Ludgate Investments Ltd. Company Registration no. 4043908

Place of registration: Companies House, Cardiff

Registered address: 26 Dover Street, London W1S 4LY

click here Regulated and Authorised by the Financial Conduct Authority (FCA)

FCA Registration no. 194783

Ludgate Investments Ltd. Pillar 3 Disclosure Statement 1. Introduction The Firm is required by the Financial Conduct Authority (“FCA”) to disclose information relating to the capital it holds and each material category of risk it faces in order to assist users of its accounts and to encourage market discipline. These disclosures aim to provide information on the risk exposures faced by the Firm and the risk assessment process it has in place to monitor these. Known as “Pillar 3” disclosures, they are required to be made under Chapter 11 of the FCA’s Prudential Sourcebook for Banks, Building Societies and Investment Firms (“BIPRU”) and are seen as complementary to the Firm’s minimum capital requirement calculation (“Pillar 1”) and the internal review of its capital adequacy (“Pillar 2”).

The Firm makes Pillar 3 disclosures annually and these are made as at the accounting reference date.

2. Risk management The Firm is engaged only in providing investment advice and as such the risk management procedures are not complex. Board meetings are held quarterly and these include detailed appraisals of all aspects of business. The financial performance of the Firm and the adequacy of its regulatory capital are closely monitored by the Board. In addition, an annual review of the systems and controls in place at the Firm is conducted in order to ensure that all risks are identified, monitored and controlled.

Appropriate action is taken where risks are identified which fall outside the Firm’s risk tolerance levels or where the need for remedial action is required in respect of identified weaknesses in the Firm’s mitigating controls.

Specific risks applicable to the Firm come under the headings of business, operational, credit and market risks.

2.1 Business risk The Firm’s revenue is reliant on the performance of the existing fund which it advises. As such the risk posed to the Firm relates to a decline in the value of the portfolio in respect of which it provides investment advice. However, the Firm considers that any business risk is mitigated by the contract that it has in place with its investment advisory client and the cash balances that are maintained.

2.2 Operational risk The Firm’s exposure to operational risk is limited given the nature of its activities as an adviser and the fact that it does not undertake any dealing or managing activities. The Firm has operational procedures and controls in place in order to mitigate any risks identified and seeks to ensure that all personnel are aware of their responsibilities in this respect.

An appropriate insurance policy is in place to mitigate the risk of a claim for professional negligence being brought against the Firm.

2.3 Credit risk The Firm is exposed to credit risk in respect of investment advisory fees invoiced and cash held on deposit.

The number of credit exposures relating to the Firm’s clients is limited. Invoices for investment advisory fees are issued quarterly and are settled promptly. The Firm considers that there is little risk of default by its clients. The bank account is held with a large international credit institution. An analysis of the credit risk exposure is given below:

Credit risk exposure     Exposure £’000     Risk weighting     Risk weighted exposure at 8% (£’000)

Cash at bank                             55                                 20%                                           1

Trade debtors                            28                                100%                                          2

Other debtors                            204                              100%                                         16

Total                                                                                                                                   19

Given the nature of the Firm’s exposures, no specific policy for hedging and mitigating credit risk is in place. The Firm uses the simplified, standardised approach detailed in BIPRU 3.5.5. of the FCA Handbook when calculating risk weighted exposures in respect of its debtors. This amounts to 8% of the total debtor balance. All bank balances are subject to a risk weighted exposure of 1.6% in accordance with BIPRU 3.4 of the FCA Handbook.

2.4 Market risk The Firm was not exposed to any market risk as at 31 December 2016.

3. Capital adequacy

3.1 Capital resources As at 31 December 2016 the Firm held regulatory capital resources of £243,000. This comprises solely core Tier 1 capital (share capital and retained audited reserves) of £257,000 less a deduction of £14,000 for illiquid assets.

3.2 Capital requirement As at 31 December 2016, the Firm’s Pillar 1 capital requirement was £198,000. This has been determined by reference to the Firm’s Fixed Overheads Requirement (“FOR”) and calculated in accordance with the FCA’s General Prudential Sourcebook (“GENPRU”) at GENPRU 2.1.53.  The requirement is based on the FOR since at all times this exceeds the total of the credit and market risk capital requirements it faces and also exceeds its base capital requirement of €50,000.

The FOR is based on annual expenses net of variable costs deducted, which include discretionary bonuses paid to staff and allowable commission and fees. The Firm monitors its expenditure monthly and takes into account any material fluctuations in order to determine whether the FOR remains appropriate to the size and nature of the business or whether any adjustment needs to be made within the year. This is monitored by senior management on a monthly basis.

4. Remuneration Code disclosure The Firm is a Remuneration Code Proportionality Level Three Firm and has applied the rules appropriate to its proportionality level. The Board of Directors is responsible for the Firm’s remuneration policy. All variable remuneration is adjusted in line with capital and liquidity requirements.

Remuneration Code staff remuneration by business area (BIPRU 11.5.18(6))

The Firm currently operates in one business area “Advisory and asset management”. For the period from 1 January 2016 to 31 December 2016 the total remuneration for that business area amounted to £408,000.

Aggregate quantitative remuneration by senior management and other Remuneration Code staff (BIPRU 11.5.18(7))

Type of Remuneration Code staff           Total Remuneration

Senior management (SIF)                                                                 £408,000

Other Remuneration Code staff                                                                   £0

Totals                                                                                                   £408,000

Ludgate Investments Ltd. Stewardship Code

Commitment to the Financial Reporting Council’s Stewardship Code

Under Rule 2.2.3R of the FCA’s Conduct of Business Sourcebook, Ludgate Investments Limited (“Ludgate”) is required to include on this website a disclosure about the nature of its commitment to the UK Financial Reporting Council’s Stewardship Code (the “Code”) or, where it does not commit to the Code, its alternative investment strategy. The Code is a voluntary code and sets out a number of principles relating to engagement by investors with UK equity issuers. Investors that commit to the Code can either comply with it in full or choose not to comply with aspects of the Code, in which case they are required to explain their non compliance. We have detailed below the reasons why the firm has chosen not to commit to the Code.

Ludgate commits to the Code in so far as it is able, notwithstanding that it currently acts as adviser rather than as investment manager to its clients. The majority of Ludgate’s investee companies are unquoted ones, with a limited number of shareholders, and where Ludgate generally has a seat on the board.

Although Ludgate may engage with the management of its investee companies, as an adviser it is not in a position to exert influence by exercising proxy voting rights. That voting responsibility rests with its client. Consequently, while Ludgate supports the general objectives that underlie the Code, the provisions of the Code are not relevant to the type of activity currently undertaken by Ludgate. If Ludgate’s investment strategy changes in such a manner that the provisions of the Code become relevant, Ludgate will amend this disclosure accordingly.

For further information on Ludgate’s approach, contact Paul Celerier at