on aressing some of the worl's most pressing problems.
8226160160160160160160 Only high revisit SAR will enable wie area, global scale persistent monitoring of the worl. This represents a new way of unerstaning the Earth, by proviing the ability to see an track changes in minute etail.
8226160160160160160160 Such real time monitoring of the worl will impact almost every sector, rive our efforts to combat climate change an coul represent a 100bn long term market opportunity.
8226160160160160160160 As the clear market leaer an with significant first mover avantages, ICEYE is prime to become the ominant player in the application of SAR ata to a wie array of commercial markets.
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Source:1 https://www.swissre.com/press-release/Floos-an-storms-rive-global-insure-catastrophe-losses-of-USD-38-billion-in-first-half-of-2022-Swiss-Re-Institute-estimates/43169-e49f-4168-8bc-2a944313b0
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Case stuy - ALL.SPACE
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Overview
ALL.SPACE (formerly Isotropic Systems) is aiming to create a mesh network of satellite connectivity by eveloping an antenna capable of connecting to any satellite in any constellation in any orbit.
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Thanks to the thousans of communications satellites being launche by the likes of SpaceX, Amazon an OneWeb, Space-base connectivity is expecte to grow 20-fol over the next five years. Whilst this hols the promise of eventually elivering ubiquitous connectivity across the worl, having the satellite ishes / antennas neee to actually connect to all these satellites remains a major potential bottleneck. Current terminals are expensive, bulky, lack the ability to track fast moving satellites across the sky an are not well-suite for non-stationary applications.
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ALL.SPACE is resolving these issues by eveloping a high banwith, low power, flat panel igital antenna that can connect to any satellite. This enables ALL.SPACE to mesh satellites together, seamlessly linking to multiple satellite services for uninterrupte connectivity.
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Seraphim Space first investe in ALL.SPACE in 2020, having tracke the business for several years. The Company le ALL.SPACE's 37m Series B funing roun in October 2021.
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The Opportunity
ALL.SPACE's beach hea market is efence, where the requirement for resilient, reliable communication is of paramount importance. ALL.SPACE's ability to connect from a single antenna to multiple ifferent networks simultaneously - be they military or commercial satellite communications networks - can enable such resilience. With the US Department of Defense alone spening upwars of 1bn a year on satellite communications, this market represents a sizeable opportunity for the company.
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ALL.SPACE's ultimate aim is to enable reliable high-spee connectivity for the billions of cars, trains, buses, aircraft an ships that toay remain largely unconnecte. It also hols the tantalising promise of being able to converge both terrestrial- an satellite-base connectivity networks which coul result in an eventual aressable market measure in the tens of billions.
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Our Thesis
8226160160160160160160 With 4% of the worl's population still lacking access to broaban, satellites have a critical role to play in connecting those parts of the worl terrestrial networks cannot reach. Many billions are being investe in increasing satellite connectivity to aress this opportunity.
8226160160160160160160 However, afforable high-performance flat panel electronic steerable antennas ("ESAs") are the major bottleneck for the 100bn satcom inustry's future growth. In their absence, much of the promise of forthcoming spike in satellite connectivity risks being squanere.
8226160160160160160160 In time, ESAs will replace the vast majority of existing parabolic an mechanically steere antennas whilst also ramatically expaning market reach.
8226160160160160160160 The company which prouces ESAs at the lowest cost an highest performance will ominate a category, which provies a pathway to billions in potential revenue over the next ecae.
8226160160160160160160 The avantages erive from ALL.SPACE's technology is likely to trump those of any woul-be competitors ,enabling them to ominate the market.
8226160160160160160160 ALL.SPACE's founer was previously part of the team that scale the satcoms operator O3B to a 2.3bn sale to SES an has the experience to replicate this success at ALL.SPACE.
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Case stuy - HawkEye 360
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Overview
HawkEye 360 operates the worl's largest satellite constellation collecting raio frequency signals to ientify an geolocate previously invisible activities.
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HawkEye 360 is the worl's leaing commercial provier of Space-base RF ata an analytics. It operates its own constellation of satellites to collect, ientify, process an geolocate a broa set of RF signals generate on Earth from very high frequency raios, raars, cell towers, satellite phones, emergency beacons an more.
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Its satellites monitor hunres of millions of square kilometres aily to ientify hien signals, often of illicit activity. Its avance analytical proucts help first responers save lives, law enforcement halt hien illegal activities an telecoms operators utilise spectrum. Its capabilities inclue mapping signals of interest, creating surveys of global spectrum usage an proviing eeper visibility of maritime activities.
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In November 2021, the Company investe 2.0m (16318.7m) in HawkEye 360's 14m Series D funing roun. It was the co-lea investor in this roun alongsie Insight Partners.
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The Opportunity
The market potential for HawkEye 360 RF-base signals intelligence is estimate to be -10bn per annum.
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Illegal, unreporte an unregulate fishing is evastating our oceans. It is worth up to 23.bn each year, an it is extremely ifficult to police. Reucing its impact requires unerstaning an eliminating the factors that enable it.
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HawkEye 360's Dark Maritime service is alerte when a vessel in a specific area goes ark. It is then able to automatically follow the vessel through analysing RF signals from their communications an other onboar systems, HawkEye 360 is able to buil a eep visibility of the vessel's activity that is then use to hol the ba actor to account.
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The company also offers a range of global efence an intelligence applications incluing their GPS interference etection capability. This can be use to monitor activity where GPS jamming is routinely implemente to obscure activity an isrupt critical location service - this has been particularly useful in Ukraine conflict.
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Our Thesis
8226160160160160160160 Monitoring, geolocating an analysing RF is critical to unerstaning human activity. This in turn has a crucial role to play in making our worl both safer an more sustainable.
8226160160160160160160 HawkEye 360 has first mover avantage in Space-base RF signals intelligence gathering. Its satellites can etect ozens of ifferent signals an it has alreay collecte, geolocate an archive over 30 million RF signals.
8226160160160160160160 The business is therefore well positione to become the ominant player in the RF omain with a low latency multi-platform collection strategy from 1,200 km own to the groun.
8226160160160160160160 HawkEye 360's RF signals intelligence is the right ata set to use for tipping an cueing or orchestrating other sensing moalities to facilitate true AI-enable Earth observation ata fusion.
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ICEYE operates the worl's first an largest constellation of miniaturise satellites that use raar to image the Earth uring both the ay an night, even through clou. ICEYE's raar technology has the ability to monitor change in near real time with unrivalle sensitivity an on a global scale.
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Total estimate long-term aressable market: 10bn+
Key sectors aresse: Insurance, efence, climate
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Key evelopments uring Perio:
183 Achieve first close on 136m Series D funing roun.
183 Leaing insurers Tokio Marine an AON announce commercial collaborations.
183 Contract announce with US regulatory agency, National Oceanic Atmospheric Aministration, to tackle environmental hazars linke to climate change.
183 Name on Fast Company's list of worl's most innovative companies.
183 Launche seven aitional satellites.
183 Agreement signe with European Space Agency to support isaster response.
183 Announce partnership with BAE Systems' new multi sensor constellation.
183 Signe contract with Ukraine government to provie persistent capability.
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ALL.SPACE (formerly Isotropic Systems) is aiming to create a mesh network of satellite connectivity by eveloping an antenna capable of connecting to any satellite in any constellation in any orbit.
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Total estimate long-term aressable market: 10bn+
Key Sectors Aresse: Communications, efence, transport
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Key evelopments uring Perio:
183 Multi-beam antenna to improve communication passe first US Air Force trials.
183 Partnere with SES to complete milestone trials to unlock next-generation connectivity for US Army an NATO.
183 Complete trials with Telesat emonstrating multi-orbit connectivity.
183 Joine UK Government an European Space Agency consortium le by CGI to evelop hybri satellite communications for trains.
183 Announce next generation, multi-orbit communications antenna for the efence market.
183 Announce partnerships on its new antenna with ST Engineering iDirect an Teleyne.
183 Complete rebran to ALL.SPACE.
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HawkEye 360 is the worl's leaing commercial provier of Space-base RF ata an analytics. It operates its own constellation of satellites to collect, ientify, process an geolocate a broa set of RF signals generate on Earth from VHF raios, raars, cell towers, satellite phones, emergency beacons an more.
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Total estimate long-term aressable market: 10bn+
Key Sectors Aresse: Maritime, efence
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Key evelopments uring Perio:
183 Ae Leios as investor to bring Series D funing roun to 10m.
183 Aware 1.m contract with US Air Force Research Laboratory an a new five-year contract with National Geospatial Intelligence Agency.
183 Opene new satellite manufacturing facility to expeite innovation of its state-of-the-art RF satellites to satisfy the rigorous requirements for serving efence an intelligence customers.
183 Aware inefinite elivery, inefinite quantity contracts to compete for orers for US Department of Defense's Joint All Domain Comman an Control.
183 Announce a two-year cooperative research an evelopment agreement with US Army Space.
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Note: 1 EO refers to Earth Observation 2 PORI refers to price of recent investment 3 total income recognise by the Company in connection with any portfolio company, an each portfolio company's turnover, pre-tax profit an net assets attributable to shareholers are not isclose as they are commercially sensitive160
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Arqit is eveloping encryption reborn for the clou era. It is eploying a constellation of laser communications satellites that utilise quantum technology to istribute quantum-safe, unhackable encryption keys for securing any en evice.
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Total estimate long-term aressable market: 0bn+
Key Sectors Aresse: Cyber security, communications, efence
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Key evelopments uring Perio:
183 Signe research an evelopment contract with US Air Force to assess viability for Department of Defense infrastructure.
183 License QuantumClouTM service to Virgin Orbit to protect its launch an space solutions businesses.
183 Entere into technology alliance partnership agreement with Juniper Networks.
183 Selecte by UK Ministry of Defence to join its Multi-Domain Integrate Systems ata transfer an ata management project.
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LeoLabs is proviing the mapping service for Space by eploying a network of groun-base antennas capable of etecting objects as small as 2cm as far as 1,000km away. By mapping the skies in real time, LeoLabs is aiming for its clou-base ata platform to become the air traffic control system for Space
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Total estimate long-term aressable market: 1-bn
Key Sectors Aresse: Space, insurance, efence
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Key evelopments uring Perio:
183 Committe to Australia as strategic site for its sixth Space raar.
183 Signe multi-year agreement with New Zealan Government for Space regulatory an sustainability platform.
183 Aware contract to support Japan Air Self Defence Force with commercial Space omain awareness.
183 Signe agreement with the UK Space Agency to provie real-time observation ata from its global raar network for all UK-license satellites in lower Earth orbit.
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D-Orbit is the market leaer in the Space logistics an orbital transportation services inustry. It currently operates the worl's only160 in-Space last mile elivery service, having successfully elivere more than 80 payloas to orbit via its ION satellite carrier spacecraft.
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Total estimate long-term aressable market: 1-bn
Key Sectors Aresse: Space, logistics, atacentres
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Key evelopments uring Perio:
183 Successfully emonstrate in-orbit clou computing an storage.
183 Conclue fourth space taxi mission for its ION space carrier.
183 Successfully launche an complete its fifth an six ION missions.
183 Aware 3m contract for ebris removal by European Space Agency.
183 Signe contract with SpaceX for 11 launches in 2023.
183 Signe multi-year launch contract with Astrocast.
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Altitue Angel operates a clou-base automate air traffic control platform for rones an flying taxis. Its software powers the worl's first sky corrior for rones.
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Total estimate long-term aressable market: 10bn+
Key Sectors Aresse: Logistics, aviation
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Key evelopments uring Perio:
183160160160160160 Completion of successful two-year pilot of 8km rone super-highway.
183160160160160160 UK government provie contract to buil out linear 26km autonomous rone highway connecting eight UK cities over the next two years - a worl first.
183160160160160160 Term sheet signe with major national telecoms company for significant investment an commercial partnership.
183160160160160160 Announce partnership with Inmarsat on solutions for flying rones beyon visual line of sight.
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PlanetWatchers operates a crops analytics platform with persistent monitoring capabilities regarless of weather an light conitions. It is currently servicing agricultural insurance companies an increasingly other agricultural customers.
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Total estimate long-term aressable market: -10bn
Key Sectors Aresse: Agriculture, insurance, climate
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Key evelopments uring Perio:
183 Entere into contract with Canaian fertiliser company, Nutrien Ag Solutions, for igital transformation of agriculture.
183 Entere into contract with leaing US crop insurer, AgriSompo, for automate policy an claims analysis.
183 Entere into contract with crop insurer, ProAg, for insights into planting, acreage, crop type an crop amage.
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Satellite Vu is aiming to become the Earth's thermometer by launching the first infrare imaging smallsat constellation capable of monitoring the thermal footprint of any builing on Earth every few hours to etermine valuable insights into economic activity, energy efficiency an carbon footprint.
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Total estimate long-term aressable market: 1-bn
Key Sectors Aresse: Energy, property, efence
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Key evelopments uring Perio:
183 Close 1631m Series A funing roun to launch first infrare imaging satellites.
183 Signe eal with Surrey Satellite Technology to buil high-resolution thermal imaging satellite constellation.
183 At COP26 conference, UK Space Agency announce aitional funing for Satellite Vu.
183 Partnere with Lanmark to provie climate change ata to UK property sector.
183 Selecte SpaceX to launch first two satellites in 2023.
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Astroscale's ambition is to ensure the safe an sustainable use of Space for the benefit of future generations. The business is on a mission to make Space operations more sustainable with a long-term view to enable a vibrant in-orbit Space economy. To enable this, the company is eveloping a set of capabilities aroun satellite monitoring, refuelling, upgraing, repairing an isposal. Ongoing an planne missions are focuse on emonstrating capabilities aroun en-of-life isposal of low Earth orbit satellites, active removal of Space ebris an life extension of geostationary satellites.
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Total estimate long-term aressable market: 1-bn
Key Sectors Aresse: Space, efence
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Key evelopments uring Perio:
183160160160160160 Close 112m Series F funing roun
183160160160160160 Aware UK Space Agency contract to stuy removal of two efunct satellites from Space.
183160160160160160 Entere into collaboration agreement with Mitsubishi Heavy Inustries for removal from orbit of ol rocket stage.
183160160160160160 Complete its Elsa-D mission, emonstrating some core technologies require for commercial operations of its en-of-life an active ebris removal services.
183160160160160160 Aware follow-on contract from European Space Agency an OneWeb to evelop Elsa-D's successor mission, Elsa-M, which intens to emonstrate the capability to capture an remove multiple efunct satellites from orbit.
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Responsible Investment
"We believe embeing the UN Principles of Responsible Investment in our investment process results in better long-term outcomes for investors an closer alignment between their investment objectives an value for society more broaly."
Sarah Shackleton
COO, Seraphim Space
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Being a responsible investor an taking into consieration environmental, social an governance ("ESG") factors are paramount to the way the Company an Investment Manager operate.160 The Investment Manager is a signatory to Principles of Responsible Investment, the UN-supporte network of investors eicate to promoting sustainable investment through incorporating ESG factors into their investment an ownership ecisions (the "UNPRI").
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The Directors an Investment Manager believe that ensuring robust assessment of ESG-relate risks an opportunities as part of the investment analysis an ecision-making processes leas to investment in more robust businesses, ultimately creating long-term, sustainable value. During the Perio, with the assistance of Sancroft, an international sustainability consultancy firm, the Investment Manager create a proprietary ESG ue iligence tool an further evelope its investment process to ensure consistent consierations of material ESG factors are embee across the investment cycle from investment screening to ue iligence, ownership an exit, ensuring the Investment Manager makes socially responsible ecisions over the long term.160
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SpaceTech is a powerful new inustry which can contribute significantly to achieving the Unite Nations Sustainable Development Goals (the "SDGs") an their unerlying targets. The extent to which our portfolio companies contributes to the SDGs is seen as a key factor in the success of our investment strategy an, as such, consierations of this are also an integral part of Seraphim Space's ecision-making process.
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Responsible Investment Policy
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The Investment Manager's Responsible Investment Policy, which has been aopte by the Company, sets out its commitment an approach to integrating positive impact an ESG risk factors into its investment ecisions an asset management processes an practices. The Investment Manager's Responsible Investment Policy may be foun at https://seraphim.vc/esg/. The Investment Manager will upate its Responsible Investment Policy as necessary to reflect emerging regulations an best practices.
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ESG investment approach
As a firm focuse entirely on investments in SpaceTech, Seraphim Space's ESG approach is ynamic an fit for our investment strategy. Seraphim Space follows a balance approach by measuring an mitigating risks, whilst also riving the positive impacts of the portfolio companies' proucts an services an their contribution to achievement of the SDGs.
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Exclue investments
Before a prospective portfolio company enters the investment process, it is reviewe against a list of exclue areas we will never knowingly invest:
8226160160160 in anything that has any irect involvement in controversial weapons (i.e. nuclear, cluster, chemical, biological, etc.)
8226160160160 in anything that has any irect involvement in autonomous weapons1
8226160160160 in companies whose proucts constitute a weapon (i.e. their prouct is itself a weapon)
8226160160160 in companies whose technology forms a strategic part of any weapons system2
8226160160160 in companies who sell their technology for military application to high-risk countries3 an
8226160160160 in companies who sell technology which is able to ientify iniviuals to governments in countries with high human rights risks3.
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1As efine by US Department of Defense, being a "weapons system that, once activate, can select an engage targets without further intervention by a human operator".
2The term "strategic" is use to ifferentiate between military parts or services that are essential for military operations an enhance military capability an parts or services that are either not material to military capability or are generic parts or services also wiely use for non-military purposes. As efine by the US Department of Defense, a weapons system is "a combination of one or more weapons with all relate equipment, materials, services, personnel an means of elivery an eployment require for self-sufficiency".
3Base on publicly available country risk ratings.
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ESG risk management
Seraphim Space recognises that ESG-relate risks an opportunities to eliver against the SDGs must be ientifie pre-investment. Therefore, all new investments unergo robust ESG ue iligence in parallel with commercial ue iligence. Seraphim Space's recently-evelope proprietary ESG ue iligence tool is use, among other things, to ientify exclue investments an ESG-relate risks an opportunities at the prospective portfolio company an its bespoke ue iligence template is use to map the technology category to the material ESG risks to ensure effort an analysis is focuse on the highest risk ESG categories.
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Seraphim Space's ue iligence process is roote in internationally accepte frameworks an guiance, incluing the Sustainability Accounting Stanars Boar's materiality map an the Worl Economic Forum an Business for Social Responsibility's white paper on the Responsible Use of Technology.
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Where high ESG risks are ientifie, these are carefully consiere, with input from legal counsel an/or external avisors as require. Enhance ESG screening may be conucte if eeme appropriate. When the Investment Manager consiers ESG risks are too great an cannot be rectifie or mitigate in a reasonable timeframe, no investment is mae.160 Provie that the ESG risks associate with the investment are eeme to be within an acceptable range, post-acquisition processes an practices are efine to take steps to aress any specifically ientifie risks an ientify any ESG-relate opportunities that can be realise an champione.
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Ownership an ESG reporting
Each portfolio company is actively encourage to integrate ESG consierations in their business strategies an value creation plans. Seraphim Space works with the boars an management teams of portfolio companies to ientify an aress ESG risks an positive impact opportunities an with co-investors to increase collective influence in these areas. Seraphim Space aims to get each portfolio company to complete an annual ESG questionnaire that keeps Seraphim Space informe of progress an performance against their ESG strategy. This helps to ientify gaps where Seraphim Space can target further support an assist the portfolio company in eveloping plans to aress sustainability risks, capitalise on opportunities an meet establishe ESG objectives in their own operations an throughout their value chains.
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In situations where a portfolio company fails to aress aequately any significant risks ientifie at investment, Seraphim Space will take this into consieration when assessing follow-on investment opportunities into the company.
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Objective Reporting Metrics for ESG Factors
The Company intens to provie ESG metrics, such as carbon emissions, job creation an iversity, for the aggregate portfolio in the future. Below are some of the SDGs most impacte by the SpaceTech sector, an etails of the targets that a selection of the SSIT portfolio companies are aressing.
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SDG 2 - Zero Hunger
SDG 2 aims to en hunger an all forms of malnutrition. It also commits to universal access to safe, nutritious an sufficient foo throughout the year. This requires sustainable foo prouction systems an resilient agricultural practices, equal access to lan, technology an markets, an international cooperation on investments in infrastructure an technology to boost agricultural prouctivity.
In orer to contribute to the success of SDG 2, the SDG targets inclue:
183160160160160160 Target 2.3 By 2030, ouble the agricultural prouctivity an incomes of small-scale foo proucers, in particular women, inigenous peoples, family farmers, pastoralists an fishers, incluing through secure an equal access to lan, other prouctive resources an inputs, knowlege, financial services, markets an opportunities for value aition an non-farm employment
183160160160160160 Target 2.4: By 2030, ensure sustainable foo prouction systems an implement resilient agricultural practices that increase prouctivity an prouction, that help maintain ecosystems, that strengthen capacity for aaptation to climate change, extreme weather, rought, flooing an other isasters an that progressively improve lan an soil quality
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SpaceTech can play a key role in agricultural management an subsequently contributing to SDG 2. This coul be through optimising crop prouctivity through informe management processes an increase efficiency in the use of existing resources, incluing lan, sees, fertilisers, plant protection agents an water (contributing to Target 2.3). In aition, enhance monitoring can be use to improving livestock management through an ientification of suitable grazing (contributing to Target 2.4).
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Agriculture is a strongly regulate inustry through which Western farmers are covere by insurance in case of climate-relate events. Thanks to government-backe insurance coverage, farmers in evelope economies can mitigate natural isasters' consequences allowing them to make annual investment to improve their prouctivity. However, in eveloping countries crop insurance has typically not been available or afforable. Farmers are more expose to natural isasters, putting foo security in jeopary an also leaing to uner investment in methos to increase prouctivity.
PlanetWatchers is an example portfolio company contributing to the igital transformation of agriculture aressing SDG 2 (Target 2.4). Through avance raar imaging analytics, PlanetWatchers provies global information to the crop insurance inustry to support insurance policies an valiate claims. They provie automate ata at the fiel level on planting ates, acreage reporting, crop classification an etaile amage analysis of floo an win events, riving forwar the implementation of resilient agricultural practices. Furthermore, in the event of extreme weather events such as floos or hurricanes, which estroy crops in their wake, PlanetWatchers' ata is use to automate insurance claims, saving insurers time, money an protection against frauulent claims, whilst compensating farmers fairly an rapily. This is expecte to increase the availability of insurance to farmers in eveloping countries.160
SDG 7 - Afforable an Clean Energy160
SDG 7 aims to ensure access to afforable, reliable, sustainable an moern energy for all. In oing so, this can contribute to tackling nearly every major challenge in the worl toay. Major progress has been mae in this regar with global renewable energy uptake increasing by 30% since 2000[9]. However, this still only represents about 12% of the global energy mix.
In orer to achieve SDG 7, several targets nee to be achieve, incluing:
183160160160160160 Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix.
183160160160160160 Target 7.3: By 2030, ouble the global rate of improvement in energy efficiency.
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SpaceTech solutions can positively influence an facilitate greater progress towars achieving SDG 7. For example, efforts are unerway albeit still currently only at the research an evelopment phase, to evelop space energy solutions, harvesting energy via solarfarms in orbit to provie clean energy to Earth (Target 7.2). In aition, SpaceTech infrastructure can be use to accurately measure an monitor energy efficiency at the builing, inustrial factory, town, city, country an continent levels (Target 7.3).
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Satellite Vu is a high-growth, UK base SpaceTech company aiming to become the Earth's smart energy meter by launching the first infrare imaging smallsat constellation capable of monitoring the thermal footprint of any builing on Earth every few hours. With 40% of all carbon emissions coming irectly or inirectly from builings, fining a way to pinpoint the worst energy wasting builings at global scale is a pressing issue if the worl is to achieve net zero. Satellite Vu's high resolution, high revisit infrare satellite constellation hols the key to resolving this, making a significant contribution towars Target 7.3 by proviing valuable insights into economic activity, energy efficiency an carbon footprint.
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SDG 1 - Life on Lan
SDG 1 seeks to protect, restore an promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat esertification, halt an reverse lan egraation an halt bioiversity loss. Preserving iverse forms of life on lan requires targete efforts to protect, restore an promote the conservation an sustainable use of terrestrial an other ecosystems.
In orer to contribute to the success of SDG 1, the SDG targets inclue:
183160160160160160 Target 1.1: By 2020, ensure the conservation, restoration an sustainable use of terrestrial an inlan freshwater ecosystems an their services, in particular forests, wetlans, mountains an rylans, in line with obligations uner international agreements.
183160160160160160 Target 1.2: By 2020, promote the implementation of sustainable management of all types of forests, halt eforestation, restore egrae forests an substantially increase afforestation an reforestation globally.
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SpaceTech can be utilise to achieve SDG 1 through a number of methos. The most common metho is through monitoring the Earth's surface to better unerstan how to manage it an how it is changing over time. For example, forest cover monitoring helps ientify exactly where eforestation is occurring, an this can be associate with the materials use in supply chain risk mapping (contributing to Target 1.2). Monitoring can also be use for unerstaning animal movement, which is vital for bioiversity research, preicting conservation hotspots, ientifying human-animal conflict zones, rebuiling an sustaining prouctive fisheries an ecosystems an unerstaning the sprea of panemic isease an invasive species (contributing to Target 1.1).
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Pixxel is a SpaceTech ata company, builing a constellation of hyperspectral earth imaging satellites esigne to provie global coverage every 24 hours, with the aim of etecting, monitoring an preicting global phenomena which can contribute to a number of SDGs. In particular, it can contribute to improve management of life on lan (Target 1.1). Conventional optical imagery ientifies three bans (re, blue an green) per pixel whereas hyperspectral splits into >400 bans, proviing unique spectral signatures etecting minute changes of chemical an biological composition, unlocking a range of novel environmental an sustainability use cases across a number of areas:
183160160160160160 map an monitor forest cover
183160160160160160 measure an reverse eforestation
183160160160160160 measure climate risks such as flooing, famine an wilfire
183160160160160160 track natural capital utilisation an impact on future economic an ecological sustainability
183160160160160160 etect hazarous materials an take timely measurements to curb the anger
183160160160160160 monitor water resources an manage these in a sustainable manner
183160160160160160 fiel level observation of changes in crop health an the ientification of nutrient eficiencies an
183160160160160160 monitor methane emissions an quantifying carbon sequestration.
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Section 172: Engaging with Key Stakeholers
"Our responsibilities to stakeholers, together with consieration of the long-term consequences of our ecisions an maintaining high stanars of business conuct, are integral to the way the Boar operates"
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S.172 Responsibilities
Uner section 172 of the Companies Act 2006 ("s.172"), the Directors have a uty act in the way they consier, in goo faith, woul be most likely to promote the success of the Company for the benefit of its members as a whole.160 In oing so, the Directors are require to take into account (amongst other matters) the likely long-term consequences of their ecisions, the nee to foster relationships with the Company's wier stakeholers, the esirability of the Company maintaining a reputation for high stanars of business conuct an the impact of the Company's operations on the community an environment.
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The Boar is require to escribe to the Company's shareholers how the Directors have ischarge their uties an responsibilities uner s.172 over the course of the Perio, incluing how the Boar has engage with an unerstans the views of stakeholers, how stakeholers' nees have been taken into account, the outcome of this engagement an the impact that it has ha on the Boar's ecisions.
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As an externally manage investment company, SSIT has no premises, employees or customers an conucts its core activities through thir-party service proviers. Currently, SSIT has no ebt finance.160 We consier, therefore, shareholers to be the Company's principal stakeholers but also regar potential shareholers, the Investment Manager, the Aministrator, other key service proviers (corporate brokers, external Auitor, legal avisers, public relations an communications aviser, epositary an registrar) an portfolio companies as key stakeholers.160 The Investment Manager's Responsible Investment Policy is integrate into its investment process, ensuring that it has regar to the impact of SSIT's investments on the wier community an environment.
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Our responsibilities to stakeholers, together with consieration of the long-term consequences of our ecisions an maintaining high stanars of business conuct, are integral to the way the Boar operates an foremost in our mins in our iscussions, ecision-making an reporting.160 Through engagement, we can better unerstan stakeholers' views an concerns an consier them in our iscussions an ecision-making. We welcome, therefore, shareholers' an other stakeholers' views an place great importance on our engagement with them.
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Stakeholer Engagement
The table below sets out the principal ways in which we engage with the Company's key
stakeholer groups.
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Examples of Stakeholer Consierations
Set out below are examples of ecisions an actions uring the year which have require the Directors to have regar to applicable s.172 factors.160
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Business Review
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Business Moel
As the worl's first liste SpaceTech fun, SSIT is the only liste investment company proviing public access to a private SpaceTech businesses.
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The Company carries on business as an investment trust, which is a form of collective investment vehicle constitute as a close ene public limite company.160 The Company's shares are trae on the premium segment of the Lonon Stock Exchange's main market.
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The Company has no employees.160 It is manage by the Boar, comprising four inepenent non-executive Directors.160 The management of the Company's investments in accorance with its investment objective an policy is elegate to the Investment Manager an the Company's ay-to-ay functions, incluing aministrative, financial an share registration services, are carrie out by uly appointe service proviers.160 The Boar oversees the activities an performance of the Investment Manager an other key service proviers.160 As an investment company with no employees, we believe that the best way to achieve SSIT's strategic objectives is to have effective an strong working relationships with the Investment Manager an other key service proviers.
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The Company complies, where relevant, with the Financial Conuct Authority's Listing Rules, Disclosure Guiance an Transparency Rules an Prospectus Rules.160 In aition to publishing its Annual an Interim Reports, the Company announces regulatory, financial an portfolio information on a perioic basis via the Lonon Stock Exchange, thereby helping current an potential investors to make informe investment ecisions.160 Aitional information is available on the Company's website (https://investors.seraphim.vc/).
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Investment Strategy
The Company provies investors with exposure to nascent SpaceTech companies, being businesses which rely on Space-base connectivity or precision, navigation an timing signals, or whose technology or services are alreay aressing, originally erive from or of potential benefit to the Space sector.160 These businesses comprise companies proviing the SpaceTech infrastructure for collecting an communicating ata, principally via satellites, as well as in companies with the technology that facilitates the exploitation of this ata for terrestrial applications in areas such as climate, communications, mobility an security (incluing cyber security).
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Investment Objective
The Company's objective is to generate capital growth over the long term through investment in a iversifie, international portfolio of preominantly early an growth stage unquote SpaceTech businesses with the potential to ominate globally.
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Investment Policy
The Company seeks exposure to early an growth stage privately finance SpaceTech businesses, acquiring primarily minority holings. The Company intens to realise long-term value through exiting its investments over time.
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The Company invests internationally with a view to maintaining a iversifie portfolio primarily locate in the US, UK an Europe. The Company's portfolio is expecte to comprise 20 to 0 holings. The Company will at all times invest an manage the portfolio in a manner consistent with spreaing investment risk.
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Investments are mainly in the form of equity an equity-relate instruments although the Company may invest in a range of financial instruments incluing, without limit, securities, erivatives, warrants, options, futures, convertible bons, convertible loan notes, convertible loan stocks or convertible preferre equity. The Company may also on occasion invest in other ebt-base investments not referre to above, incluing, without limit, loan stock, payment-in kin instruments an shareholer loans. In aition to participating in new issues, the Company may also unertake seconary transactions that involve the acquisition of existing stakes.
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The Company may Invest in companies, as well as other forms of legal entity, incluing partnerships an limite liability partnerships. The Company may acquire investments irectly or by way of holings in special purpose vehicles, intermeiate holing entities or other structures. The Company will not invest in other liste close-ene investment funs.
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Investment restrictions
The Company will invest an manage its assets with the objective of spreaing risk through the following investment restrictions:
183160160160160160 other than the ability for the aggregate value of the Company's holing in one single portfolio company or other entity to represent up to 20% of Gross Asset Value, the aggregate value of the Company's holing in any other single portfolio company or other entity will represent no more than 1% of Gross Asset Value an
183160160160160160 the Company's aggregate investment in publicly quote companies will represent no more than 30% of Gross Asset Value.
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The Company will generally only invest in publicly quote companies that constitute part of the Initial Portfolio or the Retaine Assets or in circumstances where it has alreay mae an initial investment prior to the portfolio company's initial public offering. However, the Company may invest up to % of Gross Asset Value in aggregate, in publicly quote companies that o not constitute part of the Initial Portfolio or the Retaine Assets or in which it has not alreay mae an initial investment prior to an initial public offering. For the avoiance of oubt, any process by which an unliste investment of the Company becomes liste shall be eeme not to be a new investment by the Company.
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Each of the restrictions above will be calculate at the time of investment. The Company will not be require to ispose of any investment or to rebalance the portfolio as a result of a change in the respective valuations of its assets.
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Heging an erivatives
Save for investments mae using equity-relate instruments as escribe above, the Company will not employ erivatives of any kin for investment purposes other than to potentially hege ownsie risk on a quote portfolio company for specific reasons, such as where the Company is subject to lock-up provisions. Derivatives may be use for currency heging purposes.
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Borrowings
Although the Company oes not inten to use structural gearing with a view to enhancing returns on investments, the Company may, from time to time, use borrowings for the purpose of briging investments, to manage its working capital requirements an efficient portfolio management purposes. Borrowings will not excee 10% of NAV, calculate at the time of rawown of the relevant borrowings.
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Cash management
The Company may hol cash on eposit an may invest in cash equivalent investments, which may inclue short-term investments in money market-type funs an traeable ebt securities ("Cash an Cash Equivalents"). There is no restriction on the amount of Cash or Cash Equivalents that the Company may hol or where it is hel.
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Cash an Cash Equivalents will be hel with approve counterparties an in line with pruent cash management guielines agree between the Boar an the Investment Manager.
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The Company will hol sufficient Cash or Cash Equivalents for the purpose of making follow-on investments in accorance with the Company's investment policy an to manage the working capital requirements of the Company.
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Target Returns an Divien Policy
The Directors inten to manage the Company's affairs to achieve shareholer returns through capital growth rather than income.
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The Company has no formal benchmark. However, the Company targets an annualise total return on the Company's portfolio of at least 20% over the long term (ajuste for any iviens pai or share buy-backs by the Company). This is intene to be a target only an reflects the Investment Manager's expectations of the potential returns that can be generate by investing in a portfolio of early an growth stage private companies which have the potential to generate substantial returns for their shareholers over the long term whilst recognising that not all portfolio companies will achieve their potential an that some may fail in their entirety. It shoul not be taken as an inication of the Company's expecte future performance, return or results over any perio an oes not constitute a profit forecast. The actual return generate by the Company over any perio will epen on a wie range of factors, incluing, but not limite to, the terms of the investments mae, the performance of its portfolio companies, general economic an market conitions an fluctuations in currency exchange rates.
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As the Company's priority is to prouce capital growth over the long term, it has no ivien target an will not seek to provie shareholers with a particular level of istribution. However, the Company intens to comply with the requirements for maintaining investment trust status for the purposes of section 118 of the Corporation Tax Act 2010 regaring istributable income. Therefore, in accorance with regulation 19 of the Investment Trust (Approve Company) (Tax) Regulations 2011, the Company will not (except to the extent permitte by those regulations) retain more than 1% of its income (as calculate for UK tax purposes) in respect of each accounting perio an any excess will be istribute in the form of a final ivien.
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Share Rating Management
The Boar recognises the nee to aress any sustaine an significant imbalance of buyers an sellers which might otherwise lea to the orinary shares traing at a material iscount or premium to their NAV.
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The Boar has not aopte any formal iscount or premium targets which woul ictate the point at which the Company woul seek to buy back or issue orinary shares. However, the Boar is committe to utilising its share buy-back an issuance authorities where appropriate in such a way as to mitigate the effects of any such imbalance. In consiering whether buy-back or issuance might be appropriate in any particular set of circumstances, the Boar will take into account, amongst other things, prevailing market conitions, the cash resources reaily available to the Company, the Company's immeiate pipeline of investment opportunities, the level of the Company's borrowings (if any), the Company's working capital requirements an the egree of NAV accretion that will result from the buy-back or issuance, an, in the case of buy-backs, whether higher returns woul be mae from investing capital than buying back orinary shares.
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The Boar will keep shareholers informe, on a regular an ongoing basis, of the approach which it has aopte to share rating management, principally through commentary in the Company's Annual an Interim Reports.
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Key Performance Inicators
At each Boar meeting, the Directors consier a number of performance measures to assess the Company's success in achieving its objectives.160 The key performance inicators ("KPIs") use to measure the performance an progress of the Company over timeare as follows:
183160160160160160 the movement in NAV per share (as the Company oes not pay iviens, this is the same as the NAV total return per share)
183160160160160160 the movement in the share price (as the Company oes not pay iviens, this is the same as the share price total return per share)
183160160160160160 the premium/iscount of the share price to the NAV per share
183160160160160160 ongoing charges an
183160160160160160 portfolio fair value versus cost.
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The first four KPIs are establishe inustry measures.160 Having regar to the Company's target return, we believe that, at this stage in the Company's life, the portfolio fair value vs. cost is an appropriate KPI to measure the portfolio's performance."
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An explanation of the KPIs can be foun in Alternative Performance Measures below.160 The KPIs for the year ene 30 June 2022 are shown above.
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Environmental, Social an Governance Matters
Socially responsible investment
The Boar has enorse the Investment Manager's Responsible Investment Policy, which seeks to ensure that the Investment Manager's management of SSIT's investments takes account of environmental, social, governance an ethical factors where appropriate. The Investment Manager actively engages with portfolio companies on ESG factors an often has a participation role at boar level within such companies, helping to guie their governance policies. Details of the Responsible Investment Policy are inclue above.
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Environment
As an investment company with all its activities outsource to thir parties, the Company oes not have any physical assets, property, employees or operations of its own an, therefore, the Company's own irect environmental impact is minimal. The Company has no greenhouse gas emissions to report from its operations, nor oes it have responsibility for any other emissions proucing sources uner the Companies (Directors' Report) an Limite Liability Partnerships (Energy an Carbon Reporting) Regulations 2018.160 For the same reasons, the Company consiers itself to be a low energy user uner the Streamline Energy Carbon Reporting regulations an, therefore, is not require to isclose energy an carbon information.
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The Company notes the Taskforce for Climate-relate Financial Disclosures ("TCFD") recommenations on climate-relate financial isclosures. The Company is an investment company an, as such, it is exempt from the Financial Conuct Authority's Listing Rules requirement to report against the TCFD framework.
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A key focus of the Investment Manager's Responsible Investment Policy, an its engagement with portfolio companies, is on their management of environmental risks, particularly those associate with the climate change, an their ability to evelop proucts an services that help aress climate change impacts.
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Employees, human rights an community issues
The Boar recognises the requirement uner section 414C of the Companies Act 2006 to provie information about employees, human rights an community issues, incluing information in respect of any of its policies in relation to these matters an their effectiveness.160 These requirements o not apply to SSIT as it has no employees, all of the Directors are non8209executive an it has outsource all of its functions to thir-party proviers. Consequently, SSIT has not reporte further in respect of these provisions.
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Moern slavery
The Company oes not provie goos or services in the normal course of business an, as an investment company, oes not have customers.160 Consequently, the Directors o not consier that the Company is require to make a statement uner the Moern Slavery Act 201 in relation to slavery or human trafficking.
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Diversity
The Boar an Investment Manager strongly believe that having iversity in skills, experience, ientity an cognitive thought has significant benefits when making ecisions.
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The Boar currently comprises four inepenent Directors appointe on merit-base qualifications. The skills an experience which the current members of the Boar bring to SSIT's leaership are escribe below.160 Currently, the Boar has 7% female representation (greater than the Financial Conuct Authority target for liste companies, which will apply in the next reporting perio, of 40%) an the Senior Inepenent Director (Sue Inglis) is also female (in line with the Financial Conuct Authority target for liste companies, which will apply in the next reporting perio, of one senior position being hel by a woman).
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The Investment Manager (together with its affiliates) has a iverse employee base (currently, 9% female an 18% from non-white British or other white backgrouns) an continues to eicate recruiting resources to increasing its iversity across all positions an levels.
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Bribery Act 2010
The Boar has a zero-tolerance policy in relation to bribery an corruption an has receive assurance through internal controls reporting from the Company's key service party proviers, incluing the Investment Manager, that aequate safeguars are in place to protect against any such potentially illegal behaviour by employees or agents.
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Criminal Finances Act 2017
The Company has a zero-tolerance policy towars the criminal facilitation of tax evasion.
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Principal an Emerging Risks an Uncertainties
Uner the Financial Conuct Authority's Disclosure Guiance an Transparency Rules, the Directors are require to ientify those material risks to which the Company is expose an take appropriate steps to mitigate those risks. The significant risk factors are isclose in the Company's IPO prospectus, which is available on the Company's website (https://investors.seraphim.vc/),
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The Boar thoroughly consiers the process for ientifying, evaluating an managing any significant risks face by the Company, incluing emerging risks, on an ongoing basis, an these risks are reporte an iscusse at Boar meetings. The Boar ensures that effective controls are in place to mitigate these risks an that a satisfactory compliance regime exists to ensure all applicable local an international laws an regulations are uphel (see 'Risk management an internal control systems' for further information).160 For each material risk ientifie in the risk matrix, the likelihoo an consequences are ientifie, management controls an frequency of monitoring are confirme an results are reporte an iscusse at each scheule Auit Committee meeting an more often if require.
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The key areas of risk face by the Company an mitigating factors are summarise below:
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Going Concern
In light of the conclusions rawn in the longer-term viability statement below an as set out in note 2 to the financial statements below, the Directors have a reasonable expectation that the Company has aequate resources to continue in operational existence for at least 12 months from the ate of this report.160 Accoringly, the Directors believe that it is appropriate to continue to aopt the going concern basis in preparing the financial statements.160
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Longer-term Viability
As require by the AIC Coe, the Directors have assesse the prospects of the Company over a perio longer than the 12 months require by the going concern provision. The Boar has assesse the Company's prospects over the perio of three years ening 30 September 202. The Boar has chosen this perio because it is consistent with the three-year basis that the Directors evaluate the Company's financial position as a whole on a quarterly basis an projecting longer term financial an economic scenarios woul be imprecise given the lack of longer-term economic visibility.
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In assessing the Company's prospects an longer-term viability, the Boar has taken into account:
183160160160160160 the principal an emerging risks an their mitigation ientifie in the 'Principal an Emerging Risks an Uncertainties' section above
183160160160160160 the nature of the Company's business
183160160160160160 the Company's cash reserves an the value of its liste holings
183160160160160160 the ability of the Investment Manager an Directors to minimise the level of cash outflows, if necessary, as the Investment Manager consiers the Company's future cash requirements before making investments an the Boar receives regular upates from the Investment Manager on the Company's cash position, which allows the Boar to limit funing for existing an/or new investments as require
183160160160160160 the Investment Manager monitors the Company's cash requirements to meet ongoing fees an expenses an expects to maintain sufficient assets in cash reserves to meet these obligations
183160160160160160 the circumstances in which a performance fee is payable to the Investment Manager as outline in note 4 to the financial statements an
183160160160160160 that the Company oes not have any gearing or any obligation to pay iviens or buy-back or reeem shares.
The process for ientifying, evaluating an managing significant an any emerging risks face by the Company an perioic reports from the Investment Manager an Aministrator regaring risks face by the Company are reviewe routinely at Auit Committee an Boar meetings. The Boar ensures that effective controls are in place to mitigate these risks an that a satisfactory compliance regime exists to ensure all applicable local an international laws an regulations are uphel. When require, the Company seeks expert avice regaring tax, legal an other factors.
Base on a robust assessment of the principal an emerging risks facing the Company, the Boar believes that the most significant risks to the Company's longer-term viability are:
183160160160160160 the risk of a significant an prolonge economic ownturn160
183160160160160160 the majority of the Company's investments are in private companies that are not liqui an may be subject to restrictions on sale or transfer, which may limit the Company's ability to realise investments at short notice an/or at a reasonable price or at all an
183160160160160160 the inability to raise funs, shoul the nee arise.
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The Boar has consiere the Company's viability over the three-year perio, base on a working capital moel prepare by the Investment Manager. The working capital moel forecasts key cash flow rivers, such as capital eployment rate an operating expenses, an inclues robust ownsie scenarios with continue high inflation an a consiere amount of aitional investment activity in the near term. Capital raises, realisations an/or share buy-backs are assume to not occur uring the three-year perio, unless alreay preetermine.
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Base on its assessment, the Boar has conclue there is a reasonable expectation that the Company will continue to meet its liabilities as they fall ue an remain viable, even in a scenario where global macroeconomic uncertainty persists for an extene perio an incluing severe but plausible ownsie scenarios over the three-year perio of the assessment.
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Life of the Company
The Company has no fixe life but, in accorance with its Articles of Association, an orinary resolution proposing that it continues in existence as an investment company will be propose at its AGM in 2026 an, if passe, every five years thereafter. If any such resolution is not passe, proposals will be put forwar by the Directors within three months after the ate of the resolution to the effect that the Company be woun up, liquiate, reconstructe or unitise.
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Future Development of the Company
While the future evelopment of the Company is epenent on the success of its investment strategy, which is subject to various factors incluing external ones (such as the economic environment an market evelopments) which are outsie the control of the Boar an Investment Manager, an the future attractiveness of the Company as an investment vehicle, the Boar's intention is that the Company will continue to pursue its investment objective an policy. The Chair's Statement an the Investment Manager's Report inclue commentary on the outlook for the Company.
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Approval of Strategic Report
The Strategic Report above is provie in accorance with The Companies Act 2006 (Strategic Report an Directors' Report) Regulations 2013 an is intene to provie information about the Company's strategy an business nees, its performance an results for the Perio an the information an measures which the Directors use to assess, irect an oversee the Investment Manager in the management of the Company's activities. The Strategic Report has been approve by the Boar an is signe on its behalf by:
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Will Whitehorn
Chair
1 October 2022
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Directors an Investment Manager
160
Boar of Directors
160
The Boar of the Company, which combines consierable knowlege of the SpaceTech inustry, venture capital investment, the investment company sector an corporate governance, is responsible for ensuring conformance to the investment strategy, monitoring the performance of the Investment Manager an ensuring goo governance, incluing in relation to ESG matters.
160
The Directors are all non-executive an inepenent.
160
1With effect from the conclusion of the AGM to be hel on 17 November 2022, Angela Lane will succee Christina McComb as Chair of the Auit Committee an Christina McComb will succee Will Whitehorn as Chair of the Management Engagement Committee.
160
160
Investment Manager
The Company has appointe Seraphim Space Manager LLP as its Alternative Investment Fun Manager.160 The Seraphim Space team is comprise of seasone venture capitalists an some of the sector's most successful entrepreneurs who scale their SpaceTech businesses to multi-billion Dollar exits.
160
The senior iniviuals responsible for executing an overseeing the Company's investment strategy are shown below.
160
Mark Boggett, CEO
Mark is a pioneer in SpaceTech investment having co-foune Seraphim Space an launche the Seraphim Space LP fun, Seraphim Space Camp Accelerator, UK Space Tech Angels an SSIT. Previously, Mark was a irector at YFM Equity Partners, the firm behin the high profile British Smaller Companies VCTs 1 2. He also worke at Brewin Dolphin an Williams e Broe. He complete his unergrauate egree in Accounting Finance an Master's in Economics an Finance from the University of Lees. Mark has been a fun representative on the boars of a range of global leaing SpaceTech companies, incluing LeoLabs, Spire Global (liste on NYSE), Arqit (liste on NASDAQ) an HawkEye 360.160
160
James Bruegger, CIO
James, co-founer an CIO of Seraphim Space, is a prolific venture capital investor in the global SpaceTech omain. James was an early venture capital investor in Arqit, ICEYE, LeoLabs an D-Orbit an le investments in several companies that went public, incluing Spire Global an AST SpaceMobile. Previously, he worke at YFM Equity Partners an Burlington Consultants, a boutique strategy consultancy that was acquire by Deloitte Touche. James hols a first-class egree in History from University College Lonon. James has been a fun representative on the boars of a range of global leaing SpaceTech companies, incluing ICEYE, D-Orbit, Ultrasoc, ALL.SPACE (formerly Isotropic Systems) an Satellite Vu.160
160
Rob Desborough, Managing Partner
Rob is a partner at Seraphim Space, heaing up the early stage investments. He is a co-founer of Seraphim Space Camp Accelerator, which was launche in 2018 an is now one of the worl's leaing accelerator programmes for SpaceTech start-ups. Prior to Seraphim Space, Rob was with YFM Equity Partners as an Investment Director. Rob hols a BSc (Hons) in Biomeical Sciences from the University of Glasgow an a Postgrauate Diploma (PGDip) in Information Technology Systems from the University of Strathclye. Uner Rob's guiance the Seraphim Space Camp Accelerator has grauate 63 SpaceTech start-ups, which have collectively raise 200m in co-investment synicate from 73 venture capital investors. He is a fun representative on the boars of Xona Space Systems, Altitue Angel an other early stage investments.160160
160
Patrick McCall, Venture Partner
Patrick is the former chair of Virgin Galactic an Virgin Orbit. He was a Director at Virgin from 2001 an evelope businesses incluing Virgin Active an Virgin Trains. His most recent role was senior partner at Virgin Group. He playe a key role in brokering the agreement for Virgin to launch a satellite from Cornwall this year.
160
Sarah Shackleton, COO
Sarah is the COO at Seraphim Space an has 2 years of finance experience. Prior to Seraphim Space, Sarah was a partner at Development Partners International since its inception in 2007. She was responsible for aministration of the firm an its funs, incluing legal, compliance, HR, IT, operations, facilities an ESG an also sat on the investment committee. Sarah has experience as an active boar irector on private equity fun general partners an investment holing companies. Before joining Development Partners International, Sarah was an Associate Director on the Technology Equity Research team at UBS in Lonon, specialising in the telecommunications equipment sector an covering large-cap European companies, incluing Nokia, Ericsson an Alcatel-Lucent. Sarah hols a BSc (Hons) in Economics an Accounting from the University of Bristol.
160
Anre Ronsoehr, Investment Principal
Anre is an Investment Principal at Seraphim Space, following a career focusse on the Space sector. He worke for almost a ecae at Virgin Management, the family office of Sir Richar Branson. Anre co-le the see investment in One Web in 201 an was instrumental in investments into Virgin Galactic an Virgin Orbit. During this time, Anre worke han-in-han with the boars an C-level teams of each of these three pioneering space businesses, helping shape them into the billion businesses they are toay. Anre has been a fun representative on the boars of a range of SpaceTech companies, incluing Astroscale an PlanetWatchers.
160
Maureen Haverty, Investment Vice Presient
Maureen joine Seraphim Space as Vice Presient following a successful career in the Space inustry. She was COO at Apollo Fusion, a Space start up that was sol for 14m, where she was responsible for business evelopment, manufacturing an complex programmes. She was also Senior Director of Corporate Development at Astra, a rocket launch company liste on NASDAQ. She has a first-class Batchelor Civil an Environmental Engineering (BE) egree from University College Cork an a PhD in Nuclear Engineering from University of Manchester. Maureen is focusse on eal origination, eal execution, portfolio management an fun operations in aition to actively supporting the Seraphim Space Camp Accelerator.
160
Canace Johnson, Inepenent Avisory Committee Member
Canace has a long an istinguishe career as founer/co-founer of Space ventures such as SES ASTRA, SES Global, Loral-Teleport Europe an Europe Online, as well as having playe critical roles in eveloping Space sector leaers, incluing Iriium an ILS. An experience venture capitalist an investor, she has been a member of the Strategic Committee of Iris Capital for the past ecae an, until recently has serve as Presient of the European Business Angel Network, now Presient Emeritus. Canace serves an has serve on the boars of a number of emerging Space leaers, incluing NorthStar Earth an Space an Kacific. Canace serves on the Seraphim Space's Investment Committee as an inepenent member to avise an aress any conflicts of interest.
160
Matt O'Connell, Inepenent Avisory Committee Member
Matt is a recognise thought leaer in the geospatial intelligence inustry. Currently an Operating Partner at DCVC, supporting their investments, incluing Space companies Capella an Planet. Matt has been working with Seraphim Space since 2018. Before that, he was CEO of OneWeb until July 2016. In 2006, he foune GeoEye (NASDAQ: GEOY), a leaing global provier of satellite an aerial imagery an igital mapping information, which was acquire by Digital Globe in 2013 for 1.3bn. He has serve on several private company boars an government an inustry avisory commissions. Matt serves on Seraphim Space's Investment Committee as an inepenent member to avise an aress any conflicts of interest.
160
Ann Winbla, Inepenent Avisory Committee Member
Ann is a Managing Director of Hummer Winbla Venture Partners, a venture capital firm she co-foune in 1989. She is a well-known an respecte software inustry entrepreneur an technology leaer. Ann's firm has launche over 160 enterprise software companies an le investments that pioneere successful companies across the enterprise software sector. She serve as a irector of numerous private an public companies incluing MuleSoft, Hyperion, Sonatype, The Knot, Liqui Auio, Net Perceptions an Ace Metrix. She also currently serves as a Director of OptiMine. Ann serves on Seraphim Space's Investment Committee as an inepenent member to avise an aress any conflicts of interest.
160
160
Directors' Report
The Directors present their Annual Report an auite financial statements for the Company for the Perio.160 The Corporate Governance Report forms part of this Report.
160
Company Status
The Company is incorporate an omicile in the Unite Kingom an registere in Englan an Wales.160
160
The Company is an investment company as efine in section 833 of the Companies Act 2006 an operates as an investment trust in accorance with section 118 of the Corporation Tax Act 2010 ("s.118").160 The Company has receive confirmation from HM Revenue an Customs that it has been accepte as an approve investment trust with effect from 14 July 2021, provie it continues to meet the eligibility conitions of s.118 an the ongoing requirements for approve companies in the Investment Trust (Approve Company) (Tax) Regulations 2011.160 The Directors inten at all times to conuct the affairs of the Company to enable it to continue to qualify as an investment trust for the purposes of s.118.
160
The Company manages its affairs so as to be a qualifying investment for inclusion in an Iniviual Savings Account an it is the Directors' intention that the Company shoul continue to o so.
160
Business Review
The Company's principal activity is investment in a iversifie, international portfolio of preominantly early an growth stage privately finance SpaceTech businesses that have the potential to ominate globally an are category leaers with first mover avantages in areas such as climate change, sustainability, communications, mobility an global security (incluing cyber security) with the objective of generating capital growth over the long term.
160
A etaile review of the Company's business an performance uring the Perio, the principal risks an uncertainties facing the Company, any future likely evelopments in the Company an any important events since 30 June 2022 are containe in the Strategic Report above an shoul be rea as part of this Report.
160
Results an Diviens
The profit for the Perio was 1633.4m.160 A loss of 1634.3m was attributable to revenue.160 As the Company is focuse on generating capital growth over the long term an given the nature of the Company's investments, the Boar oes not anticipate recommening paying any iviens in the foreseeable future.
160
Share Capital
On incorporation, the issue share capital of the Company was 1630.01 represente by one orinary share, hel by an iniviual (an employee at the Company's legal avisers) as the subscriber to the Company's memoranum of association. That orinary share was subsequently transferre on 10 June 2021 to the Investment Manager.
160
To enable the Company to obtain a certificate of entitlement to conuct business an to borrow uner section 761 of the Companies Act 2006, on 10 June 2021, 0,000 reeemable preference shares were allotte to the Investment Manager. The reeemable preference shares were pai up as to one quarter of their nominal value an reeeme immeiately following SSIT's IPO.
160
On 14 July 2021, 10,000,000 orinary shares were issue for cash at 100p per share pursuant to the IPO (gross procees: 16310.0m) an a further 28,414,61 shares were issue at 100p per share to the LP Fun investors pursuant to the Company's acquisition of the Initial Portfolio (gross procees: 16328.4m).160
160
Prior to the IPO, the Company agree to acquire the Retaine Assets on or before 31 December 2021 an the sellers of the Retaine Assets (the LP Fun investors) agree to reinvest the consieration receive (net of any withholing require to meet tax liabilities) by subscribing for orinary shares at 100p per share.160 Pursuant to the acquisition of the Retaine Assets, the Company issue a further 60,970,366 orinary shares between 10 September 2021 an 20 December 2021 (gross procees: 16361.0m).160 No orinary shares have been issue since 21 December 2021.
160
At 30 June 2022, the Company's issue share capital comprise 239,384,928 orinary shares, which were issue pursuant to the IPO an Initial Portfolio an acquisitions of the Retaine Assets, an no shares were hel in treasury.160 The total number of voting rights of the Company at 30 June 2022 was, therefore, 239,384,928.
160
Shareholers are entitle to all iviens pai by the Company (as state above, the Company oes not expect to pay iviens in the foreseeable future).160 On a wining up, provie the Company has satisfie all its liabilities, shareholers are entitle to the surplus assets of the Company.160 Shareholers are entitle to atten an vote at all general meetings of the Company an, on a poll, to one vote for each orinary share hel.
160
There are:
183160160160160160 no restrictions on the transfer of securities in the Company save where the Company is legally entitle to impose such restrictions, such as restrictions on transfers by Directors an persons closely associate with them uring close perios, or the Company's Articles of Association allow the Boar to ecline to register a transfer of shares or otherwise impose a restriction on shares to prevent the Company breaching any law or regulation
183160160160160160 no agreements between holers of securities regaring their transfer which are known to the Company
183160160160160160 no restrictions on exercising voting rights save where the Company is legally entitle to impose such restrictions, such as if, having been serve with a notice uner section 793 of the Companies Act 2006, a shareholer fails to isclose etails of any past or present beneficial interest
183160160160160160 no special rights with regar to control attache to securities in the Company an
183160160160160160 no agreements to which the Company is party that might affect its control following a successful takeover bi.
160
Share Issues an Buy-backs
The Boar has not aopte any formal premium or iscount targets which woul ictate the point at which the Company woul seek to issue or buy back orinary shares. Information on the Boar's approach to share issues an buy-backs can be foun uner 'Examples of Stakeholer Consierations' an 'Share Rating Management' above in the Strategic Report.
160
By way of special resolutions passe on 10 June 2021, the Directors have a general authority to allot up to 1.0bn orinary shares for cash on a non-pre-emptive basis. This authority will expire at the conclusion of the 2022 AGM.160 The Directors are seeking shareholers' approval at the 2022 AGM to renew the general authority to allot for cash on a non-pre-emptive basis up to 23,938,492 orinary shares, representing c.10% of the orinary shares in issue at 13 October 2022 such authority to expire at the 2023 AGM or 31 December 2023, whichever is the earlier. Unless specifically authorise by shareholers, no issue of orinary shares on a non-pre-emptive basis will be mae at a price less than the prevailing NAV per orinary share at the time of issue.
160
By way of a special resolution passe on 10 June 2021, the Company was grante authority to make market purchases up to 14.99% of its issue share capital following completion of the IPO an the acquisition of the Initial Portfolio.160 The Company has not bought back any shares uner this authority which expires at the conclusion of the 2022 AGM. The Directors are seeking shareholers' approval at the 2022 AGM to renew the authority to make market purchases up to 14.99% of the orinary shares in issue, excluing any treasury shares, on the ate on which the resolution is passe, such authority to expire at the 2023 AGM or 31 December 2023, whichever is the earlier. The Company may hol bought-back shares in treasury an then sell such shares (or any of them) for cash or cancel bought-back shares (or any of them).160 Shares will only be re-sol from treasury at a premium to the NAV per share.
160
Major Interests in Shares
At 30 June 2022 an 30 September 2022, the Company ha been notifie uner the Financial Conuct Authority's Disclosure Guiance an Transparency Rules or was otherwise aware of the following shareholers who were irectly or inirectly intereste in 3% or more of the voting rights in the Company's issue share capital:
160
Directors
The names an biographical etails of the Directors at the ate of this Report are shown above.160 Details of the interests of the Directors an their connecte persons in the Company's orinary shares, the Directors' remuneration policy an their remuneration can be foun in the Directors' Remuneration Report below.160 No Director has a service contract with the Company an there are no agreements between the Company an its Directors proviing for compensation for loss of office.
160
The rules concerning the appointment an replacement of Directors are containe in SSIT's Articles of Association an the Companies Act 2006. Further etails are provie in the Corporate Governance Report below.160
160
In line with the AIC Coe an the Company's Articles of Association all of the Directors are retiring at the forthcoming AGM an each person offers themself for election.160 The Chair confirms that, following formal performance evaluation, all the Directors continue to be effective an their contribution is valuable an they emonstrate full commitment to an inepenence in their roles. The Boar consiers each Director to be inepenent of the Investment Manager an each has the full support of the Boar in staning for election.
160
Directors' Insurance an Inemnification
Directors' an officers' liability insurance cover is in place in respect of the Directors an was in place throughout the Perio.
160
The Company's Articles of Association provie that the Company may, subject to the Companies Act 2006 an other applicable UK legislation for the time being in force affecting the Company, inemnify any person who is a Director of the Company against (a) any liability whether in connection with any negligence, efault, breach of uty or breach of trust by that person in relation to the Company or any associate company or (b) any other liability incurre by or attaching to that person in the actual or purporte execution an/or ischarge of that person's uties an/or the exercise or purporte exercise of that person's powers an/or otherwise in relation to or in connection with that person's uties, powers or office.
160
Relate Party Transactions
The Company's transactions with relate parties in the year were with its Directors an the Investment Manager.
160
There were no material transactions between the Company an its Directors uring the year other than the amounts pai to them in respect of Directors' remuneration for which there were no outstaning amounts payable at the year en.160
160
In relation to the provision of services by the Investment Manager, other than fees payable by the Company in the orinary course of business, there were no transactions with the Investment Manager affecting the financial position of the Company uring the year. Details of amounts pai to the Investment Manager uring the Perio can be foun in note 4 to the financial statements below.160 There were no amounts outstaning to the Investment Manager at 30 June 2022.
160
Risks an Risk Management
The principal risks an uncertainties facing the Company are set out above.160 Further etails of the Company's key financial risks are set out in note 1 to the financial statements below.
160
Articles of Association
The Company's Articles of Association may only be amene by special resolution at a general meeting of shareholers.
160
Listing Rule 9.8.4
The Financial Conuct Authority's Listing Rule 9.8.4 requires the Company to inclue certain information in a single ientifiable section of the Annual Report or a cross reference table inicating where the information is set out.160 The Directors confirm that there are no isclosures to be mae in this regar other than in accorance with Listing Rule 9.8.4(7) (etails of an allotment for cash of equity securities mae uring the year), the information on which is etaile on above uner 'Share Capital'.
160
Whistleblowing
The Boar has consiere arrangements by which staff of the Investment Manager or Aministrator may, in confience, raise concerns within their respective organisations about possible improprieties in matters of financial reporting or other matters.160 It has conclue that aequate arrangements are in place for the proportionate an inepenent investigation of such matters an, where necessary, for appropriate follow-up action to be taken within their organisations.
160
Disclosure of Information to the Company's External Auitor
Having mae enquiries of the Investment Manager an Aministrator, each of the Directors confirms that, at the ate of approval of this Report:
183160160160160160 as far as they are aware, there is no relevant auit information of which the external Auitor is unaware an
183160160160160160 they have taken all the steps a Director might reasonably be expecte to have taken to be aware of any relevant auit information an to establish that the external Auitor is aware of that information.
160
This confirmation is given an shoul be interprete in accorance with the provisions of section 418 of the companies Act 2006.
160
Inepenent External Auitor
The Company's external Auitor, BDO LLP, was appointe prior to SSIT's IPO an is willing to continue in office.160 Resolutions to re-appoint BDO LLP an authorise the Auit Committee to etermine its remuneration will be propose at the forthcoming AGM.
160
Annual Report
As isclose in the Auit Committee Report below, the Auit Committee has given ue consieration that the Annual Report, taken as a whole, is fair, balance an unerstanable. Therefore, the Boar is of the opinion that the Annual Report provies the information necessary for shareholers to assess the performance, strategy an business moel of the Company.
160
Events After the Balance Sheet Date
There have been no significant events since 30 June 2022.
160
2022 AGM
A separate notice convening the Company's first AGM will be sent to shareholers in ue course.160 The notice will inclue an explanation of the resolutions to be consiere at the AGM. A copy of the
notice will also be publishe on the Company's website (https://investors.seraphim.vc).
160
We believe that all the resolutions to be propose at the AGM are in the best interests of shareholers as a whole an therefore recommen shareholers to vote in favour of them as we will be oing with our own holings.
Approval
This Directors' Report was approve by the Boar on 1 October 2022.
160
On behalf of the Boar:
160
Will Whitehorn
Chair
1 October 2022
160
160
Corporate Governance Report
The Boar aims to promote SSIT's long term sustainable success an ensure that SSIT is run in a manner that is consistent with our beliefs in integrity, fairness, transparency an iligence. This is achieve through the application an maintenance of the highest stanars of corporate governance.
160
Corporate Governance Framework an Compliance
The Financial Conuct Authority's Disclosure Guiance an Transparency Rules (the "Disclosure Rules") require liste companies to isclose how they have applie the principles an complie with the provisions of the UK Corporate Governance Coe issue by the Financial Reporting Council (the "FRC") in July 2018 (the "UK Coe").160 The UK Coe can be viewe at www.frc.org.uk.
160
The relate Coe of Corporate Governance issue by the Association of Investment Companies (the "AIC") in February 2019 (the "AIC Coe") aresses the principles an provisions set out in the UK Coe, as well as setting out aitional provisions on issues that are of specific relevance to liste close-ene investment companies, such as the Company.160 The AIC Coe is available on the AIC website (www.theaic.co.uk).160 It inclues an explanation of how the AIC Coe aapts the principles an provisions set out in the UK Coe to make them relevant for liste close-en investment companies.160 The FRC has enorse the AIC Coe an confirme that AIC member companies who report against the AIC Coe will be meeting their obligations in relation to the UK Coe an the associate isclosure requirements of the Disclosure Rules.160
160
The Company became a member of the AIC with effect from 14 July 2021 following completion of its IPO.160 The Boar consiers that reporting against the principles an provisions of the AIC Coe provies more relevant information on the Company's governance arrangements to shareholers than reporting against the principles an provisions of the UK Coe.160160
160
The Boar operates uner a governance framework which is consistent with the principles an provisions of the AIC Coe. This Report escribes how the Company applies those principles an provisions.160 The Auit, Management Engagement an Remuneration an Nomination Committee Reports below form part of this Report.160 The Boar confirms that the Company
complie with the relevant principles an provisions of the AIC Coe uring the Perio.
As an externally manage investment company, the Company has no employees an all its substantive operations are conucte on its behalf by its thir-party service proviers, the Company has not complie with the provisions in the UK Coe relating to the role of the chief executive, executive irectors' remuneration an the nee for an internal auit function.160 However, the Auit Committee consiers the nee for an internal auit function at least annually (see below for further information).
160
Boar Leaership an Purpose
Role of the Boar
The Boar is collectively responsible for promoting the long-term sustainable success of the Company, generating value for shareholers whilst having regar to the interests of wier society.160
160
The Boar's role is to provie leaership an irection within a robust framework of risk management an internal controls.160 It sets the Company's strategic objectives (subject to the Company's Articles of Association an such approval of the shareholers in general meeting as may be require from time to time) an ensures that the necessary resources are in place to enable the Company's objectives to be met.160
160
In managing the Company, the aim of both the Boar an the Investment Manager is always to ensure SSIT's long-term sustainable success an, therefore, the likely long-term consequences of any ecision are a key consieration.160 The Investment Manager's Responsible Investment Policy is integrate into its investment process, ensuring that it has regar to the interests of wier society in managing SSIT's portfolio.
160
Company purpose an strategy
The Company's purpose is to provie a vehicle through which a broa range of investors can gain exposure to a iversifie, international portfolio of preominantly early an growth stage privately finance SpaceTech businesses that have the potential to ominate globally an are category leaers with first mover avantages in areas such as climate change, sustainability, communications, mobility an security (incluing cyber security).160 The Company seeks to generate capital growth over the long term for shareholers.
160
Operating as an externally manage investment company, SSIT seeks to fulfil its purpose by elegating operational matters to specialist thir-party service proviers, subject to oversight by the Boar.160 In particular, the Investment Manager an Aministrator are responsible for implementing the Company's strategy an managing the Company's ay-to-ay operations, respectively. 160The Company's success is base on such implementation an management being effective.160 The Boar's strategy is, therefore, to work closely with the Investment Manager an Aministrator in a long-term relationship esigne to foster an environment that is consistent with SSIT's culture an values an contributes to achieving SSIT's strategic objectives.
160
Culture an values
As an externally manage investment company, SSIT's culture an values are the prouct of the behaviours of both the Boar an the Investment Manager an the way in which they interact with each other an with the Company's other stakeholers an portfolio companies.
160
The Boar operates in an open, respectful an inclusive manner, where ifferences of perspective are welcome an constructive challenge is encourage. Avice an input are sought from external avisers an others, as require, to ensure a broa range of views are available an to guar against groupthink.160 As note in more etail uner 'Section 172: Engaging with Stakeholers' above, the Boar seeks to engage with its Investment Manager, Aministrator an other key service proviers in a constructive an collaborative manner.
The Investment Manager has establishe an organisation riven by purpose where its employees are unite by a passion to work with the most impactful companies in the SpaceTech sector. The Investment Manager strives to evelop a culture of canour an openness, with employees empowere to innovate an work autonomously.160 Value is place on output (the quality of work prouce) rather than input (the number of hours logge).160 Team cohesion an collaboration are core tenets of the Investment Manager's people strategy.
160
Both the Boar an Investment Manager aim to ensure that SSIT is run in a manner that is consistent with their beliefs in integrity, fairness, transparency an iligence an responsive to the views of the Company's shareholers an other stakeholers.160 Both seek to maintain high stanars of business conuct at all times.
160
We believe that the culture an values of the Boar an Investment Manager encourage constructive an robust challenge an ebate, generate strong collective wisom an ultimately lea to goo ecision making, all of which are important to the successful implementation of the Company's strategy.
160
Recognising the importance of culture an values, the Boar monitors them on an ongoing basis.160 They are also formally reviewe as part of the annual Boar an Investment Manager evaluation process.
160
Conflicts of interest
Directors have a uty to avoi situations where they have, or coul have, a irect or inirect interest that conflicts, or possibly coul conflict, with the Company's interests ("conflict situations").160 As permitte by the Companies Act 2006, the Company's Articles of Association allow the Directors to authorise conflict situations, where appropriate.
160
The Boar has a proceure in place to eal with conflict situations. As part of this process, Directors must submit any actual or potential conflict situations they may have to the Boar for approval as soon as possible.160 In eciing whether to approve a conflict situation, the Boar will act in a way it consiers, in goo faith, will be most likely to promote the Company's success, taking into consieration whether the Director's ability to act in accorance with their wier uties is affecte.160 The Company Secretary maintains the register of approve conflict situations (which also inclues a list of other external positions hel), which is table an consiere at each Boar meeting. Directors have a uty to keep the Boar upate about any changes to their approve conflict situations.160 In certain circumstances the conflicte Director may be require to absent themself from iscussions or ecisions on the matter on which they are conflicte (in which event, the Director will not be counte when etermining whether the meeting is quorate).160 No such circumstances arose in the Perio.160 None of the Directors have, or have ha, any potential conflicts of interest of the nature liste in provisions 6 an 12 of the AIC Coe.
160
The Boar also has a proceure in place to manage potential conflicts of interest of the Investment Manager.160 These can arise, for example, where share options an/or warrants have been grante to an affiliate of the Investment Manager by a participant in an accelerator programme run by that affiliate an the Company subsequently has the opportunity to invest in the participant.160 In such instances, only the inepenent avisory committee members of the Investment Manager's Investment Committee (liste above) consier the investment at the Investment Committee meeting, an the final stage of the Boar's conflict management process requires any such investment to be approve by the Boar before it is mae.160 During the Perio, the Boar approve investments in three companies (1634.7m investments in aggregate) in former accelerator programme participants (for further information, see 'Examples of Stakeholer Consierations' above.
160
Division of Responsibilities
The Boar has overall responsibility for the Company's activities.160 However, the Company has elegate or outsource various matters to its staning Committees an key service proviers, most notably the Investment Manager an the Aministrator, all of which operate within clearly efine terms of reference or agreements that set out their roles, responsibilities an authorities.160
160
Boar
The Boar's principal responsibilities inclue:
183160160160160160 etermining the Company's strategic objectives
183160160160160160 overseeing the execution of the Company's strategy, business conuct an implementation of its key investment, financial, operational an compliance policies, ensuring they are aligne with SSIT's purpose an strategy an the Boar's culture an values an that any necessary corrective action is taken
183160160160160160 ensuring that appropriate internal controls an risk management frameworks are in place to enable risk to be manage an continually assesse
183160160160160160 scrutinising the performance of the Investment Manager, Aministrator an other key service proviers an holing them to account
183160160160160160 reviewing the Company's valuation policy an the propose valuations of its investments
183160160160 ensuring effective engagement with, an encouraging participation from, shareholers an other key stakeholers an
183160160160160160 proviing constructive challenge an strategic guiance an offering specialist avice,
The Boar's responsibilities for this Annual Report are set out in the Directors' Responsibility Statement below.
160
Matters not elegate or outsource to Committees an key service proviers are reserve for consieration an approval by the Boar (incluing those matters liste in a formal scheule of reserve matters approve by the Boar), thus enabling the Boar to maintain full an effective control over appropriate strategic, financial, operational an compliance issues. The reserve matters inclue:
8226160160160 approving SSIT's long-term objectives an any matters of a strategic nature, incluing any change in investment objective, policy an restrictions, incluing those which may nee to be submitte to shareholers for approval
8226160160160 the appointment an removal of key service proviers an any material amenments to the Company's agreements with them
8226160160160 approval of any other material contracts an agreements entere into, varie or terminate
8226160160160 approving any transactions with relate parties
8226160160160 approval of quarterly an any a hoc NAV an other financial announcements
8226160160160 approval of the Company's operating an marketing bugets
8226160160160 the Company's corporate governance arrangements an
8226160160160 approving any actual or potential conflicts of interest, incluing any potential investments in respect of which the Investment Manager may have a potential conflict of interest.
The full scheule of matters reserve for the Boar is available on the Company's website (https://investors.seraphim.vc/).
160
The primary focus at Boar meetings is a review of investment performance an associate matters (such as new investments, progress of portfolio companies, investment pipeline, projecte cash flow an market environment), share price iscount/premium, investor relations, inustry issues, legal an regulatory (incluing corporate governance) evelopments an principal an emerging risks an uncertainties, in particular those ientifie in the Strategic Report above.
160
Chair
The Chair is Will Whitehorn.160 His primary role as Chair is to provie leaership to the Boar. The principal responsibilities of the Chair inclue:
8226160160160 ensuring the overall effectiveness of the Boar in irecting the Company
8226160160160 taking a leaing role in setting the Company's strategic objectives
8226160160160 facilitating open, honest an constructive ebate among Directors an the effective contribution of all Directors
8226160160160 ensuring the Company is meeting its responsibilities to shareholers an wier stakeholers an
8226160160160 engaging with shareholers to ensure that the Boar has a clear unerstaning of their views.
Full etails of the role an responsibilities of the Chair are available on the Company's website (https://investors.seraphim.vc/).
160
Senior Inepenent Director
The Senior Inepenent Director is Sue Inglis.160 Her primary responsibilities as such are to serve as a souning boar for the Chair, act as an intermeiary for other Directors an be available to respon to shareholers' concerns if they cannot be resolve through the normal channels of communication (i.e. through the Chair).160 The Senior Inepenent Director leas the annual evaluation of the Chair.160 Full etails of the role an responsibilities of the Senior Inepenent Director are available on the Company's website (https://investors.seraphim.vc/).
160
Boar Committees
The Boar has three staning Committees, being the Auit Committee, Management Engagement Committee an Remuneration an Nomination Committee:160 The roles an responsibilities of the Committee are inclue in their respective Reports on below an the terms of reference of each Committee are available on the Company's website (https://investors.seraphim.vc/).160 The Committees review their terms of reference at least annually, with any propose changes recommene to the Boar for approval.160 Committee chairs will atten AGMs to answer any questions on each of their Committee's activities.160 In aition, Committee chairs will seek engagement with shareholers on significant matters relate to their areas of responsibility.
160
The Boar may also establish aitional Committees from time to time to take operational responsibility on specific matters.160 These Committees ensure that key matters are ealt with efficiently.
160
Investment Manager
The Investment Manager is the Company's alternative investment fun manager ("AIFM") for the purpose of the EU AIFM Directive as incorporate into UK legislation.160 The Investment Management Agreement ate 22 June 2021 between the Company an the Investment Manager (the "IMA") sets out the matters in respect of which the Investment Manager has authority an responsibility, subject to the overall control an supervision of the Boar.160 These inclue the Investment Manager having full iscretion in relation to SSIT's portfolio management activities in accorance with SSIT's investment policy an any other restrictions impose in the IMA or the Boar from time to time.160 The Investment Manager is also responsible for promoting the Company's investment proposition to professional an retail investors.
160
In avance of Boar meetings, the Investment Manager provies regular reports, which inclue operating upates on the Company's investments, information on potential new investment opportunities, cash flow forecasts an other financial information an other relevant information.160 Senior representatives of the Investment Manager atten Boar meetings.160 The Investment Manager is responsible for keeping the Boar informe, in a timely manner, of any material evelopments arising from its portfolio management activities or other relevant matters, incluing interactions with shareholers an other key stakeholers.
160
Uner the IMA, the Investment Manager is entitle to management an performance fees, etails of which are inclue in note 4 to the financial statements below.160 The Investment Manager's appointment is terminable by the Company or Investment Manager on not less than 12 months' notice, such notice to expire on or at any time after the thir anniversary of SSIT's launch (14 July 2021). The IMA may be terminate with immeiate effect on the occurrence of certain events.
160
Aministrator/Company Secretary
The Company has appointe the Aministrator to provie fun accounting, company secretarial an other aministrative services.160 The Aministrator's responsibilities inclue:
8226160160160 unertaking the ay-to-ay financial an aministration functions of the Company, incluing calculation of the NAV an maintenance of the Company's accounting an statutory recors
8226160160160 proviing the company secretarial functions require by the Companies Act 2006
8226160160160 ensuring that the Company complies with applicable laws, rules an regulations, incluing laws an regulations applicable to investment trusts an the rules of the Financial Conuct Authority an Lonon Stock Exchange
8226160160160 avising on all governance matters
8226160160160 supporting the Boar to ensure that it has the policies, processes an information it nees to function effectively an efficiently
8226160160160 ensuring that Boar proceures are followe an
8226160160160 facilitating the flow of information between the Boar, Committees, Investment Manager an other service proviers.
160
In avance of Boar meetings, the Aministrator provies regular reports, which inclue financial an other operational information, etails of any breaches or complaints an relevant legal an regulatory, corporate governance an other technical upates.160 The Aministrator is responsible for keeping the Boar informe, in a timely manner, of any material evelopments regaring matters within the scope of its role an responsibilities.
160
Boar an Committee Meetings
Regular Boar an Committee meetings are scheule throughout the year (Boar: four Auit Committee: two Management Engagement Committee: one Remuneration an Nomination Committee: one).160 In aition, the Boar an Committees meet between scheule meetings in preparation for or follow-up after scheule meetings an any other matters that may arise between scheule meetings. As the Company was only launche in July 2021 an has a long-term investment strategy, the Boar i not hol a strategy meeting in the Perio, but intens to hol one in the current financial year an annually thereafter.160
160
The Company Secretary assists the Boar an Committee Chairs in agreeing the agena in sufficient time before the meeting to allow input from key stakeholers.160 Care is taken to ensure that papers are presente clearly an with the appropriate level of etail to assist the Boar an Committees in ischarging their uties.160 The Boar uses a web-base system which provies reay access to Boar an Committee papers an materials.160 Prior to each Boar an Committee meeting the Directors receive the agena an supporting papers through this system to ensure that they have all the latest an relevant information in avance of the meeting to enable them sufficient time to prepare properly for the meeting an to make further enquiries about any matter prior to the meeting, shoul they so wish.160 This also allows any Director who is unable to atten to submit views in avance of the meeting.
160
The Investment Manager, the Aministrator an, as require, the Company's other key service proviers are expecte to be present at formal Boar an Committee meetings unless ientifie conflicts require otherwise.160
160
Due to its size the Boar has eeme it appropriate for all Directors to be members of all committees. When running meetings, the Chair or Committee Chair maintains a collaborative atmosphere an ensures that all Directors have the opportunity to contribute to the ebate. The Directors are able to voice their opinions in a calm an respectful environment, allowing coherent iscussion.
160
The proceeings at all Boar an Committee meetings are fully recore, incluing any Director's concerns, in the minutes.160 After each Boar an Committee meeting, the Company Secretary operates a follow-up proceure to ensure that actions are complete as agree by the Boar or Committee.
160
The number of scheule meetings uring the Perio, an the attenance of the iniviual Directors at those meetings, is shown in the table below.160
1Appointe a Director with effect from 1 January 2022 an attene all scheule Boar an Committee meetings hel following her appointment.
160
In aition to the scheule meetings, there were 16 a hoc Boar an Committee meetings uring the Perio.160 These meetings were convene to conclue a number of matters previously iscusse at scheule meetings an eal with matters arising between scheule meetings, as well as, to consier the Investment Manager's preliminary reports on propose portfolio valuations. Prior to a hoc an valuation meetings, the Directors receive the agena an supporting papers. Typically, all Directors atten a hoc an valuation meetings, although this is not always feasible or necessary an Directors who is unable to atten a meeting can communicate their views ahea of the meeting.
160
Boar Composition an Succession
Boar composition an inepenence
At the ate of this Report, the Boar consists of four non-executive Directors, all of whom are (an were on appointment) inepenent of the Investment Manager.160 Each of the Directors is (an was on appointment) inepenent when assesse against the circumstances set out in provision 13 of the AIC Coe.160
160
The current Boar was selecte to bring a breath of skills, experience an knowlege relevant to the Company's structure an strategy.160 Three of the Directors were appointe prior to the IPO an the fourth joine the Boar on 1 January 2022.160 Details of the Directors, incluing their skills an experience, are set out above.160 Details of the recruitment process resulting in the appointment of the fourth Director are inclue in the Remuneration an Nomination Committee's Report below.
The composition of the Boar is a funamental river of its success as the Boar must provie strong an effective leaership of the Company without any one iniviual or small group ominating the ecision-making. The strong an iverse mix of experience iniviuals on the current Boar enables high calibre ebate an constructive challenge.160 The Boar is able to use the skills, experience an knowlege of the iniviual Directors to their maximum potential an make ecisions that are in the best long-term interests of the Company.160
160
The Boar's tenure, succession an iversity policies seek to ensure that the Boar continues to be well-balance an refreshe regularly by the appointment of new Directors with the necessary skills, experience, knowlege an personal qualities an who can bring fresh perspectives.
160
Boar iversity
The Boar supports the objectives of improving the performance of corporate boars by encouraging the appointment of the best people from a range of iffering perspectives an backgrouns.160 The Boar recognises the benefits of iversity (incluing gener, social an ethnic backgrouns an cognitive an personal strengths) on the Boar an takes this into account in the recruitment of new Directors.160 The Boar is committe to ensuring that its Director search processes actively seek a iverse range of caniates with the right skills, experience, knowlege an personal qualities so that appointments can be mae on the basis of merit against objective criteria.160
160
The following table shows the gener iversity of the Boar at 30 June 2022 (there have been no changes since that ate).
160
160
Appointments to the Boar
The Remuneration an Nomination Committee reviews at least annually the composition of the Boar an its Committees, incluing the balance of skills, experience, knowlege, iversity (incluing gener, social an ethnic backgrouns an cognitive an personal strengths) an length of service, an makes recommenations to the Boar when it consiers that a new Director shoul be recruite.160
160
Once a ecision has been taken by the Boar to recruit a new Director, the Remuneration an Nomination Committee oversees the recruitment process.160 At the outset, the Committee reviews the current balance an iversity of the Boar, ientifies any specific skills, experience, knowlege an personal qualities that are require to ensure the continue effective operation of the Boar an then sets objective selection criteria to ensure a formal an transparent appointment process.160 The Remuneration an Nomination Committee intens to use non-executive irector recruitment consultants an/or open avertising when recruiting new Directors in the future.160 Following the creation of a shortlist of caniates, the ecision-making process will be base on merit, with ue consieration of the objective selection criteria ientifie.
160
When consiering new appointments, the Committee also takes into account other emans on the caniates' time.160 In avance of joining the Boar, successful caniates will be aske to isclose any existing significant commitments with an inication of the time involve an to confirm that they are able to allocate sufficient time to the business of the Company an that there are no situations where they have, or coul have, a irect or inirect interest that conflicts, or possibly coul conflict, with the Company's interests.
Directors are not appointe for any specific term an are subject to election at the first AGM following their appointment an, thereafter, annual re-election at AGMs.160 Directors' appointments are reviewe by the Remuneration an Nomination Committee ahea of their submission for re-election, with submission being contingent on satisfactory performance evaluation.160 Directors may resign by notice in writing to the Boar at any time.
160
At the time of appointment, a new Director receives a letter of appointment that sets out their uties an obligations.160 Copies of the letters of appointment of the current Directors are available for inspection at the Company's registere office an at each AGM.
160
Boar inuction an training
New Directors will receive an inuction on joining the Boar covering the Company's strategy, policies, operational structure an governance, which will be coorinate by the Company Secretary. In aition, new Directors will be briefe fully about the Company's strategy an portfolio by the Investment Manager.
160
The Company Secretary is charge with assisting in the ongoing training an evelopment of all Directors, incluing proviing the Directors with etails of the Company's regulatory an statutory obligations (an changes thereto).160 Directors are able to receive training or aitional information on any specific subject pertinent to their role as a Director that they request or require.160 The Directors are encourage to participate generally in inustry events an to atten any other relevant seminars an conferences, if necessary at the Company's expense.
160
Information an support
To enable the Boar to function effectively an the Directors to ischarge their responsibilities, the Directors are regularly upate, in a timely manner, on investment, financial, investor an other stakeholer engagement an other matters.160 In aition to perioic reporting at scheule Boar an Committee meetings, the Directors receive, an may request, a hoc aitional information from the Investment Manager, Aministrator an other key service proviers.160 The Directors also maintain regular engagement, through formal meetings an calls as well as informal communications, with the Investment Manager, Aministrator an other key service proviers.160 This active engagement creates an open an collaborative culture that ensures that we have a thorough unerstaning of the Company's business an facilitates our robust scrutiny an constructive challenge of the activities an performance of, in particular, the Investment Manager an Aministrator.
160
The Directors have access to the avice an services of the Company Secretary.160 The Company Secretary is responsible for facilitating goo an timely information flows within the Boar an its Committees an between Directors an the Investment Manager.160
160
There is a proceure in place for Directors to take inepenent professional avice at the Company's expense shoul this be require to ai them in their uties.
160
Time commitment
All Directors are aware of the nee to allocate sufficient time to the Company in orer to ischarge their responsibilities effectively. Directors must obtain prior approval from the Boar when they take on any aitional external appointments an it is their responsibility to ensure that such appointments will not prevent them meeting their time commitments to the Company.
160
Where a significant aitional external appointment is approve by the Boar, the reasons for permitting the appointment will be explaine in the Annual Report.160 During the Perio. the Boar approve Sue Inglis' appointment as chair of ThomasLloy Energy Impact Trust plc, a newly establishe liste investment company.160 Taking into account her wealth of experience in the investment company sector, that all of her roles are in that sector an her time commitments to her other roles, the Boar was satisfie that she woul continue to have sufficient time to meet her commitments to the Company.160
160
Election an re-election by shareholers
Directors are require to stan for election at the first AGM following their appointment an annual re-election at each subsequent AGM.160 A Director who retires at an AGM may, if willing to continue to act, be electe or re-electe at that meeting.160 If, at a general meeting at which a Director retires, the Company neither re-elects that Director nor appoints another person to the Boar in the place of that Director, the retiring Director shall, if willing to act, be eeme to have been re-electe unless at the general meeting it is resolve not to fill the vacancy or unless a resolution for the re-election of the Director is put to the meeting an not passe.
160
All of the Directors will retire at the forthcoming AGM an are willing to continue to act.160 Having consiere their effectiveness, emonstration of commitment to the role, attenance at meetings an contribution to the Boar's an its Committees' eliberations, the Boar has approve the nomination for election of all of the Directors.160
160
Boar tenure
The Boar's policy on Director, incluing Chair, tenure is that a Director shoul normally serve no longer than nine years but, where it is in the best interests of the Company, its shareholers an other stakeholers, a Director may serve for a limite time beyon that.
160
The Boar believes that the continuity of experience an knowlege of its Directors is important an that a suitable balance requires to be struck with the nee for refreshing of the skills an experience of the Boar.160 The Boar believes that some limite flexibility in its approach to Director, incluing Chair, tenure will enable it to manage succession planning more effectively.
160
The Boar also believes that Directors with more than nine years' service can still form part of an inepenent majority.160 In the event that any Director, incluing the Chair, shall have been (or on re-election woul be) in office for nine years or more the Company will consier whether there is a risk that such a Director might reasonably be eeme to have lost inepenence through such long service.
160
In the event of a Director being in office for nine years or more at the AGM at which their re-election is to be propose, the Boar will inclue an explanation in the relevant Annual Report or notice convening the next AGM as to its reasoning for recommening re-election notwithstaning the length of tenure.
160
As the Company was incorporate on 14 May 2021, no issues have arisen to be consiere by the Boar with respect to long tenure.
160
Succession planning
The aim of the Company's succession plan is:160
183160160160160160 to preserve continuity by phasing the retirement of the original Directors so that they o not all retire at once after serving nine years160an
183160160160160160 to ensure the Boar's skills an experience are regularly refreshe an the benefits of a truly iverse Boar are further enhance, in terms of age, gener an iversity of backgroun an thought.
Succession planning is explaine in more etail in the Remuneration an Nomination Committee report below.
160
Annual Performance Evaluations
Boar, Committees, Chair an iniviual Directors
Details on the annual evaluations of the Boar, its staning Committees, the Chair an iniviual Directors, conucte by the Remuneration an Nomination Committee, are inclue in that Committee's Report below.160 Having consiere the Committee's report an recommenations, the Boar accepte all of the Committee's recommenations.
160
Investment Manager
Details on the annual evaluation of the Investment Manager, conucte by the Management Engagement Committee, are inclue in that Committee's Report below.160 Having consiere the report an recommenation from the Management Engagement Committee, the Boar believes that the continue appointment of the Investment Manager on the terms agree is in the interests of the shareholers as a whole.
160
Aministrator an other key service proviers
Information on the annual evaluations of the Aministrator an other key service proviers is inclue in the Management Engagement Committee Report on below.160 Having consiere the Committee's report an recommenations, the Boar accepte all of the Committee's recommenations.
160
Directors' Remuneration
The Directors' Remuneration Report below inclues the Directors' remuneration policy an etails of the remuneration of each Director.
160
Risk Management an Internal Control Systems
A critical factor in achieving the long-term sustainable success of the Company is unerstaning the risks that the Company faces an ensuring that controls are in place to manage an mitigate them.160 The Company's principal an emerging risks, together with etails of how we seek to manage an mitigate them, are set out in the Strategic Report above.160 The Company's financial risks are iscusse in note 13 to the financial statements below.
160
Responsibility for, an effectiveness of, risk management an internal controls
The Boar is responsible for etermining the nature an extent of the principal an emerging risks the Company is willing to take in orer to achieve its long-term strategic objectives. The Boar is also responsible for maintaining the Company's systems of risk management an internal controls (such as financial, operational an compliance controls).160 The AIC Coe requires the Boar to review the effectiveness of the Company's systems of risk management an internal controls at least annually.
160
The Boar has establishe an ongoing process for ientifying, evaluating an managing the principal an emerging risks face by the Company.160
160
The Boar, through the Auit Committee, has establishe, in conjunction with the Investment Manager an Aministrator, an ongoing process esigne to meet the particular nees of the Company in ientifying, evaluating an managing the risks to which it is expose.160 The process accors with the Financial Reporting Council's 'Guiance on Risk Management, Internal Control an Relate Financial an Business Reporting'. The process was in operation throughout the Perio an up to the ate of this Report. The system is esigne to meet the specific risks face by the Company an takes account of the nature of the Company's reliance on the Investment Manager, Aministrator an other key service proviers an their internal controls. The process therefore manages rather than eliminates the risk of failure to achieve the Company's business objectives an provies reasonable, but not absolute, assurance against material misstatement or loss.
160
At its September 2022 meeting, the Auit Committee carrie out an annual assessment of the Company's risk management an internal controls for the Perio an taking account of events since 30 June 2022.160 The Committee etermine that the risk management an internal controls were operating effectively an as expecte, an the results of the assessment were then reporte to the Boar at the following Boar meeting.
160
Base on the ongoing work of the Auit Committee in monitoring the risk management an internal control systems on behalf of the Boar an the Auit Committee's report to the Boar on its finings an conclusions regaring those systems, the Boar:
183160160160160160 is satisfie that it has carrie out a robust assessment of the principal an emerging risks facing the Company, incluing those that coul threaten its business moel, future performance, solvency, liquiity or reputation an
183160160160160160 has reviewe the aequacy an effectiveness of the risk management an internal control systems an no significant failings or weaknesses were ientifie.
160
Risk management an internal control systems
The Company's risk management an internal control systems are esigne to ientify, manage an mitigate on a timely basis both the principal an emerging risks inherent to the Company's business an activities an safeguaring the Company's assets.160 The Company has a risk-base approach to risk management an internal controls through a etaile matrix that ientifies each of the key risk areas associate with the Company's business an activities an the controls employe to minimise an mitigate those risks. The Auit Committee is responsible for monitoring an regularly reviewing the Company's risk management an internal control systems, incluing the risk matrix, an reports its finings an conclusions to the Boar.160 Where changes in risk are ientifie uring the Perio, the risk matrix is upate as appropriate an an assessment mae as to whether further action is require to manage the changes ientifie. The risk matrix was reviewe an upate by the Auit Committee, an approve by the Boar, uring the Perio.160160
160
The Company has elegate its ay-to-ay activities to the Investment Manager an Aministrator an has clearly efine their roles, responsibilities an authorities. The Investment Manager an Aministrator have their own risk management an internal control systems. The Investment Manager, which is regulate by the Financial Conuct Authority, an Aministrator both operate risk-controlle frameworks on an ongoing basis.160 The Aministrator has an annual type 2 report prouce uner the International Stanar on Assurance Engagements (ISAE) 3402. This entails an inepenent rigorous examination an testing of its controls an processes.
160
The Boar oversees the ongoing performance an actions of the Investment Manager an Aministrator at its scheule quarterly meetings an, as require, at a hoc meetings. At each quarterly Boar meeting, the Investment Manager reports on the performance an valuation of the Company's investments, activities since the last Boar meeting, any specific new risks ientifie relating to the Company's portfolio an cash projections an the Aministrator reports on the Company's corporate activity an financial, compliance, governance, legal an regulatory matters.160 The Boar also receives upates from the Investment Manager an Aministrator on material evelopments affecting the Company's business, activities or investments between quarterly Boar meetings.
160
The Boar, Investment Manager an Aministrator, together, review all financial performance an results notifications. The Investment Manager reports to the Boar twice a year regaring the Company's longer-term viability, which inclues financial sensitivities an stress testing of the business to ensure that the aoption of the going concern basis is appropriate.
160
The Company is ultimately epenent upon the quality an integrity of the management an staff of the Investment Manager an Aministrator.160 In each case, qualifie an able iniviuals have been selecte at all levels.160 The Investment Manager an Aministrator are aware of the risk management an internal controls relevant to their activities an are collectively accountable for the operation of those controls.
160
Each year a etaile review of the quality of services an performance of the Investment Manager, Aministrator an other key service proviers pursuant to their terms of engagement is unertaken by the Management Engagement Committee.160160
160
Internal Auit Function
For the reasons state in the Auit Committee Report below, the Boar oes not currently consier that an internal auit function is require.
160
Relations with Shareholers an Other Stakeholers
We place great importance on communication with shareholers, as well as with the Investment Manager, Aministrator an other key stakeholers.160 Details of our engagement with all of the Company's key stakeholers an how we ha regar to those stakeholers in our ecision-making processes uring the Perio are set out in the Strategic Report above.160 In aition, the Chairs of the Boar's staning Committees will seek to engage with shareholers on significant matters relate to their areas of responsibility.
160
The Boar recognises that relationships with suppliers are enhance by prompt payment an the Aministrator, in conjunction with the Investment Manager, ensures all payments are processe within the contractual terms agree with the iniviual suppliers.
160
Approval
This Corporate Governance Report was approve by the Boar on 1 October 2022.
160
On behalf of the Boar:
160
Will Whitehorn
Chair
1 October 2022
160
160
Auit Committee Report
The Auit Committee consists of all Boar members an is currently chaire by Ms McComb.160 Ms Lane was appointe as Director an member of the Auit Committee with effect from 1 January 2022 an will succee Ms McComb as a Chair of the Auit Committee with effect from the conclusion of the Company's forthcoming AGM.
160
The AIC Coe permits the Chair of the Boar to be a member of the Auit Committee. The Boar believes that Mr Whitehorn's experience an knowlege is a significant benefit to the Committee.
The Committee members have consierable business an financial experience an the Boar consiers that the membership as a whole has sufficient recent an relevant sector an financial experience to ischarge the responsibilities of the Committee.160 Ms Lane is a Chartere Accountant.160 All members of the Committee are inepenent of the Company's external Auitor an Investment Manager.
160
The Committee's authority an uties are clearly efine in its written terms of reference which are available on the Company's website (https://investors.seraphim.vc/).160 The terms of reference inclue all matters inicate by the Financial Conuct Authority's Disclosure Guiance an Transparency Rule 7.1, the AIC Coe an the UK Coe.160 The terms of reference are reviewe at least annually.
160
The Committee meets no less than two times a year an at such other times as the Committee Chair shall require.160 At least once a year the Committee meets with the external Auitor without any representative of the Investment Manager or Aministrator being present.
The Committee's effectiveness is reviewe on an annual basis as part of the Boar's performance evaluation process.
160
160
Main Activities
During the Perio, the Committee hel two scheule meetings an several a hoc meetings an there was ongoing liaison an iscussion between the external Auitor, BDO LLP, an the Auit Committee Chair with regars to the auit approach, ientifie risks an other matters pertinent to the Committee.160 The external Auitor was invite to atten the Committee meeting at which the Interim Report was consiere.160
160
The matters consiere, monitore, reviewe an, where appropriate challenge by the Committee uringthe Perio inclue the following:
183160160160160160 the terms of reference of the Committee for approval by the Boar
183160160160160160 the Company's accounting policies an practices
183160160160160160 the Investment Manager's valuation approach an the quarterly valuations of the Company's investments prepare by the Investment Manager
183160160160160160 the Company's key risks, incluing emerging risks, the risk management systems in place an the Company's risk matrix
183160160160160160 the aequacy an effectiveness of the Company's internal control environment
183160160160160160 whether there is a nee for an internal auit function
183160160160160160 the format of the Annual an Interim Reports an financial statements
183160160160160160 the Interim Report, associate results announcement an relate matters
183160160160160160 the regulatory changes impacting the Company
183160160160160160 the Financial Reporting Council's latest Annual Auit Quality Inspection Report on BDO LLP
183160160160160160 the inepenence of the external Auitor
183160160160160160 the remuneration an terms of engagement of the external Auitor. an
183160160160160160 the auit plan of the external Auitor for the Perio.
160
After the Perio en, the Committee met on 19 September 2022 an 12 October 2022 to consier an review the Annual Report an financial statements an relate matters an recommen the Annual Report an financial statements to the Boar for approval.160 The external Auitor was invite to atten the Committee meeting in October 2022 an the Committee met with the external Auitor without representatives of the Investment Manager or Aministrator being present.
160
Financial Reporting
The primary role of the Committee in relation to financial reporting is to review, with the Aministrator, Investment Manager an external Auitor, an report to the Boar on the appropriateness of the Annual Report an financial statements an Interim Report, concentrating on, amongst other matters:
183160160160160160 the quality an acceptability of accounting policies an practices
183160160160160160 the clarity of the isclosures an compliance with financial reporting stanars an relevant financial an governance reporting requirements
183160160160160160 material areas in which significant jugements ha been applie or where there ha been iscussion with the external Auitor, incluing the valuation of unliste investments an going concern an viability statements
183160160160160160 whether the strategic report inclue in the Annual Report inclue a fair review of the evelopment an performance of the business an financial position of the Company, together with a escription of the principal an emerging risks an uncertainties that it faces an
183160160160160160 whether the Annual Report an financial statements, taken as a whole, were fair, balance an unerstanable an provie the information necessary for shareholers to assess the Company's position an performance, business moel an strategy.
160
To ai its review, the Committee consiere reports from the Aministrator an Investment Manager an the report from the external Auitor on the outcome of its annual auit.
160
Significant Areas of Jugement Consiere by the Committee
The Committee has etermine that a key risk of misstatement of the Company's financial statements relates to the valuations of its private company investments hel at fair value through profit or loss as they represent a significant proportion of the Company's net assets (70.0% as at 30 June 2022) an since the valuations of these investments require the use of estimates, assumptions an jugements.160 There is also an inherent risk of management overrie as the Investment Manager's performance fee is calculate base on NAV (see note 4 to the financial statements below for etails of the performance fee). Whilst the Aministrator is responsible for calculating the NAV, the most significant input to calculating the NAV is the valuation of the Company's investments, which are prepare by the Investment Manager an reviewe by the Committee before approval by the Boar.
160
The Company's private company investments are early or growth stage companies. The Investment Manager's approach to valuation of these investments is outline in the Investment Manager's Report above an in notes 2 an 8 to the financial statements below.160 The valuation methoology use for each private company investment is reassesse at each valuation ate.160
On a quarterly basis, the Investment Manager provies a etaile analysis of the propose valuations of the Company's investments with supporting materials.160 The Committee consiers in etail an, as necessary, challenges the analysis an supporting materials, incluing the methoology an integrity of the valuations, an may request aitional information.160 Once the Committee has satisfie itself that the key estimates, assumptions an jugements use in the valuations are appropriate an that the investments have been fairly value, it recommens the valuations for approval by the Boar.
160
The external Auitor has explaine the results of its auit work on valuations in the Inepenent Auitor's Report below.160 There were no ajustments propose that were material in the context of the Annual Report an financial statements as a whole.
160
Risk Management
The Boar is accountable for carrying out a robust assessment of the principal risks facing the Company, incluing those threatening its business moel, future performance, solvency an liquiity.
160
On behalf of the Boar, the Committee reviews the effectiveness of the Company's risk management processes. The Company's risk assessment process an the way in which significant business risks are manage are key areas of focus for the Committee. The work of the Committee uring the Perio was riven primarily by the Company's assessment of its principal an emerging risks as set out in the Strategic Report above. The Committee also receives reports from the Investment Manager an Aministrator on the Company's risk evaluation process an reviews changes to significant risks ientifie.
160
No significant weaknesses were ientifie in the Perio.
160
Internal Auit
The Committee consiers at least once a year whether there is a nee for an internal auit function.160 Currently, the Committee oes not consier there to be a nee for an internal auit function, on the basis that there are no employees in the Company an all outsource functions are with parties who have their own internal controls an proceures. The Management Engagement Committee regularly reviews the performance of the key service proviers an their risk an control processes.
160
External Auitor
BDO LLP was appointe as the Company's external Auitor following its incorporation. The Perio is the first perio of auit.160
160
The reappointment of the external Auitor is subject to annual shareholer approval at the AGM.160 There are no contractual obligations restricting the choice of external Auitor an the Company will put the auit services contract out to tener at least every 10 years.160 In accorance with professional guielines, the statutory auitor will be rotate at least every five years.160 The current statutory auitor, Mr Wieer, has complete his first year in the role.
160
To form a view on auit quality an the effectiveness of the external auit process, the Committee reviewe an consiere:
183160160160160160 the external Auitor's fulfilment of the agree auit plan an variations from it
183160160160160160 iscussions or reports highlighting the major issues that arose uring the course of the auit
183160160160160160 feeback from the Aministrator an Investment Manager evaluating the performance of the auit team, incluing the robustness of the auit, the level of challenge offere by the auit team, the skills, experience an overall quality of the auit team, the timeliness of elivering the tasks require for the auit an reporting to the Committee an the overall quality of the service an
183160160160160160 the Committee's own observations an interactions with the external Auitor.
160
The Committee also consiere the external Auitor's technical competence, unerstaning of the Company's business an whether it emonstrate an appropriate level of iligence, professional scepticism an challenge.160 Following this review, the Auit Committee was satisfie that BDO LLP ha carrie out its uties in a iligent an professional manner an provie a high level of service.
160
The Committee monitors the external Auitor's inepenence through three aspects of its work:
183160160160160160 the approval of a policy regulating the non-auit services that may be provie by the external Auitor to the Company
183160160160160160 assessing the appropriateness of the fees pai to the external Auitor for all work unertaken by it an
183160160160160160 reviewing the information an assurances provie by the Auitor on its compliance with the relevant ethical stanars.
160
Details of the auit an non-auit fees pai to BDO LLP in respect of the Perio are set out in note to the financial statements below. Notwithstaning such non-auit services, the Committee consiere BDO LLP to be inepenent of the Company an that the provision of such services was not a threat to BDO LLP's objectivity an inepenence.
160
BDO LLP confirme that all its partners an staff involve with the auit were inepenent of any links to the Company an that these iniviuals ha complie with BDO LLP's ethics an inepenence policies an proceures which are fully consistent with the Financial Reporting Council's Ethical Stanars.
160
Having satisfie itself as to the effectiveness an inepenence of BDO LLP as the Company's external Auitor, the Committee recommene to the Boar that BDO LLP be reappointe as external Auitor for the year ening 30 June 2023.160 Accoringly, a resolution proposing the reappointment of BDO LLP as the external Auitor will be put to shareholers at the 2022 AGM.
The Committee will continue to monitor the performance of the external Auitor on an annual basis an will consier its inepenence an objectivity, taking account of appropriate guielines. In aition, the Committee Chair will continue to maintain regular contact with the lea auit partner outsie the formal Committee meeting scheule, not only to iscuss formal agena items for upcoming meetings, but also to review any other significant matters.
160
Financial Statements
The Boar has requeste the Committee to confirm that, in its opinion, the Boar can make the require statement that the Annual Report an financial statements, taken as a whole, are fair, balance an unerstanable an provie the information necessary for shareholers to assess the Company's position an performance, business moel an strategy.160 The Committee has given this confirmation base on its review of the whole ocument, unerpinne by involvement in the planning for its preparation an review of the processes to assure the accuracy of factual content.
160
Committee Evaluation
The activities of the Committee were consiere as part of the Boar evaluation process complete in May 2022 in accorance with stanar governance arrangements as summarise in the Remuneration an Nomination Committee Report below.160 The conclusion from the process was that the Committee was operating effectively with the right balance of membership an skills.
160
Approval
This Auit Committee Report was approve by the Committee on 1 October 2022.
160
On behalf of the Committee:
160
Christina McComb
Auit Committee Chair
1 October 2022
160
160
Management Engagement Committee Report
160
The Management Engagement Committee consists of all the Directors an is currently chaire by Mr Whitehorn.160 Ms McComb will succee Mr Whitehorn as Chair of the Management Engagement Committee with effect from the conclusion of the Company's the AGM on 17 November 2022.
160
The Committee's authority an uties are clearly efine in its written terms of reference which are available on the Company's website (https://investors.seraphim.vc/).160 The terms of reference are reviewe at least annually.
160
The Committee meets once a year an at such other times as the Committee Chair shall require.160 It met once uring the Perio.
160
The Committee's effectiveness is reviewe on an annual basis as part of the Boar's performance evaluation process.
160
160
Evaluation of the Investment Manager
The performance of the Investment Manager is consiere at every Boar meeting, with a formal evaluation by the Committee at least once each year. For the purpose of its ongoing monitoring, the Boar receives etaile reports an views from the Investment Manager on the Company's investment strategy, investment portfolio an pipeline (incluing associate risks) an investment performance.
160
The Committee met in May 2022 for the purpose of the formal annual evaluation of the Investment Manager's performance an to review the terms of the Investment Management Agreement (etails of which are inclue uner 'Investment Manager' below an in note 4 to the financial statements below), incluing the fee provisions.160 The Committee reviewe etaile questionnaires complete by the Investment Manager, which inclue sections on the Investment Manager's systems, controls an policies.160 The results of the etaile questionnaire complete by the Directors an the Investment Manager in connection with the Boar evaluation, to the extent that they were relevant to the Investment Manager evaluation, were also reviewe.160 Other factors reviewe inclue:
183160160160160160 quality an continuity of the Investment Manager's team
183160160160160160 investment results achieve to ate
183160160160160160 the Investment Manager's engagement with the Boar an other key stakeholers
183160160160160160 the Investment Manager's ongoing commitment to promoting the Company
183160160160160160 the Investment Manager's compliance with contractual arrangements an uties, incluing compliance with SSIT's investment policy
183160160160160160 the methoology an level of the annual management an performance fees (see note 4 to the financial statements below for etails) an the other terms of the Investment Management Agreement, having regar to those of comparable liste investment companies an
183160160160160160 the Investment Manager's culture an its strategy an goals for eveloping its business.
160
Following its review, the Committee conclue that the Investment Manager was performing well against the requirements set by the Boar an that it was satisfie, in all material respects, with the services provie by, performance of an support from the Investment Manager an also with the interaction between the Boar an the Investment Manager.160
160
The Committee conclue that, in its opinion, the continuing appointment of the Investment Manager on the terms agree was in the best interests of shareholers as a whole an recommene this to the Boar.160 The Boar agree with the Committee's recommenation an approve the continuing appointment of the Investment Manager on the terms agree.
160
Evaluation of Other Key Service Proviers
The performance of the Company's other key service proviers is monitore by the Boar on an ongoing basis an formally evaluate by the Committee ay least once a year, with a key focus on the Aministrator an Company Secretary.160
160
At its meeting in May 2022, the Committee also unertook the formal annual evaluation of the other key service proviers' performance an reviewe their respective remuneration.160 The Committee reviewe a etaile questionnaire complete by the other key service proviers, which inclue sections on their systems, controls an policies.160 In most instances, relationships with the other key service proviers are manage by the Investment Manager an/or Aministrator an Company Secretary on behalf of the Boar an the Committee consiere feeback receive from the Investment Manager an the Aministrator regaring the levels of service provie by, an relationships with, the other key service proviers.160
160
The Committee was satisfie, in all material respects, with the levels of service provie by the other key service proviers.160 The Committee conclue that, in its opinion, the continuing appointments of the other key service proviers on the terms agree remaine appropriate an in the best interests of the Company an recommene this to the Boar.160 The Boar agree with the Committee's recommenations an approve the continuing appointments of the other key service provier on the terms agree.
160
Committee Evaluation
The activities of the Committee were consiere as part of the Boar evaluation process complete in May 2022 in accorance with stanar governance arrangements as summarise in the Remuneration an Nomination Committee Report below.160 As the Committee ha not yet met at that stage, it was not possible to assess whether it was operating effectively but it was conclue that the Committee has the right balance of membership an skills.
160
Approval
This Management Engagement Committee Report was approve on 1 October 2022.
160
On behalf of the Committee:
160
Will Whitehorn
Management Engagement Committee Chair
1 October 2022
160
160
Remuneration an Nomination Committee Report
The Remuneration an Nomination Committee consists of all the Directors an is chaire by Ms Inglis.160 Iniviual Directors are not involve in ecisions connecte with their own appointments.
160
The Committee's authority an uties are clearly efine in its written terms of reference which are available on the Company's website (https://investors.seraphim.vc/).160 The terms of reference are reviewe at least annually.
160
The Committee meets once a year, an at such other times as the Committee Chair shall require.160 In aition to its scheule meeting in May 2022, the Committee met in connection with the recruitment of an aitional Director uring the Perio.
160
The Committee's effectiveness is reviewe on an annual basis as part of the Boar's performance evaluation process.
160
Key Responsibilities
183160160160160160 Developing an reviewing the Directors' remuneration policy an policies on Boar tenure an iversity.
183160160160160160 In conjunction with the Chair, reviewing the Directors' remuneration levels an consiering the nee to appoint external remuneration consultants.
183160160160160160 Reviewing outsie commitments of the Directors.
183160160160160160 Evaluating the Boar, its Committees an the Directors an consiering whether the Directors shoul be recommene for election or re-election.
183160160160160160 Reviewing the composition of the Boar an its Committees, incluing the balance of skills, experience, knowlege an iversity (incluing gener, social an ethnic backgrouns an cognitive an personal strengths).
183160160160160160 Formulating succession plans for the Directors consistent with SSIT's policies on Boar tenure an iversity.
183160160160160160 Ientifying, evaluating an recommening caniates for new Boar appointments.
183160160160160160 Reporting to the Boar on how the Committee has ischarge its responsibilities an making recommenations as appropriate.
160
Principal Activities During the Perio
Recruitment of aitional Director
Prior to the IPO, the Boar conclue that, ue to the nature of the Company's investments an the subjectiveness of private company valuations, it woul be esirable to recruit an aitional (fourth) Director with venture capital, private company valuation an recent financial experience an the skills to act as Chair of the Auit Committee.160 The search for the aitional Director commence prior to the IPO an was complete in December 2021.160 The process involve extensive esktop searches for iniviuals with the necessary skills, experience, knowlege an personal qualities, as well as seeking recommenations from, among others, the Company's avisers.160 Following initial interviews, a short list of potential caniates, iverse in terms of both gener an ethnic backgroun, was rawn up.160 Angela Lane, a Fellow Chartere Accountant, was the successful caniate, having been selecte as a result of her wealth of venture capital an Auit Committee chair experience an knowlege of investment companies an her ability to commit the time require for the role.160
160
The process for recruiting aitional Directors in the future is escribe uner 'Appointments to the Boar' above.160 The Committee intens to use non-executive irector recruitment consultants an/or open avertising when recruiting new Directors in the future.
160
Annual evaluation of Boar, Committees an Directors
The Committee ensures that there is a formal an rigorous annual evaluation of the performance of the Boar, its Committees, the Chair an iniviual Directors.160
160
The evaluations, which were facilitate by the Company Secretary an unertaken uring May 2022, consiste of performance appraisals, questionnaires an iscussions to etermine effectiveness an performance in various areas.160 The areas consiere inclue (a) the Boar's composition, knowlege, skills an inepenence, (b) its governance an processes, (c) the contributions of160 iniviual Directors to the Boar's work, () the relationships an communication between the Directors, as well as between the Boar an the Investment Manager, the Aministrator an other key service proviers, (e) investment matters elivering shareholer value an key priorities for the financial year ening 30 June 2023.160 The Committee also sought the views of the Investment Manager as part of the evaluation process.160 As there was no Senior Inepenent Director at the time the evaluation was unertaken, the performance evaluation of the Chair was le by the Committee's Chair.
160
Following review an iscussion of the evaluation results, the Committee conclue, at its scheule meeting in May 2022, that:
183160160160160160 the Boar an each of its staning Committees ha a goo balance of relevant skills, experience an knowlege an their structures, sizes an compositions were appropriate at this stage in the Company's life an, accoringly, no changes were expecte to be require for at least the next 12 months
183160160160160160 each Director continue to be inepenent in character an jugement, their skills an experience were a significant benefit to the Boar an they ha emonstrate their ability to commit the time require to fulfil their responsibilities
183160160160160160 the Directors (iniviually an collectively as the Boar) ha been operating effectively
183160160160160160 there were no specific aitional training requirements for any of the Directors
183160160160160160 the propose election of each Director at the 2022 AGM shoul be recommene
The Committee mae recommenations to the Boar base on the outcome of its eliberations.160160
160
Other routine activities
At its scheule meeting in May 2022, the Committee also:
183160160160160160 reviewe the Boar's policies on iversity an Boar tenure an its succession plan an recommene them to the Boar for approval (see 'Boar iversity', 'Boar tenure' an 'Succession Planning' above for etails of these policies, as approve by the Boar) an
183160160160160160 reviewe the Directors' remuneration policy an the annual remuneration of the Directors an conclue that no changes were require in respect of the year ening 30 June 2023.
160
Succession Planning
The Boar is in an early stage of its life, with all Directors having a number of years of their tenure left.160 The tenure of all Directors, incluing the Chair, is expecte not to excee nine years unless exceptional circumstances warrant, such as to allow for phase retirements of the current Directors. The Committee consiers succession planning annually an has evelope a succession plan that seeks to achieve an appropriate balance between preservation of experience an knowlege an bringing in fresh ieas an perspectives an is consistent with the Company's policies on Boar tenure an iversity.
160
Committee Evaluation
The activities of the Committee were consiere as part of the Boar evaluation process complete in May 2022 in accorance with stanar governance arrangements as summarise uner 'Annual evaluation of Boar, Committees an Directors' earlier in this Report.160 The conclusion from the process was that the Committee was operating effectively with the right balance of membership an skills.
160
Approval
This Remuneration an Nomination Committee Report was approve on 1 October 2022.
160
On behalf of the Committee:
160
Sue Inglis
Remuneration an Nomination Committee Chair
1 October 2022
160
160
Directors' Remuneration Report
This Report has been prepare by the Directors in accorance with the requirements of the Companies Act 2006 an the Large an Meium-size Companies an Groups (Accounts an Reports) Regulations 2008.160 By law, the Company's Auitor is require to auit certain of the isclosures provie in this Report.160 Where isclosures have been auite, they are inicate as such. An orinary resolution for the approval of this Report will be put to shareholers at the Company's first AGM on 17 November 2022.
160
Annual Statement from the Chair of the Boar
The Company's remuneration policy, which is set out below, is subject to shareholer approval every three years or sooner if an alteration to the policy is propose. An orinary resolution for the approval of the remuneration policy will be put to shareholers at the Company's first AGM on 17 November 2022.
160
The remuneration of the Directors has been set in orer to attract iniviuals of a calibre appropriate to the future evelopment of the Company.160 For the Perio, the Directors' remuneration was set at 1630,000 per annum for each Director.160 The Remuneration an Nomination Committee reviewe the level of fees uring the Perio an the Boar approve the Committee's recommenation that there shoul be no increase in the level of fees for the year ening 30 June 2023. The Remuneration an Nomination Committee i not receive inepenent avice or services in respect of its review of the Directors' remuneration however, the Company Secretary provie it with etails of comparable fees an other market information
160
Remuneration Policy
It is the Company's policy to etermine the level of Directors' fees which shoul be sufficient to attract an retain Directors with appropriate skills an experience necessary for the effective stewarship of the Company an the expecte contribution of the Boar as a whole in achieving the Company's objectives.160 The time committe to the Company's business an the specific responsibilities of iniviual Directors are taken into account. The policy aims to be fair an reasonable in relation to the level of fees payable to non-executive irectors of comparable investment companies an other investment companies of similar size an complexity as the Company.
160
The Company's Articles of Association limit the aggregate fees payable to the Directors to 16300,000 per annum (any change to that limit requires shareholer approval).160 Within that limit, it is the responsibility of the Boar as a whole to etermine an approve the Directors' fees, following a recommenation from the Remuneration an Nomination Committee.160 The fees are fixe an payable in cash, quarterly in arrears.160 Annual fees are pro-rate where a change takes place uring a financial year.160160 Directors have no entitlement to pensions or pension-relate benefits, meical or life insurance schemes, share options or long-term incentive schemes.
160
The Directors' fee rates are reviewe by the Remuneration an Nomination Committee at least annually, but reviews will not necessarily result in a change to the rates.160 Any feeback receive from shareholers will be taken into account when setting fee rates.160 Directors abstain from voting on their own fees.
160
The Directors are entitle to the reimbursement of reasonable fees an expenses incurre by them in the performance of their uties. Where expenses are recognise as a taxable benefit, a Director may receive the grosse-up costs of that expense as a benefit.
160
The Directors o not have a service contract.160 Each Director has signe a letter of appointment with the Company.160 The letters of appointment o not inclue any minimum perio of notice of termination by either party or any provision for compensation for loss of office.160
160
Subject to this policy being approve by shareholers at the forthcoming AGM, it is intene that the policy will continue in force until the AGM in 202.
160
Annual Report on Directors' Remuneration (Auite Information)
The table below shows all remuneration earne by each iniviual Director uring the Perio.160 No Director receive taxable benefits uring the Perio.
1Appointe with effect from 1 January 2022.
160
Remuneration for each Director is set at 1630,000 per annum. None of the Directors receive any other remuneration or aitional iscretionary payments uring the Perio from the Company.
160
Relative Importance of Spen on Pay
The remuneration of the Directors with respect to the Perio totalle 163169,9.160 As outline below, the Directors inten to manage the Company's affairs to achieve shareholer returns through capital growth rather than income.160 Therefore, no iviens have been eclare or pai uring the perio an a comparison of amounts pai to Directors against istributions to shareholers woul not be relevant.160
160
Directors' Interests (Auite Information)
The Directors who hel office uring the Perio an their interests in the orinary shares of the Company at 30 June 2022 are shown in the table below. There have been no changes to the Directors' interests between 30 June 2022 an the ate of this Report.
160
Save as isclose above, none of the Directors nor any member of their respective immeiate families has any interest, whether beneficial or non-beneficial, in SSIT's share capital.
160
There are no requirements for the Directors to own shares in the Company.
160
Company Performance
The chart in the annual report shows the value of 163100 investe in the Company on 14 July 2021 (the Company's launch ate) compare with the value of 163100 investe in the MSCI Worl Aero an Defence Inex (in Sterling terms), as a significant proportion of portfolio companies' revenues are erive from the broaer efence inustry an/or many portfolio companies have government as a significant customer.
160
Approval
This Directors' Remuneration Report was approve by the Boar on 1 October 2022.
160
On behalf of the Boar:
160
Will Whitehorn
Chair
1 October 2022
160
160
160
Directors' Responsibilities Statement
160
Responsibilities
The Directors are responsible for preparing the Annual Report an financial statements in accorance with applicable law an regulations.
160
Company law requires the Directors to prepare financial statements for each financial year. Uner that law the Directors are require to prepare the Company's financial statements, in accorance with UK-aopte International Accounting Stanars an the requirements of the Companies Act 2006. Uner company law the Directors must not approve the financial statements unless they are satisfie that they give a true an fair view of the state of affairs of the Company an of the profit or loss for the Company for that financial year.
160
In preparing the financial statements, the Directors are require to:
183160160160160160 select suitable accounting policies an then apply them consistently
183160160160160160 make jugements an accounting estimates that are reasonable an pruent
183160160160160160 state whether they have been prepare in accorance with UK-aopte International Accounting Stanars, subject to any material epartures isclose an explaine in the financial statements
183160160160160160 prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business an
183160160160160160 prepare a Directors' Report, strategic report an Directors' remuneration report which comply with the requirements of the Companies Act 2006.
160
The Directors are responsible for:
183160160160160160 keeping aequate accounting recors that are sufficient to show an explain the Company's transactions an isclose with reasonable accuracy at any time the financial position of the Company an enable them to ensure that the financial statements comply with the Companies Act 2006
183160160160160160 for safeguaring the assets of the Company an, hence, for taking reasonable steps for the prevention an etection of frau an other irregularities an
183160160160160160 ensuring that the Annual Report, taken as a whole, is fair, balance an unerstanable an provies the information necessary for shareholers to assess the Company's performance, business moel an strategy.
160
Website Publication
The Directors are responsible for ensuring the Annual Report an financial statements are mae available on a website. Financial statements are publishe on the Company's website in accorance with legislation in the UK governing the preparation an issemination of financial statements, which may vary from legislation in other jurisictions. The maintenance an integrity of the Company's website is the responsibility of the Directors, which they have elegate to the Investment Manager. The Directors' responsibilities also exten to the ongoing integrity of the financial statements containe on the website.
160
Responsibility Statement
The Directors confirm to the best of their knowlege, that:
183160160160160160 the Company's financial statements have been prepare in accorance with UK-aopte International Accounting Stanars an give a true an fair view of the assets, liabilities, financial position an profit an loss of the Company
183160160160160160 the Strategic Report inclues a fair review of the evelopment an performance of the business an financial position of the Company, together with a escription of the principal an emerging risks an uncertainties that it faces an
183160160160160160 the Annual Report an financial statements, taken as a whole, are fair, balance an unerstanable an provie the information necessary for shareholers to assess the Company's position an performance, business moel an strategy.
160
This responsibility statement was approve by the Boar on 1 October 2022.
160
On behalf of the Boar
160
Will Whitehorn160160
Chair
1 October 2022
160
160
Statement of Comprehensive Income
For the perio from inception to 30 June 2022
160
160
All Revenue an Capital items in the above statement erive from continuing operations. No operations were acquire or iscontinue in the perio.
160
The Total column of this statement is the profit an loss account of the Company, an the Revenue an Capital columns represent supplementary information prepare uner guiance issue by the Association of Investment Companies.
160
The accompanying notes below form an integral part of these financial statements.
160
160
Statement of Financial Position
As at 30 June 2022
160
160
The financial statements were approve an authorise for issue by the Boar of Directors on 1 October 2022 an signe on its behalf by:
Will Whitehorn160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160 Sue Inglis
Chair160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160 Director
160
The accompanying notes below form an integral part of these financial statements.
160
Statement of Changes in Equity
For the perio from inception to 30 June 2022
160
The accompanying notes below form an integral part of these financial statements.
160
160
Statement of Cash Flows
For the perio from inception to 30 June 2022
The accompanying notes below form an integral part of these financial statements.
160
160
Notes to the Financial Statements
For the perio ene 30 June 2022
160
1.160160160160160 General Information
160
The Company is a newly establishe, externally manage close-ene investment company, incorporate in Englan an Wales on 14 May 2021 with registere number 1339698. The Company's orinary shares were amitte to traing on the Lonon Stock Exchange's main market on 14 July 2021.
160
2.160160160160160 Significant Accounting Policies
160
The principal accounting policies applie in the preparation of these financial statements are set out below. These policies have been consistently applie, unless otherwise state.
160
The information in the financial statements covers the perio from the Company's incorporation on 14 May 2021 to 30 June 2022. During that perio the meaningful activities of the Company took place from the Company's amission to traing on the Lonon Stock Exchange on 14 July 2021 to 30 June 2022.
160
Basis of preparation
These financial statements have been prepare on the historic cost basis, as moifie for the measurement of certain financial instruments hel at fair value through profit or loss an in accorance with UK-aopte International Accounting Stanars an those parts of the Companies Act 2006 applicable to companies uner International Financial Reporting Stanars.
160
Where presentational guiance set out in the AIC SORP is consistent with the requirements of UK-aopte International Accounting Stanars, the Directors have sought to prepare the financial statements on a basis compliant with the recommenations of the AIC SORP. In particular, supplementary information which analyses the Statement of Comprehensive Income between items of revenue an capital nature has been presente alongsie the total Statement of Comprehensive Income. The etermination of whether an item shoul be recognise as revenue or capital is carrie out in accorance with the principles an recommenations set out in the AIC SORP. The Directors have chosen to apply the non-allocation approach, so all inirect costs are charge to the revenue column of the Statement of Comprehensive Income.
160
In these financial statements values are roune to the nearest thousan (163'000).
160
Going concern
The Company's cash balance at 30 June 2022 was 1637.7m, which was sufficient to cover its liabilities of 1634.m at that ate (incluing 1634.2m investment settle post perio-en) an any foreseeable expenses for a perio of at least 12 months from the ate of approval of these financial statements, incluing in severe but plausible ownsie scenarios.
160
The Company's cash balance is comprise of cash hel on eposit with substantial global financial institutions with strong creit ratings an the risk of efault by the counterparties is consiere extremely low. The major cash outflows of the Company are expecte to be for the acquisition of new investments, which are iscretionary. The Company is close-ene an there is no requirement for the Company to buy back or reeem shares.
160
The COVID-19 panemic has cause severe isruptions in global economies an capital markets. The panemic is not yet over an may continue to materially an aversely affect the performance of the global economy which coul impact on the Company's operations an investments in the future. The war in Ukraine has also ha, an is expecte to continue for some time to have, substantial aitional impacts on the global economy, in particular in respect of increasing inflation rates.
160
The Boar has inquire, an it is satisfie, that the Company's service proviers have ha robust processes in place in orer to continue to provie the require level of services to the Company, an to maintain compliance with laws an regulations, in the face of the challenges arising as a result of COVID-19. There have been no operational ifficulties encountere or isruption in service to ate. Foreign currency movements have also been significant in recent months, particularly weakness of Sterling against the US Dollar. Given the ongoing nature of both the COVID-19 panemic an the war in Ukraine, it is currently not possible to etermine the potential scale an scope of the ultimate effects on the global economy, capital markets an the Company's operations an investments. As the situation continues to evolve, this will remain a risk to the Company. In the meantime, the Directors an Investment Manager are actively monitoring the situation. In aition, they have consiere the following specific key potential impacts:
183160160160160160 unavailability of key personnel at the Investment Manager or Aministrator ue to illness
183160160160160160 increase volatility in the fair value of investments an
183160160160160160 uncertainty regaring the ability to raise aitional capital an support the existing portfolio an
183160160160160160 isruptions to business activities of the unerlying investments.
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In consiering these key potential impacts, the Directors an Investment Manager have assesse them with reference to the Company's risk framework an mitigation measures in place.
160
Base on the assessment outline above, incluing the various risk mitigation measures in place, the Directors o not consier that the effects of COVID-19, the war in Ukraine or Sterling weakness have create a material uncertainty over the assessment of the Company as a going concern.
160
On the basis of this review, an after making ue enquiries, the Directors have a reasonable expectation that the Company has aequate resources to continue in operational existence for at least 12 months from the ate of approval of these financial statements. Accoringly, they continue to aopt the going concern basis in preparing the financial statements.
160
Segmental reporting
The chief operating ecision-maker, who is responsible for allocating resources an assessing performance of the operating segments, has been ientifie as the Boar of Directors as a whole. The key measure of performance use by the Boar to assess the Company's performance an to allocate resources is the Company's NAV, as calculate uner UK-aopte International Accounting Stanars, an therefore no reconciliation is require between the measure of profit or loss use by the Boar an that containe in the Annual Report.
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For management purposes, the Company is organise into one main operating segment, which invests preominantly in early an growth stage privately finance SpaceTech businesses globally.
160
All of the Company's current bank interest income is erive from within the UK.
160
The Company's non-current assets are locate in the US, the UK, the EU, Israel an Japan. Due to the Company's nature, it has no customers.
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Functional currency an foreign currency transactions
These financial statements are presente in Sterling. As the majority of the Company's transactions are in Sterling, it is appropriate for the Company's functional currency to be Sterling. However, the Company hols investments enominate in currencies other than Sterling, incluing US Dollars. In aition, an element of the income from the Company's investments will be generate in currencies other than Sterling.
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Transactions in foreign currencies are translate at the foreign exchange rate ruling at the ate of the transaction. Monetary assets an liabilities enominate in foreign currencies at the reporting ate are translate at the foreign exchange rate ruling at that ate. Foreign exchange ifferences arising on translation are recognise in the Statement of Comprehensive Income. The Company may employ erivatives for currency heging purposes, but the Boar has not one so in the Perio.
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New an amene stanars an interpretations not applie
Accounting stanars an interpretations have been publishe an will be manatory for the Company's accounting perios beginning on or after 1 July 2022 or later perios. The following are the new or amene accounting stanars or interpretations applicable to the Company:
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183160160160160160 amenments to IAS 1 'Presentation of Financial Statements' on classification of liabilities, effective for annual perios beginning on or after 1 January 2023
183160160160160160 amenments to IAS 1 'Presentation of Financial Statements' an IFRS Practice Statement 2 'Making Materiality Jugements' on isclosure of accounting policies, effective for annual perios beginning on or after 1 January 2023 an
183160160160160160 amenments to IFRS 12 'Income taxes' on eferre tax relating to assets an liabilities arising from a single transaction, effective for annual perios beginning on or after 1 January 2023.
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The Company has consiere the IFRS accounting stanars an interpretations that have been issue but are not yet effective. None of these stanars or interpretations are likely to have a material effect on the Company, as it is the belief of the Boar that the activities of the Company are unlikely to be affecte by the changes to these stanars, although any isclosures recommene by these stanars, where applicable, will be provie as require.
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Assessment as an investment entity
IFRS 10 'Consoliate Financial Statements' sets out the following three essential criteria that must be met, if a company is to be consiere as an investment entity:
183160160160160160 it must obtain funs from multiple investors for the purpose of proviing those investors with investment management services
183160160160160160 it must commit to its investors that its business purpose is to invest funs solely for returns from capital appreciation, investment income or both an
183160160160160160 it must measure an evaluate the performance of substantially all of its investments on a fair value basis.
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In satisfying the secon essential criteria, the notion of an investment time frame is critical an an investment entity shoul have an exit strategy for the realisation of its investments. Also as set out in IFRS 10, further consieration shoul be given to the typical characteristics of an investment entity, which are that:
183160160160160160 it shoul have more than one investment to iversify the portfolio risk an maximise returns
183160160160160160 it shoul have multiple investors, who pool their funs to maximise investment opportunities
183160160160160160 it shoul have investors that are not relate parties of the entity an
183160160160160160 it shoul have ownership interests in the form of equity or similar interests.
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The Directors are of the opinion that the Company meets the essential criteria an typical characteristics of an investment entity as it obtains funs from investors to invest for returns from capital appreciation an the performance of substantially all of its investments are not consoliate, but hel at fair value through profit or loss, in accorance with IFRS 9 'Financial Instruments'.160 Fair value is measure in accorance with IFRS 13 'Fair Value Measurement'.
160
The Company has one unconsoliate subsiiary, Seraphim Space Ventures LP. As the Company is regare as an investment entity, this subsiiary has not been consoliate in the preparation of the financial statements.160
160
The registere office of the subsiiary is 1209 Orange Street, Wilmington, 19801, Delaware. The amount investe in the Company's unconsoliate subsiiary uring the perio an its carrying value at 31 December 2021 was 1.
160
Income recognition
Interest income is accounte for on an accruals basis using the effective interest rate metho.
160
Fair value movement
Gains or losses resulting from the movement in fair value of the Company's investments hel at fair value through profit or loss are recognise in the Capital column of the Statement of Comprehensive Income at each valuation point.
160
Expenses
Expenses are accounte for on an accruals basis. The Company's management, aministration an all other expenses are charge through the Revenue column an performance fee is charge to the Capital column of the Statement of Comprehensive Income.
160
Share issue expenses of the Company irectly attributable to the issue an listing of shares are charge to the share premium account.
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Taxation
The Company has receive confirmation from HMRC that it has been accepte as an approve investment trust with effect from 14 July 2021, provie it continues to meet the eligibility conitions of section 118 of the Corporation Tax Act 2010 ("s.118") an the ongoing requirements for approve companies in the Investment Trust (Approve Company) (Tax) Regulations 2011. The Directors believe that the Company has conucte its affairs in compliance with s.118 since approval was grante an intens to continue to o so.
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In respect of each accounting perio for which the Company is an continues to be approve by HMRC as an investment trust, the Company will be exempt from UK corporation tax on its chargeable gains. The Company will, however, be subject to UK corporation tax on its income (currently at a rate of 19%).
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In principle, the Company will be liable to UK corporation tax on any ivien income. However, there are broa-ranging exemptions from this charge which woul be expecte to be applicable in respect of most of the iviens the Company may receive.
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A company that is an approve investment trust in respect of an accounting perio is able to take avantage of moifie UK tax treatment in respect of its 'qualifying interest income' for an accounting perio. This is subject to HMRC being notifie that the Company intens to classify its income istributions as interest istributions.
160
To the extent that the Company receives income from, or realises amounts on the isposal of, investments in foreign countries it may be subject to foreign withholing or other taxation in those jurisictions. To the extent it relates to taxable income, this foreign tax may, to the extent not relievable uner a ouble tax treaty, be able to be treate as an expense for UK corporation tax purposes, or if the Company has a tax liability it may be treate as a creit against UK corporation tax up to certain limits an subject to certain conitions.
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Deferre tax is the tax expecte to be payable or recoverable on temporary ifferences between the carrying amounts of assets an liabilities in the financial statements an the corresponing tax bases use in the computation of taxable profit. Deferre tax liabilities are generally recognise for all taxable temporary ifferences an eferre tax assets are recognise to the extent that it is probable that taxable profits will be available against which euctible temporary ifferences can be utilise.
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Deferre tax liabilities are recognise for taxable temporary ifferences arising on investments, except where the Company is able to control the timing of the reversal of the ifference an it is probable that the temporary ifference will not reverse in the foreseeable future. Deferre tax is calculate at the tax rates that are expecte to apply in the perio when the liability is settle or the asset is realise. Deferre tax is charge or creite to the Statement of Comprehensive Income except when it relates to items charge or creite irectly to equity, in which case the eferre tax is also ealt with in equity.
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Deferre tax assets an liabilities are offset when there is a legally enforceable right to set off tax assets against tax liabilities an when they relate to income taxes levie by the same taxation authority an the Company intens to settle its current tax assets an liabilities on a net basis. Deferre tax assets an liabilities are not iscounte.
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Financial instruments
Financial assets an financial liabilities are recognise in the Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. Financial assets an financial liabilities are only offset, an the net amount reporte in the Statement of Financial Position an Statement of Comprehensive Income, when there is a currently enforceable legal right to offset the recognise amounts an the Company intens to settle on a net basis or realise the asset an liability simultaneously.
160
At 30 June 2022, the carrying amounts of cash an cash equivalents, receivables, payables an accrue expenses reflecte in the financial statements are reasonable estimates of fair value in view of the nature of these instruments or the relatively short perio of time between the original instruments an their expecte realisation.
160
Financial assets
The classification of financial assets at initial recognition epens on the purpose for which the financial asset was acquire an its characteristics.
160
All financial assets are initially recognise at fair value. All purchases of financial assets are recore at the ate on which the Company became party to the contractual requirements of the financial asset.
160
The Company's financial assets principally comprise of cash an cash equivalents an investments hel at fair value through profit or loss.
160
Cash an cash equivalents
Cash an cash equivalents comprise cash balances, short term eposits hel on call with banks an other short-term highly liqui eposits with original maturities of three months or less an that are reaily convertible to a known amount of cash an are subject to an insignificant risk of changes in value.
160
Investments hel at fair value through profit or loss
Investments are esignate upon initial recognition as hel at fair value through profit or loss. Gains or losses resulting from the movement in fair value are recognise in the Statement of Comprehensive Income at each valuation point.
160
Financial assets are recognise/erecognise at the ate of the purchase/isposal. Investments are initially recognise at cost, being the fair value of consieration given. Transaction costs are recognise in the Statement of Comprehensive Income as incurre.
160
Fair value is efine as the amount for which an asset coul be exchange between knowlegeable willing parties in an arm's length transaction. The value of the Company's investments is calculate on the following bases:
183160160160160160 the value of investments that are not publicly trae are value using recognise valuation methoologies in accorance with the International Private Equity an Venture Capital Association Valuation Guielines. These methos inclue primary valuation techniques, revenue or earnings multiples, mark to market, milestones or recent transactions
183160160160160160 where an investment in an unliste business has been mae recently, the Company may use the calibrate price of recent investment as the best inicator of fair value. In such a case, changes or events subsequent to the relevant transaction ate are assesse to ascertain if they imply a change in the investment's fair value
183160160160160160 publicly trae securities are value by reference to their bi price or last trae price, if applicable, on the relevant exchange in accorance with the AIC's valuation guielines an applicable accounting stanars. Where traing in the securities of a portfolio company is suspene, the investment in those securities woul be value at the estimate of its net realisable value. In preparing these valuations, account is taken, where appropriate, of latest ealing prices, valuations from reliable sources, comparable asset values an other relevant factors an
183160160160160160 any value otherwise than in Sterling is converte into Sterling at the prevailing rate.
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Derecognition of financial assets
A financial asset (in whole or in part) is erecognise:
183160160160160160 when the Company has transferre substantially all the risks an rewars of ownership or
183160160160160160 when it has neither transferre nor retaine substantially all the risks an rewars an when it no longer has control over the asset or a portion of the asset or
183160160160160160 when the contractual right to receive cashflow has expire.
160
Purchases of investments for cash are classifie as operating activities in the Statement of Cash Flows as the Company's objective is to generate capital growth over the long term through investment in a portfolio of preominantly early an growth stage privately finance SpaceTech businesses.
160
Financial liabilities
Financial liabilities are classifie accoring to the substance of the contractual agreements entere into an are recore on the ate on which the Company becomes party to the contractual requirements of the financial liability.
160
The Company's financial liabilities are measure at amortise cost an inclue trae an other payables an other short-term monetary liabilities which are initially recognise at fair value an subsequently measure at amortise cost using the effective interest rate metho.
160
A financial liability (in whole or in part) is erecognise when the Company has extinguishe its contractual obligations, or it expires or is cancelle. Any gain or loss on erecognition is taken to the Statement of Comprehensive Income.
160
Provisions
A provision is recognise when there is an expecte future economic outflow on which the timing or amount is uncertain.
160
Share capital
Financial instruments issue by the Company are treate as equity if the holer has only a resiual interest in the assets of the Company after the euction of all liabilities. The Company's orinary shares are classifie as equity instruments.
160
For the issue of each Orinary Share, 1630.01 has been recognise in share capital an the remaining amount receive has been recognise in share premium. Incremental costs irectly attributable to the issue of new shares are shown in share premium as a euction from procees. Amounts in the share capital an share premium accounts are not istributable.
160
As isclose in note 11, the amount staning to the creit of the share premium account of the Company on completion of the IPO, less issue expenses set off against the share premium account, was cancelle by a court orer ate 14 December 2021 an creite to other reserves, which are istributable. Retaine earnings inclue cumulative unrealise movements in investments which are classifie as capital on the Statement of Comprehensive Income an not istributable an cumulative revenue items which are classifie as istributable to shareholers.
160
3.160160160160160 Significant Accounting Jugements, Estimates an Assumptions
160
The preparation of the financial statements requires the application of estimates which may affect the results reporte in the financial statements. Estimates, by their nature, are base on jugement an available information.
160
Investment entity
As isclose in note 2, the Directors have conclue that the Company meets the efinition of an investment entity as efine in IFRS 10, IFRS 12 an IAS 27. This conclusion involve a egree of jugement an assessment as to whether the Company met the criteria outline in the accounting stanars.
160
Valuation
The key area involving a high egree of estimation or complexity that is significant to the financial statements has been ientifie as the risk of misstatement of the valuation of the Company's unliste investments (see note 8). In aition, as isclose in note 4, amounts payable as management fee or performance fee to the Investment Manager are epenent on NAV an therefore, valuation of investments.
160
The Company's unliste investments are early or growth stage companies. Given the nature of these investments, there are often no current or short-term future earnings or positive cash flows. Consequently, the Company abies by the IPEV Valuation Guielines in etermining fair value. Although not consiere to be the efault valuation technique, the appropriate approach to etermine fair value may be base on a methoology with reference to a calibrate price of recent investment, or, in the case of terms for a future roun being agree, fair value may be base with reference to a calibrate price of such future roun, iscounte for execution risk. This will be of greater reliability than methos base on estimates an assumptions an accoringly, where there have been recent investments by thir parties, the price of that investment will generally provie a basis of the valuation. Recent transactions may inclue post year-en (if terms agree pre year-en) as well as pre year-en transactions epening on their nature an timing. Where a significant milestone is achieve by a portfolio company an there has not yet been a subsequent funing roun, the fair value will be etermine using comparable metrics. Where relevant, such as in cases where portfolio companies are profitable or have stable an preictable revenues, fair value may be etermine using a multiples approach (earnings or revenue, respectively). It may be necessary to apply iscounts to some or all of the comparables ue to ifferences between the portfolio company an the comparables (such as size, margin, liquiity, marketability etc). In aition, in the case of unerperformance, fair value write-owns will be taken. Publicly trae securities are value by reference to their bi price or last trae price.
160
The Company will consier whether the basis for the last valuation remains appropriate each time valuations are reviewe. In aition, inputs to the fair value calculation will be recalibrate to assess the appropriateness of the methoology use in relation to the market performance since the roun, such as the portfolio company's traing performance relative to the expectations of the roun an macro-economic conitions an general market performance.
160
160
In all cases, valuations of unliste investments are base on the jugement of the Directors after consieration of the above an upon available information believe to be reliable, which may be affecte by conitions in the financial markets. Due to the inherent uncertainty of the investment valuations, the estimate values may iffer significantly from the values that woul have been use ha a reay market for the investments existe an the ifferences coul be material. Due to this uncertainty, the Company may not be able to sell its investments at the carrying value in these financial statements when it esires to o so or to realise what it perceives to be fair value in the event of a sale.
160
4.160160 Management an Performance Fees
160
Management fee
Uner the Investment Management Agreement, the Investment Manager is entitle to a management fee of 1.2% per annum of NAV up to 163300m an 1.00% per annum of NAV above 163300m, payable quarterly in avance.
160
Management fees incurre in the perio were 1632.7m, of which 163NIL was payable to the Investment Manager as at 30 June 2022.
160
Performance fee
Uner the Investment Management Agreement, the Investment Manager is also entitle to a performance fee of 1% over an 8% hurle with full catch-up, calculate on NAV annually.160 The performance fee is only payable where the ajuste NAV at the en of a performance perio excees the higher of the performance hurle an a high water mark.160 The accrue performance fee will only be pai to the extent that the aggregate of the net realise profits on unliste investments, net unrealise gains on liste investments an income receive from investments uring the relevant performance perio is greater than the performance fee payable an, to the extent that such aggregate is less than the performance fee payable, an amount equal to the ifference shall be carrie forwar an inclue in the performance fee payable as at the en of the next performance perio.160 Subject to the Takeover Coe, the Investment Manager is require to reinvest 1% of any performance fee pai in shares of the Company.160 Full etails of the performance fee are set out in the Company's IPO prospectus, which is available on the Company's website (https://investors.seraphim.vc/).
160
No performance fee was accrue for or pai to the Investment Manager for the Perio.
160
.160160160160160 Operating Expenses
160
During the perio, the Company's external Auitor, BDO LLP were also pai 163210k (incluing VAT), in relation to share issue an valuation work, complete before the IPO, which was recognise in share premium.
6.160160160160160 Tax
160
As an investment trust, the Company is exempt from UK corporation tax on capital gains arising on the isposal of shares. Capital profits from creitor loan relationships an erivative contracts are exempt from UK tax where the profits are accounte for through the Capital column of the Statement of Comprehensive Income, in accorance with the AIC SORP.
Therefore, no tax liability has been recognise in the financial statements.
160
The March 2021 Buget announce an increase to the main rate of corporation tax to 2% from 1 April 2023 an, as the Finance Act 2021 was enacte on 24 May 2021 an the accounting perio ens after this ate, eferre tax is recognise at this new increase rate. Base on this prospective corporation tax rate of 2%, the Company has an unrecognise eferre tax asset of 1631,019,196 arising as a result of having unutilise management expenses carrie forwar at the perio-en of 1634,076,786. These expenses will only be utilise if the tax treatment of the Company's income an chargeable gains changes or if the Company's investment profile changes.
160
Deferre tax is not provie on capital gains an losses arising on the revaluation or isposal of investments because the Company meets (an intens to continue to meet for the foreseeable future) the conitions for approval as an investment trust.
160
160
7.160160160160160 Earnings Per Share
160
160
8.160160 Investments Hel at Fair Value Through Profit or Loss
160
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Fair value measurements
The Company measures fair value using the following fair value hierarchy that prioritises the inputs to valuation techniques use to measure fair value. The hierarchy gives the highest priority to unajuste quote prices in active markets for ientical assets or liabilities (Level 1 measurements) an the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy uner IFRS 13 are as follows:
160
Level 1:160160160160160160 Quote price (unajuste) in an active market for an ientical instrument.
160
Level 2:160160160160160160160160160160160 Valuation techniques base on observable inputs, either irectly (i.e. as prices) or inirectly (i.e. erive from prices). This category inclues instruments value using quote prices in active markets for similar instruments, quote prices for ientical or similar instruments in markets that are consiere less than active, or other valuation techniques for which all significant inputs are irectly or inirectly observable from market ata.
160
Level 3: 160160160160160160160160160160 Valuation techniques using significant unobservable inputs. This category inclues all instruments for which the valuation technique inclues inputs that are not base on observable ata an the unobservable inputs have a significant effect on the instrument's valuation. This category inclues instruments that are value base on quote prices for similar instruments for which significant unobservable ajustments or assumptions are require to reflect ifferences between the instruments.
160
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The level in the fair value hierarchy within which the fair value measurement is categorise in its entirety is etermine on the basis of the lowest level input that is significant to the fair value measurement. For this purpose, the significance of an input is assesse against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant ajustment base on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires jugement, consiering factors specific to the asset or liability.
160
The etermination of what constitutes 'observable' requires significant jugement by the Company. The Company consiers observable ata to be market ata that is reaily available, regularly istribute or upate, reliable an verifiable, not proprietary an provie by inepenent sources that are actively involve in the relevant market.
160
The objective of the valuation techniques use is to arrive at a fair value measurement that reflects the price that woul be receive if an asset was sol or a liability transferre in an orerly transaction between market participants at the measurement ate.
160
The following table analyses, within the fair value hierarchy, the Company's investments measure at fair value at 30 June 2022.
160
160
The Level 1 investments were value by reference to the closing bi prices of each portfolio company on the reporting ate.
160
Due to their nature, the unliste investments are always expecte to be classifie as Level 3 as these are not trae an their fair values will contain unobservable inputs.
160
There were no transfers between levels uring the perio ene 30 June 2022.
160
Significant unobservable inputs for Level 3 valuations
The fair value of unliste securities is establishe with reference to the International Private Equity an Venture Capital Association Valuation Guielines an the Company may base valuations on the calibrate price of recent investment in the portfolio companies, comparable milestones or multiples of earnings or revenues where applicable. An assessment will be mae at each measurement ate as to the most appropriate valuation methoology.
160
The valuation methoologies applie involve subjectivity in their significant unobservable inputs an the table below outlines these inputs. Note 13 below illustrates the sensitivity that flexing these inputs has on fair value ("FV").
160
160
160
Details of significant holings as require by Scheule 4 of The Large an Meium-size Companies an Groups (Accounts an Reports) Regulation 2008 are set out in the annual report.
160
160
9.160160160160160 Trae an Other Receivables
160
160
10.160160160160160 Trae an Other Payables
160
160
11. Share Capital
160
160
1Cash receive by the Company was 163147,639k after the irect euction of certain share issuance costs of 1632,361k. Other share issuance costs of 1631,077k were subsequently pai in cash an total share issuance costs of 1633,438k were eucte from share premium.
2Shares issue by way of irect subscriptions in connection with the Company's acquisition of the Initial Portfolio as outline above.
3Shares issue by way of irect subscriptions in connection with the Company's acquisition of the Retaine Assets as outline above.
160
On incorporation, the issue share capital of the Company was 1630.01 represente by one orinary share, as the subscriber to the Company's Memoranum of Association. The orinary share was fully pai up.
160
To enable the Company to obtain a certificate of entitlement to conuct business an to borrow uner section 761 of the Companies Act 2006, on 10 June 2021, 0,000 reeemable preference shares were allotte to the Investment Manager. The reeemable preference shares were consiere to be pai up as to one quarter of their nominal value an reeeme immeiately following the IPO out of the IPO procees. A holer of the reeemable preference shares is entitle (in priority to any payment of ivien on any other class of share) to a fixe cumulative preferential ivien of 0.01%. per annum on the nominal amount of the reeemable preference shares hel by that person, such ivien to accrue annually an to be payable in respect of each accounting reference perio of the Company within 21 ays of the en of such perio.
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The amount staning to the creit of the share premium account of the Company on completion of the IPO, less issue expenses set off against the share premium account, was cancelle by a court orer ate 14 December 2021 an creite to other reserves. This amount shall be capable of being applie in any manner in which the Company's profits available for istribution, as etermine in accorance with the Companies Act 2006, are able to be applie.
160
12. Net Asset Value Per Share
160
13. Financial Risk Management
160
Financial risk management objectives
160
The Company's investing activities intentionally expose it to a variety of financial risks. The Company makes investments in orer to generate returns, in accorance with its investment policy an objectives.160
160
The most important types of financial risks to which the Company is expose are market risk (incluing price, interest rate an foreign currency risk), liquiity risk an creit risk. The Boar of Directors has overall responsibility for the etermination of the Company's risk management an sets policies to manage financial risks at an acceptable level to achieve the Company's objective. The policy an process for measuring an mitigating each of the main risks are escribe below.
160
The Investment Manager an the Aministrator provie avice to the Boar which allows it to monitor an manage financial risks relating to its operations through internal risk reports which analyse exposures by egree an magnitue of risks. The Investment Manager an the Aministrator report to the Boar on a quarterly basis.
160
Categories of financial instrument
160
For financial assets an liabilities carrie at amortise cost, the Directors are of the opinion that their carrying value approximates to their fair value.
160
Financial assets/liabilities are as follows:
160
160
Capital risk management
160
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the capital return to shareholers. The capital structure of the Company consists of issue share capital, share premium, retaine earnings an other reserves, as state in the Statement of Financial Position.
160
In orer to maintain or ajust the capital structure, the Company may buy back shares or issue new shares. There are no external capital requirements impose on the Company.
160
During the perio ene 30 June 2022, the Company ha no borrowings.
160
The Company's investment policy is set out in the Strategic Report.
160
Market risk
160
Market risk inclues price risk (impact of the general market on the price of any liste holings or the uncertainty associate with the price of unliste holings), foreign currency risk an interest rate risk.
160
a)160160160 Price risk
160
The investments hel by the Company present a potential risk of loss of capital to the Company. Price risk arises from uncertainty about future prices of the unerlying financial investments hel by the Company. See note 8 for quantitative information about the fair value measurement of the Company's Level 3 investments.
160
The table below outlines that the valuation methoologies employe involve subjectivity in their significant unobservable inputs an illustrates sensitivity of the valuations to these inputs. The inputs have been flexe by the percentages outline.
160
160
Variable input shifts are explaine as follows:
183160160160160160 Investments value using Level 1 methoologies or the calibrate price of recent transactions which complete in the three months ene 30 June 2022 are flexe up an own by % as we believe these o not involve significant subjectivity
183160160160160160 Investments value using the calibrate price of recent transactions which complete more than three months but less than six months before 30 June 2022 are flexe up an own by 10% as the subjectivity is thought to be greater than the above, but still not very material
183160160160160160 Investments value using the calibrate price of recent transactions which complete more than six months before 30 June 2022 are flexe up an own by 20% as there is a greater chance that market movements woul impact the price of private transactions.
183160160160160160 Partial write owns use in the Perio were 2%, an therefore, the inputs are flexe up an own by this amount to account for a similar level of improvement or eterioration in the portfolio companies' performance.
183160160160160160 Uncertainty iscounts of 1% were applie where a funing roun was complete after the en of the Perio. In an upsie scenario, this input is flexe up by 20% to remove the applie uncertainty iscount an account for a % flex up in relation to the unerlying price which we o not believe involves significant subjectivity. In the ownsie scenario, the input is flexe own by % in relation to the unerlying price (similar to the flex use for investments value using the calibrate price of recent investment which complete in the three months prior to 30 June 2022).
183160160160160160 Investments value using milestone multiples relative to comparable companies or MA transactions, with the iscount factor flexe up an own by 10%. 10% flex is consiere reasonable as a result of jugement in relation to the comparable multiples.
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The Company is expose to a variety of risks which may have an impact on the carrying value of the Company's investments.
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i)160160160 Not actively trae
The majority of Company's investments are not generally trae in an active market but are inirectly expose to market price risk arising from uncertainties about future values of the investments hel. The Company's investments vary as to inustry sub-sector, geographic istribution of operations an size, all of which may impact the susceptibility of their valuation to uncertainty.
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Although the investments are in the same inustry, the risk is manage through careful selection of investments within the specifie limits of the investment policy. The investments are monitore on a regular basis by the Investment Manager.
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ii)160160 Concentration
The Company invests in early an growth-stage unquote SpaceTech businesses. This means that the Company is expose to the concentration risk of only making investments in the SpaceTech sector, of which concentration risk may further relate to sub-sector, geography, the relative size of an investment or other factors.
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The Boar an the Investment Manager monitor the concentration of the investment portfolio on a quarterly an ongoing basis respectively to ensure compliance with the investment policy.
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iii)160160 Liquiity
The Company's liquiity risk lies with the amount of cash an cash equivalents investe in the investments as it is ynamic in nature. The Company maintains flexibility in funing by keeping sufficient liquiity in cash, short term eposits an other cash equivalents, which may be investe on a temporary basis in line with the cash management policy as agree by the Boar from time to time.
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As at 30 June 2022, 1637.7m, or 23.9% of Company's financial assets, were money market fixe eposits an cash balances hel on eposit with banks with high creit ratings.
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b)160160160 Foreign currency risk
The Company has exposure to foreign currency risk ue to the acquisition of some investments an payment of some expenses in currencies other than Sterling. Consequently, the Company is expose to risks that the exchange rate of its currency relative to other foreign currencies may change in a manner that has an averse effect on the value of that portion of the Company's assets or liabilities enominate in currencies other than Sterling. The following table shows the sensitivity of the fair value of the portfolio an NAVs as at 30 June 2022 to the recent movement in Sterling, using FX rates as at 27 September 2022 (when Sterling hit a low) an 14 October 2022 (last available rates) with all other variables hel constant.
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The following table sets out, in Sterling, the Company's total exposure to foreign currency risk an the net exposure to foreign currencies of the monetary assets an liabilities.
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c)160160160 Interest rate risk
The Company's exposure to interest rate risk relates to the Company's cash an cash equivalents. The Company is subject to risk ue to fluctuations in the prevailing levels of market interest rates. Any excess cash an cash equivalents are investe at short-term market interest rates. As at the ate of the Statement of Financial Position, the majority of the Company's cash an cash equivalents were hel in interest bearing fixe eposit accounts.
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The Company ha no other interest-bearing assets or liabilities as at the reporting ate. As a consequence, the Company is only expose to variable market interest rate risk. As at 30 June 2022, the cash balance hel by the Company was 1637.7m.160 A 0.% increase/(ecrease) in interest rates with all other variables hel constant woul result in a change to interest receive of +/- 163288k per annum.
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Liquiity risk
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Liquiity risk is the risk that the Company may not be able to meet a eman for cash or fun an obligation when ue. The Investment Manager an the Boar monitor forecast an actual cash flows to consier further investing activities.
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The Company aopts a pruent approach to liquiity management an through the preparation of bugets an cash flow forecasts maintains sufficient cash reserves to meet its obligations.
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Creit risk
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Creit risk refers to the risk that a counterparty to a financial instrument will efault on a contractual obligation or commitment that it has entere into with the Company, resulting in financial loss to the Company. It arises principally from investments in money market funs hel an also from erivate financial assets, cash an cash equivalents an other receivables balances.
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The Company's policy for creit risk is to minimise its exposure to counterparties with perceive higher risk of efault by only ealing with counterparties that meet certain creit stanars.
Creit risk is monitore on an ongoing basis by the Investment Manager in accorance with the proceures an policies in place.
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The table below shows the material cash an short-term eposit balances an creit rating for the counterparties use by the Company at the year-en ate.
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The Company's maximum exposure to loss of capital at the perio en is shown below:
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14. Relate Party an Investment Manager Transactions
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Directors
As at 30 June 2022, the Company ha four non-executive Directors. Directors' fees for the perio ene 30 June 2022 amounte to 163170k, of which 163NIL was outstaning at the perio en.
160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160160
Investment Manager
Seraphim Space Manager LLP has been appointe as the Company's exclusive Investment Manager an AIFM an is responsible for the ay-to-ay operation an management of the Company's investment portfolio, subject at all times to the overall supervision of the Boar. The Investment Manager is consiere to be a relate party in accorance with the Financial Conuct Authority's Listing Rules.
For the provision of services uner the Investment Management Agreement, the Investment Manager earns a management fee an performance fee, as isclose in note 4. Further etails of the Investment Management Agreement are inclue uner 'Investment Manager' in the Corporate Governance Report on above.
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1.160160160160160160160160 Ultimate Controlling Party
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In the opinion of the Boar, on the basis of the shareholings avise to it, the Company has no ultimate controlling party.
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16.160160160160160160160160 Subsequent Events
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Please refer to the annual report above for etails of subsequent events in the normal course of business. There are no other significant subsequent events
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Alternative Performance Measures
We assess the Company's performance using a variety of measures, some of which are not specifically efine uner UK-aopte International Accounting Stanars an are therefore terme 'APMs'.160 Our APMs, which are shown below, are reconcile, where appropriate, to the financial statements through the narrative below. The Boar believes that each of the APMs, which are typically use within the liste investment company sector, provie aitional useful information to shareholers to help assess the Company's performance.
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Share price movement
Share price movement in the Perio, expresse as a percentage of the opening share price/NAV per orinary share.
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NAV per share movement
Net asset value per share movement in perio.
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-Discount/+Premium
The amount by which the market price per share of a liste investment company is either lower (iscount) or higher (premium) than the NAV per share, expresse as a percentage of the NAV per orinary share.
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Ongoing Charges
Operating costs incurre in the Perio, charge to Revenue or Capital in the Statement of Comprehensive Income, calculate as a percentage of the average publishe net assets in respect of the Perio. Operating costs exclue, for this purpose, the costs of acquiring an isposing of investments, any finance costs, taxation an any costs not expecte to recur in the foreseeable future.160 The calculation is performe in accorance with the guielines issue by the AIC.
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The ongoing charges calculate above are ifferent from the ongoing costs provie in the Company's Key Information Document ('KID'), which are calculate in line with the Package Retail an Insurance-base Investment Proucts Regulation.160 The ongoing costs in the KID inclue investment transaction costs.
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Portfolio Fair Value vs. Initial Cost
The amount by which the fair value of the assets in the portfolio has change in relation to the initial cost of the assets, expresse as a percentage of the initial cost.
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Glossary
Aministrator or Company Secretary: Ocorian Aministration (UK) Limite.
AGM: Annual general meeting.
AI: artificial intelligence.
AIC: The Association of Investment Companies, the trae boy for liste close-ene investment companies.
AIC SORP: The Statement of Recommene Practice for the Financial Statements of Investment Trust Companies an Venture Capital Trusts, issue by the AIC as amene from time to time.
Amazon AWS Space Accelerator: the accelerator programme run by an affiliate of the Investment Manager in 2021 on behalf of Amazon Web Services.
Auitor: BDO LLP.
Boar: the Boar of Directors of the Company.
Bookings: contracte future revenues.
Company or SSIT: Seraphim Space Investment Trust PLC.
Directors: the Directors of the Company.
Discount: the share price of a liste investment company is rarely the same as its NAV. When the share price is lower than the NAV per share it is sai to be traing at a iscount.160 The iscount is the ifference between the share price an the NAV, expresse as a percentage of the NAV.
ESG: environmental, social an governance.
Fair value-weighte average growth: average growth rates for multiple portfolio companies, weighte by each portfolio companies' relative fair value.
FCA: Fellow Chartere Accountant.
FV: fair value.
FX: foreign exchange.
GEO: geosynchronous equatorial orbit (3,786km from Earth) equatorial orbit with a 24-hour perio.160
GP: general partner.
GPS: global positioning system.
Gross Asset Value: the value of the gross assets of the Company, etermine in accorance with its accounting policies.
HEO: high Earth orbit being any orbit beyon 3,786km from Earth.
IAS: International Accounting Stanar.
IFRS: the International Financial Reporting Stanars, being the principles-base accounting stanars, interpretations an the framework by that name issue by the International Accounting Stanars Boar, to the extent they have been aopte by the UK.
IoT: the interconnection via the internet of computing evices embee in everyay objects, enabling them to sen an receive ata.
Initial Portfolio: the portfolio of investments acquire from the LP Fun by the Company on completion of its IPO, etails of which are set out in the IPO prospectus, which is available on the Company's website (https://investors.seraphim.vc/).
Investment Management Agreement: the Investment Management Agreement entere into between the Investment Manager an the Company, etails of which are inclue uner 'Investment Manager' in the Corporate Governance Report above.
Investment Manager or Seraphim Space: Seraphim Space Manager LLP.
IPEV: the International Private Equity an Venture Capital Association
IPO: initial public offering, being an offering by a company of its share capital to the public with
a view to seeking an amission of its shares to a recognise stock exchange.
LEO: low Earth orbit being an orbit that is relatively close to the Earth's surface, extening from 160km to 2,000km above Earth.
Lonon Stock Exchange: Lonon Stock Exchange PLC.
LP Fun: Seraphim Space LP.
MEO: meium Earth orbit, extening from 2,000km to below 3,786km all orbits above low Earth orbit an below geostationary equatorial orbit are sai to be in meium Earth orbit.
NASDAQ: National Association of Securities Dealers Automate Quotations.
NAV or net asset value: the value of the assets of the Company less its liabilities as calculate in accorance with its accounting policies (or, in the context of an orinary share, the NAV of the Company ivie by the number of orinary shares in issue).
New Space: the emerging commercial Space inustry.
Perio: the Company's first accounting perio, being the perio commencing on 14 May 2021 (the ate of incorporation of the Company) an ening on 30 June 2022.
Premium: a premium occurs when the share price of a liste investment company is higher than the NAV.160 The premium is the ifference between the share price an the NAV, expresse as a percentage of the NAV.
Retaine Assets: the investments acquire from the LP Fun by the Company subsequent to its IPO, etails of which are set out in the IPO prospectus, which is available on the Company's website (https://investors.seraphim.vc/).
RF: raio frequency the use of electromagnetic raiation for transferring information between two circuits that have no irect electrical connection.
Seraphim Space Accelerator: accelerator programme for early stage SpaceTech companies run by an affiliate of the Investment Manager.
Smallsat: small spacecraft with a mass less than 180kg an about the size of a large kitchen frige.
SPAC: special purpose acquisition company.
Space Prime: multi-capability Space prime contractor offering a wie range of services to government customers.
SpaceTech: in the context of a business, an organisation which relies on Space-base connectivity an/or precision, navigation an timing signals or whose technology or services are alreay aressing, originally erive from or of potential benefit to the Space sector.
Total return: The Total Return on an investment comprises both changes in the NAV per share or share price an iviens pai to shareholers an is calculate on the basis that all historic iviens have been reinveste in the NAV or shares on the ate the ivien is pai.
VHF: very high frequency (enoting raio waves of a frequency of c.30-300 MHz an a wavelength of c.1-10 metres).
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Corporate Information
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Registere Office
th Floor
20 Fenchurch Street
Lonon
EC3M 3BY
Boar of Directors
Will Whitehorn (Chair)
Sue Inglis (Senior Inepenent Director)
Christina McCombAngela Lane
Investment Manager
Seraphim Space Manager LLP
2n Floor One Fleet Place
Lonon
EC4M 7WS
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Aministrator an Company Secretary
Ocorian Aministration (UK) Limite
th Floor
20 Fenchurch Street
Lonon
EC3M 3BY
Corporate Brokers
Deutsche Bank AG, Lonon Branch
Winchester House
1 Great Winchester Street
Lonon
EC2N 2DB
J.P. Morgan Securities PLC
2 Bank Street
Canary Wharf
Lonon
E14 JP
Legal Aviser
Stephenson Harwoo LLP
1 Finsbury Circus Lonon
EC2M 7SH
Depositary
Ocorian Depositary (UK) Limite
th Floor 20 Fenchurch Street
Lonon
EC3M 3BY
Registrar
Computershare Investor Services PLC
The Pavilions
Brigwater Roa
Bristol
BS99 6ZZ
Inepenent Auitor
BDO LLP
Baker Street
Lonon
W1U 7EU
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Custoian
Liberum Wealth
1st Floor Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey
GY1 3JX
160
Public Relations an Communications Aviser
SEC Newgate
14160Greville160StreetLononEC1N1608SB
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160
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Ientifiers
Website: https://investors.seraphim.vc/
ISIN GB00BKPG0138
Ticker SSIT
SEDOL BKPG013GIIN GXNBCF.99999.SL.826
Registere Company Number 1339698
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Cautionary Statement
The Annual Report may inclue statements that are, or may be eeme to be, 'forwar-looking statements'. These forwar-looking statements are sometimes, but not always, ientifie by the use of forwar-looking terminology, incluing the terms 'believes', 'estimates', 'anticipates', 'expects', 'intens', 'may', 'will' or 'shoul' or, in each case, their negative or other variations or comparable terminology.
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These forwar-looking statements inclue all matters that are not historical facts. They appear in a number of places throughout this Annual Report an inclue statements regaring the intentions, beliefs or current expectations of the Directors or Investment Manager concerning, amongst other things, the investment objective an investment policy, investment performance, results of operations, financial conition, liquiity, financing strategies an prospects of the Company an the markets in which it invests.
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By their nature, forwar-looking statements involve risks an uncertainties because they relate to events an epen on circumstances that may or may not occur in the future. Forwar-looking statements are not guarantees of future performance.
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The Company's actual investment performance, results of operations, financial conition, liquiity, financing strategies an prospects may iffer materially from the impression create by the forwar-looking statements containe in this Annual Report.
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Subject to their legal an regulatory obligations, the Directors an the Investment Manager expressly isclaim any obligations to upate or revise any forwar-looking statement containe in this Annual Report to reflect any change in expectations with regar thereto or any change in events, conitions or circumstances on which any statement is base.
[1] Stockholm International Peace Research Institute
[2] https://breakingefense.com/2021/10/space-force-plans-up-to-2-3b-in-comsatcom-contracts/
[3] https://spacenews.com/biens-2023-efense-buget-as-billions-for-u-s-space-force/
[4] Union of Concerne Scientists - Satellite Database (2021) Gunter's Space Page
[] https://www.nasa.gov/mission_pages/station/news/orbital_ebris.html
[6] https://www.ucsusa.org/resources/satellite-atabase
[7] https://newspaceglobal.com/nsrs-in-orbit-services-report-projects-14-3-billion-in-revenues-as-non-geo-constellations-grow-eman/
[8] https://www.climate.gov/news-features/blogs/beyon-ata/2021-us-billion-ollar-weather-an-climate-isasters-historical
[9] https://ourworlinata.org/renewable-energy
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